BUR cases are built from two primary sources:

BUR Operations compile and control selected cases.

The BMF file contains information reported on Form 1120, U.S. Corporation Income Tax Return, and Form 1041, U.S. Income Tax Return for Estates and Trusts.

The IRMF information is matched with the BMF information to verify all income is reported. A BUR case results when computer analysis detects a discrepancy between the two data sources. Examples (not all-inclusive) of the information in the IRMF are:

Avoid auditing returns. All returns in the BUR inventory were previously screened for unallowable items and audit potential. They were not selected for action in either event. See IRM 4.119.4.21, Taxpayer Responses, for additional information.

Chapter 61 of the Internal Revenue Code (Information and Returns), Subchapter A (records and Returns, Part III (Information Returns)), sections 6031-6059, contains the requirements for the filing of information returns for income reporting purposes. Rev. Proc. 2005-32 identifies 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 Service’s possession as taxpayer contacts and other actions not considered an examination, inspection, or reopening.

The Director of Exam Field and Campus Policy is responsible for the BMF Underreporter program.

Management officials are responsible for:

Employee-Tax examiner (TE). After cases are selected from the inventory, they are worked according to procedures in this IRM. The TE performs an in-depth analysis of each case. The TE determines if the income/deductions in question is satisfactorily identified on the tax return. If so, close the case. If reasonable doubt remains that the income/deductions are included on the return, send taxpayer either:

Tax examiners also use Correspondex (CRX) letters to obtain or provide additional information. To distinguish guidelines relative to Letter 2531, Letter 2030 and/or Letter 3219-B from guidelines relative to Correspondex letters, the following statements in this IRM are true.

Process Codes (PC) are used to provide an audit trail for BUR case processing.

Internal Processing Codes (IPC) are codes used in BUR for internal processing.

Tax examiners use the Data Collection Instrument (DCI) to record actions taken.

Program Reports. The following reports are used to monitor BUR inventory and identify multiple controls:

See Exhibit 4.119.4-1, Acronyms, and Exhibit 4.119.4-2, Glossary, for a list of abbreviations and definitions used in BUR processing.

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 is not functioning as it should. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

The Taxpayer Bill of Rights (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. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

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 BUR operation. An Addendum to the SLA lists contacts from various Operations in the Ogden Service Center. Visit the Service Level Agreement (SLA) at https://www.irs.gov/pub/tas/sbse_sla_05-30-2011.pdf.

Refer taxpayers to TAS when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is received and steps cannot be taken to resolve the taxpayer’s issue the same day.

All potential TAS referrals must be approved by the BUR TAS Liaison.

The BUR TAS Liaison will complete Sections I, II and III of Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), and forward to TAS. The taxpayer's problem and the taxpayer's relief sought must be clear and specific in Items 12a and 12b of Section I. The Liaison is also required to document the reason why the relief action was not taken.

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

Employees must be personally knowledgeable of the rules that govern the Assessment Statute Expiration Date (ASED) and Refund Statute Expiration Date (RSED). These rules are outlined in IRM 25.6, Statute of Limitations.

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

On a quarterly basis, verification that the operation has completed the required search for cases that are statute imminent is sent to the Planning and Analysis (P&A) Staff. The P&A staff forwards a consolidated Campus report as appropriate.

Before disclosing any tax information, ensure the caller is the taxpayer or the authorized representative. See the Taxpayer Authentication guidelines in IRM 21.1.3.2.3, Required Taxpayer Authentication, IRM 21.1.3.3, Third Party (POA/TIA/F706) Authentication, or IRM 21.1.3.2, General Disclosure Guidelines, for further information.

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

Modernized e-File (MeF) is a web-based system that allows electronic filing of Tax Returns through the Internet. MeF documents can be obtained on-line using the Employee User Portal (EUP). Click the following link to access EUP: https://eup.eps.irs.gov/eup_login/.

