Potential AUR cases are systemically identified through computer matching of tax returns with corresponding Information Returns Master File (IRMF) payer information documents. Cases are selected for inventory in a manner determined to provide overall compliance coverage. Selected cases undergo an in-depth review by a tax examiner to identify underreported and/or over-deducted issues which require further explanation to resolve the discrepancy.

Chapter 61 of the Internal Revenue Code (Information and Returns), Subchapter A (Records and Returns), Part III (Information Returns), sections 6031 – 6059, contain the requirements for the filing of information returns for income reporting purposes. Rev. Proc. 2005-32 provides authority to treat taxpayer contacts to verify a discrepancy between the taxpayer’s tax return and an information return, or between a tax return and information otherwise in the IRS’s possession as taxpayer contacts and other actions not considered an examination, inspection or reopening.

The Director, Exam Field and Campus Policy, Small Business/Self Employed, is the executive responsible for the IMF AUR Program.

The AUR Program Manager, Headquarters Exam Operations, Field and Campus Policy, IMF AUR Policy is responsible for IMF AUR policy and for providing guidance for the AUR Program.

AUR inventory is monitored and managed using a series of specific, detailed reports accessed through the AUR system.

IDRS reports applicable to AUR cases are accessed and monitored through the use of the Control-D reporting system.

Process improvement procedures are in place to mitigate system and IRM inefficiencies.

SBSE AUR Policy analyzes case data available through the AUR system to determine quality and efficiency.

System access is granted via permissions through Business Entitlement Access Request System (BEARS) and AUR Coordinators. AUR Policy performs quarterly reviews to verify the accuracy of system permissions.

Program effectiveness is measured through periodic program reviews.

Terms used in this IRM are listed and defined in Exhibit 4.19.3-2, Glossary.

Acronyms used in this IRM are listed and defined in Exhibit 4.19.3-1, Abbreviations.

Internal Revenue Manuals and publications which may be helpful if in-depth research is needed to resolve unusual technical issues not covered in AUR instructions are listed in IRM 4.19.3.2.3, Related IRMs and Publications.

The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate. Its job is to protect taxpayer’s rights by striving to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights (TBOR). TAS offers free help to taxpayers, including when taxpayers face financial difficulties due to an IRS problem, when they are unable to resolve tax problems, they haven’t been able to resolve on their own, or when they need assistance to address an IRS system, process, or procedure that isn't functioning as it should. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

The TBOR lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. See Taxpayer Bill of Rights, for further information.

TAS and Small Business Self-Employed (SBSE) have a Service Level Agreement (SLA) between them that outlines the procedures and responsibilities for the processing of TAS cases whenever the statutory or delegated authority to complete case transactions rests outside of TAS. The SBSE SLA covers the AUR operation. An Addendum to the SLA lists contacts from various Operations in the Ogden Service Center. Visit the SLA at Taxpayer Advocate Service, for further information.

The Operations Assistance Request (OAR) may include Form 907, Agreement to Extend the Time to Bring Suit. Taxpayers have two years to appeal Letter 105C/ 106C. If Form 907 is filed in response to Letter 105-C/ 106-C issued by AUR, it must be signed by the Operations manager or approved delegate. See IRM 4.19.13.11.6.3, Replies Received on Closed Claims, Including to Letter 105-C/ Letter 106-C, for further information.

Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and you can't resolve the taxpayer’s issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve within 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer’s issues. Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.5, Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS. In addition, provide the taxpayer with the number for the National Taxpayer Advocate (NTA) toll-free line, 877-777-4778 or TDY/TDD 800-829-4059 and advise the taxpayer TAS is available if they are not satisfied with the service they received.

The Statute Awareness Program was created to minimize barred assessments and erroneous abatements. The time involved in the processing of AUR issues, AUR employees must be particularly watchful for conditions that may indicate statute imminent cases.

If the case is Statute imminent take the appropriate actions to prevent a barred assessment. If the case is identified during a phone call and the case belongs to another site, notify the Site immediately of the imminent statute (in other words, phone call, email, fax statute referral, etc.).

Although the system generates the Statute Listing on a weekly basis to alert management to statutes in danger of expiring, employees must be personally knowledgeable of the rules that govern the assessment statute expiration date (ASED). These rules are outlined in IRM 25.6, Statute of Limitations.

Each functional area must ensure an adequate number of "Statute Specialists" are assigned.

Before disclosing any tax information, you must be sure you are speaking with or faxing information to the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 4.19.3.22.2.2, Disclosure, for further information.

The following additional IRMs and publications/documents are listed as a convenience when AUR determines in-depth research is required to resolve unusual technical issues not covered in AUR instructions, Form 1040 instructions and various publications. When reference to one of the related IRMs is required for AUR processing, the complete IRM reference is stated in this IRM.

