This IRM provides guidance for report writing that examiners should understand and apply in the performance of their duties.

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

"Policy Statements" generally advise IRS employees and the public of the IRS’ commitment to an ideal or value. They are authorized by the Commissioner or Deputy Commissioners. These statements can form the basis for procedures and instructions in the Internal Revenue Manual (IRM). Policy Statements are organized by business process in IRM 1.2.1, Servicewide Policy Statements.

"Delegation Orders" are issued by Division Commissioners, Chiefs, National Taxpayer Advocate, and equivalent level executives to re-delegate authorities delegated to them or their subordinates by the Commissioner or through the Commissioner. As a Bureau Head, the Commissioner receives authorities through Statute, Regulations or Treasury decisions, the President of the United States, and the Secretary of the Treasury (Treasury Orders and Directives). See IRM 1.2.2, Servicewide Delegations of Authority, for Delegation Orders applicable to all divisions and functions. See IRM 1.2.63, Division Delegations of Authority for Large Business and International, and IRM 1.2.65, Small Business/Self-Employed Division Delegations of Authority, for Delegation Orders applicable to those business units.

The Director, Examination Headquarters, is the executive responsible for providing policy and guidance for SB/SE Examination employees and ensuring consistent application of policy, procedures and tax law to effect tax administration while protecting taxpayers’ rights. See IRM 1.1.16.5.5, Examination Headquarters, for additional information.

The Director, Examination Field and Campus Policy, reports to the Director, Examination Headquarters, and is responsible for the delivery of policy and guidance that impacts the field and campus examination processes. See IRM 1.1.16.5.5.1, Examination Field and Campus Policy, for additional information.

Field Examination General Processes (FEGP), which is under the Director, Examination Field and Campus Policy, is the group responsible for providing policy and procedural guidance on standard examination processes to field employees. See IRM 1.1.16.5.5.1.1, Field Examination General Processes, for additional information.

Examiners are responsible for observing the Taxpayer Bill of Rights, including the taxpayer’s right to be informed regarding IRS decisions about their tax accounts. Examiners should ensure taxpayers receive clear explanations of the outcomes by issuing examination reports and letters that identify the amounts (if any) of tax due, interest, additional amounts, additions to the tax and assessable penalties. See IRM 4.10.1.2.1, Taxpayer Bill of Rights (TBOR), for additional taxpayer rights and examiner responsibilities. See IRM 4.10.1.4.6, Problem Solving, and IRM 4.2.1.22, Taxpayer Advocate Program, for additional guidance.

Examiners and their managers should thoroughly acquaint themselves with the report writing procedures and information contained in this IRM, as well as other resources, such as those listed in IRM 4.10.8.1.7, Related Resources, below.

Reports are derived from a variety of sources including the Audit Information Management System (AIMS), AIMS - Centralized Information System (A-CIS), and Examination Returns Control System (ERCS) databases. These reports provide Headquarters and Field Examination with timely and reliable information. There are a variety of reports designed to meet the needs of the group or function. Additional information can be found in IRM 4.4.27, Reports; IRM 4.7.6, Reports; and IRM 1.4.40.5, Monitoring Reports Overview.

Periodic program reviews are conducted to:

The following table contains a list of terms used throughout this IRM and their definitions.

The following table lists acronyms used throughout this IRM and their definitions.

Following are the primary sources of procedures and guidelines examiners will use for report writing:

Links to other helpful information:

Audit reports serve several important purposes. Therefore, examiners should take all necessary steps to ensure report accuracy. Audit reports:

The type of audit report an examiner prepares depends on the outcome of the examination. For example, reports are prepared for the following types of cases:

This section contains general guidance for income tax report preparation. Other sections in this IRM contain specific guidance for reports for each type of outcome (e.g., no-change, agreed, etc.). LB&I examiners see IRM 4.46.6, Workpapers and Reports Resources, for additional report writing guidance.

Form 4549, is the basic report form for most individual and corporate income tax cases. Form 4549 reflects adjustments to taxable income and the corrected tax liability, and allows for a taxpayer signature, waiving restrictions on assessment and collection of a deficiency or acceptance of an overassessment. By signing, the taxpayer is indicating they do not wish to exercise appeal rights with regard to the adjustments reflected in the report. The report is subject to review and acceptance by the Area Director (or comparable level of management) as stated on the form. See Exhibit 4.10.8-1, Preparation of Form 4549 / Form 4549-A, for instructions for preparing Form 4549.

Form 4549-A, Report of Income Tax Examination Changes (Without Taxpayer Signature), does not have a place for the taxpayer(s) to sign, and is appropriate for no-change, unagreed (RA), excepted agreed, fully allowed claims for refund, and abatement cases. If Form 4549-A is issued in an unagreed or partially agreed case, examiners typically prepare and provide Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, to the taxpayer to solicit a consent to assessment. See Exhibit 4.10.8-1, Preparation of Form 4549 / Form 4549-A for instructions for preparing Form 4549-A. See Exhibit 4.10.8-2 for additional information and instructions for preparing Form 870.

An Information Only report is a completed Form 4549 that does not propose a change in tax liability. It furnishes taxpayer information to the taxpayer or others who need this information. The report should be labeled "FOR INFORMATION ONLY." Information reports are usually submitted in connection with offers in compromise and requests for information from Headquarters and other Area offices.

Forms in the 870 series are used to indicate the taxpayer is waiving the statutory restriction upon assessment and collection of the deficiency of tax and are used in excepted agreed cases and unagreed cases requiring a Preliminary (30-day) letter. Signing the waiver stops the running of interest 30 days from the date of receipt if the assessment and notice for payment are not made within the 30-day period. Signing the waiver does not preclude assertion of a further deficiency by the Commissioner or a request for further consideration of the issues by the taxpayer. See Exhibit 4.10.8-2, Preparation of Form 870, for instructions for preparing Form 870.

Report Generation Software (RGS) is required for generation of all income tax examination reports (with the exception of LB&I agents utilizing BNA Software inside of IMS) and for entry of all data required for the Examination Operational Automation Database (EOAD). EOAD is designed to allow the tracking of examination adjustments by issue and related cause. This data helps identify specific areas of noncompliance based on examination reports. See IRM 4.10.16, Examination Operational Automation Database (EOAD). Procedures for using RGS in report writing can be found in RGS User Guides, training materials, and IRM 4.10.15, Report Generation Software (RGS).

RGS contains the nationally approved standard explanations and automatically inserts standard explanations for statutory adjustments. The user also has an opportunity to customize standard explanations. The number of customized standard explanations should be limited as the National Standard Explanations are approved by Counsel. See IRM 4.10.8.12.4, Explanation of Items, for additional information.

