8.7.1 Guidelines for Cases with Special Issues

Manual Transmittal

February 24, 2017

Purpose

(1) This transmits revised IRM 8.7.1, Technical and Procedural Guidelines, Guidelines for Cases with Special Issues.

Material Changes

(1) Editorial and grammatical changes were made throughout this IRM.

(2) Removed all procedures and exhibits applicable to Tax Computation Specialist (TCS) and Account and Processing Support (APS) employees.

(3) Added a new paragraph (2) in IRM 8.7.1.1 with information about restitution-based assessments.

(4) Updated IRM 8.7.1.4 with current law under IRC 41.

(5) Deleted IRM 8.7.1.4.3.

(6) Deleted IRM 8.7.1.6.5.

(7) Updated delegation order in IRM 8.7.1.8.7.1.

(8) Added reference in IRM 8.7.1.9.3 for when Area Counsel concurrence is required to remove fraud penalties.

(9) Added new IRM 8.7.1.11 for overview of criminal restitution.

(10) Added new IRM 8.7.1.11.1 on criminal restitution debt.

(11) Added new IRM 8.7.1.11.2 on restitution debt assessed as a tax.

(12) Added new IRM 8.7.1.11.3 on identifying restitution based assessments on IDRS.

(13) Added new IRM 8.7.1.11.4 for civil actions on cases with restitution based assessments.

(14) Deleted Exhibit 8.7.1-1.

Effect on Other Documents

IRM 8.7.1 dated 9/25/2012 is superseded.

Audience

Appeals Employees

Effective Date

(02-24-2017)


Anita M. Hill
Director, Case and Operations Support

Introduction to Cases with Special Issues

  1. This section provides general information about special issues found in Appeals cases, specifically Personal Holding Company-Deficiency Dividend, Restricted Interest, and Accumulated Earnings. It also provides information on requesting assistance from Art Appraisal Services (AAS) and Appeals Technical Employees (ATE) procedures for jeopardy assessment, termination assessments, and refund suits.

  2. This section provides guidance on identifying criminal restitution-based assessments (RBAs). Technical Services (TS) has exclusive responsibility for completing assessments on criminal restitution cases where IRC 6201(a)(4) is applicable. The case will only be sent to Appeals to consider the civil liability. Appeals employees must never adjust the RBAs. See IRM 8.7.1.11, Overview of Criminal Restitution-Based Assessment Process.

Personal Holding Company Tax Alleviated by Deficiency Dividend

  1. IRC 547 provides a method for relieving a personal holding company from payment of tax imposed under IRC 541 by paying deficiency dividends. If the taxpayer agrees to a deficiency in personal holding company tax, the ATE will advise the taxpayer of the procedures required to secure the benefits of IRC 547.

  2. Appeals Officers and Appeals Team Case Leaders (ATE):

    1. Use Form 2198, Determination of Liability for Personal Holding Company Tax, as an informal agreement for liability of personal holding company tax under IRC 547(c)(3). For authority to enter into such agreements, see Delegation Order No. 4-1 [formerly Delegation Order 8 (Rev. 11)] in IRM 1.2.43.2Delegation Order 4-1 (formerly DO-8, Rev. 11).

    2. Do not accept Form 2198 unless sufficient time remains to make an assessment, taking into consideration the taxpayer is allowed 120 days.

    3. Do not accept this agreement form on behalf of the IRS unless the taxpayer executes an appropriate agreement form, such as Form 870 or Form 870-AD, covering the proposed adjustments to both income tax and personal holding company tax for the years involved. Form 870 must contain conditional paragraphs as shown in IRM Part 4. Ordinarily it is not necessary to insert conditional paragraphs on Form 870-AD since the acceptance of Form 870-AD and Form 2198 are concurrent. See also Rev. Proc. 63-1, 1963-1 C.B. 471.

    4. When using closing agreements as determinations under IRC 547(c)(2), see IRM 8.13.1, Closing Agreements, and Rev. Proc. 68-16, 1968-1 C.B. 770.

    5. If Form 2198 is accepted, solicit taxpayer's claim (Form 976) and secure necessary substantiating evidence.

    6. Specific rules for establishing the date of the determination are set forth in the Regulations. There are two deadlines that apply: 1) The taxpayer has 90 days after the date of the determination (generally, the date the signed Form 2198 is mailed to the taxpayer by registered or certified mail) to distribute the deficiency dividend. 2) The taxpayer has 120 days after the date of the determination to file a claim on Form 976, Claim for Deficiency Dividends Deductions by a Personal Holding Company, Regulated Investment Company, or Real Estate Investment Trust.

    7. If no unusual circumstances are involved and verification of payment of dividends can easily be made, verify the claim. Prepare Form 3189, Deficiency Dividend Deduction Case Transmittal, and Form 5402, Appeals Transmittal and Case Memo, and close the case.

    8. If unable to verify the claim, send the substantiating evidence and administrative file to Compliance to verify the claim and prepare the report. Clearly state on the transmittal that the entire case file must be returned to Appeals, including the Revenue Agent Report (RAR) reflecting the recommendation to allow or disallow the claim.

    9. When preparing settlement computations, the ATE is responsible for providing the information contained in (3) below.

    10. Depending on local procedures, either APS or the ATE controls the 120 days. APS must notify the ATE of the date Form 2198 is mailed.

  3. Tax Computation Specialists (TCS) (or employee who prepares settlement computation):

    1. Because the amount of personal holding company tax is embedded in the body of the settlement computation and hard to see, the employee preparing the settlement computations (AO or TCS) must provide the amount in Reference Number 321 field of the Form 5403 Worksheet. This requirement is valid for MFT 02 returns.

    2. The AO or TCS, whomever prepares the settlement computations, is responsible for preparing a computation of the personal holding company tax.

    3. Interest is restricted for personal holding company tax underpayments under IRC 547(f)(2) and on overpayments under IRC 547(b)(2). This information is annotated in the settlement computation (on Form 3610, 5278, etc.) when applicable.

  4. For further information relative to the handling and disposition of Form 2198, see IRM Part 4.

  5. For docketed personal holding company tax cases, see IRM 8.4.1, Procedures for Processing and Settling Docketed Cases.

  6. Termination of Form 872-A by the taxpayer is rare. For special rules concerning the termination of a Special Consent on a personal holding company tax case, see IRM 25.6.22.7, Open-ended Consents.