The AUR system design protects both taxpayer data and the individual AUR users. ALL users are responsible for protecting taxpayer information. Users should access ONLY the data needed to perform their duties, and not divulge taxpayer information to any employee who doesn't have an official "need to know" . Users will report infractions to their managers immediately.

Returns are filed electronically by electronic transmitters or from a home computer through a third-party vendor (Online Filing). Individual electronic returns are transmitted to Andover (ANSC), Austin (AUSC), Fresno (FSC), Kansas City (KCSC), Philadelphia (PSC) and Memphis (ECC-MEM).

All electronically transmitted returns are identified by a unique document locator number (DLN). The file location codes (FLC) shown below are for the electronic filing of individual income tax returns. The second number listed is the rollover FLC used when a site exhausts the regular FLC for a given processing date.

Information such as loose forms, schedules, and correspondence CANNOT be attached to an Electronic Filed (ELF) return. Do not use an attachment or association form.

TRDB has a Tab option: "Dotted…" . Dotted line literals are only available on tax returns filed via Modernized e-File (MeF). MeF returns can be identified by a DLN Julian Date greater than 400. A TRDB screen, "Dotted…" tab display, with no entries, indicates either:

TRDB has a Tab option: "Attach" . When the user accesses the "Attach" tab, each statement/attachment the taxpayer electronically filed will be listed. There is no standard list of names/titles for the taxpayer to use so the statement/attachment will be listed by the file name the taxpayer used.

No change PCs 15, 17, 26, 47, 48, 51, 52, 70, 71, 72, 73, 91, 92 and 93 automatically generate a TC 290-0 for electronically filed returns with a "Y" in the SOURCE DOCUMENT ATTACHED? field in the Assessment window.

Automated Underreporter employees are mandated to use certain Integrated Automation Technologies (IAT) tools. When an action must be taken on IDRS (unable to complete the action within the AUR system) and an IAT tool is available, AUR employees with access to IAT tools are required to complete the action using the IAT tool. The IAT tools assist the tax examiner with IDRS research and input. See Exhibit 4.19.3-18, Mandated IAT Tools, for a list of mandated IAT tools.

If an IAT tool isn't functioning properly, the case will be worked using IDRS. For more information on each tool see IAT Website.

The Tax Cuts and Jobs Act (TCJA) enacted December 2017 resulted in major tax reform legislation. TCJA delivered tax relief by reducing the tax rates and increasing the standard deduction. As a result, taxpayers now use only the newly redesigned Form 1040, U.S. Individual Income Tax Return / Form 1040-SR, U.S. Tax Return for Seniors and accompanying Schedules.

One or more of these schedules may be used depending on the taxpayer’s income, credits, taxes or payments. The schedules are:

The deduction for personal exemptions for taxpayers, their spouse, or dependents was suspended for TY 2018 to 2025. To offset this change, the standard deduction amounts were increased. See IRM 4.19.3.13, Standard Deduction, for additional information.

TCJA legislation included, but not limited to:

Losses from a trade or business of noncorporate taxpayers are limited when the net losses from all trade or business income is more than an inflation-adjusted threshold amount for tax years after 2017 and before 2026.

The following provision was extended by Further Consolidated Appropriations Act, 2020 and will expire:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act of 2021 was signed on December 27, 2020, and The American Rescue Plan (ARP) Act of 2021 was signed on March 11, 2021. The legislations allowed for advance payments of the recovery rebate credit, these payments are referred to as Economic Impact Payments (EIP).

EIP (ARP = EIP3) was issued to most eligible taxpayers between March and December of 2021. The amount was based on the AGI of their TY 2020 tax return. If a TY 2020 tax return was not processed when eligibility and amount of payment were determined, TY 2019 tax information may have been used.

IRS began issuing EIP1 in April 2020, EIP2 in December 2020 and EIP3 in March 2021. The EIP amounts for each round are as follows:

Economic Impact Payments can be identified on the tax account as:

If the taxpayer claimed the RRC on their tax return, the IRS may correct the allowable amount of the RRC during original processing. If changes were made to the RRC during original processing, math error codes: 681, 682 and/or 683 will display on the tax account screen.

During screening phase, no adjustment will be made to the RRC.

During responses phase: If the taxpayer requests an adjustment to the RRC, advise the taxpayer the request must be submitted on Form 1040-X. Send PARAGRAPH 222, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer’s response includes a Form 1040-X and is requesting an adjustment to the RRC, work AUR issues included on Form 1040-X and then forward the Form 1040-X to AM to process the RRC.