RGS users must save a complete copy of all audit reports provided to the taxpayer or representative to RGS Case File Documents. Each report must be saved as a single PDF file using the established file naming convention: REPORT – [Form #] – [Creation Date Using YYYYMMDD Format]. See IRM 4.10.15, Report Generation Software (RGS), and the RGS File Naming Conventions job aid for additional guidance. When applicable, the file name should include additional descriptive information to allow users to identify the correct report (see example 2 below).

A complete audit report includes the following elements.

Form 9984, Examining Officer's Activity Record, should properly document actions related to report delivery. When reports are issued be sure to include:

The examiner should discuss the progress of the examination and potential issues with the taxpayer and/or representative at frequent intervals throughout the examination. To facilitate discussion of proposed adjustments to individual, corporate, or fiduciary income tax returns, the examiner may provide the taxpayer with a Form 5278, Statement - Income Tax Changes. See IRM 4.10.7.5, Proposing Adjustments to the Taxpayer and/or Representative, for guidance on the time and manner for issuing reports in both office and field examinations.

Whenever possible, examiners should discuss proposed adjustments (including penalties) with the taxpayer and/or representative during a face-to-face appointment. If penalties requiring supervisory approval are proposed and the examiner has not yet obtained approval, Form 5278 or a written list of proposed adjustments (including penalties) can be shared to facilitate discussion during a face-to-face appointment. The activity record should be contemporaneously documented to indicate the date and circumstances under which the Form 5278 or written list was provided.

When a report is mailed, the examiner must prepare and issue the appropriate letter to transmit the report and notify the taxpayer of the examination process and their rights (e.g., Letter 915, Letter 950, Letter 4121, Letter 5153, etc.). See IRM 4.10.8.2.3.1 below for additional guidance on preparing and issuing letters.

If the issuance of a 30-day letter is delayed while the examiner secures the manager’s signature on the letter or the penalty approval form, TCOs must update the ERCS action code to 08, Follow-Up Action.

For a joint return, follow IRM 4.10.1.2.2.1, Separate Notice Requirements, to determine if the report must be issued separately.

Generally, a qualified representative is authorized to receive any notice or other written communication required or permitted to be given to the taxpayer in the matter concerning the taxpayer, as directed on Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization. Before issuing an audit report, the examiner should research the Centralized Authorization File (CAF) on IDRS to ensure the taxpayer did not submit a new Form 2848 or Form 8821 through channels other than the examiner. For more detailed information on how to mail correspondence when a POA is involved, see IRM 4.11.55.2.9, Notices and Communications. See IRM 4.10.1.3.3, Written Communication to the Taxpayer's Representative, for guidance including the preparation and issuance of Letter 937, Transmittal Letter for Power of Attorney.

This section provides general guidance for soliciting payment, receiving executed audit reports, and closing cases within established time frames based on taxpayer responses to issued reports.

Upon completion of a field or office examination resulting in no adjustments (Disposal Code 02), the examiner will prepare and provide the appropriate no-change letter to the taxpayer(s) and, if applicable, to the taxpayer’s representative.

The following no-change letters advise the taxpayer that a no-change is proposed but the determination is subject to review:

SB/SE examiners must generate a "no-change" report using RGS and provide it to the taxpayer and, if applicable, the taxpayer’s representative, at the conclusion of the examination. The "Other Information" or "Remarks" section of the report must include the statement "No-Change Subject to Approval by Area Director or Area Manager."

Examiners must prepare an undated Letter 590, No-Change Final Letter (or Letter 992, No-Change, for Form 1120-S, U.S. Income Tax Return for an S Corporation; Form 1065, U.S. Return of Partnership Income; or Form 5500, Annual Return/Report of Employee Benefit Plan), and have it signed by the group manager. Letter 590 (or Letter 992) notifies the taxpayer the report has been reviewed and accepted. For cases excluded from paperless electronic closure, the closing letter is left undated in the case file (with a copy for the file) and it’s mailed by CCP. Closing letters for paperless electronic closure cases are mailed by the group instead of CCP.

On Form 3198, check the boxes for "No-Change Letters" and "Letter 590" or "Letter 992" in the "Letter Instructions for CCP" section if CCP is responsible for mailing the letter.

Re-opening procedures do not apply if subsequent changes are needed before issuance of Letter 590 or Letter 992.

The "no-change" report may be acceptable documentation for repetitive audit verification in lieu of Letter 590 (or Letter 992) if the transaction code on the transcript corroborates the taxpayer’s no-change report. The examiner should research IDRS using command code IMFOLZ or BMFOLZ which will display the results of the last two audits. This command code will show the "No-Change Issue Codes," also known as "IMF Issue Codes," disposal codes and any deficiency amount. The "IMF Issue Codes" can be found in IRM Exhibit 4.10.16-1, IMF Issue Codes.

This section contains procedures for an examination that results in adjustments that do not change the taxpayer’s liability in the year examined and do not impact any other tax years.

In cases where the examination results in adjustments but no change to the tax liability in the year examined and there is no impact to any other tax year(s), it is still important to notify the taxpayer of the adjustments so the taxpayer treats the issue(s) properly when filing subsequent year returns.

Upon completion of a field or office examination resulting in no-change with adjustments (Disposal Code 01), and there is no impact to other tax years, the examiner will prepare and provide Letter 3402-A, Change/No-Change Report Transmittal - Adjustments Do Not Impact Other Tax Years, to the taxpayer(s) and, if applicable, to the taxpayer’s representative. Letter 3402-A advises the taxpayer that a no-change with adjustments is proposed but is subject to review. It is not necessary to secure the taxpayer’s agreement since there is no tax liability.

The examiner must generate an "agreed" report using RGS and provide it to the taxpayer and, if applicable, the taxpayer’s representative, at the conclusion of the examination.

The examiner must prepare an undated Letter 1156, Change, No-Change Final Letter, and have it signed by the group manager. Letter 1156 notifies the taxpayer the report has been reviewed and accepted. For cases excluded from paperless electronic closure, the closing letter is left undated in the case file (with a copy for the file) and it’s mailed by CCP. Closing letters for paperless electronic closure cases are mailed by the group instead of CCP.

On Form 3198, check the boxes for "No-Change Letters" and "Letter 1156" in the "Letter Instructions for CCP" section if CCP is responsible for mailing the letter.

Re-opening procedures do not apply if subsequent changes are needed before issuance of Letter 1156.