Accumulated Earnings Tax IRC Notification

  1. Termination of Form 872-A by the taxpayer is rare. For special rules concerning the termination of a Special Consent on an accumulated earnings tax case or a personal holding company tax case, see IRM 25.6.22.7, Open-ended Consents.

  2. See IRM 4.10.13, Examination of Returns, Certain Technical Issues, for additional information and procedural instructions for accumulated earnings tax cases.

Credit for Increasing Research Activities, IRC 41

  1. The research credit is a nonrefundable credit generally allowed for a percentage of expenditures paid or incurred for qualified research. See IRC 41, Credit for Increasing Research Activities, for details.

  2. The research credit was first enacted in the Economic Recovery Tax Act of 1981 as IRC 44F. Major revisions were made by the Tax Reform Act of 1984 and the section was redesignated as IRC 30 and again by the Deficit Reduction Act of 1986 when it was redesignated as IRC 41, where the authority remains today.

  3. The research credit has been extended numerous times with one gap: no credit is allowed for amounts paid or incurred after June 30, 1995, and before July 1, 1996. The Protecting Americans from Tax Hikes Act of 2015 made the research credit permanent.

  4. Use care to ensure the correct law and applicable regulations are applied when computing the research credit for any taxable year.

    1. See the Appeals Issue Locator at https://organization.ds.irsnet.gov/sites/APPEALS-PQCS/Lists/IssueLocator/Search.aspx for more information about the Research Credit.

    2. Additional information can be found at the Business Credits Issue Practice Group's web site at https://organization.ds.irsnet.gov/sites/lbi_ipg_program/General/default.aspx

    Note:

    The Definition of a Qualified Activity under Section 41 is an Appeals Coordinated Issue – Category of Case and requires a referral to Technical Guidance, but does not require Review and Concurrence. Two other issues involving the Research Credit, Extraordinary Utilities and Allocation of Indirect Costs to Self-Constructed Supplies, are Compliance Coordinated Issues and they require both a referral to Technical Guidance and Review and Concurrence.

  5. Form 6765, Credit from Increasing Research Activities, provides for the various computations of the research credit, the reduced credit and the amount of the suspended research credit. Refer to the corresponding revision of the form and instructions for the applicable taxable year.

Research Credit as Component of General Business Credit

  1. The Tax Reform Act of 1986 added the research credit to the general business credit (GBC) for years beginning after 1985. Prior to that it was a stand-alone credit. As part of GBC, it is subject to the carryback and carryforward provisions of IRC 39(a).

  2. Special rules apply where both the credit and a deduction is claimed for the same research expenditures.

    1. IRC 280C(c)(1) provides that no deduction is allowed for that portion of the qualified research expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year.

    2. The taxpayer must reduce deductions by the amount of the credit computed, regardless of whether the taxpayer is able to utilize the full credit in the credit computation year, unless the taxpayer elects a reduced research credit pursuant to IRC 280C(c)(3).

    3. This is a yearly election and may be claimed only on an original timely filed return (with extensions).

    4. See IRC 280C(c) for details and prior law.

    5. ATEs must take IRC 280C into consideration when providing the Tax Computation Specialist with the adjustments to the research expenditures and the research credit.

Research Credit Suspension

  1. The Tax Relief Extension Act of 1999 provides for two suspension periods for the research credit. As a result, credit arising from these suspension periods cannot be taken into account on original returns.

    1. First suspension period is July 1, 1999 – September 30, 2000: The credit cannot be taken into account prior to the later of October 1, 2000.

    2. Second suspension period is October 1, 2000 – September 30, 2001: The credit cannot be taken into account prior to October 1, 2001.

  2. No credit involving the two suspension periods may be claimed on a timely filed or late filed original income tax return, even if that original return is filed after the expiration of such suspension period. The amount can only be claimed on a Form 1040X/ Form 1120X or a Form 1045/ Form 1139.

  3. Further, any claim for refund of an overpayment of tax attributable to a research credit suspension period cannot be filed before the expiration of the applicable suspension period or before the date the original return for the applicable taxable year is filed.

  4. See Notice 2001-2 and IRM 21.7.4, Business Tax Returns and Non-Master File Accounts, Income Taxes/Information Returns, for additional information on research credit suspension periods.

  5. To determine the amount of the credit that is suspended, the taxpayer must first calculate the research credit for the taxable year.

    1. Because the research credit suspension periods merely delay the use of research credits attributable to a research credit suspension period, the limitations contained in IRC 38(c), IRC 39, and IRC 41(g) on the amounts of research credit allowable to any person as a credit against tax for any taxable year remain applicable.

    2. Further, taxpayers not electing to take a reduced credit under IRC 280C(c)(3) must continue to reduce applicable deductions, amounts chargeable to capital account, and credits for the taxable year by the full amount of the research credit as required by IRC 280C(c)(1) and IRC 280C(c)(2).

  6. The amount of the total credit that is suspended is based solely on the number of months in the fiscal year before the suspension date (October 1, 2000 or October 1, 2001) and the number of months after the suspension date, not on the dollar amounts incurred for qualified research activity during the suspension periods. Any adjustment to the credit amount is to be allocated to the different periods before and after the suspension date. See the examples below:

    1. Example 1: If the taxpayer’s fiscal year runs from April 1, 1999 through March 31, 2000 and the taxpayer has a $10,000 research credit, $2,500 (25% = 3 months for April, May & June out of 12 months) is allowable on the original return and the remaining $7,500 is suspended until October 1, 2000 (the months covering July through March involve a suspension period). The taxpayer can file a claim for the $7,500 credit that was suspended on or after October 1, 2000.

    2. Example 2: If the taxpayer’s fiscal year runs from December 1, 1999 through November 30, 2000 and the taxpayer has a $10,000 research credit, no credit is allowable on the original return because all 12 months involve the first or second suspension period. The taxpayer can file a claim for $8,300 (83% = 10 out of the 12 months involved in the first suspension period, December 1999 through September 2000) after their return is filed for the period ending November 30, 2000; and the taxpayer can file a claim for the remaining $1,700 (second suspension period for October and November 2000) on or after October 1, 2001.

    3. Example 3: If the taxpayer files a calendar year return for the year 2001 and the taxpayer has a $50,000 research credit, $12,500 (25% = 3 months for October, November & December out of 12 months) is allowable on the original return. Even though the due date of the original return (3/15/2002) is after the date the second suspension period expires (10/01/2001), the taxpayer cannot claim the suspended portion of the credit on their original return. The taxpayer can file a claim for the $37,500 suspended credit anytime after they file their original return.