The following forms can be e-filed through the MeF platform:

Electronically transmitted returns are identified by a unique Document Locator Number (DLN). The first two digits represent the File Location Code (FLC). Use the FLC shown below for the electronic filing of income tax returns. The second number listed is the rollover FLC used when a site exhausts the regular FLC for a given processing date.

An attachment or association form cannot be used to file information such as loose forms, schedules, and correspondence to a MeF return. They must be filed separately.

The Integrated Data Retrieval System (IDRS) is a computer system that contains the most accurate and current information for each taxpayer’s account.

The most common command codes are:

Is a web-based system with the capability to record case history notes, collect, retrieve, view, and manage taxpayer account information through a single user interface. It includes automated inventories such as correspondence imaging (CIS), 4442 and e911 referrals, and transcripts. Additional case resolution tools such as automated forms, pre-formatted letters, worksheets, checklists, payoff calculator, tax return data, and IDRS alerts are all available in AMS. AMS interfaces with a variety of systems including IDRS, ACSWeb, AUR, ATFR, RCA, ANMF, and ELITE. See IRM 4.119.4.3.5, Correspondence Imaging System (CIS) Documents, for additional information.

BUR cases are assembled into batches, and divided into work units.

Activity Codes/Category Codes, Internal Process Codes (IPC), and Process Codes (PC) are required to provide an audit trail for BUR case processing. See Exhibit 4.119.4-7, Activity Codes/Category Codes, Exhibit 4.119.4-6, BUR Process Codes (PC)Exhibit 4.119.4-5, BUR Internal Process Codes (IPC), for further instructions.

When assigning a work unit from a batch, verify that there is a case folder for every TIN shown on the Work Unit Listing and that the TIN on the case folder matches the TIN on the Work Unit Listing before updating the control on IDRS. If a case folder is missing (or there is an extra folder) see IRM 4.119.4.2.3, Lost Case.

Update the IDRS Control for the case folders that are verified against the Work Unit Listing.

Whenever an action is taken on a case:

When it is necessary to refer the case to another user:

When it is necessary to transfer the case to another program area outside of BUR (e.g., Independent Office of Appeals (Appeals), Exam, etc.) see IRM 4.119.4.21.1.1.4, Case Transfer to Another Area.

When the income or deduction(s) in question are satisfactorily identified on the tax return or analysis identifies acceptable information return reporting, the case is closed, and the taxpayer is not contacted.

Each case consists of tax year information for the current BUR processing year. The contents of the case folder include:

In addition, a complete case file must include the following:

Ensure that the Tax Return and IDRS; CC: IRPTRL, CC: TXMODA, CC: ENMOD and CC: CFINK are all for the same entity and for the correct tax year.

Some cases may have an amended return attached to the original income tax return.

An action trail must be made part of the case file. As the case is worked, document actions taken.

When a TIN is assigned to a batch, but the corresponding case (i.e., case folder, DCI, and/or paper filed tax return) is missing, it is considered a "lost" case. Lost case includes incorrectly associated paper tax return in the case folder or incorrect case folder in the work unit (based on the Work Unit listing verification).

When a lost case is identified, provide the information to the Lead Tax Examiner who will attempt to locate the case:

If the original tax return DLN and the Form 4251 DLN do not match.

If the tax return was processed to the incorrect entity or tax year/period, research IDRS to determine if the mixed issue (entity or period) has been corrected:

A numeric indicator displays in the Centralized Authorization File (CAF) field of IDRS CC: TXMOD when a POA is on file. See below for a list of the CAF indicators:

In addition to CAF indicators, the following transaction codes may also be present on the account:

CAF must always be researched to determine if there is a valid POA (who is authorized to receive notices) on file, before issuing a notice. Indications that a POA is authorized to receive notices include:

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The Third-Party Designee (Check Box) authority on the tax return does not apply to Compliance issues, including BUR. Therefore, do not send copies of BUR correspondence to a Third-Party Designee and do not disclose specific case or tax return information based on a Third-Party Designee check box.