This section contains procedures for an examination that results in adjustments that do not change the taxpayer’s liability in the year examined but may impact other tax year(s). Generally, cases considered by Appeals involve a disputed tax liability. However, Appeals will consider cases that do not have an immediate tax consequence but may impact the tax liability of other tax year(s). See IRM 8.1.1.3.2, No Immediate Tax Consequence Cases.

When an examination results in adjustments that do not change the taxpayer’s liability in the year examined, but impact other tax year(s):

For an examination that results in a no-change with adjustments that impacts other tax year(s), examiners generate an "agreed" report and provide it to the taxpayer and, if applicable, to the taxpayer’s representative, at the conclusion of the examination. The examiner should solicit the taxpayer’s signature since there are proposed adjustments to the return and they impact other tax year(s).

If an agreement is secured, close the case to CCP. The examiner will use the disposal code applicable to the closure for each tax year examined (e.g., disposal code 01 for the no-change with adjustments), and prepare the applicable closing letter (undated) to be issued by CCP (e.g., Letter 1156, Change, No-Change Final Letter, for the no-change with adjustments).

When an agreement is not secured, examiners must follow unagreed procedures in IRM 4.10.8.12 and generally use Letter 950-F, to transmit the no-change with adjustments examination report and offer the taxpayer the opportunity to go to Appeals. See IRM 4.10.8.12.1(4) when fewer than 240 days remain on the statute of limitations.

When a multi-year examination results in both change and no-change year(s), the examiner should prepare a separate report for the no-change year(s), depending on the type of no-change, i.e., no adjustments impacting other tax years, etc. See IRM 4.10.8.3.1 through IRM 4.10.8.3.3.

See IRM 4.10.8.7 for procedures for closing cases that contain at least one agreed/no-change year and one unagreed year.

The following form letters are no-change notification letters:

The following form letters may be issued as final no-change letters:

For TEFRA Partnership cases the following form letters are issued as no-change notification letters:

For BBA Partnership cases the following form letters are issued as no-change notification letters:

For nonfiler cases closed without an examination report, the following form letters are issued as no-change notification letters:

For no-change cases with no adjustments, RGS will populate the no-change issue codes on the Form 5344 from the issues created and no-changed.

Enter the disposal code on the appropriate line of Form 5344 as:

Form 4549 is the basic report form for regular agreed individual and corporate cases.

General guidance related to the issuance of audit reports is found in IRM 4.10.8.2.3. The subsections below provide additional guidance depending on whether the individual or corporate tax periods result in a deficiency or an overassessment.

Form 4605, Examination Changes Partnerships, Fiduciaries, S Corporations and Interest Charge Domestic International Sales Corporations, is the basic report form for use in these cases.

Form 886–S, Partners’ Shares of Income, Deductions and Credits, and Form 886–X, Shareholders’ Shares of Income, Deductions and Credits, are forms used to identify partner and shareholder level adjustments for each year in which a change is recommended in Investor Level Statute Control (ILSC) examinations.

Form 886-Z, TEFRA Partners' Shares of Income, should be printed for the case file only. It reflects the percentages of ownership that are not on the Form 886-S or Form 886-X. See IRM 4.31.2, TEFRA Examinations - Field Office Procedures, and IRM 4.31.5, Investor Level Statute Control (ILSC) Examinations - Field Office Procedures, for procedures in working an ILSC key case and related investors. See IRM 4.31.9, Centralized Partnership Audit Regime (BBA) Field Examination Procedures for procedures when working BBA cases.

Form 886–S, Form 886–X, and Form 886–Z, should clearly reflect corrected items of income, separately stated items, and other items to be adjusted at the investor level.

Letter 921, Report Transmittal For ILSC Partnership, Fiduciary, & S Corporation, is a report transmittal letter for ILSC partnership, fiduciary, and S corporation cases.

The basic reports for BBA partnerships are found in IRM 4.31.9 and summarized below:

See the Audit Procedures shelf on the Partnerships Knowledge Base, for report writing resources.

Form 4605 is the basic report form for "regular agreed" Interest Charge Domestic International Sales Corporation (Form 1120–IC DISC) cases.

Form 886–Y, Examination Changes—Shareholder’s Share of Deemed and Actual Domestic International Sales Corporation’s Distributions, is prepared in conjunction with Form 4605 for each year in which a change is recommended to show the corrected Schedule of Distributions.

The basic reports used for fiduciary cases are as follows:

Inform taxpayers that the agreed case is subject to review and once it is accepted, they will receive Letter 987, Agreed Income Tax Change, stating the case is closed. Examiners will prepare Letter 987 which is signed by the group manager. For cases excluded from paperless electronic closure, the letter is left undated in the case file (with a copy for the file) and it’s mailed by CCP. Closing letters for paperless electronic closure cases are mailed by the group instead of CCP.

Letter 987 contact information can be completed with either the examiner's name or the group manager's name.

Annotate the "Letter Instructions for CCP" section of Form 3198"Agreed - Letter 987" if CCP is responsible for mailing the letter.

The allowance of partial overassessments should not be made routinely but only if the facts and circumstances warrant such action. Whether a partial overassessment should be allowed must be a matter of sound judgment and discretion. Group manager approval will be obtained prior to the allowance of a partial overassessment. Group manager concurrence will be documented on Form 9984.

A partial overassessment will be made only if there has been an agreement on the issue(s) resulting in the partial overassessment. These cases generally fall into the following categories:

The following are examples of partial overassessments that could be made for the situations listed above:

This subsection includes guidance for partially agreed individual and corporate deficiency cases. See IRM 4.10.8.6.1 for partial overassessment guidance.

Generally, TCOs only consider a partial agreement after a request for an Appeals conference is received and the taxpayer indicates agreement to one or more issues in the request. RAs generally have opportunities to secure an agreement or partial agreement prior to issuing a 30-day letter.

The subsections below provide guidance for soliciting a partial agreement. If the taxpayer indicates agreement to one or more issues prior to the request for an Appeals conference, follow IRM 4.10.8.6.2.1, Partially Agreed Deficiency Cases - Individuals and Corporations – Prior to Request for Appeals Conference. If the taxpayer indicates agreement as part of the request for an Appeals conference, follow IRM 4.10.8.6.2.2, Partially Agreed Deficiency Cases - Individuals and Corporations – After Request for Appeals Conference.