  7. Any research credit not allowed in the taxable year that is attributable to a research credit suspension period may not be claimed as a carryback or carryforward until the day after the end of the applicable research credit suspension period. After the end of the applicable research credit suspension period, however, research credits attributable to a research credit suspension period not used currently as a credit against tax may be carried to other taxable years under the rules of IRC 39.

  8. During these suspension periods, the research credit is not used to determine any amount required to be paid for any purpose under the Internal Revenue Code. This restriction extends to the determination of underpayments for the computation of penalties and additions to tax.

  9. In general, additions to tax for failure to pay estimated tax are made under IRC 6654 or IRC 6655 for any underpayment of income tax imposed by the Code even if the underpayment is created or increased because of the suspension of the research credit. No additions to tax for failure to pay estimated tax, however, are made for any period before July 1, 1999, for any underpayment of income tax imposed by the Internal Revenue Code to the extent the underpayment is created or increased by reason of the suspension of the research credit. See Notice 2001-2.

  10. In determining estimated tax payments, a credit created by a claim for research credit can only be applied to an estimated tax payment that is due after the suspension period expires. An example of this is a credit attributable to the second suspension period cannot be used to reduce any estimated tax payment due before October 1, 2001.

  11. Since the taxpayer can apply a credit from a suspension period to an estimated tax payment, pay special attention to the preparation of Sequa Worksheets for interest computations. See IRM 8.17.6., Interest Issues in Settlement Computations, for information on preparing the Sequa Worksheets when the taxpayer claimed research credits which are subject to the suspension periods.

  12. The suspension periods also affect the availability dates (e.g. interest computation date) of credits/abatements against the taxpayer’s tax liability, and must therefore be taken into consideration when preparing Form 2285 for restricted interest computations.

Valuation Issues in Appeals Cases

  1. The purpose of this section is to make ATEs aware of Art Appraisal Services (AAS), and to encourage contact with this office when needed. The office maintains a core of financial analysts and art appraisers to assist service personnel on their cases. In addition, AAS can assist ATEs in locating experts in other fields.

Requests for Art Appraisal Service Assistance

  1. The ATE consults with AAS on any case claiming a value for a single work of art in excess of $50,000. Telephone discussions with this office are encouraged in order to take advantage of expert advice and to facilitate the handling of all referrals for valuation assistance. To determine information and items necessary to obtain valuation assistance on works of art, see IRM 8.18.1, Valuation Assistance Procedures, for detailed instructions and procedures.

  2. Requests for AAS’s assistance must be submitted through the online Specialist Referral System (SRS). Referrals may be created at https://srs.web.irs.gov/default.aspx.

  3. Requesters are encouraged to contact the valuation specialists by telephone to informally discuss a valuation problem to determine the type of assistance required. For detailed instructions and procedures, see IRM 8.18.1, Valuation Assistance Procedures.

Jeopardy and Termination Assessments Cases

  1. Code Section 7429 provides for administrative and judicial reviews for jeopardy and termination assessments.

  2. Appeals procedures for termination assessment cases are in many respects the same as for jeopardy assessments.

  3. The following subsections provide procedures for processing these cases.

Jeopardy Assessments

  1. Jeopardy assessments are made under IRC 6861 or IRC 6862. These sections provide an expedited assessment procedure when tax collection is endangered if regular assessment and collection procedures are followed. IRC 6867 allows the Service to presume that tax collection will be jeopardized in certain circumstances where an individual is in physical possession of an unidentified large amount of cash.

    1. IRC 6861 applies to assessments of deficiencies of income, estate, gift and certain excise taxes

    2. IRC 6682 applies to taxes other than income, estate, gift and certain excise taxes whether or not the due date for filing and paying the tax expired.

  2. Service policy on jeopardy assessments is found in Policy Statement P-4-88. Also see IRM 4.15.1, Jeopardy and Terminations, and IRM 5.1.4, Jeopardy, Termination, Quick and Prompt Assessments.

Jeopardy Assessment Procedures for Compliance

  1. Under IRC 7429(a), the Compliance Area Director has five (5) days after a jeopardy assessment to furnish the taxpayer with a written statement of the information the Service relied on in making the assessment. See IRM 5.1.4, Jeopardy, Termination, Quick and Prompt Assessments, for a pattern letter.

  2. As a result of the enactment of the IRS Restructuring and Reform Act of 1998 on July 21, 1998, it is now a statutory requirement for Chief Counsel or his/her delegate to approve all jeopardy and termination assessments and all jeopardy levies. See IRC 7429(a)(1)(A).

  3. Jeopardy assessments initiated by Collection personnel are limited to proposed:

    1. Trust Fund Recovery Penalty assessments;

    2. Employment and excise tax assessments, whether or not the return due date expired;

    3. Partnership penalty assessments;

    4. Income tax assessment when there is no question about the amount of the liability.

  4. A jeopardy assessment is requested:

    1. when it is determined collection is in jeopardy;

    2. when one or more of the four conditions outlined in Policy Statement P-4-88 exists;

    3. for Trust Fund Recovery Penalty assessments, and IRC 6020(b) assessments, for which appropriate appeal/protest periods are not expired;

    4. when assessment/collection action is proposed after the return due date for a signed return for income tax liabilities.

Jeopardy Assessments On Cases Pending in Appeals

  1. Examination occasionally investigates cases pending in Appeals to determine the need for a jeopardy assessment. An investigation by Examination is limited to whether collection of any proposed deficiency is endangered by any circumstance that might adversely affect the taxpayer's ability to pay or the Government's ability to collect. Appeals is responsible for making the final determination of the tax liability in controversy.

  2. If Examination determines that a jeopardy assessment is not warranted, the Area Director returns the case to the Appeals Office with a notice to that effect.

  3. When a jeopardy assessment is warranted, it is made by the Area Director. The case and jeopardy assessment file are immediately returned to the Examination function that referred the case. In income, estate and gift tax cases, Appeals issues any notice of deficiency required by IRC 6861(b). Send a copy of the notice of deficiency to the appropriate Examination function.

  4. When a case and jeopardy assessment file are returned to Appeals, only consider the issues in the tax case. The taxpayer needs to ask for a review of the jeopardy determination and appropriateness of the amount assessed for Appeals to consider it.