The Families First Coronavirus Response ACT (FFCRA), enacted in March 2020 provides small and midsize employers refundable tax credits that reimburse them, dollar for dollar, for the cost of providing paid sick and family leave related to COVID-19. The FFRCA extends to self-employed individuals equivalent refundable tax credits against net income tax. The COVID-related Tax Relief Act of 2020 extended the period during which eligible self-employed individuals may claim tax credits to leave taken through March 31, 2021.

Self-employed individuals are eligible to receive qualified sick leave wages or qualified family leave wages under the Emergency Paid Sick Leave Act (EPSLA) or the Emergency Family and Medical Leave Expansion ACT (Expanded FMLA).

Eligible self-employed individuals are allowed an income tax credit equal to their "qualified sick leave equivalent amount" or "qualified family leave equivalent amount" for leave taken for reasons under the EPSLA or the Expanded FMLA. The credits are taken on Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals.

Taxpayers will complete Form 7202, Part I (TY 2020), Part I January 1, 2021 through March 31, 2021 or Part III, April 1, 2021, through September 30, 2021 (TY 2021) to claim Credit for Sick Leave and enter the amount on Form 1040/1040-SR Schedule 3, line 12b (TY 2020), line 13b ( for leave taken before April 1, 2021) or 13h ( for leave taken after March 31,2021) (TY 2021) if:

The American Rescue Plan (ARP) Act of 2021 was signed on March 11, 2021. The legislation allowed for advance payments of the recovery rebate credit, these payments are referred to as Economic Impact Payments (EIP3). The EIP was based on the taxpayer 2020 tax year information. See IRM 4.19.3.2.8, Coronavirus Aid Relief, and Economic Security (CARES) Act and Coronavirus Response Relief Supplemental Appropriations (CRRS) Act of 2021, for further information.

ARP legislation was amended to extend the tax credits for paid sick and family leave for wages paid. Taxpayers can now claim credit from April 1, 2021 through September 30, 2021. See IRM 4.19.3.2.9, Families First Coronavirus Response Act for further information.

Section 9611 of the American Rescue Plan Act (ARP) increases the Child Tax Credit (CTC) for tax year 2021 and authorizes qualified individuals to receive periodic advance payments (in equal amounts) of up to 50% of the refundable portion of the Additional Child Tax Credit (AdvCTC). See IRM 4.19.3.15.4, Child Tax Credit, for further information.

Beginning TY 2021, the American Rescue Plan (ARP) Act of 2021 expanded the Child Tax Credit as a fully refundable credit. Taxpayers must submit a completed Schedule 8812, Credits for Qualifying Children and Other Dependents. See IRM 4.19.3.17.5, Refundable Child Tax Credit, for further information.

The American Rescue Plan 2021 Act (ARP) Section 9631, enacted on March 11, 2021 amended the Child and Dependent Care Credit (CDCC), making it fully refundable for TY 2021 and increasing the maximum percentage rate to 50 percent. See IRM 4.19.3.17.5, Refundable Child and Dependent Care Credit, for further instructions.

The ARP allows employers to amend dependent care plans to allow the taxpayer unused amounts in a subsequent year. Unused amounts are added to the maximum amount of Dependent Care Benefits (DCB) allowed for 2021. See IRM 4.19.3.8.2.1, Dependent Care Benefits, for further information.

Each user may have clearance to view any case on the system. This function is necessary for any user answering taxpayer phone inquiries.

To view any case, take the following actions:

The only entries that can be updated on the cases are:

The Print menu option may be accessed when the user selects View Case from the Review menu.

When an SSN is assigned to a batch, and the corresponding paper return is missing, the case is considered a "lost case" .

When a lost case is identified:

Some cases are found to be missing after the work unit has been released by the tax examiner and is being disassembled by the Control Function. The Control Function notates "Lost Case" on a case transfer sheet and routes the case transfer sheet to the Lead. The Lead contacts the tax examiner who released the case.

If the original tax return DLN and the Form 4251 DLN don't match:

If the DLNs match, but the taxpayer's name is different, close the case with PC 29.

If the tax return is for the incorrect tax year (the DLNs match, but the TY is different), close the case with PC 29 and route the return to be processed to the correct tax year.

The Case History screen is used to determine the location or status of a particular case. See AUR System Guide, Viewing Cases. If the case is:

For TY 2014 and subsequent years, access the case data using View Case in the appropriate tax year on the system.

For TY 2013 and prior, if information on the case is needed, the case must be ordered from files.

A case where a paper Form 1040/Form 1040-SR was filed should have the tax return present in the case file. If the Form 4251 is batched without an original tax return, order the TC 150 return on the Tax Account screen.

Some cases may have an amended return, Form 1040-X, Amended U.S. Individual Income Tax Return, attached to the original individual tax return.