Letter 921 transmits Form 4605, for nontaxable pass-through entity returns when adjustments are made to the entity’s return (both agreed and unagreed). Enclose Form 4605 to reflect the adjustments made to the entity’s ordinary income/loss and separately stated items of income, loss, deduction and credit. A nontaxable pass-through entity indicates agreement by having an authorized person sign Form 4605; however, the signature at the entity level is not binding. Therefore, an agreement (or partial agreement) must be obtained at the investor level. Partial agreements are not processed on nontaxable pass-through entities.

See IRM 4.31.5, Investor Level Statute Control (ILSC) Examinations-Field Office Procedures, for detailed information on pass-through entities.

The procedures for processing a partially agreed S corporation or fiduciary case that is subject to tax are the same as the procedures for individual and corporation cases outlined in IRM 4.10.8.6.2.

Letter 921, Report Transmittal for ILSC Partnership, Fiduciary, & S Corporation, is used to transmit the pass-through audit adjustments from Form 4605 to the investors. The agreement (or partial agreement) must be obtained at the investor level. Partial agreements are not processed on an Interest Charge Domestic International Sales Corporation.

A "90-Day / Notice of Deficiency Reconsideration" case is one in which the taxpayer receives a statutory notice of deficiency (determination) and requests reconsideration of the deficiency before the 90 days have expired. Technical Services has responsibility for issuing notices of deficiency for SB/SE Field Examination, LB&I, and Estate and Gift cases. The last day the taxpayer can file a petition with the United States Tax Court is 90 days after the notice is issued (150 days if either the taxpayer is outside the United States when the notice is mailed or the notice is mailed to an address outside the United States).

If sufficient time remains to reconsider a case prior to the expiration of the 90 days (or 150 days), Technical Services may return the case to the examination group to consider the taxpayer’s request for an interview and/or additional information. If sufficient time does not remain to reconsider the case prior to the expiration of the 90-day (or 150-day) time period, Technical Services will inform the taxpayer they should petition if they disagree, otherwise the tax will be assessed. 90-Day / Notice of Deficiency Reconsideration cases are a priority and must be closed back through Technical Services.

Technical Services will use Form 3990, Reviewer’s Report, to transmit a 90-Day / Notice of Deficiency Reconsideration case to the group, and provide instructions and a response date. Examiners must follow the instructions from Technical Services and if revisions to the report are needed the examiner must:

Once the examination group has completed work on the case, it should be returned to Technical Services. The statutory notice reviewer is responsible for notifying the taxpayer of the final outcome of the reconsideration using Letter 555-T, Reconsideration After Statutory Notice, or Letter 645-T, No Change - After Statutory Notice Issued. Neither of these letters are issued by the examination group.

If an unagreed case results in a proposed refund where a claim has not been filed, examiners should advise the taxpayer to file a valid claim for refund before the RSED expires if they want to protect their opportunity to recover the refund. See IRM 4.10.11.5.2, Refund Statute Expiration Date (RSED) - Consideration and Examiner’s Responsibilities, for additional information about the RSED.

A claim invitation is not needed in an agreed case because the Service considers an agreement (e.g., Form 4549 series) or a waiver in the Form 870 or Form 890 series to be a valid claim for refund when the taxpayer agrees to an overassessment determined by the Service as explained in IRM 25.6.1.10.2.6.2.2(3), Prescribed Forms for Amending an Original Tax Return or Abating a Penalty Already Paid.

Taxpayers should be invited to file claims in the following types of unagreed cases if the proposed overassessments are not already covered by claims:

To invite a taxpayer to file a claim, the following must be added to the "Other Information" section of the Form 4549 or Form 4549-A:

Follow the instructions from Technical Services for processing the case.

Prepare Form 4549–A showing the general adjustments, the personal holding company income, and the reduction / credit due to the allowance of any deficiency dividend deduction. The examiner should include a statement in the "Other Information" section to identify the credit as a deficiency dividend deduction per the allowed claim and note restricted interest is applicable. See Exhibit 4.10.8-4 for a sample Form 4549-A.

For all cases where a deficiency dividend deduction is allowed, the examiner will prepare Form 3189, Deficiency Dividend Deduction Case Transmittal. See Exhibit 4.10.8-5 for a sample Form 3189.

If a return for which deficiency dividends were paid has not yet been filed, the examiner should prepare Form 5346 to report dividends paid to shareholders in the current year and attach a copy of Form 3189 so that it can be associated upon filing.

Examiners must flag Form 3198 as a restricted interest case and check the" Other Code Section" box in the "Special/Restricted Interest Feature" section, inserting "IRC 547" - claim for deficiency dividends paid case.

Generally, Technical Services will request the examiner to return the case to Technical Services for review prior to closing. Check the "Personal Holding Companies" box in the "Forward to Technical Services" section of Form 3198.

30-day letters are used to transmit the findings of the examination (e.g., audit report) to the taxpayer and allow the taxpayer 30 days to request Appeals consideration of their case, or take other actions as outlined in the specific letter.

30-day letters are generally issued for cases resulting in the following:

Generally, taxpayers with 240 or more days remaining on the statute of limitations will receive the appropriate 30-day letter. This allows 30 days for the taxpayer to respond to the letter (and extend the statute if needed) and if the taxpayer fails to respond, it also ensures adequate time to close the case from the group (IRM 4.10.8.2.4.4) and provide Technical Services at least 180 days to issue the notice of deficiency. See IRM 25.6.23.7.1, Minimum Time Remaining on ASED.

When fewer than 240 days remain on the statute of limitations, the examiner should prepare and issue an agreed examination report with Letter 5153, Examination Report Transmittal - Statute less than 240 Days (Straight Deficiency), Letter 5153-A, Examination Report Transmittal - Statute less than 240 Days (Claim), Letter 5153-B, Examination Report Transmittal - Statute less than 240 Days (No-Change with Adjustments), or Letter 5153-D, Examination Report Transmittal - Statute less than 240 Days (Bankruptcy), to transmit the report and notify the taxpayer additional time is needed on the statute of limitations for Appeals to consider their case if it is unagreed, and allow 10 days to respond. Examiners sign Letter 5153, which is not a 30-day letter. Office examiners will update the ERCS action code to 07. If a statute extension has not already been solicited, the examiner should follow the procedures in IRM 25.6.22, Extension of Assessment Statute of Limitations By Consent, and simultaneously solicit an extension (using a separate envelope), then proceed as follows:

30-day letter procedures are applicable to income, estate, gift, excise, and employment tax cases. See IRM 4.23.22, Unagreed Employment Tax Case Procedures, IRM 4.24.10, Excise Tax, Appeals Referral Procedures, or IRM 4.25.6, Report Writing Guide for Estate and Gift Tax Examinations, for procedures related to employment tax, excise and estate and gift examinations.