If an original POA is found attached to the tax return (not detached during processing), take the following actions:

Disregard invalid POAs, see IRM 4.119.4.21.1.11, Letters From a Third Party and Authorization From a Valid Power of Attorney (POA), for additional information.

Consider valid POAs approved.

Check Yes or No on the POA section of the DCI to indicate if a POA is authorized to receive notices.

Review IDRS CC: TXMOD for Transaction Codes (TC), Freeze Codes, or for Indicators that may require research, referral, or other specific actions.

If any of the following conditions are present on the current year, follow the instructions below to perform required actions.

If Freeze Code -A is present, this indicates an amended return was filed. See IRM 4.119.4.3.3, Transaction Codes Reflecting Tax Liability, for further instructions.

If Freeze Code -F is present, this indicates that an advanced payment (TC 640) has posted to the account. See IRM 4.119.4.3.4, Other Transaction Codes and Math Error Codes, for further instructions.

If Freeze Code -I is present, a Manual Interest computation is required at the time of assessment.

If a Freeze Code “I-” is present on the tax account:

Freeze Code “-L” (Audit Indicators TC 420 or 424, not reversed by TC 421) indicates the return is currently being requested or possibly audited by Exam. Take the following action when this Freeze Code is present:

Freeze Code -O is a Disaster Indicator set by TC 971 AC 086 or 087 on IDRS CC: ENMOD. See IRM 4.119.4.4.3, Declared Disaster Areas, for further instruction.

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Freeze Code -S identifies tax returns filed within a declared disaster area and is set with a TC 971 Action Code (AC) 688 on CC:ENMOD. See IRM 4.119.4.4.3, Declared Disaster Areas.

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Freeze Code -U indicates the Erroneous Refund area is monitoring a case for available credits. Transfer to the Erroneous Refund Coordinator.

Freeze Code -V and/or TC 520 (not reversed by TC 521 or 522), a Bankruptcy condition is present. If identified on the IDRS CC:TXMOD:

Freeze Code -W and/or TC 520 (not reversed by TC 521 or 522) with closing code 60-67, 70-81, 84, 85 or 89 indicates that a Bankruptcy or litigation is present. If present:

Freeze Code -Y indicates that the taxpayer filed an Offer-in-Compromise (OIC) with the service. See IRM 4.119.4.3.4, Other Transaction Codes and Math Error Codes, TC 780 for further guidance.

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Refer to Document 6209, IRS Processing Codes and Information, for additional information regarding any other Freeze Codes not mentioned above.

A TC 150 indicates a return was filed and posted to the Master File. The TC 150 amount is the tax assessed when the original return was filed.

TC’s 29X and 30X indicate an adjustment to the tax after the original return was filed (i.e., TC 150). These adjustments are associated with a source document that details the reason for the adjustment.

Prior to issuing Letter 2531 or Letter 2030, review the TC 29X/30X source document. The following are considered source documents:

IDRS CC: TXMOD will indicate if the adjustment source document is a CIS document. If it is determined the adjustment is a CIS document, view/print the CIS print utilizing AMS view image. See IRM 4.119.4.3.5, Correspondence Imaging System (CIS) Documents, for further information. If the image is not available via AMS or MeF and does not meet the conditions in (7) below, close the case PC 4290.

TC 290 for .00 adjustment source documents should be ordered when one of the following is present:

Do not order TC 290 for .00 adjustment source documents for the following:

Do not order the TC 290/291 (or TC 300/301) source document for the following situations:

Use the IAT eClerical Tool or IDRS CC: ESTAB to request the source document:

Once you receive the requested source document determine if the source document resolves the U/R issue:

When a TC 300/301 is present on the Tax Module with a TC 421 and no -L freeze, a Disposal Code displays on the Tax Module. If pursuing U/R income, determine the Disposal Code. The Disposal Code is located under the column titled DIS CD in the transaction section of the Tax Module:

If a TC 300/301 and a TC 577 with Julian date 999 is displayed on the tax Module (no -L Freeze present) the U/R income has not been addressed by Examination Function. Review the papers to determine what changes were made and take those changes into consideration when calculating U/R income adjustments.