All cases have online data which displays in a series of screens. See AUR System Guide, for more information.

An action trail MUST be made part of the case data whenever significant actions are taken. For example, when a case is closed in screening because the discrepant income has been determined to be reported somewhere other than where income would be normally reported, or an oral statement is accepted to revise a notice or close a case no change, use either the IR Note window or the Case Note window to document actions or leave an appropriate action trail. See AUR System Guide, Case Notes and Information Return Notes.

Form 4251 is attached to a return when it is pulled from the files at the Federal Records Center.

The Case Analysis screen is the main screen used by tax examiners for the analysis of AUR cases. See AUR System Guide, Case Analysis Overview.

Beginning in TY 2022, a digitized tax return can be viewed using the ORGINAL RETURN button in the Case Analysis screen.

Certain Transaction Codes, Freeze Codes, or Indicators may require research, referral, or other specific actions. When these conditions are present, the Message window displays on the Case Analysis screen when the SSN of the case is entered. If this message window is displayed, review the information on the Tax Account screen to determine the appropriate action to take.

Within the Case Analysis screen various windows are displayed, depending upon the issues involved on an individual case. You must work certain windows in the proper order if two or more of them are present. The eleven windows and their proper sequence are:

The Tax Account screen displays posted information from the taxpayer's Master File account. It contains the name and address, Date of Birth (DOB) for both primary and secondary taxpayers, return amounts, transactions, and other current data (including Reason Codes (RC)). The data is downloaded to the AUR system from ECC-MTB. The taxpayer's phone number and hours of contact can be entered. This screen is used to order a return if the related adjustment has posted to the account. See AUR System Guide, Tax Account Screen.

Compare the Adjusted Gross Income (AGI) and Taxable Income (TXI) on the return with the AGI/TXI on the Tax Account screen. A mismatch could be due to a taxpayer and/or processing error. The AUR Function is responsible for issuing a CP 2000 to correct these types of errors.

If the AGI on the return and the AGI on the Tax Account screen don't match, the taxpayer/processing error may be found on page 1 of the return.

If the Tax Account screen displays an asterisk in the NEW TRANS field, a new TC has been added since the case was last analyzed. When an asterisk displays:

If the Tax Account screen displays the Indicator KITA (Killed in Terrorist Action) or HSTG (Hostage in Terrorist Action) in the KITA IND field, or if the system displays the message "KITA/HSTG indicator present. See IRM 4.19.3" , use PC 18 to close the case.

If the Tax Account screen displays the indicator PDT (Potentially Dangerous Taxpayer), follow normal procedures and exercise caution when speaking to the taxpayer. When warranted, promptly report any assaults, threats, harassment, or forcible interference incurred during, or related to, the performance of official AUR duties to management and the local Treasury Inspector General for Tax Administration (TIGTA) office.

If the Tax Account screen displays the indicator CAU (Caution Upon Contact), the taxpayer has previously threatened physical harm, threatened suicide; filed or threatened to file a frivolous lien or a frivolous civil or criminal legal action against an IRS employee, a former employee, a contractor, or an immediate family member of an IRS employee, a former employee, or contractor. Follow normal procedures and exercise caution when speaking to the taxpayer.

When warranted, promptly report any new instances, see (7) above, using Form 13090, Caution Indicator Referral Report, and provide a copy of the completed form to management. Ensure the form contains:

The Information Return window displays the complete IR. See AUR System Guide, Information Return window.

Payer address information, as shown on the Information Return window, displays on the CP 2000/ CP 2501.

The Income Comparison screen displays a comparison of amounts reported by payers on IRs and the amount the taxpayer reported on their tax return. Access this window when it is necessary to view RETURN and IRP amounts or to determine the discrepant income type. See AUR System Guide, Income Comparison Screen.

The OFFSET field displays codes describing how matched return and IRP amounts were offset for identification of potential discrepancies.

When attempting to offset income, make sure the income to which it is being offset has not already been used. However, if you can determine that offsets were applied incorrectly, analyze that issue as well.

The initial review of IRs is accomplished from the Case Analysis screen. See AUR System Guide,, Case Analysis Overview.

Delete EIN IRs as invalid if any of the following apply:

Delete the EIN IR when the payee name line(s) is obviously not the taxpayer. For example, the name line(s) contains any of the following groups:

Consider the EIN IR valid (as belonging to the taxpayer) when ANY of the following conditions are present:

Compare all valid EIN IRs to amounts on the tax return and related schedules. Use the instructions for the particular type of income involved.

Assert SE tax, as appropriate, only on the issues that are normally subject to SE tax. See IRM 4.19.3.16.1, Self-Employment Tax, for further instructions and Exhibit 4.19.3-20, Examples of Self-Employment Income.