Examiners issue reports to ILSC pass-through entities with Letter 921; however, this letter is not a 30-day letter. Thirty-day letter procedures are followed for the investors’ reports reflecting their share of the adjustments made at the entity level. Only the investors will be able to request a hearing with Appeals because there is no "deficiency" at the entity level. See the applicable sections of IRM 4.31, Pass-Through Entity Handbook, for additional 30-day letter guidance for pass-through entities.

If an examination of a return results in a deficiency or overassessment that is offset (no deficiency or overassessment results) by a net operating loss carryback, a manual computation of interest may be required. If the taxpayer disagrees with the examination results, they will be afforded an opportunity to request an Appeals hearing. Letter 950-F is used for this purpose.

The following form letters, specific to the type of case, are 30-day letters used to transmit the examination report and allow the taxpayer 30 days to request Appeals consideration of their case, or take other actions as outlined in the specific letters:

The following items must be included with the 30-day letter:

30-day letters should be prepared by the examiner, and include the examiner’s or group manager’s name in the contact area, depending on the type of letter.

IRC 6651(f), Fraudulent Failure to File (FFTF) Cases — The portion of a FFTF penalty attributable to the amount of tax shown on a filed delinquent return is assessable immediately and is not subject to deficiency procedures. See IRM 25.1.7.7.1, Assessment Procedure for the Fraudulent Failure to File (FFTF) Penalty. To ensure the facts of a particular case support fraud, and because the assessment of a FFTF penalty attributable to the amount shown on a filed return will not be reviewed by the Tax Court, all 30-day letters proposing a FFTF penalty (e.g., Letter 2777) on a filed return must be reviewed and approved by Area Counsel prior to issuance. Furthermore, the period of limitations on assessment of such portion would not be suspended by the issuance of a notice for the other portion.

The unagreed report forms listed below are generally used to present the audit findings for an unagreed case. They are similar to those used for agreed cases and the instructions for completing agreed case reports generally apply. However, unagreed report forms do not include a statement regarding the acceptance of the report by the Area Director. They also do not include a signature line for the taxpayer’s consent to assessment and collection, so a waiver is required. See IRM 4.10.8.2.2 and Exhibit 4.10.8-2 for instructions for preparing waivers.

Generally, the report forms shown in the table below are used for unagreed income tax cases.

In certain cases, it may be necessary to set up separate assessments for taxpayers who filed a joint return. For example, when only one spouse signs an agreement and the deficiency is not fully paid, an assessment may need to be made on the agreeing, or "obligated," spouse in order to protect the statute of limitations for that taxpayer while unagreed procedures are applied to the other spouse. Similarly, a separate assessment would need to be made when only one spouse does not petition Tax Court after receiving a 90-day letter. In these situations, separate assessments are made using MFT 31, as long as the SSN's are valid (no asterisks). If invalid, Non-Master File procedures found in IRM 21.7.12, Non-Master File (NMF) Adjustments, and IRM 3.17.46, Automated Non-Master File Accounting, will apply.

Although an assessment will be made on the obligated spouse, no collection notices will be mailed until the case is ultimately resolved (and assessment adjusted if necessary). At that time, an MFT 31 assessment will be set up for the other spouse.

If only one spouse signs an adequate protest requesting Appeals consideration and no response is received from the other spouse, the case will normally be sent to Appeals as long as there is sufficient time on the statute of limitations for both spouses. In other words, one signature on the protest may be adequate.

However, if one spouse agrees and one protests, a separate assessment may be necessary on the obligated spouse especially if the statute of limitations for that spouse is imminent. In any event, note on the Form 3198 that one spouse has signed a waiver, so CCP can calculate interest accordingly.

If one spouse agrees and the other does not respond to the 30-day letter, a separate assessment needs to be set up on the obligated spouse before the case is sent to Technical Services for 90-day letter procedures.

Procedures for creating an MFT 31 account:

EEfax the Form 3177 to CCP and request a partial assessment be made on the obligated spouse:

Continue normal unagreed procedures for the disagreeing/petitioning spouse. Associate an IMFOLT or copy of the Form 5344 received from CCP showing that the partial assessment on the other spouse has been made on MFT 31. Close the case using normal RGS procedures and check the "MFT 31 Assessment" box in the Special Features section on Form 3198.

Examiners should refer to IRM 21.6.8, Split Spousal Assessments (MFT 31 / MFT 65), for additional information.

For most Office Examination reports, examiners will use the standard explanations in IRM 4.10.10, Standard Paragraphs and Explanation of Adjustments, and RGS. The explanations include enough information to enable the taxpayer to challenge the issue. As an option, lead sheets may be attached to the report to explain the issue(s) but examiners should follow the format in IRM 4.10.8.12.4(2).

For Field Examination, a copy of the examiner’s lead sheet relating to each issue, including statutory adjustments, will be attached to the report to explain the items. A separate lead sheet must be used for each issue. If the issue is applicable to more than one year, the issue should be shown on one combined lead sheet. The copy of each issue lead sheet used as an attachment to the examination report must be modified to remove extraneous information that does not address the Conclusion, Facts, Law, and Taxpayer’s Position (e.g. audit steps and workpaper references should generally be removed, depending on the facts and circumstances). The following format should be used:

An alternative position is a secondary position the Service may ultimately rely on if the primary position is not upheld. The primary and alternative positions will usually address a different set of law and arguments. As a result, the tax computation for the alternative positions may be different from the primary position. The primary position should be the one resulting in the larger liability when two positions are considered. All alternative positions must be addressed or Appeals will not raise them in the event they do not sustain the primary position. Therefore, the examiner must thoroughly document the facts, law, taxpayer’s position and conclusion for all alternative positions that may be applicable if the primary position is not sustained.

Alternative positions must be discussed with the taxpayer, or their authorized representative prior to issuing the examination report.

An alternative position is not required for an adjustment that is supported by multiple code sections of tax law for one position.

An alternative position must be used for tax law that supports two totally separate positions. For example:

References for alternative positions in unagreed cases:

Form 4665 can be used to transmit a case file to Appeals, but examiners must ensure the Form 4665 or any similar document does not contain statements or comments intended to influence Appeals’ decision-making process. This includes recommendations concerning what Appeals should consider and how Appeals should resolve the case. It is permissible to include a neutral list of unagreed issues, without discussion, and indicate which ones, if any, are coordinated issues. Information related to the managerial conference should be documented on Form 9984, not on Form 4665.

If Form 4665, or other similar document, includes statements or comments that may be construed as prohibited ex parte communications, or includes prohibited communications, regardless of whether such content is included as part of a document that is either placed on top of the case file as a transmittal or inserted into the case file in conjunction with preparing the case for transmission to Appeals, the Form 4665 or document must be shared by the examiner with the taxpayer and representative at the time the case file is sent to Appeals.

See IRM 4.2.7, Ex Parte Communication Procedures, and the Ex Parte Communications website for additional information and guidance.

Items that need safeguarding from unauthorized or inadvertent disclosure with Form TDF 15-05.11, Sensitive But Unclassified (SBU) Cover Sheet, should not be included or referenced on Form 4665. Examples include fraud referrals and identification of informants.

Generally, 30-day letters should be issued to the taxpayer and representative in person. However, if circumstances necessitate mailing the 30-day letter, the examiner should follow the procedures in this section.

30-day letters will be sent by ordinary mail unless it is considered necessary to document the mailing and delivery. In such cases, certified or registered mail should be used and a return receipt requested.

In the case of a joint return, follow the procedures in IRM 4.10.1.2.2.1, Separate Notice Requirements, to mail the 30-day letter.

A copy of the 30-day letter should be sent to the taxpayer’s representative. See IRM 4.10.8.2.3 for additional guidance regarding sending correspondence to the taxpayer’s representative.

A copy of the 30-day letter and report must be maintained in the case file. See IRM 4.10.9.9, Case File Assembly for Closing.

Field Examination: After issuing the 30-day letter, the case must be updated to status code 13 (for monitoring).

Office Examination: Examiners should update the case for 15 days using ERCS action code 04 (even if a subsequent IDR is issued).

In general, Statement of Procedural Rules 601.105(d)(1) does not provide for an extension of time to reply to a 30-day letter. However, as a matter of practice, extensions may be granted under reasonable circumstances.

Reasonable circumstances include but are not limited to the following:

Requests for extensions should be in writing and should state the reason(s) why additional time is needed. Since many requests are made by telephone, the extension may be granted verbally and confirmed in writing upon receipt of the written request.

Extensions should not be granted if the statute of limitations will expire within 240 days and the granting of an extension will not leave sufficient time to process the case. Under such circumstances an extension to respond to a 30-day letter will be contingent upon securing an extension of the statute of limitations.

Extensions are granted by the group manager or a designated management official. The taxpayer should be notified in writing of the extension and the specific extended response date. Letter 686, Extension of Time for Certain Actions, signed by the group manager, will be used for this purpose. Extensions are normally granted for no more than 30 days unless a specific reason supports additional time.

If the taxpayer lives outside of the United States, the 30-day letter should be modified to allow for a reasonable period of time to respond.

The taxpayer may respond to the 30-day letter in a variety of ways. This section provides instructions depending on the type of response.

If the taxpayer does not file a small case request or formal written protest within the time allowed, but indicated their intent to do so, examiners should issue:

If the 30-day letter is returned as undeliverable, an attempt must be made to obtain the correct address (see IRM 4.10.2.8.4, Undeliverable Initial Contact Letters).

If the taxpayer has not submitted a small case request or formal written protest in response to the 30-day letter, and the examiner has taken the actions in paragraphs (1) or (2), when applicable, close the case as follows:

LB&I examiners follow guidance in IRM 4.46.5.13, Appeals Case Return Procedures instead of the guidance in this section.

If the taxpayer provides new information or evidence related to the issues in the unagreed report, Appeals will release jurisdiction and return the case to Examination so the examiner can evaluate the new information and make an audit determination. See IRM 8.6.1.7.5, Taxpayer Provides New Information. The examiner must document the issue lead sheet(s) and supporting workpapers to reflect the evaluation of the new information or evidence. In addition, the examiner must follow the table below to determine the appropriate actions required.

If the taxpayer raises a new issue to Appeals, Appeals will release jurisdiction and return the case to Examination so the examiner can evaluate the new issue and make an audit determination. See IRM 8.6.1.7.4, Taxpayer Raises New Issue. The examiner must create an issue lead sheet(s) and supporting workpapers to reflect the evaluation of the new issue. In addition, the examiner must follow the table below to determine the appropriate actions required:

Time spent by examiners to prepare the unagreed report and accompanying explanatory lead sheets or standard explanations is charged to the case under Direct Examination Time (DET).

Time spent by examiners on 30-day letter activities (including protest reviews, and follow-up letter) will be reported using non-examination Activity Code 646. Preparation of the report (including explanatory lead sheets or standard explanations) is not reported under Activity Code 646.

Use Form 1914, Computation of Allowable MACRS/ ACRS/ Depreciation Deduction, accessed via RGS (or equivalent schedule), to compute allowable depreciation expenses.

Worksheets should be provided to the taxpayer in cases in which the passive loss, the allowed loss and the disallowed (suspended, carryover) loss must be allocated among the various passive activities so the activities can be properly reported in subsequent years.

Any adjustment to a net operating loss deduction should be completely explained in the report. The adjustment on Form 4549 should be identified as a NOL carryback with source year identified or NOL carryforward with source year identified.

Examiners should refer to IRM 4.11.11, Net Operating Loss Cases, when making adjustments to net operating losses.

Examiners should be aware that Net Operating Loss deductions may result in Joint Committee jurisdiction. See IRM 4.36.2, Identification of Joint Committee Cases.

Examiners should also note that Net Operating Loss deductions usually require restricted interest computations. For examination procedures on these cases, see IRM 4.10.8.14.3.4.

Taxpayer name or address changes require the examiner to complete Form 2363, Master File Entity Change, as soon as clear and concise notification is received. See IRM 4.10.2.11, Taxpayer Change of Address or Name, for additional information on "clear and concise notification" and completing Form 2363. See the Form 2363 Job Aid - Name Change and the Form 2363 Job Aid - Address Change for examples on completing the form.

Examiners must also complete Form 2363, when there is an allowable/agreed change to the taxpayer’s filing status.

The examiner must EEfax the Form 2363 to CCP as soon as possible. See the CCP book on the Exam Procedures Knowledge Base for the CCP Exam Efax Numbers.

When closing the case, prepare Form 3198 and check the "Form 2363" box in the "Forms Enclosed" section.

After filing a joint return for a taxable year, spouses may not subsequently file separate returns for that same year, unless prior to the due date of the return (without regard to any extension of time to file) either spouse subsequently files a separate return. See CFR 1.6013-1(a)(1). The separate return is a superseding return.