  5. IRC 7429(b) permits a taxpayer to seek judicial review of a jeopardy determination of the appropriateness of the amount of the jeopardy assessment. The period for seeking judicial review is the earlier of the 16th day after requesting Appeals review of the jeopardy assessment or the date Appeals notifies the taxpayer of its determination. Therefore, Appeals should complete its review of the jeopardy determination and the appropriateness of the assessed amount, and should issue a written determination to the taxpayer, within 15 days after the taxpayer makes his request for Appeals review under IRC 7429(a)(2).

  6. Some jeopardy assessments lend themselves to complete resolution of both the merits of the liability and the reasonableness of the jeopardy determination. Therefore, both aspects can be resolved by agreement if the action is taken within 15 days after the taxpayer's request is filed or the taxpayer decides not to request judicial review of the assessment in District Court.

Termination Assessments

  1. The Area Director makes a termination assessment under the conditions found in Policy Statement P-4-89 and the procedures in IRM Part 4. Time limitations for holding Appeals conferences, rendering a prompt decision, and statutory provisions for filing suit in District Court are the same as for jeopardy assessment.

  2. Because of time limitations involved, if the taxpayer provides new information or documentation to the ATE, the Area Director may need to promptly comment on the new evidence. Appeals retains jurisdiction over the case in instances where the Area Director comments on the new evidence.

  3. Inform the taxpayer of the right to judicial review under IRC 7429(b) when a taxpayer does not agree with the Appeals decision. Return the case file and a report, in duplicate, to the Area office Examination function.

  4. At the end of the full tax year, the taxpayer is required to file a full year return. Generally, Examination is responsible for issuing the notice of deficiency required under IRC 6851(b) for the taxpayer's taxable year. Area office and Campus controls are established to determine whether or not the taxpayer files a full year return.

  5. Examination either examines the taxpayer's return or prepares a substitute for the return. The taxpayer may protest the notice of deficiency and come to Appeals. In some cases, it is possible for Appeals to receive the case prior to issuance of the notice of deficiency. In these cases, Appeals issues the notice of deficiency. If Appeals issues the notice of deficiency, a copy of the notice is sent to the appropriate Examination function.

Civil Cases Involving Department of Justice

  1. The Department of Justice (DOJ) has exclusive jurisdiction over any action in which a taxpayer has filed a suit in the United States District Court or in the United States Court of Federal Claims for recovery of taxes paid.

  2. When a suit for refund of taxes is filed and the taxes at issue are part of a pending case, further consideration is postponed on the case, including all years under consideration (suit and nonsuit) and on any related cases.

  3. However, it is not necessary to postpone consideration for years not in litigation if the issues in the nonsuit years are unrelated to the issues in the years under litigation. In such situations, contact the DOJ through local Associate Area Counsel (to obtain permission to consider non-suit years).

  4. Either the Campus or Associate Area Counsel notifies the appropriate Appeals office when a suit for refund is filed in a case pending before Appeals. See IRM 5.8, Offer in Compromise, for suits involving offers in compromise.

Closing Department of Justice Cases

  1. Appeals is notified when the case jurisdiction changes to Department of Justice (DOJ), exclusively.

  2. After the ATE prepares the case for release to DOJ, APS will close the case on AIMS and ACDS, recharge the administrative file and send it to Counsel.

Appeals Procedures on Refund Suits

  1. This section explains procedures for handling Refund Suits in various scenarios. It provides information on the following:

    • When to issue the notice of claim disallowance.

    • What to do if the case involves an application to reconsider a claim previously disallowed.

    • What information should go in the Appeals Case Memorandum.

    • What to do before issuing a statutory notice of deficiency on the suit years.

    • What happens if the taxpayer files a petition with the Tax Court.

    • How to handle related cases that are in Appeals for consideration.

Refund Suits with No Deficiency in Appeals Cases

  1. After notice that a suit has been filed in an Appeals case involving no deficiency, issue the notice of claim disallowance (when required), prepare Form 5402, Appeals Transmittal and Case Memo and identify the case as a court case.

  2. Forward the return to APS for processing, who will complete the appropriate actions and promptly send the administrative file, including the return, to Counsel.

  3. However, if the Campus maintains a follow-up control on the Refund Litigation file, APS will forward the administrative file to the Campus, referring in the transmittal to the Campus's Refund Litigation control number.

Refund Suits with Disposition of Pending Claims

  1. If a claim has not previously been disallowed or Form 2297, Waiver of Statutory Notification of Claim Disallowance, was not signed by the taxpayer, issue a statutory notice of claim disallowance.

  2. If the case involves an application for reconsideration of a claim previously acted upon, prepare Form 5402 to transmit the return to APS and enter the date the notice of claim disallowance was issued or the date Form 2297 was filed. Finally, advise the taxpayer that, because of filing suit, the case is under jurisdiction of the DOJ and Appeals will give no further consideration to the case.

Refund Suits with Statutory Notice of Deficiency Issued

  1. Before issuing a notice of deficiency on the suit years, consult with the DOJ through Counsel, for advice and concurrence. If the DOJ concludes a notice of deficiency should be issued, they notify Counsel, who notifies the appropriate Appeals office.

  2. If the notice of deficiency raises an issue under a specific Internal Revenue Code section or Tax Court Rule 142 that places the burden of proof on the Government with respect to the issue, consider sending the proposed notice to Counsel for consideration. There is no need to consider sending the proposed notice to Counsel if the burden of proof issue involves only IRC 7491.

  3. Notify Counsel if you have information that the taxpayer intends to petition the Tax Court after receiving a notice of deficiency.

Refund Suits with Deficiency in Appeals Cases

  1. If there are proposed deficiencies before Appeals for years involved in the suit, Form 5402 and accompanying ACM used to forward the return to APS must include the following:

    1. the amount of the proposed deficiency;

    2. the basis for determination;

    3. if possible, an expression of Appeals' views on whether a statutory notice of deficiency should be issued; and

    4. date of expiration of statutory period of limitations.

Refund Suits When Petition is Filed with US Tax Court

  1. If the Tax Court acquires jurisdiction, process the case the same as other docketed cases. Chief Counsel notifies the DOJ that a petition was filed. See IRM 8.4.1, Procedures for Processing and Settling Docketed Cases.

Refund Suits Affecting Related Appeals Cases

  1. Appeals may have pending cases related to issues in suit involving either the same or different taxpayers. Use Form 5402 to transmit the years in suit, indicating the related cases are pending before Appeals, the issue involved, and the relationship with the years in suit. Also request prompt advice on disposition of the years in suit.