EIN IRs don't display with an Income Identify Code in the INC CD field. When applicable enter the appropriate Income Identify Code, for example, interest, securities, or SE income. If it can't be determined which Income Identify Code to enter, see Exhibit 4.19.3-9, Income Identify Codes, and enter the value from the "Displayed Codes" column. If the IR has a status code of "U" , it is necessary to remove the "U" before an Income Identify Code can be entered.

Delete IRs when:

Consider IRs with the following conditions valid and pursue any U/R amounts:

The payee entity name line of the IR may contain terms or variations of terms. See Exhibit 4.19.3-10, Non-Select Table.

Amended IRs are identified on the Case Analysis screen by Indicator "A" , "R" , "D" or "X" in the AMD IND field. Amended IRs are identified on the Information Return window by the literal "AMEND" , "REPLC" , "DUPLE" , or "DELET" . If the computer has pre-identified amended IRs that are used to replace the original IR, the amended IRs have the literal "REPLC" and the literal on the original is "DELET" . PARAGRAPH 47 automatically generates when Amended IRs are included on the notice. See Exhibit 4.19.3-7, CP PARAGRAPHS. Delete original IRs if amended IRs match an original. The amended and original IR must have:

Pursue all IRs if the amended IR(s) doesn't match an original, or if the amended IR matches more than one of the other IRs.

When there are two identical IRs (SSN/EIN, name, amount, account number, income type, etc.) take the following actions:

Do not consider IRs as duplicates when the account numbers are obviously different, even though all other elements are identical.

If a 99NEC, 99MIS, PTK-1 or TRK-1 IR are present for the same taxpayer, from the same payer AND for an identical money amount, see IRM 4.19.3.8.12.1, Conduit Income - Analysis, for further information.

Different income types may be combined on one information document, (for example, Form W-2 may include ordinary wages, allocated tips, W/H). On the Case Analysis screen, each income type is displayed separately and can be assigned a status code.

The information return will display a check box for IRA/SEP/SIMPLE IND on Form 1099-R, box 7 and PROP/SERVICES on Form 1099-S, box 4. When checked, refer to the table below for additional information:

An Income Identify Code in the INC CD field of the Case Analysis screen and the Information Return window identifies certain income types to the system so that U/R income is included in related calculations (such as, earned income qualifying for earned income credit (EIC), income subject to SE tax). See Exhibit 4.19.3-9, Income Identify Codes. The tax examiner may change or delete this code if information on the taxpayer's return indicates the displayed code for U/R income types is inaccurate.

The following general rules apply to the analysis of all types of IRs:

Misplaced entries on the tax return are frequent causes of U/R discrepancies. Taxpayers report income on their returns in a variety of places. It is important to thoroughly review the ENTIRE return before identifying income as being underreported.

When comparing IRs with entries on any line not specifically identified for that income type, the amount must match within $1 or be clearly identified as the income type in question.

When payer documents are attached (Form W-2, Form 1099-MISC, etc.) to a paper return, consider them more accurate than the IR UNLESS:

Taxpayers recreate payer information (such as, but not limited to Form W-2, Form 1099-R.) to include with their ELF return, increasing the potential for input errors of the payer information, such as transposed money amounts or missing information (for example, pension plan box on Form W-2, COD on Form 1099-R). Review ELF payer documents displayed in the TRDB window as follows:

For ELF returns, consider the IR more accurate than the ELF payer document when the ELF payer document shows less income than the IR. All elements of the IR are considered more accurate than the ELF payer document elements.

If the return is missing supporting forms or schedules, research IDRS. If the information isn't available, take the following action(s):

The Create Information Return window is used to create a new IR. See AUR System Guide, Creating Information Returns.

Create an IR if:

The Modify Information Return window modifies an existing IR. See AUR System Guide, Modifying Information Returns.

Modify an IR if:

Use the SEARCH option to view only those IRs that fit specific criteria (for example, payer name, income type). See AUR System Guide, Search Function.

Use the SCROLL IR option to view multiple IRs on the Information Return window, without returning to the Case Analysis screen. See AUR System Guide, CA Tools Menu.

Use the GROUP option when a breakdown isn't provided and it is necessary to compare a total money amount for related IRs with a single line entry on the return. See AUR System Guide, Grouping Information Returns.

If a 99MIS IR has two elements with identical money amounts (for example, NEC is $500 and MED is $500) and the taxpayer reports one of the amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A photocopy of a prior year CP 2000 response may be attached to the return. Consider the information in the previous year's response. This information may result in resolving the U/R issue(s).

When a U/R issue for the same type of income from the same payer was resolved per a copy of a Letter 2625-C response from a prior year attached to the return, delete any current year IR.