A TC 976 or TC 971 AC 010 or 012 through 016 present on the tax account indicates that the taxpayer filed an amended (or duplicate) tax return. If a TC 290/291 is not present allow Accounts Management time to process the amended/duplicate return before contacting the taxpayer.

TC 295 indicates an abatement of tax, based on a tentative allowance, input by Accounts Management. TC 299 indicates an abatement of the original tax. If there is a TC 295 or 299 unreversed, (or only partially reversed) by TC 294 or 298, and there is U/R income, issue a notice. Subtract the TC 295 (plus the TC 299) amount minus the TC 294/TC 298 amount from the TC 150 amount to determine the total tax per return.

TC 305 indicates an abatement of tax, based on a tentative allowance, input by Exam. TC 309 indicates an abatement of the prior tax assessment (with an interest computation date). If there is a TC 305 or 309 unreversed, (or only partially reversed) by TC 304 or 308, and there is U/R income, issue a notice. Subtract the TC 305 (plus the TC 309) amount minus the TC 304/TC 308 amount from the TC 150 amount to determine the total tax per return.

Other TCs shown on the Tax Module may require additional action.

TC 160 or 166 indicates a Delinquency/Failure to File Penalty was assessed. TC 161 or 167 means a portion, or all of the penalty has been abated. When a U/R issue exists, compute or recompute the Delinquency/Failure to File Penalty when required. If the Delinquency/Failure to File penalty is restricted by a TC 160/161 and applicable, enter the amount on the adjustment or it will unpost. See IRM 4.119.4.16.1, Failure to File Penalty (FTF), for additional information.

TC 170 or 176 indicates an Estimated Tax (ES) Penalty was assessed. TC 171 or 177 means a portion, or all of the penalty has been abated.

TC 270 or 276 indicates a Failure to Pay Penalty (FTP) was assessed. TC 271 or 277 means a portion, or all of the penalty is abated. See IRM 4.119.4.16.2, Failure to Pay Penalty (FTP), for additional information.

TC 460 indicates a request for extension of time to file was approved. The extension date appears at the end of the transaction code line in the EXT-DT field.

TC 480 (not reversed by TC 481 or 482) indicates the taxpayer has filed an "Offer in Compromise (OIC)" with the Service. Continue normal BUR processing. A TC 29X may be input on these type cases. Send copies of the case data to Collection OIC function upon their request.

TC 530 (not reversed by TC 531 or 532) with a closing code 07 or 10, indicates that the account is considered uncollectible.

TC 604 (not reversed by TC 605) indicates that assessed debit has been cleared.

TC 640 indicates an advanced payment of an underreporter proposal. The TC 640 payment sets an -F freeze and is released with a TC 29X in a BUR blocking series.

TC 670 indicates a subsequent payment. When a payment relating to the BUR issue posts as a TC 670, input a TC 570 to prevent the payment from refunding.

TC 766 or 767 (tax year 2017 and prior) indicates substantiated payment credits, including withholding (W/H). W/H may need to be adjusted due to the BUR processing. Before proposing a change to W/H, be certain that the adjustment has not been previously allowed.

TC 766 with CRN 263 BMF programming systemically posts a TC 766 CRN 263 by using the AC 115 amount posted for a case with an IRC Section 965 tax liability where a 965(h) deferred payment election was made. During original processing these returns are assigned Computer Condition Code (CCC) J (tax returns reporting an IRC 965 election). See (17) below, and IRM 4.119.4.4.9, Miscellaneous, for additional information.

TC 780 indicates that the Service accepted an Offer In Compromise (OIC) from the taxpayer. If an unreversed TC 780 is present, take the following action:

TC 806 credits the tax module for W/H claimed on a Form 1041 tax return. TC 807 reverses the TC 806 credit in whole or in part. W/H may need to be adjusted due to the BUR processing. Before proposing a change to W/H, be certain that the adjustment has not been previously allowed.