Separate return filed by an executor — Under certain circumstances, a surviving spouse may file a joint return for the year of death if an executor or administrator has not been appointed by certain times. IRC 6013(a)(3), and Treas. Reg. 1.6013–1(d)(3) & (4). An executor or administrator for a deceased person may disaffirm a joint return filed by the surviving spouse by filing a separate return for the deceased within the prescribed time. See IRC 6013(a)(3) and Treas. Reg. 1.6013–1(d)(5).

"Invalid joint elections" — Sometimes, after a joint return is processed, it is determined that the joint election is not valid even though the return, itself, is valid for purposes of IRC 6011 and IRC 6012. Some reasons a joint election may not be valid include:

Spouses who originally filed returns on a separate basis may find it to their advantage to file a joint return. To change filing status from separate to joint, taxpayers must file a joint return or an amended Form 1040X electing a joint filing status (hereafter referred to as "amended joint return" ).

Generally, the primary taxpayer is the first SSN shown on the joint return; however, if only one spouse filed a separate return prior to an amended joint return, the one who previously filed is the primary taxpayer.

The following subsections relating to the examination of an amended joint return, preparation of reports, and closing procedures, provide the special steps required when both spouses filed separate returns before the filing of an amended joint return, resulting in two accounts on Master File.

A report including adjustments to investment credits (including the recapture of investment credit) should include a computation showing the correct investment credit.

IRC 46 defines the credits which are considered investment credits. Form 3468, Investment Credit, may be used to show the computation of the corrected investment credit.

IRC 38 limits the amount of general business credits (including investment credit) which may be used in any year. Form 3800, General Business Credit, may be used to show the limitations of the investment credit when the taxpayer is eligible for more than one type of general business credit. The report should clearly show the amount and year of origin of any adjustments to investment credit carrybacks or carryforwards.

IRC 50(a) requires the recapture of all or part of the investment credit in the case of an early disposition of the property which generated the credit. Form 4255, Recapture of Investment Credit, may be used to show the computation of the tax due to the recapture of the investment credit.

When an audit results in an adjustment to self-employment tax, the information is forwarded electronically to the Social Security Administration via the Form 5344. See IRM 4.4.29.2, Self-Employment Income Adjustments.

Include the following information as applicable on Form 5344: (See IRM 4.4.29.2.1.1, Reference Code Changes to Self-employment Income/Tax):

If it is discovered during an examination that tip income has been underreported by the employee to the employer, FICA tax may have to be adjusted. See IRM 4.4.29.3, Group Procedures for Adjustments to Tip Income, and IRM 4.23.10.18, Procedures for Employee Tax Adjustment on Tip Income Not Reported to Employer.

When an examination results in an adjustment to the employees share of FICA tax, examiners must follow IRM 4.23.10.17, General Procedures for Adjusting the Employee Share of FICA/RRTA Taxes including Additional Medicare Tax (AdMT).

An individual who employs domestic workers reports employment tax payments annually on Schedule H, Household Employment Taxes, which is attached to Form 1040, Form 1040-NR, or Form 1040-SS. If an individual is not required to file an income tax return (for example, because income is below the amount that requires the individual to file) Schedule H may be filed by itself.

The use of Schedule H to report and collect these taxes does not change the nature of the tax.

For purposes of Schedule H the employer is:

Adjustments to Schedule H require the preparation of Form 4667, Examination Changes - Federal Unemployment Tax; Form 4668 Employment Tax Examination Changes Report; and Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment. The adjustments on Form 4668 should be made to the fourth quarter.

When Schedule H adjustments are made, Form 3198 must be attached to the case file.

As with any other employment tax changes involving wages, corrected or delinquent W–2’s should be secured as necessary.

See IRM 4.23.10.10.5, Household Employment Taxes, for additional information.

Engineer’s Memorandum Report, Form 3213 — is used as the report transmittal for the engineer's report on non-LB&I cases. The Issue Management System (IMS) is used to transmit reports on LB&I cases.

International Examiner’s Report, Form 3963 — is used as the report transmittal for the international examiner's report on SB/SE and LB&I cases. Form 3963 provides administrative information, compliance check information, issues considered but not changed, and Form 886–A, etc.

IRC 6404(g) suspends interest if, as a result of an examination, the IRS fails to timely provide individual taxpayers adequate notice of liability and the basis for the liability. The IRS has 36 months (or 18 months in certain cases) from the return due date or return filed date (with regard to extensions), whichever is later, to notify the taxpayer of the additional liability without suspending interest. See IRM 20.2.7.8, IRC 6404(g) Interest Suspension, for additional information on the notification period, interest suspension period, and effect of amended returns.

A notice provided within the prescribed time period prevents the suspension of interest if the notice adequately states the amount of the liability and the basis for the liability. See IRM 20.2.7.8.5, IRC 6404(g) Notice, for adequate notice requirements and the effect of multiple notices. See IRM 4.31.6.10.6.3, IRC Section 6404(g), Suspension of Interest and Certain Penalties, for notice requirements for individual investors of a pass-through entity.

The IRC 6404(g) notice date must be noted on a copy of the notice retained in the case file.

When 6404(g) interest suspension applies, the examiner must include a statement in the "Other Information" section of the examination report using language similar to the following:

On every individual case with a liability adjustment, examiners must indicate on page two of Form 3198, IRC 6404(g) is not applicable or enter the notice date(s) and the applicable liability amount.

If there is more than one IRC 6404(g) notice date, note on Form 3198 that restricted interest applies due to IRC 6404(g), and to see the "Other Information" section of the examination report.

See IRM 20.2.7, Abatement and Suspension of Debit Interest, for additional information.

There are generally two types of changes that may be made as a result of transactions involving an Individual Retirement Arrangement (IRA) or qualified retirement plan during an examination: adjustments to income, and taxes resulting from not complying with IRA rules.

Adjustments to income: adjustments to income, such as the taxpayer’s deduction for an IRA contribution or inclusion of premature distributions in income, will be reflected on the "adjustments to income" line on Form 4549.

Taxes Resulting from not Complying with IRA Rules:

IRM 21.6.5.4.2, Individual Retirement Arrangement (IRA) Taxes, lists the taxes that may be assessed on IRAs and qualified retirement plans if the taxpayer does not conform to rules governing IRAs. Attention should be given as to whether the tax is an income or excise tax as this will affect the preparation of the reports and the statute of limitations.

When an adjustment is proposed to the Qualified Business Income Deduction (QBID), the examination report must include a lead sheet, worksheet or similar document showing the calculation and how the adjustment was determined. See the IRC 199A - Qualified Business Income Deduction book on the Form 1040 Knowledge Base site for more information.

Sometimes it is necessary to convert the tax return the taxpayer originally prepared to another form of tax return. This section contains procedures for converting certain filed returns to a different type of tax return.

Completion of Form 5344 is required prior to the closing of a case.

Use of Form 5344 in RGS is required.

Required entries for examiners are outlined in IRM 4.4.12, Examined Closings, Surveyed Claims, and Partial Assessments.

EOAD was designed to provide data that would allow the tracking of examination adjustments by issue. This data will be used to enhance the ability to identify specific areas of noncompliance based on examination results and track the effectiveness of the examination classification process.

Capture of EOAD data is mandatory for all examinations of Individual, Corporate, S Corporation, and Partnership returns.

EOAD data must be entered for all issues examined, both adjusted and non-adjusted items.

Data capture for EOAD should be done just prior to closing the case (after completion of the examination report and automated 5344). See IRM 4.10.16, Examination Operational Automation Database (EOAD), for detailed instructions.

Effective March 1, 2006, CCP established uniform guidelines for file folder color. Examination groups must use the following file folder colors when closing paper cases to Case Processing:

Pursuant to IRC 6601(a), the IRS is authorized to assess interest on any tax that is not paid on or before the last date prescribed for payment. The courts have interpreted this to mean that interest on an underpayment can only be charged when the tax is both due and unpaid, reasoning that interest is charged only for the loss of the use of money. See IRM 20.2.5.7, Revenue Ruling 99-40, Use of Money.

There are certain periods of time when the Government retains the taxpayer’s money without paying for its use. For example:

Examiners should ensure proper calculation of interest when an original return had an overpayment and the taxpayer chose to elect to apply all or part of the overpayment shown on its return to its estimated tax for the succeeding tax year instead of taking a refund. Rev. Rul. 99-40, 1999-2 C.B. 441 held if an overpayment claimed on a return is credited to the succeeding year’s estimated tax, interest will be assessed on that portion of a subsequently determined deficiency for the overpayment return year that is less than or equal to the overpayments as of the date on which overpayment is applied to the succeeding year’s estimated taxes. Any remaining portion of the deficiency will be assessed from the original due date of the tax for the overpayment return year. Potential Rev. Rul. 99-40 cases are those with a TC 830 -Overpayment Credit Elect (Transferred) to Next Periods Tax or TC 836 - Overpayment Credit Elect Transferred to Next Periods Tax on the module. When an overpayment is applied as a credit elect, TC 830 or TC 836 identifies the amount debited on the overpayment year module and TC 710 - Overpayment Credit Applied from Prior Tax Period or TC 716 - Generated Overpayment Credit Applied from Prior Tax Period identifies the amount credited to the succeeding year module. CCP generally will not apply the provisions of Rev. Rul. 99-40 unless advised.

When Rev. Rul. 99-40 is applicable, examiners check the box "Rev. Rul. 99-40 applicable due to credit elect" under the "Special / Restricted Interest Features" on page two of Form 3198 to ensure proper calculation of interest. Examiners must include Form 2220, Underpayment of Estimated Tax by Corporations, or Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, (subsequent year) in the case file which provides a schedule of the required estimated tax payments for the succeeding tax year and the related transcripts.

When Rev. Rul. 99-40 is not applicable, examiners check the box on Form 3198"Rev. Rul. 99-40 NOT applicable due to credit elect" . If Rev. Rul. 99-40 has been considered, even if it is determined it does not apply, TC 971 with action code 653 is required to be input on IDRS by CCP. For additional information, see IRM 20.2.5.7.2, Revenue Ruling 99-40 and Credit Elects (May/Sequa), and the Revenue Ruling 99-40 Job Aid.

In the case of a decedent, if a fiduciary relationship exists, reports and correspondence should include the name of the current administrator or other proper representative. The correspondence and reports will also be mailed to the fiduciary's address. Once legal evidence of death is obtained, correspondence and examination reports should be addressed as indicated below.

For Joint Returns:

For Single/Separate Returns:

Joint Return Agreements - Must be signed by the surviving spouse and executor or administrator of the deceased taxpayer’s estate. If no executor has been appointed, the surviving spouse signs for self and for the decedent (e.g., "John Doe, Deceased, by Mary Doe, Surviving Spouse." ) If both taxpayers are deceased, the executor for each estate must sign the agreement.

If the surviving spouse does not receive all of the decedent’s assets or sufficient assets to cover the tax liability, he/she cannot sign as the surviving spouse and correspondence should be sent to the decedent’s last known address and to the surviving spouse at his/her current address.

If the surviving spouse received all of the decedent’s assets and the estate is closed, Form 2045, Transferee Agreement, and Form 870 with special language, will need to be solicited. See IRM 4.11.52, Transferee Liability Cases.

Refer to IRM 25.6.22.6.1.4, Decedents, when preparing a consent for a decedent.

If a decedent dies intestate and no executor or administrator is appointed, generally no one may sign a consent for the decedent or the estate extending the period of assessment for income tax. See IRM 25.6.22.6.1.4(4), Decedents, for limited circumstances where the Service may accept a consent signed by the decedent’s surviving spouse. Similarly, a consent cannot be executed after the executor or administrator has been discharged. See Rev. Rul. 83–41, 1983–1 C.B. 349, clarified and amplified by Rev. Rul. 84–165, 1984–2 C.B. 305.

A surviving spouse generally has no authority to sign a consent on behalf of the deceased spouse. See IRM 25.6.22.6.1.4(4), Decedents, for limited circumstances where the Service may accept a consent signed by the decedent’s surviving spouse. Estates are generally considered successors in interest to the decedent under state law and as the decedent's successor in interest, the executor or administrator of the estate is the proper party to execute a consent.

If necessary, a statutory notice of deficiency should be issued.

When a refund is to be issued to someone other than the taxpayer in whose name the tax was paid, documentary evidence must be provided to permit refunds to be made. This includes (but is not limited to) deceased taxpayers, trustees, estates, guardians, minors, dissolved corporations, reorganizations, and bankruptcy cases. See IRM 4.4.3.7, Refunds to Other Taxpayers, and its subsequent sections for guidance in determining what evidence is necessary.

In addition, Form 1310, Statement of Person Claiming Refund Due to a Deceased Taxpayer, should be secured if an overassessment is recommended on a joint return and one of the taxpayers has died since the return was filed.

IRC 692(d) provides relief for federal income tax liabilities of decedents who died as a result of certain terrorist attacks. IRC 692(d) applies to victims of:

Note on Form 3198 that the case involves a decedent and any name or address change.