If all IRs are matched exactly, but there is still a U/R amount:

If the discrepancy is resolved, close the case using PC 2X.

Foreign source income IRs are identified by:

Joint ownership is indicated when there are two or more names on the IR, or one payee name is on the IR followed by "and" or "or" . This situation occurs primarily when working with interest, dividend and/or securities income.

When the taxpayer reports the appropriate percentage of ownership from a jointly owned IR, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

If the taxpayer resides in a Community Property state, see IRM 4.19.3.5.4, Community Property States, for further instructions.

If the filing status is 3 (Married Filing Separately), the spouse's name appears on the IR, the taxpayer doesn't report ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the income in question or doesn't include a statement that ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, research IDRS using CC INOLE, RTVUE, ENMOD, etc. for the spouse's return.

If the filing status is 6 (taxpayer claiming an exemption for spouse not filing), issue a notice as appropriate to the primary taxpayer for the U/R issue.

Taxpayers who reside in a community property state and who are subject to the state’s community property laws must follow the state community property laws to report their community/separate income on a federal tax return.

AUR may receive requests for filing status changes based on the June 26, 2013 Supreme Court ruling on a provision of the 1996 Defense of Marriage Act (DOMA). The effect of the Supreme Court’s opinion is that same-sex couples who are lawfully married under state law are treated as married for all federal tax purposes including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming earned income tax credit (EITC) and child tax credit (CTC). If the taxpayer submits a Form 1040-X requesting a filing status change see IRM 4.19.3.22.8.4, Referrals.

Refer to Pub 555, Community Property for applicable states.

Married taxpayers can elect to file either a joint return or separate returns (to get a greater tax advantage). If the taxpayers meet certain conditions, they may be eligible to file a non-joint return using either FS 1 (single) or FS 4 (head of household), as opposed to FS 3 (married filing separate).

Registered Domestic Partners (RDPs) are not married for federal tax purposes. They can use only the single filing status, or if they qualify, the head of household filing status. RDPs treat income as jointly owned. An RDP must report half of all community income and all of their separate income on their tax return. Taxpayers attach Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States, (or similar statement) to show how the income has been allocated.

Community income is generally income from:

Separate income is generally income from separate property. Separate income belongs to the taxpayer who owns the property.

When married taxpayers choose to file separate tax returns, they should use Form 8958 (or similar statement), to list their income, deductions and W/H. Each taxpayer is instructed to attach the Form 8958 (or similar statement) or a photocopy of the other spouse's payer documents (Form 8958, etc.) to each of their individual tax returns.

On the Form 8958(or similar statement), community income is generally equally divided between both taxpayers and each taxpayer would report their separate income.

On an individually filed tax return, if there is partially reported income/deductions and the taxpayer resides in a community property state as listed in (3) above, determine if the AUR condition is the result of the income allocation.

On married filing joint (FS 2) returns if there is an indication the primary or secondary taxpayer is deceased, but the Tax Account screen (Entity section) doesn't reflect this, research IDRS CC INOLES to determine which taxpayer is deceased.

Follow the procedures listed below to screen the case:

If issuing a notice, input the current information in the Update Address window. See IRM 4.19.3.22.1.6, Address Updates, for further information.

AUR HQ inputs zip codes for specific declared disaster area situations, as necessary, based on IRS Disaster Relief Memos. Follow system prompts to ensure proper handling of declared disaster area cases. Disaster types with case impact:

Special rules apply to qualified retirement plans and for withdrawals and loans from IRAs (which are taken into consideration on Form 8606, Nondeductible IRAs. See IRM 4.19.3.8.10.3, Retirement-Analysis, for additional information). reported on:

A frivolous return is defined as noncompliance with filing and/or paying tax based on unfounded legal or constitutional arguments. Frivolous returns often contain the following:

If in doubt about whether the return is frivolous, consult with your lead or manager. If it is determined during screening the return is frivolous, close the case with PC 13, and send to "FRP" in Ogden, see IRM 4.19.3.22.10, Disagreed Responses, for further information.

If the return is determined NOT to be frivolous, continue normal processing.

If FRP requests an AUR case after taxpayer contact, close the case with the appropriate PC (38, 64 or 85), prepare Form 3210 and send to "FRP" in Ogden, see IRM 4.19.3.22.10, Disagreed Responses, for further information.

The primary objective of the fraud program is to foster voluntary compliance through the recommendation of a criminal investigation/prosecution and/or civil penalties against taxpayers who evade the assessment and/or payment of taxes known to be due and owing.