TC 830 or 836 identifies the credit elect amount on the overpaid module and TC 710 or 716 identifies the posting of the prior year credit elect to the BUR tax year module.

TC 925 is a universal indicator of BUR IDRS activity. TC 925 displays process codes in a string of up to 10 process codes, allowing IDRS users to know the extent of BUR activity on the account (i.e., case open, Letter 2030 issued, closed agreed, etc.).

TC 971 Action Code 114/115 are used for IRC pipeline processing and post processing adjustments. See IRM 4.119.4.4.9, Miscellaneous, for additional information.

TC 971 Action Code 177 indicates the taxpayer reported an investment into a Qualified Opportunity Fund (QOF). This could have been input during original processing or a previous amended return.

TC 971 Action Code 199 was posted on tax year 2019 accounts when the return was filed before the extended due date of July 15, 2020, due to COVID-19.

TC 971 Action Code 375, 376 or 377 (not reversed by TC 972), indicates that a Form 1120-S was converted to Form 1120 tax return.

TC 971 Action Code 522 indicates Identity Theft. Refer the case to Lead Tax Examiner for referral to Headquarters (HQ).

TC 971 Action Code 653 indicates that Rev. Rul. 99-40, (May Sequa), has been considered on the module. Manual Interest determination is required when inputting the assessment. See IRM 4.119.4.16.6, Revenue Ruling 99-40 and Credit Elects (May Sequa), for additional information.

If a Transaction Code other than those explained in IRM 4.119.4.3.3, Transaction Codes Reflecting Tax Liability, or IRM 4.119.4.3.4, Other Transaction Codes and Math Error Codes, are indicated on the IDRS CC:TXMOD, refer to Document 6209, IRS Processing Codes and Information.

If there is a math error code present, it displays in the MATH-STS-CD field of IDRS CC: TXMOD. See Document 6209, IRS Processing Codes and Information, for a full definition of Math Error Codes.

When preparing a Letter 2030, use "per return" figures from the filed tax return, however, when "per return" amounts on the Letter 2030 differ from those shown on the original return because of a processing change (Math Error Code present), previously filed amended return, or other adjustment, and:

The Correspondence Imaging Inventory (CII) is an inventory system used to manage scanned images of amended returns, documents, and electronic case files.

When a duplicate/amended return (TC 976 or TC 971 with AC 010 or 012 through 016 and a posted TC 290/291) is present, IDRS CC:TXMODA will display an indicator 1 in the CII-IND field indicating that a CII document is available.

If a CII document is indicated, take the following actions:

To exit AMS, click on the Exit Account link in the upper right-hand corner. In the Taxpayer Lookup window, click on the Log off link to exit the system.

The primary objective of the National Fraud Program is to foster voluntary compliance through the recommendation of a criminal investigation and/or civil penalties against taxpayers who evade the assessments 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 a tax due and fraudulent intent.

The objective of the Campus Fraud Referral Program is to:

The Fraud Enforcement Advisor (FEA) assists with the development of fraud in the Campus Examination environment.

The Functional Fraud Coordinator (FFC) is a fraud specialist assigned to a specific function or operation within the Campus. The FFC is responsible for reviewing Form 13549, Campus Fraud Lead Sheet, for potential fraud issues, conducting research to establish a pattern of non-compliance and, when appropriate, referring cases to the Campus Fraud Coordinator.

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

The Brookhaven Campus Fraud Coordinator (BCFC) is a fraud liaison dedicated to each SB/SE Exam/AUR Campus. The BCFC is the main point of contact for each CFC and BSC FFC/CFC and Office of Fraud Enforcement Advisor (OFEA).

A frivolous return is defined as noncompliance with filing and/or paying tax based on unfounded legal or constitutional arguments per IRM 25.25.10, Revenue Protection - Frivolous Return Program. If in doubt about whether the return is frivolous, consult with the Lead Tax Examiner or manager. If it is determined during screening that the return is frivolous, close the case with PC 4130.