  2. If further consideration of related cases appears warranted, ask Counsel to determine whether the DOJ has any objection to adjusting the nonsuit year(s). Before taking final action on any related case covering the nonsuit year(s), ask Counsel to determine if the DOJ has any objection to the proposed disposition. If the Appeals case covering the nonsuit year(s) is docketed in the Tax Court, Counsel (rather than Appeals) coordinates action with the DOJ.

  3. For Department of Justice cases (or related issues or cases) involving closing agreements, see IRM 8.13.1, Processing Closing Agreements in Appeals.

Settlements by Department of Justice (DOJ)

  1. This section covers the different settlements handled by the DOJ; specifically, those where the settlement affects cases pending in Appeals.

  2. If the DOJ receives a proposal of settlement in a case previously considered by Appeals that affects only years in suit, Counsel does not refer the proposal to the Appeals office for comment unless circumstances warrant coordination.

DOJ Settlements Affecting Appeals Cases
  1. If the proposal of settlement affects cases pending before Appeals, other than docketed Tax Court cases, Counsel refers the proposal directly to the Appeals office for comment. Comments furnished to Counsel must be limited to adequacy of the proposal. If there is an issue in the Appeals case not present in the years in suit and not covered by the proposal of settlement, call the issue to the attention of Counsel. Also, mention any other factor which might cause problems with acceptance of the proposal. Do not enter into further settlement negotiations with the taxpayer without specific authorization.

  2. Delegation Order 30-2, delegates authority to Chief Counsel and the Associate Chief Counsels, to sign recommendation letters to the DOJ concerning settlement offers for years or parties not in suit, but related to pending refund suits for other years or parties.

  3. In exercising this authority, consider the advice of the Area Director of the Appeals office with jurisdiction over the nonsuit years or parties.

Disposition Based Upon Department of Justice Settlement
  1. When Counsel notifies Appeals a settlement is accepted by the DOJ, dispose of the case for the nonsuit year(s) in the usual manner. Counsel will dispose of the refund suit years. ATE’s should resolve issues not covered in the settlement using normal procedures and avoid entering into any agreement before the settlement of the years in suit is effective.

Cases Involving Criminal Prosecution and Restrictions on Appeals Jurisdiction in Criminal Cases

  1. Appeals does not act on civil liability in a pending criminal prosecution case without concurrence of Criminal Investigation (CI).

  2. In any case in which prosecution for criminal fraud is recommended to the DOJ, or in which the question of liability for criminal fraud remains under investigation, treat criminal prosecution as pending until a final disposition is made on the criminal aspects. IRM Part 4 and the Policies of the Internal Revenue Service Handbook, contain text relative to cases with criminal fraud implications.

  3. Appeals may act on civil liability when notified in writing by Criminal Investigation that:

    1. Recommended criminal prosecution was declined and no court proceedings will be instituted; or

    2. All court proceedings which were instituted as the result of the recommendation for criminal prosecution are complete.

  4. Appeals may act on civil liability when court proceedings on criminal prosecution are not fully completed, but only if the Department of Justice has given clearance for a determination or a settlement, in whole or in part.

  5. Under Policy Statement P-4-26, Appeals takes no action that would imperil successful criminal investigation or prosecution. Coordinate with Criminal Investigation on intended actions on criminal tax and tax-related violations under the investigative jurisdiction of CI.

Appeals Jurisdiction in Criminal Cases

  1. The notice of Criminal Investigation referred to above releases Appeals from the restriction to act on criminal cases imposed by Delegation Order No. 66, as revised. However, the notice received from Criminal Investigation in pending criminal cases may have limitations or qualifications. Appeals authority is subject to any of these restrictions.

Appeals Case Memo or Status Report on Pending Criminal Case
  1. State in the Appeals Case Memo (ACM) that there are criminal aspects in the case and indicate whether or not such aspects were completed.

  2. If Criminal Investigation's notice of clearance is prior to the completion of final criminal action and:

    1. Appeals action is completed within 45 days from the date of notice, give Criminal Investigation four extra copies of the ACM.

    2. Appeals action is not completed within 45 days from the date of notice, forward a status report (with four copies) at the end of that period to Criminal Investigation and send a similar report every 30 days until completion. Document the Status Report with any lack of cooperation or good faith on the part of the taxpayer or taxpayer's Counsel. Upon completion, give the ACM (with four extra copies) to Criminal Investigation.

Report to Criminal Investigation When Convicted Taxpayer on Probation

  1. Appeals may consider the civil liability of a taxpayer convicted of violating the internal revenue laws and placed on probation for a specified period of time conditioned upon satisfactory settlement and/or payment of civil liability for taxes and penalties.

  2. Promptly inform the Special Agent in Charge, Criminal Investigation for the originating field office of any lack of cooperation, or any other act of the taxpayer, that appears intended to delay or to interfere with an orderly determination of liability. Also, give a Status Report on the case to the Special Agent in Charge, Criminal Investigation, no later than 60 days before the expiration of the probationary period or upon completion of the case, whichever occurs first.

Civil Liabilities After Criminal Aspects Closed

  1. After disposition of criminal aspects of a case, the administrative file is forwarded to Appeals for consideration of any unsettled civil liabilities within its jurisdiction.

  2. The closed enforcement file received by Appeals reveals any additional facts or evidence obtained by Criminal Investigation or developed in any pretrial investigation by a special agent. It also reveals whether or not the case was tried. If tried, or if additional evidence was developed, there is a special agent's summary report, prepared in accordance with instructions in IRM Part 9, Criminal Investigation. If the file does not contain the required report, request it from the area Criminal Investigation function, consistent with the limitations set forth in Federal Rule of Criminal Procedure 6(e) relating to grand jury investigations.

  3. Include a concise statement in the ACM about the joint investigation by a special agent and revenue agent, the results, and the disposition of any recommendations for criminal prosecution.

  4. Refer to IRM 8.11.1.2.6, Processing Fraud Penalty Cases, regarding the requirement to secure Area Counsel concurrence if Appeals proposes to remove fraud penalties under IRC 6663(a) or IRC 6651(f) when reaching a settlement on a case which was successfully prosecuted under Title 26.

Disaster Relief Cases

  1. If a disaster occurs and the President declares the area to be a "federally declared disaster area" , FEMA will designate certain areas within the disaster area to be eligible for Individual Assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C., Sections 5121-5206 (Stafford Act). Because taxpayers and tax practitioners may require disaster/emergency relief measures to enable them to meet their tax obligations for filing returns or paying taxes without being penalized, the IRS will provide filing and payment relief to affected taxpayers located in the areas designated by FEMA to be eligible for individual assistance. Certain compliance actions may be temporarily suspended - in accordance with IRC 7508A, Authority to Postpone Certain Deadlines by Reason of Presidentially Declared Disaster or Terroristic or Military Actions.