Tax fraud is often defined as an intentional wrongdoing on the part of a taxpayer, with the specific purpose of evading a tax known or believed to be owing. Tax fraud requires both:

The objective of the Campus Fraud Referral Program is to:

Fraud Technical Advisor (FTA) - The FTA assists with the development of fraud in the Campus Examination environment.

Functional Fraud Coordinator (FFC) - The FFC is a fraud liaison assigned to a specific function or operation within the Campus. The FFC is responsible for reviewing the Form 13549, Campus Fraud Lead Sheet, and conducting research used to establish a pattern of non-compliance. See IRM 4.19.10.4.3, Responsibilities of the Functional Fraud Coordinator (FFC), for additional information.

Campus Fraud Coordinator (CFC) - The CFC is a fraud liaison assigned to each SB/SE Campus. The CFC is the main point of contact with the FTA assigned to that campus.

Exam Fraud Coordinator (EFC) - The EFC is a fraud liaison assigned to each Taxpayer Service (TS) Exam function. The EFC is the main point of contact with the FTA assigned to that campus.

Initial processing errors, or additions to the AGI are corrected by entering the appropriate amount(s) in the MISCELLANEOUS ADJUSTMENT fields on the MISC ADJUSTMENT/SCHEDULE C EXPENSE window. The amount computed in the changed amount field is included in the AGI by the system and is considered in all calculations. This amount is included in the U/R Amount on the Return Value screen and displays on the Notice Summary as Miscellaneous Adjustment.

The MISC ADJUSTMENT/SCHEDULE C EXPENSE window has two sections. The miscellaneous adjustment section is used to correct initial processing errors or changes to the AGI that can’t be corrected using specific windows for income types. The Schedule C expense section is used to adjust expenses claimed on Schedule C.

When making a miscellaneous adjustment take the following actions:

When EIC isn't an issue, take the following action:

If Form 6781, Gains and Losses from IRC 1256 Contracts and Straddles, is attached to the return, or if Form 1040, Schedule 2, line 17z, indicates the tax is from Form 6781, continue normal processing. This is reported on Schedule D.

A net operating loss (NOL) is identified by a negative entry on Form 1040/1040-SR, Schedule 1, line 10 caused by negative amounts on Schedule 1, line 8a (other than Schedule E Part 1, line 18).

If Form 1040/1040-SR Schedule 1, shows a net operating loss, continue normal processing.

If the taxpayer is deceased and IRC 6501(d), Request for Prompt Assessment, is noted on the tax return, or the response requests a prompt assessment, AND there is a U/R amount, the case MUST BE WORKED EXPEDITIOUSLY. Prompt Assessment cases have an 18-month statutory period for the assessment of additional tax. Refer to the table below for the proper action to take:

If an attachment indicates the income in question is nontaxable and the taxpayer cites an IRC section, determine the validity of the taxpayer's statement by researching the IRC. If the IRC submitted by the taxpayer isn't valid, don’t allow.

Erroneous refunds caused by IRS error require special processing, see IRM 4.19.3.5.13, Erroneous Refunds, for further information.

For tax years 2017 and before 2026, section 461(1) of the Internal Revenue Code disallows excess business losses of the noncorporate taxpayers if the amount of the loss is more than $289,000 ($578,000 for MFJ). The threshold amounts for the disallowance will be adjusted for inflation in future years. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) repealed the section 461(1) limitation for tax year 2020. For tax year 2020, taxpayers may need to file an amended return if they filed a TY 2020 return applying the limitation.

The taxpayer may need to adjust the business loss when there are changes to income reported and the loss is more than the limitation on any of the following:

Taxpayers are instructed to report the excess business loss amount on Form 1040 / Form 1040-SR, Schedule 1, line 8o (TY 2021), 8p (TY 2022 and subsequent).

If Form 461, Limitation on Business Losses is attached, Send PARAGRAPH 202, see Exhibit 4.19.3-7, CP PARAGRAPHS.

Taxpayer’s may submit Form 461, Limitation on Business Losses, with their response. If the taxpayer provides a new or revised Form 461, input the new loss amounts in the MISC ADJUSTMENT window as a positive amount.

When contacted by an Insolvency Specialist on a case in AUR inventory that has not yet been screened:

When contacted by an Insolvency Specialist on a case that has been screened but the notice has not yet been issued:

An erroneous refund is any receipt of money from the IRS to which the recipient isn't entitled. It includes all erroneous payments to the taxpayer, even if the erroneous refund involves returning the taxpayer’s own money. An erroneous refund may occur when:

When an erroneous refund is identified and the TC 846 has not posted, use the IAT "Stop Refund" tool to stop the refund. The action to stop the refund must be input by 10:00 a.m. on the Wednesday preceding the date of the refund.