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

If FRP requests a BUR case after contacting the taxpayer, close the case with the appropriate PC (4570 or 4790), annotate the case folder and DCI for clerical "FRP to Ogden." See IRM 4.119.4.21.1.1.4, Case Transfer to Another Area, for additional information.

BUR Coordinator alerts tax examiners of ZIP Codes for specific declared disaster area situations as necessary based on IRS Disaster Relief Memos. Follow Coordinator’s instruction on proper handling of declared disaster area cases.

Possible Disaster case impact:

An affiliated group of corporations can elect to file a consolidated income tax return by including Form 851, Affiliation Schedule.

When Form 851 is included with the tax return, the consolidated return must include all the income of the parent plus the income of each subsidiary for the portion of such taxable year during which it was a member of the group.

When issuing a notice include the following Special Paragraph: "Our records show you filed Form 851, Affiliations Schedule, with your tax return. We have enclosed transcripts of information for each entity shown on your affiliations schedule. All income reported on a consolidated return must include the income of the parent plus the income of each subsidiary for the portion of the taxable year during which it was a member of the group."

The initial review of information returns (IRs) is accomplished using IDRS Command Code (CC) IRPTRL.

Compare payer information to the tax return and take the correct action if there are any discrepancies.

When comparing income from payers to the tax return, discrepancies may be discovered. Discrepancies can occur for a variety of reasons. The most common causes for discrepancies are:

Review each IR for validity prior to determining any unreported amounts. Use the following status codes to indicate the result of the review:

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡if any of the following conditions are present:

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

Foreign source income IRs may be identified by:

See IRM 4.119.4.4.5.1, Amended/Corrected Original Submission IRs, when the IR is an amended or corrected original submission.

Compare all valid IR’s to amounts on the tax return and related schedules. Use instruction for the particular type of income involved.

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 in a variety of places. It is important to thoroughly review the entire return. Consider all attached schedules, forms, documents, and statements before identifying income as being underreported.

For IRs with multiple Amount Types (e.g., Form 1099-MISC or Schedule K-1) consider each component of the IR separately.

Whenever possible attempt to match IR amounts to a specific line on the tax return. For example, match the sum of INTEREST Amount Types to the amount reported on Form 1120, line 5 or Form 1041, line 1.

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

When payer documents are attached to a paper return, consider them more accurate than the IR unless:

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

Group same amount types together when a breakdown has not been provided and it is necessary to compare a total money amount for related IRs with a single or multiple line entries on the tax return e.g., MED PAYMTS and NONEMP COM will often be combined when the business is medical.

If a Form 1099-MISC IR has two identical money amounts and the taxpayer reports one of the amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

If a Form 1099-K and Form 1099–MISC/Form 1099-NEC are present with identical money amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A photocopy of a prior year Letter 2030 or Letter 2531 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 Amount type from the same payer was resolved per a copy of a Letter 4552-C response from a prior year attached to the return, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

If a prior year BUR closure Letter 4551-C is attached to the return, request the prior year tax return to see if the resolved issue(s) corresponds to the current BUR year discrepancy. If so, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

If the discrepancy is totally resolved, close the case using PC 4210.

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If the taxable income per return is a negative amount include PARAGRAPH 32 on the Letter 2030.

When a taxpayer indicates they received income on behalf of another entity/person because they acted as an intermediary, agent, or broker for that entity/person they are considered a nominee recipient.

When an attachment or statement indicates that the taxpayer acted as a nominee recipient, and:

A Grantor Trust is a trust in which all income is distributed to the beneficiaries and not taxable to the trust.

If the entire trust is a Grantor Trust, taxpayers are instructed to fill in only the entity portion of the return and not have any entries on Form 1041, lines 1 through 22 (tax year 2018 and prior) or lines 1 through 23 (tax year 2019 and subsequent).