  2. The Disaster Assistance and Emergency Relief Program is a service-wide program under the stewardship of SBSE, Communications and Stakeholder Outreach (CSO), Stakeholder Liaison (SLHQ). The Director of CSO issues a Memorandum for Distribution stating that the president declared a "disaster area identified by the Federal Emergency Management Agency (FEMA)" to be eligible for individual assistance under the Stafford Act. This memorandum will identify the specific disaster, the disaster date (or beginning disaster date), the declaration date, "specific acts postponed," the IRS designated disaster area(s), etc. The memorandum is for internal use only. The taxpayer can obtain external notices at www.irs.gov in the section entitled, Tax Relief in Disaster Situations. See Appeals' Disaster Assistance and Emergency Relief web page for additional information, including links to specific disaster assistance declarations.

  3. The Director of FEMA appoints a Federal Coordinating Officer (FCO) to coordinate FEMA's disaster assistance efforts and work with other federal agencies on relief issues.

  4. IRS will issue a Notice of Disaster Declaration from FEMA that identifies the disaster, incident period, the FCO, the IRS designated area(s), and type of assistance available. The IRS Notice of Disaster Declaration can be amended, if additional designations are made after further evaluation. However, the Memorandum for Distribution (previously issued by CSO) is not changed as a result of additional designations. The Appeals Technical Employee (ATE) should rely on the instructions contained in the CSO's Memorandum for Distribution to determine the specific acts postponed, account freezes, the requirement for stuffers and/or soft contact letters, etc.

  5. The IRS IT organization (Information Technology) identifies the "affected taxpayers" by zip codes in the designated disaster areas.

  6. Role of Appeals - Appeals will follow the guidelines contained in the CSO's Memorandum for Distribution and IRS' Notice of Disaster Declaration from FEMA. Appeals will take the following steps after IT has identified the taxpayers in the designated disaster areas - by zip codes:

    • A Planning Quality and Analysis (PQ&A) program analyst will prepare a spreadsheet with a list of all Appeals inventory identifying taxpayers located in the IRS covered disaster area(s). The PQ&A analyst will forward the list to the designated Policy program analyst. In addition, PQ&A will include the following email attachments: (a) CSO's Memorandum of Distribution and (b) the IRS Notice of Disaster Declaration from FEMA.

    • A Policy analyst will send an e-mail notice (with attachments) to Area Technical Advisors, who will determine the need to forward information to the Appeals team level. The Policy analyst's email will contain reminders for the ATE to consider the need for Notice 1155, Disaster Relief from the IRS and/or soft contact letters, as directed in CSO's Memorandum for Distribution.

    • Appeals Policy requires the input of the "DR" (Disaster Relief) feature code on ACDS for "affected taxpayers" identified for suspension. If the ATE has not identified the taxpayer for suspension, the "DR" feature code should not be added. The ATE can determine the need to suspend action by sending the taxpayer a "soft contact letter" to determine the effect of the disaster on the taxpayer. The ATE can find a sample "soft contact letter" on Appeals' Disaster Assistance and Emergency Relief web page. The ATE should consult with the ATM to determine the need to suspend action on a case. Also, the ATE should review CSO's Memorandum of Distribution to determine the specific acts eligible for postponement under the servicewide guidelines. The ATE's decision to allow additional time would be based on local procedures.

  7. The ATE should refer to IRM 25.16.1, Special Topics, Disaster Assistance and Emergency Relief, Program Guidelines, for the servicewide instructions in working Disaster Relief cases. It provides:

    1. Program guidelines and Stewardship;

    2. The role of the National Disaster Assistance Coordinator (DPO) and the State Disaster Assistance Coordinator (SDAC);

    3. The Government Liaison (GL) and the Stakeholder Liaison Response Plan;

    4. Disclosure Provisions When Providing Emergency Relief;

    5. General Procedures for all operating divisions;

    6. Definition of Terms and acronyms used during a disaster;

    7. A sample pre-disaster awareness message; and

    8. A complete discussion of the "-O" freeze and the "-S" freeze.

  8. Appeals employees should become familiar with specific disaster relief "freeze" codes on the Integrated Data Retrieval System (IDRS). See IRM 25.16.1.6 and refer to Document 6209, IRS Processing Codes and Information. These freeze codes are systemic disaster indicators - on IRS Master Files - available to assist in identifying and processing disaster relief cases. The freeze codes will appear on IMFOLI, BMFOLI, and TXMODA. A Transaction Code 971 AC 688 will also post to ENMOD, See IRM 25.16.1.6.1 for guidance in those instances where an employee receives a taxpayer's request to self-identify for disaster relief. Affected taxpayers who reside or have businesses located outside the designated disaster area MUST call 1-866-562-5227 to self-identify for disaster relief. After they have self-identified, a transaction code (TC) 971, action code (AC) 688 will post to IDRS.

Overview of Criminal Restitution-Based Assessment Process

  1. In a criminal tax case, a court may order a defendant to pay restitution to the Service for tax related losses. Criminal Investigation (CI) provides evidence to the courts for the amount of restitution to be ordered. The amount of the restitution ordered by the court is calculated from evidence submitted at trial or from information contained in the plea agreement and presented to the court at sentencing. The court issues a Judgment and Commitment Order (J&C) shortly after the sentencing hearing.

  2. CI is required to close its case and notify the Service civil functions within 30 days of final adjudication of the amount of restitution ordered. Final adjudication occurs the day after all appeals have been exhausted for the criminal case. The J&C often only specifies a single amount of restitution that covers multiple tax years or periods. When notifying the civil functions of the amount of restitution via Form 14104, Notification of Court Ordered Criminal Restitution Payable to IRS, it is the responsibility of the CI special agent to specify whether the restitution is assessable as a tax and how it should be assessed. See IRM 25.26.1.3.1, Criminal Investigation, for more information.

  3. When the criminal aspects of the case have been completed, e.g., criminal prosecution is concluded or the criminal investigation is discontinued, CI will notify the Service civil functions including Examination Technical Services (TS) of the formal closing of the criminal case by issuing Form 13308, Criminal Investigation Closing Report, and refer the case for appropriate civil action. When a criminal case includes court ordered restitution payable to the Service, the referral from CI will also include Form 14104, Notification of Court Ordered Criminal Restitution Payable to IRS, Judgment and any other applicable supporting documents.

  4. IRC section 6201(a)(4) provides that the Secretary shall assess and collect the amount of restitution under an order pursuant to Section 3556 of Title 18, United States Code, for failure to pay any tax imposed under this title in the same manner as if such amount were tax. This law applies to restitution orders entered after August 16, 2010.

  5. The Office of Appeals is not authorized to consider or process criminal restitution appeals. Appeals must not abate or adjust any restitution-based assessment. If Appeals considers the civil liability for the taxpayer, the Appeals employee’s consideration must be made independently from the criminal restitution-based assessment. Before sending the case to Appeals, TS will ensure that all applicable RBA transaction codes are posted on the affected module(s). The linkages are updated as needed whenever the module is adjusted.

    • See IRM 8.7.1.11.1, Criminal Restitution Debt, for more information about this court-ordered debt.

    • See IRM 8.7.1.11.3, Identifying Restitution-Based Assessments on IDRS, for information on how TS links the civil modules to the MFT 31 RBA module.

    • See IRM 8.7.1.11.4, Civil Actions on Cases with Restitution-Based Assessments, for Appeals involvement.

Criminal Restitution Debt

  1. The amount of restitution ordered payable to the Service creates two separate debts for the same liability. These two separate debts provide two different means for collection, but the same liability cannot be collected twice. See IRM 21.6.8, Split Spousal Assessments (MFT 31), for more information on splitting accounts and applying payments.

    1. The first debt is the "restitution judgment" which the Department of Justice Financial Litigation Unit (DOJ FLU) is responsible for collecting.

    2. The second debt is the criminal "restitution-based assessment" (RBA) which will be assessed and collected by the Service in the same manner as if it was a tax. See IRM 8.7.1.11.2, Restitution Debt Assessed as a Tax under IRC §6201(a)(4).

      Note:

      While an RBA is collected in the same manner as if it was a tax, special rules apply if the taxpayer submits an Offer in Compromise. See IRM 5.8.4.23.2Offers in Compromise Submitted that Include Restitution.

      Caution:

      The two debts above are in addition to the proposed civil tax liability for the tax period(s) at issue in Appeals. The DOJ debt is not reflected in any IRS records, but is the full amount of restitution ordered by the court.

  2. The defendant ordered to pay restitution may be one or more of, but is not limited to, the following:

    • Individual taxpayer (e.g., filing an individual return, a separate return, or a joint return)

    • Officer or employee of a corporation

    • Partner or employee of a partnership

    • Employee of a sole proprietorship

    • Corporate director

    • Client of a return preparer

    • Return preparer

    • Tax shelter promoter

    • BMF entities (corporations, partnerships, trusts etc.).

  3. Because restitution debts stem from the same underlying tax liability, the full amount can only be collected once. Any payments that wholly or in part satisfy the restitution-based assessment (as a result of the criminal case) will also be applied against the underlying tax liability (if assessed) provided that the restitution-based assessment is attributable to the underlying civil liability (if the liability is not the same as the amount ordered by restitution, they will not be mirrored).

    Example:

    If the restitution is for tax period X but relates to the defendant’s business income tax and not his own personal income tax for the same period, the payment would be credited to his RBA and the business income tax liability. It would not be credited to his personal income tax liability for the same period.

  4. Duplicate assessments include the RBAs made on the appropriate MFT 31 account, and civil tax and/or penalties assessed on each respective party’s underlying tax account.

  5. Two responsible parties may owe different duplicate assessments amounts for the same period. The duplicate assessments may or may not be equal to the RBA amount and can be identified by a TC 971 AC 188 or TC 971 AC 189. Those accounts include, but are not limited to, the following:

    • Form 1040, U.S. Individual Income Tax Return (MFT 30)

    • Form 941, Employer’s Quarterly Federal Tax Return (MFT 01, 17*)

    • Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (MFT 10)

    • Form 1120, US Corporation Income Tax Return (MFT 02)

      Note:

      *Indicates Non-Master File (NMF)

  6. See IRM 4.8.6, Criminal Restitution and Restitution-Based Assessments, and IRM 25.26.1.2, Restitution Debt, for more information.

Restitution Debt Assessed as a Tax under IRC §6201(a)(4)

  1. Technical Services (TS) has exclusive responsibility for completing, revising, and/or abating assessments. Whether a criminal restitution order can be assessed as a tax depends on the nature of the criminal offense for tax purposes. If the restitution ordered is traceable to a tax imposed on the defendant under Title 26 (e.g., cases stemming from an underreporting of income, an inflated credit or expense, or an alleged overpayment of tax that results in a false refund), then the restitution may be assessed as a tax.

  2. Criminal Investigation (CI) in coordination with Criminal Tax (CT) Counsel will make a case-specific determination whether a restitution order relates to a tax imposed under Title 26. Restitution ordered for a criminal violation of the following statutes may meet the requirements necessary to be assessed as a tax: IRC sections 7201, 7202, 7203, 7205, 7206(1), 7206(2), 7206(4), 7206(5), 7207, and 18 USC sections 286, 287, and 371. This is not an all-inclusive list, but is representative of the most frequently encountered criminal statutes that may result in a restitution-based assessment.

  3. A criminal restitution (CR) is also referred to as a restitution-based assessment (RBA). Examination Technical Services (TS) has exclusive responsibility for completing assessments on criminal restitution (CR) cases where IRC 6201(a)(4), Assessment Authority, is applicable.

  4. The following provisions are helpful in interpreting IRC 6201(a)(4):

    1. The RBA is assessed as if it was a directly assessable tax and does not require the issuance of a statutory notice of deficiency (SNOD)(IRC 6213(b)(5)).

    2. The amount of the restitution cannot be challenged in a civil administrative or judicial proceeding based on the existence or amount of the underlying tax liability (IRC 6201(a)(4)(C)).

    3. The Office of Appeals does not consider appeals of RBAs.

    4. If an appeal is filed on the criminal restitution determination, the appeal is under the sole jurisdiction of the Department of Justice.

    5. The assessment of the restitution as if it were a tax can be made at any time and is not subject to a statute of limitations (IRC 6501(c)(11)).

    6. An RBA under IRC 6201(a)(4)(A) can be no greater than the amount ordered as restitution. If the court ordered restitution includes interest, the assessment may be less than the amount ordered, since interest is systemically calculated, and to include it would be to double assess the interest.

    7. Interest under IRC 6601 accrues on the RBA. Comments reflected on the J&C Order referring to interest under Title 18 do not have any bearing on the RBA or the Title 26 interest owed on the RBA. The Service does not have jurisdiction over Title 18 interest. The defendant is required to pay the Title 18 interest directly to the court, when applicable. The criminal court can waive the Title 18 interest on the restitution ordered, but the court cannot waive the Title 26 interest on the RBA.

  5. For more information, refer to CC-2011-018, The Assessment and Collection of Criminal Restitution, and IRS Chief Counsel Notice CC-2013-012, Deficiency and Litigation Issues Concerning Tax Periods For Which Criminal Restitution Has Been Ordered.

Identifying Restitution-Based Assessments on IDRS

  1. The criminal RBAs against an individual are posted on the individual defendant’s MFT 31 module(s). The duplicate civil assessments (when applicable) are posted on the appropriate module for the type of civil tax on which the criminal restitution is based (MFT 30, MFT 02, MFT 01, etc.). Refer to IRM 4.8.6.2.2.2, Assessing Restitution, for more information on cases where the restitution may be ordered against an entity.

    Note:

    For BMF assessments not assessed on MFT 31, be careful not to abate any portion of the actual restitution assessment amount if you are considering any adjustments to the civil assessment(s). While there may be abatements, either due to added expenses, less income, or Net Operating Loss carrybacks, do not abate more than the non-restitution assessments (TC 150, TC 290, TC 298, TC 300, TC 308, etc.). A Restitution assessment is court ordered, and cannot be reduced without the court issuing an order. If there are any questions, please contact the Technical Services (TS) office in Los Angeles, CA (at *SBSE TECH Svc Criminal Restitution).

  2. Also, the following are IDRS indicators of an RBA:

    IDRS Posting Explanation
    TC 971 AC 102 A Transaction Code (TC) 971 with action code 102 will always appear on the criminal restitution module (MFT 31) and may also appear on the appropriate module for the type of civil tax on which the criminal restitution is based (MFT 30, MFT 02, MFT 01, etc.). The TC 971 AC 102 will identify that the affected modules include criminal restitution (effective 03/23/2011). Refer to IRM 21.6.8.3 (4).
    TC 290 or TC 298 The RBA will generally be posted on MFT 31 as a TC 290 for IMF tax and a TC 298 for a BMF tax with an adjustment reason code in the range of 141 through 146. See also IRM Exhibit 4.8.6-4, RBA Reason Codes. Up to three adjustment reason codes may be applied to an assessment. If a corporation is the defendant ordered to pay restitution, the assessment will be made directly on the BMF (MFT 02, 01, 10, etc.) module, using TC 290. The adjustment reason code will not be 141 through 146, since these reason codes are only available on MFT 31 modules. You will need to look for the TC 971 AC 102 and TC 971 AC 18X for indicators that an assessment on a BMF module is a restitution assessment.
    TC 971 AC 18X The affected modules will also be cross-referenced by a TC 971 with an action code in the range of 180 through 189. In IRM 4.8.6, see Exhibit 4.8.6-7, IMF TC 971 Definitions and Examples, and Exhibit 4.8.6-8, BMF / RPP TC 971 Definitions and Examples.
    MEMO MONEY AMT (MMA) The Memo Money Amount (MMA) field of the TC 971 AC 18X is used to identify the amount of the RBA and/or Fraud Penalty that is a duplicate. The dollar amount of the MMA is displayed on CC TXMOD and IMFOLT or BMFOLT only when an amount greater than $0.00 has been entered. See IRM 4.8.6.2.2.4, Cross Referencing Accounts. Also, see examples in Exhibit 4.8.6-7 and Exhibit 4.8.6-8.

    Note:

    RPP = Return Preparer Project (RPP) Cases. See IRM 25.26.1, Criminal and Restitution-Based Assessments, and IRM 4.8.6.3.2.3, RPP Cases.

Civil Actions on Cases with Restitution-Based Assessments

  1. After the restitution assessment process has been completed, the local Examination Local Technical Service (TS) fraud coordinator will review the referral package from Criminal Investigation and determine whether civil examination actions are warranted. Field Examination is responsible for reviewing case files forwarded by TS to complete the following actions:

    1. Taking appropriate civil actions, including the recommendation not to take further civil action, to conduct a limited or in-depth civil examination, and/or prepare applicable audit reports as warranted based on the facts and circumstances of the case.

    2. Recommending the assertion of any applicable civil penalties.

    3. Forwarding the completed examination case through TS for mandatory review prior to closure.

  2. A restitution case may also be a Condition of Probation (COP) case. CI and Compliance (Examination/Collection) share primary responsibility for monitoring tax-related COP for the Service. See IRM 25.1.4.5, Special Conditions of Probation, IRM 8.7.1.9.2, Report to Criminal Investigation When Convicted Taxpayer on Probation, and IRM 4.8.2.10.3.7, Conditions of Probation.

  3. On unagreed protested cases and petitioned statutory notice of deficiency cases, the TS fraud coordinator will send notification of an RBA and/or COP case sent to Appeals by sending an email to the Appeals "Condition of Probation Case Coordinator". The COP Case Coordinator is listed under the Appeals "Contacts" section of the following website: http://appeals.web.irs.gov/directory/contacts.htm. This email is forwarded to an Account and Processing Support (APS ) delegate who will search Appeals Centralized Database System (ACDS) for the Appeals’ COP/RBA new receipt. After the case is added to ACDS, APS inputs the PB feature code on ACDS to allow for Appeals COP/RBA Case tracking.

  4. During the consideration of the civil tax liabilities, ATEs should refer to the following IRM sections (as appropriate):

    1. IRM 8.11.1.2.6, Processing Fraud Penalty Cases

    2. IRM 8.17.4.31, Counsel Review of Notices; and

    3. IRM 25.1.6.2, Procedures, in regard to the requirement for Area Counsel’s approval for removal/non-assertion of the civil fraud penalty (under IRC 6663 and/or IRC 6651(f)).

  5. Upon conclusion of Appeals’ consideration (or Counsel’s jurisdiction for a docketed case), an Appeals Policy analyst will send an email notification of the final results of the case to the following:

    • Criminal Investigation (CI) (*CI-HQ-Financial Crimes-Criminal Restitution)

    • SBSE Collection Advisory (*SBSE EEF Dallas Restitution)

    • Technical Services (*SBSE TECH Svs Criminal Restitution)