IRM text pertains to Estate and Gift Tax procedures for delinquent returns, substitute for returns (SFRs) and project cases. This IRM provides direction which is Estate and Gift Tax specific.

The IRS has the authority to conduct examinations under Title 26, Internal Revenue Code, Subtitle F - Procedure and Administration, Chapter 78, Discovery of Liability and Enforcement of Title, Subchapter A, Examination and Inspection. Additional Authority or conducting an examination is contained in the 26 CFR 601.105, Examination of returns and claims for refund, credit or abatement, determination of the correct tax liability.

Estate and gift tax examiners and managers assigned to examine and oversee the examination of estate and gift tax returns and issues are responsible for complying with servicewide policies and authorities set forth in IRM 1.2.1.5, Policy Statements for the Examining Process.

Examination of estate and gift tax returns should be conducted in a manner that will promote public confidence as stated in the Mission of the Service. See IRM 1.2.1.2.1, Policy Statement 1-1, Mission of the Service.

Policy Statement 4-52 established a general guideline that examination and processing of returns should be completed within 18 months of the filing date. See IRM 1.2.1.5.18, Policy Statement 4-52 Establishment of 18-month examination cycle.

Estate and Gift Tax examiners and managers assigned to examine and oversee the examination of international estate and gift tax returns and issues are responsible for complying with all applicable servicewide examination delegation orders and SB/SE delegation orders. A table summarizing estate and gift delegation orders is available at IRM 4.25.14, Signature Authority.

Section 3504 of RRA 98, Public Law 105-206 requires the IRS to include an explanation of the examination and collection process, as well as information about assistance from the Taxpayer Advocate with any first report/notice of proposed deficiency. Pub 3498, The Examination Process, must be used for this purpose.

Statement of Procedural Rules 601.506 requires that examiners forward to the taxpayer any correspondence (or copy), discussions, reports and/or other material that are sent to the representative. Examiners should forward such materials at the same time they are sent to the representative.

The Form 706, U.S. Estate Tax Return, instructions and 26 CFR 20.6018-4, 26 CFR 25.6019-3, and 26 CFR 25.6019-4 list required filing documents.

The following additional authorities provide the basis for examining and establishing substitute for returns:

The Director, Specialty Examination Policy is responsible for oversight of Estate and Gift Tax policy.

The Program Manager, Estate and Gift Tax Policy is responsible for oversight of the Estate and Gift Tax program.

The Chief of Estate and Gift Tax is responsible for oversight of Estate and Gift Tax examinations.

The National Quality Review System (NQRS) is a web-based review system used by Estate and Gift Tax Policy, Field and Specialty Exam Quality(FSEQ) to generate and review reports analyzing national quality performance based upon standardized quality attributes set forth in Document 12499, Estate and Gift Tax Examination Embedded Quality Job Aid. NQRS report data is compiled by QMA on a quarterly basis, but ad hoc reports may be obtained monthly. The use of NQRS is explained in additional detail in IRM 4.25.1.11, Manager Embedded Quality Review and Specialty Exam National Embedded Quality Review Programs and IRM 4.2.8, Guidelines for SB/SE National Quality Review.

Operational Reviews and related NQRS reports are conducted by Territory Managers and the Chief of Estate and Gift to measure national adherence to quality standards and managerial performance and/or oversight.

Customer (i.e., taxpayer) satisfaction reports are generated by SB/SE Operation Support Research on a quarterly basis. These reports provide masked taxpayer narratives that are responsive to a pre-defined set of survey questions. The quarterly survey reports are to be used to identify areas for examination quality improvement.

Frequent Front-line manager reviews are conducted under the Examination Quality Review System (EQRS), with the frequency based on annual personnel requirements.

The following table explains terms and acronyms used in this IRM:

The following table defines various terms used in this IRM:

The Estate and Gift Tax program is required to follow all servicewide examination procedures and those set forth in SB/SE examining process IRM. The following IRM subsections provide additional information relating to the processing, classification and examination of Estate and Gift Tax program delinquent returns and substitute for returns:

Upon receipt of a non-delinquent return, verify the following items are completed:

Verify the presence of the taxpayer’s signature and date the return was signed.

Verify all required forms and schedules are present and the computations are correct.

Using IDRS command code INOLES, determine whether an entity has been established for the taxpayer on Master File for a BMF account using an SSN with a "V" definer (MFT 51 or MFT 52). To create an account using Form 2363, enter an "X" in the box to the right of the Trans Code 000 and enter the earliest tax year that is being worked in the Years digits for MFT 51. For MFT 52 the Date of Death is required. The remainder of the form must be completed with the name control, taxpayer name and address. The completed Form 2363 must be efaxed to Centralized Case Processing (CCP). For contact information see Estate and Gift Knowledge Management, EG Contacts. See IRM 3.13.5.36, Form 2363, Master File Entity Change, for a sample completed Form 2363.

If Form 2363 is necessary, the new account can be verified using IDRS command code INOLES the Monday after the second weekend from the input date.

Do not send the tax return to Submission Processing until the account is created. Check for the creation of the entity using command code INOLES and/or BMFOLI.

Complete Form 5345-D, Examination Request-ERCS (Examination Returns Control System) Users. The following fields are specific to non-delinquent returns:

Submit Form 5345-D to the administrative staff for input.

The examiner must retain a copy of the secured tax return to use as a working copy until the original return is processed at the Campus and sent back to the examiner.

All secured non-delinquent returns must be digitized and saved to the electronic case file (Issue Management System) using established file naming conventions. IRM 4.25.1.8, Issue Management System (IMS).

If the case contains a paper case file, notate in red at the top of the return copy "Copy of Return" and include in case file. Do not make any marks on the original tax return.