Treat Form 1041 as a Grantor Trust ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when the taxpayer checks Grantor Trust box in Form 1041, Section A and:

When the taxpayer checks the Grantor Trust box and another box in Form 1041, Section A, and reports income/deductions, this is an indication that a portion of the trust is taxable. If part of the trust is taxable, the income, deductions, etc., that are taxable to the trust are reported on Form 1041. The amounts that are taxable directly to the grantor are shown on an attachment to the return or can be a statement indicating a percentage allocable to them.

If none of the above conditions apply, pursue the U/R income in full.

If IRC 6501(d), Request for Prompt Assessment, is noted on the tax return, or there is a statement requesting a prompt assessment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

When there is an indication on the tax return that income was reported on another return see IRM 4.119.4.4.7, Nominee Recipient, for additional information.

When Form 1120 is from a financial institution and the entity section shows "FDIC" (Federal Deposit Insurance Corp.) or similar wording and/or cites IRC 7507(a) (Exemption of insolvent banks from tax), close the case with PC 4260.

Refer the case to the Lead Tax Examiner when:

Digital Assets (formerly referenced in BUR as virtual currencies) such as Bitcoin or another cryptocurrency, are generally treated as property for Federal tax purposes unlike real currencies such as the U.S. dollar:

When an attachment indicates the income in question is nontaxable and the taxpayer cites the Internal Revenue Code (IRC), Regulations, Revenue Rulings, or a court case, etc., research the IRC to determine its validity. Consult with the Lead Tax Examiner if necessary.

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If a case meets sensitive case criteria (i.e., unique, or novel issue, high profile or affects a large number of taxpayers) consult with the Lead Tax Examiner for determination and referral. See IRM 4.119.4.21.1.14, Sensitive Case, for additional information.

An erroneous refund is any receipt of money from the Service to which the recipient is not 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 posted, use the IAT "Stop Refund" tool to attempt to stop the refund. See IRM 4.119.4.4.10.1, Stopping Refunds, for additional information.

Access the Payer Agent listing when questionable IR(s) are present.

During the screening phase, the tax examiner may identify questionable Information Returns (IRs) which appear to be erroneous. When the IRs appears to be questionable or erroneous, forward the case and any additional supporting information documents to the Lead Tax Examiner for determination.

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. Forward a copy of the case and any additional supporting information documents to the Lead Tax Examiner and continue processing.

The BUR Payer Agent (P/A) Coordinator will perform the following tasks.

At the end of the BUR program for the tax year, print a copy of the Payer Agent Listing and retain in the Payer Agent file for three years.

Transactions relating to regulated futures contracts, nonequity, options, dealer equity options, dealer securities futures contracts and foreign currency contracts are taxable under IRC Section 1256 and are generally referred to as "Section 1256 Contracts." Payers report these transactions on Form 1099-B, boxes 8-11. The overall aggregate profit or loss on contracts is reported in box 11.

Aggregate Profit or Loss on Contracts are identified with Document Type 1099-B and Amount Type (IRPTR Literal) PROFT&LOSS.

Agriculture Payments are governmental subsidies paid to farmers and agricultural businesses to supplement their income. Market Gain on Commodity Credit Corp (CCC) Loans are the market gain associated with the repayment of a CCC loan.

Agriculture Payments and Market Gain on Commodity Credit Corp (CCC) Loans display on IDRS CC: IRPTR with the following Amount Type and Document Type:

If an estate operated a business, income and expenses are reported on Form 1040, Schedule C, Profit or Loss From Business . Net profit or (loss) from Schedule C is carried forward to Form 1041, line 3.

Income types generally considered Business Income display on IDRS CC: IRPTR with the following Amount Type and Document Type:

Payers (generally insurance companies) report gross proceeds paid to an attorney (i.e., Attorney’s Fees) on Form 1099-MISC when they cannot determine the specific portion of the payment attributable to the taxpayer. The taxpayer is instructed to report only the taxable portion as income on their return. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Cancellation of Debt is considered income to the taxpayer if a debt owed to the Federal Government, financial institution, credit union or other creditor was discharged and is not otherwise excluded from gross income.