When an erroneous refund is identified and is the only issue, assign PC 28, 53, 68, or 88. If the Erroneous Refund Statute Expiration Date (ERSED) has expired, close the case with PC 28, 52, 71, or 96. Take appropriate actions to resolve the erroneous refund issue. See IRM 4.19.3.5.13.1, Recovering Erroneous Refunds, for additional information.

Access the Payer Agent window for all IRs showing Payer Agent Indicator "Y" or "B" . The Payer Agent window lists the payer's name, EIN, document type, source, and a synopsis of the reporting problem. See AUR System Guide, Viewing Payer Agent Information.

During the screening phase, the tax examiner may identify questionable IRs, which appear to be erroneous but are not marked with a Payer Agent code "Y" . When IRs appear to be questionable and the tax examiner determines the IRs should be investigated, take the following steps:

During the response phase, the tax examiner may receive information from the payer or the taxpayer indicating the proposed U/R is the result of a payer reporting error, or a payroll processing mistake. Take the following action to forward the information to the site Payer Agent Coordinator:

Click Indicator "F" or "B" in the PA field of the Case Analysis screen to access the Potential Fraud window. It may list the payer’s name, EIN, document type, source and money amount; however, because some fraudulently filed information returns are submitted using different payer names and EINs, a fraud indicator may be applied using money amounts only. Follow the specific instructions in the Fraud Description Notes section of the window to determine the proper action to take on the IR.

During the screening phase, the tax examiner may identify questionable IRs, which appear to be fraudulent but are not marked with a Payer Agent code "F" . When IRs appear to be potentially fraudulent see IRM 4.19.3.5.8.2, AUR Tax Examiners Fraud Responsibilities, for additional information.

During the response phase, the examiner may receive information from the taxpayer which appears to involve potential fraud. When response information appears to indicate fraud, see IRM 4.19.3.5.8.2, AUR Tax Examiners Fraud Responsibilities, for additional information.

The AUR Site Payer Agent/Fraud Coordinator will perform the following tasks:

If the referral is from the AUR FFC, create a Fraud record when a Fraud record doesn't currently exist and the information from the AUR FFC indicates a Fraud message will be added to the Fraud File:

At the end of the AUR program for the tax year, print a copy of the Payer Agent/Fraud Listing report and retain them for three years.

Employer/Payer identified IR filing discrepancies are submitted through the Enterprise Computing Center at Martinsburg (ECC-MTB) Management and Technology Information Returns Division. Documentation received from Employers/Payers is reviewed at ECC-MTB and copies are provided to the HQ (national) designated AUR Payer Agent/Fraud Coordinator (currently located in Ogden). The HQ (national) designated AUR Payer Agent/Fraud Coordinator has access to the national AUR Payer Agent File and Fraud File and is responsible for the input of all Employer/Agent Information Return documents received from ECC-MTB or the AUR FFC.

Query the Payer Agent File/Fraud File to determine if the Payer information received will be established or needs to be updated.

A Payer Agent can't be created if a Payer Agent record already exists for the EIN, document type, source code or tax year. If this condition exists, the system displays a message. To Update/Create a Payer Agent record:

The AUR Payer Agent Program is automatically invoked during the weekly run process. The program updates the Payer Agent File for all sites during the weekly process with the new and updated records.

Revised Third-Party procedures allow for the administrative action of verifying information received from Employers/Payers. This verification isn't considered a third-party contact if the purpose of the contact is to process information received from the source and/or to ensure its validity/correctness.

Wages are amounts received for performing services as an employee of an employer and are generally not subject to SE tax.

Wages are identified on the Case Analysis screen by the literal "W-2" in the DOC TYPE field and the literal "WAGES" in the INCOME TYPE field.

In addition to wage income, Form W-2 can contain information relating to Dependent Care Benefits (DCB), Employer Provided Adoption Benefits (EPAB).

Interest is reported by payers on Form 1099-INT, Form 1099-OID, Form 1099-B and on Schedules K-1 from Form 1065, Form 1041, and Form 1120-S. See Exhibit 4.19.3-12, Titles of Forms and Schedules, for further information.

Interest income is identified on the Case Analysis screen by the literal "99INT" in the DOC TYPE field and the literal "INT" , in the INCOME TYPE field and "99INT" in the DOC TYPE field and the literal "MKTDS" in the INCOME TYPE field.

Dividends are distributions paid by corporations, partnerships, and/or estates and trusts. They are reported on Form 1099-DIV and on Schedules K-1 from Form 1065, U.S. Return of Partnership Income, Form 1041, U.S. Income Tax Return for Estates and Trusts, and Form 1120-S, U.S. Income Tax Return for an S Corporation.

Capital gain distributions are normally paid by regulated investment companies, mutual funds, and real estate investment trusts from their net long-term capital gains.