The original return secured must be processed at the Campus. Send the original return using Form 3210, Document Transmittal, to Submission Processing. See Estate and Gift Knowledge Management, EG Contacts for the current mailing address.

If payment is made with the original return, the payment should be sent with the original return for processing. Notate Form 3210 with payment information.

Upon receipt of a delinquent return, ensure the following items are completed:

Verify the presence of the taxpayer’s signature and date the return was signed.

Verify all required forms and schedules are present and the computations are correct.

Using IDRS command code INOLES, determine whether an entity has been established for the taxpayer on Master File for a BMF account using an SSN with a "V" definer (MFT 51 or 52). If not, complete Form 2363, Master File Entity Change, to add an entity to the Master File. To create an account using Form 2363, enter an "X" in the box to the right of the Trans Code 000 and enter the earliest tax year that is being worked in the Years digits for MFT 51. For MFT 52 the Date of Death is required. The remainder of the form must be completed with the name control, taxpayer name and address. The completed Form 2363 must be faxed to CCP for input. See Estate and Gift Knowledge Management, Estate and Gift Knowledge Management, EG Contacts.

If Form 2363 is necessary, the new account can be verified using IDRS command code INOLES the Monday after the second weekend from the input date.

Do not send the tax return to Submission Processing until the account is created. Check for the creation of the entity using command code INOLES and/or BMFOLI.

Complete Form 5345-D, Examination Request-ERCS (Examination Returns Control System) Users. The following fields are specific to delinquent pick-ups:

Submit Form 5345-D to the administrative staff for input on ERCS.

Delinquent returns must be processed to establish an account module on master file. The amounts reported on the delinquent return are input into master file. The starting point for an examination report are the amounts reported from the delinquent return. Complete the steps outlined in paragraphs (2) through (6) to process the delinquent return pick up.

All secured delinquent returns must be digitized and saved to the electronic case file (Issue Management System) using established file naming conventions. See IRM 4.25.1.8 .

On the original return, write in red on the top margin, "DELINQUENT RETURN SECURED BY EXAMINATION" . The original return will not be returned to the group.

Attach a completed Form 13133, Expedite Processing Cycle, to the front of EACH return, paying special attention to the following:

Mail the original delinquent return and Form 13133 with a Form 3210 to Submission Processing. See Estate and Gift Knowledge Management, EG Contacts for the current mailing address.

Submission of the package will post the TC 150. The examiner will monitor the account using BMFOLT to ensure a TC 150 posts on the account. When the TC 150 posts, AIMS and ERCS will become full records. If AIMS and ERCS do not become full records within 6 weeks, the steps outlined below must be followed.

Upon receipt of a delinquent return, the examiner and group manager will determine whether a further examination of the delinquent return is necessary.

In all cases, the examiner should prepare a Report of Examination Changes (Report) using the Estate and Gift Notebook starting with the amounts from the delinquent return to reflect tax, credits, etc. per return.

The examiner will need to wait until the TC 150 posts before proceeding with an examination or commencing closing procedures found at IRM 4.25.8.4.4, Case Closing Procedures for Delinquent Returns.

One of the specific closing procedures below should be followed to ensure proper closing of a delinquent return:

Check Master File to ensure no TC 150 is posted for the same tax period and MFT. An SFR cannot be requested if a TC 150 is posted.

Using IDRS command code INOLES, determine whether an entity has been established on Master File for a BMF account using an SSN with a "V" definer (MFT 51 or 52). If not, complete Form 2363, Master File Entity Change, to add an entity to the Master File. To create an account using Form 2363, enter an "X" in the box to the right of the Trans Code 000 and enter the earliest tax year that is being worked in the Years digit for MFT 51. For MFT 52 the Date of Death is required. The remainder of the form must be completed with the name control, taxpayer name and address. The completed Form 2363 should be efaxed to the Estate and Gift Tax CCP for input. See Estate and Gift Knowledge Management, EG Contacts.

If Form 2363 is necessary, the new account can be verified using IDRS command code INOLES the Monday after the second weekend from the input date.

Complete Form 5345-D, Examination Request-ERCS (Examination Returns Control System) Users. The following fields are specific to substitute for returns when no TC 150 is posted on AIMS:

Submit Form 5345-D to the administrative staff for input on ERCS.

The request will go through validity checks on AIMS before it is completed.

It is the examiner’s responsibility to monitor AIMS using BMFOLT for the TC 150 posting. If the return does not post, contact an AIMS/ERCS Coordinator.

As soon as the TC 150SFR posts, the examination and/or closing may proceed.

If the taxpayer files a tax return with the campus after a TC 150SFR posts, refer to IRM 4.4.9.5.3.2, SFR Posted - TP Filed Return at Campus for procedures.

Prepare a Report of Examination Changes (Report) using the Estate and Gift Notebook starting with zero in the "As Filed" column.

Present the Report to the taxpayer for signature. The examiner may need to add a signature line to the Report for the taxpayer’s signature.

A Report signed by the taxpayer does not constitute a tax return. See IRM 4.12.1.10.4, No Return Secured - Agreed closure IRC 6020(a). Since only the filing of a tax return starts the assessment statute expiration date, do not update the statute date. It should remain "EE" .

Upon receipt of a signed Report, prepare a Form 13496, IRC Section 6020(b) Certification.

If payment is received, process using regular procedures. Attach the duplicate copy of Form 3244-A, Payment Posting Voucher, to the front of the signed Report.

One of the specific closing procedures below should be followed to ensure proper closing of a substitute for return prepared by an examiner.

AIMS case closure processing instructions are IRM 4.4.9.