Cancellation of Debt is reported on Form 1099-C.

Cancellation of Debt is identified on IDRS CC: IRPTR as Amount Type (IRPTR Literal) AMT DBT CN.

Commodity Credit Corporation (CCC) Loans Forfeited are reported on Form 1099-A, Acquisition or Abandonment of Secured Property, and displays on IDRS CC: IRPTR as Amount Type (IRPTR Literal) DEBT OUT.

Cooperative Distributions are paid by cooperatives to their members.

Cooperative Distributions display on IDRS CC: IRPTR with the following Amount Type and Document Type:

Crop Insurance proceeds are payments received by farmers or agricultural businesses as a result of destruction or damage to crops.

Crop Insurance is reported on Form 1099-MISC and displays on IDRS CC: IRPTR as Amount Type (IRPTR Literal) CROP INS.

Dividends are distributions of property made by a corporation to its shareholders out of its current or accumulated earnings and profits. Dividends paid directly to a shareholder are reported on Form 1099-DIV, Dividends and Distributions. Dividends received indirectly through a pass-through entity are reported on Schedules K-1 from Form 1065, U.S. Return of Partnership Income, Form 1041, U.S. Income Tax Return for Estates & 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 capital gains.

Gambling winnings are identified on IDRS CC:IRPTR as Document Type "W-2G" and Amount Type (IRPTR Literal) GR WINNING.

Income types generally considered Gross Receipts display on IDRS CC:IRPTR with the following Amount types and Document Types:

Interest income displays on IDRS CC:IRPTR with the following Amount Type and Document Type:

Original issue discount (OID), which is treated as interest income, is the excess of the stated redemption over the issue price of a debt instrument (e.g., bond).

Market discount, also treated as interest income, is the excess of the stated redemption price over the holder’s cost basis in the debt instrument.

Other income is identified with Document Type "1099-MISC" and displays on IDRS CC:IRPTR as Amount Type (IRPTR Literal) MISC OTH I.

Conduit income is the taxpayer's distributive share from a Form 1065, U.S. Return of Partnership Income, Form 1120-S, U.S. Income Tax Return for an S Corporation or Form 1041, U.S. Income Tax Return for Estates and Trusts.

Conduit income displays on IDRS CC: IRPTR with the following Amount Type and Document Type:

Refer the case to the Lead Tax Examiner for review when an IR with Amount Type PT3INCLOSS or PT3DEDLOSS is present. See IRM 4.119.4.4.9, Miscellaneous, for additional information.

Qualified Education Program Payments consist of Qualified Tuition Program (QTP) and are reported to IRS on Form 1099-Q. Amount indicators on the Form 1099-Q reflects Gross Distribution (Box 1); Earnings (Box 2); and Qualified Tuition Basis (Basis) (Box 3).

Form 1099-Q IRs may display a distribution type based on the information in Form 1099-Q, Box 5. The following distribution types are for information only.

Qualified Education Program Payments are reported on Form 1099-Q and displays on IDRS CC:IRPTR as Amount Type (IRPTR Literal) QTP EARNGS.

Real estate transactions are the proceeds from the transfer (sale or exchange) of real estate.

Real estate transactions are identified with Document Type "1099-S" and are displayed on IDRS CC:IRPTR as Amount Type (IRPTR Literal) REAL ES SL.

Rental income is compensation for the use of property by someone other than the owner.

Rents display on IDRS CC:IRPTR with the following Amount Type and Document Type:

Rent and Royalties income is compensation for the use of property or rights by someone other than the owner.

Rent and Royalties display on IDRS CC:IRPTR with the following Amount Type and Document Type:

Royalties are compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, by someone other than the owner.

Royalties display on IDRS CC: IRPTR with the following Amount Type and Document Type: