PCS was created to monitor and control pass-through entity investors. Pass-through entities can have many partners and many levels of tiering. Tiering occurs when an investor in a pass-through entity is also a pass-through entity. This complexity can make it difficult to keep track of statutes and monitor all the investors.

PCS control is a policy that was established in response to the partnership provisions of the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982. It has been expanded to cover other pass-through entities that fall outside of TEFRA.

The Director, SB/SE, Headquarters, Examination Field and Campus Policy (SE:S:E:HQ:EFCP) is responsible for:

The SB/SE Program Manager, Examination Field and Campus Policy, Campus Exam & Field Support (SE:S:E:HQ:EFCP:CEFS) is responsible for:

Field Territory Managers, Field Area Directors, Director over LB&I Ogden and Director, Examination - Brookhaven, are responsible for ensuring that:

Area office Examination Managers and campus Field Support Operations managers are responsible for:

The campus PCS Coordinator works with:

The campus PCS Coordinator is charged with:

Following are specific campus PCS Coordinator responsibilities:

Program Reports: PCS generates a variety of reports used to monitor the inventory and related statutes. These reports are explained in detail in IRM 4.29.4, PCS Reports.

Program Effectiveness: PCS is used to help identify the effectiveness of the CPF program. PCS shows the number of partners linked within a partnership structure. Failing to link partner returns timely can result in barred statutes or the need to follow burdensome procedures such as manual assessments or untimely notice procedures.

PCS is a Integrated Data Retrieval System (IDRS) based system. Access to command codes are restricted based upon need. For example, generally only the PCS Coordinator is allowed to delete records from the system.

There are several terms unique to PCS. Examples of these words:

See IRM Exhibit 4.29.1-1 for a list of acronyms.

The following Internal Revenue Manual cross references may be helpful to PCS coordinators:

Form 8342, PCS Notice Generation, is used to generate TEFRA investor notices (60-Day Letters, Notices of Final Partnership Administrative Adjustment (FPAAs), and Appeals Settlement Letters.

Notices and forms which can be generated by PCS are:

Exhibit 4.29.5-1, TEFRA Output Generated by the PCS, (Form 8340, PCS Establish or Add with Notice Generation, and Form 8342, Partnership Control System (PCS) - PCS Notice Generation)

The NBAP is a letter which notifies each notice investor or notice group that the TEFRA key case is under examination. It is generated via CC TSLODK (Form 8340, PCS Establish or Add with Notice Generation, Form 14090, TEFRA Electronic Linkage Request Check Sheet (LB&I), or Form 14091, TEFRA Electronic Linkage Check Sheet (SBSE)) using information on the Schedules K-1.

Input of CC TSLODK generates:

After the partnership is established on PCS, CC TSCHG must be used to add the address of the partnership. The address is needed for the generation of investor NBAPs. CC TSCHG items 31, 32 and 33 will be used to enter the partnership address information.

Review all NBAPs to insure the partnership address was correctly printed within the body of the letter. If no address was printed, a new letter must be generated manually.

The NBAP notices are sent by regular mail. The CC TSLOD generates two Mail Lists:

Two copies of the letter, (2)(a) above, are generated for each notice investor. One copy of an NBAP is be mailed to the investor, and one copy is filed in the key case administrative file.

A copy of the mail listing is sent (via mail or email) to the agent, and one copy is filed in the key case administrative file.

The 60-Day Letter is generated by input of CC TSNOT, notice type 2.

Letters and forms generated for partnership investors are:

Forms 870-LT/PT generated with a 60-Day Letter will have "60" displayed in the upper left hand corner, to denote that the agreement form was generated with a 60-day letter.

This notice is issued upon receipt of a 60-day Letter TMP package from Technical Services.

Three copies of the 60-day Letter, Form 870-PT or Form 870-LT, and applicable attachments are generated for each investor. Two copies are mailed to the investor, one is a customer service in case the taxpayer requests a conference, and one copy is filed in the key case administrative file.

Two copies of the 60-Day Letter Certification List are generated. One copy is sent to the Technical Services TEFRA Coordinator, and one copy is filed in the key case administrative file, (Exhibit 4.29.5-4, Certification of 60–Day Letters).

The FPAA is generated by input of CC TSNOT, notice type 3.

A separate spousal notice is generated on jointly filed returns. The spousal notice is generated based upon there being a spousal record on the TIF file.

The letters and forms generated for partnership investors are:

Forms 870-PT generated with an FPAA will have "FP" displayed in the upper left hand corner, to denote that the agreement form was generated with an FPAA.

Three copies of each FPAA, Form 870–PT, and any applicable attachments are generated for each investor. Two copies are mailed to the investor, one as a customer service in case the taxpayer files a petition, and one copy is filed in the key case administrative file.

The FPAA notices are sent by certified mail. Input of CC TSNOT, notice type 3, also generates three Certified Mail Lists:

A cover sheet is necessary for certified mailing.

The No Change FPAA is generated by input of CC TSNOT, notice type 9.

A Letter 2064, Notice of Final Partnership Administrative Adjustment, will be generated for each partner.

The no change FPAA is generally used to no-change a TEFRA case after the initial 45 day period. It is also used when a taxpayer believes there are adjustments in their favor, but the Service does not agree. The No-Change FPAA allows the taxpayer to petition the court regarding the adjustments.

For an electing large partnership a Notice of Partnership Adjustment is the final document instead of an FPAA.

The Appeals Settlement Letter to all linked investors in a TEFRA partnership is generated by input of CC TSNOT, notice type 4.

Letters and forms generated for partnership investors are:

This notice is issued upon receipt of a TMP package and request to issue the settlement letter from the Appeals office.

Three copies of each letter package are generated. Two copies are mailed to the investor and one copy is filed in the key case administrative file.

Two copies of the Appeals Letter Certification List are also generated. One copy is sent to the Appeals office Appeals Processing Manager for the Appeals office that has the key case, and one copy is filed in the key case administrative file.

Appeals Settlement Letters to all linked investors with a TEFRA indicator present on the linkage record are generated by input of CC TSNOT, notice type 5.

Letters and forms generated to partnership investors are:

This notice is generated upon receipt of a TMP package and request from the Appeals office.

Three copies of each letter package are generated for each investor. Two copies are mailed to the investor, and one copy is filed in the key case administrative file.

Two copies of the Appeals Letter Certification List are generated. One copy is sent to the Appeals office Appeals Processing Manager for the Appeals office that has the key case, and one copy is filed in the key case administrative file.

The Appeals Settlement Letter for docketed cases to all investors is generated by input of CC TSNOT, notice type 6.

Letters and forms generated for partnership investors are:

Three copies of each letter package are generated for each investor. Two copies are mailed to the investor, and one copy is filed in the key case administrative file.

Two copies of the Appeals Letter Certification List are generated. One copy is sent to the Appeals Processing Manager for the Appeals office that has the key case, and one copy is filed in the key case administrative file.

The docket number and TMP name and address must be present on the key case record for PCS to accept a request for notice type 6. It is extremely important that the literal "Tax Matters Partner" is NOT included as part of the TMP name.

The functionality of generating the schedule of adjustments via PCS has been removed. The campus or PTE should use a copy of the schedule of adjustments provided by the field when sending notices to investors. Sending the copy eliminates any transcription errors that can occur when inputting that data in PCS for the purpose of having PCS generate the schedule.

The Form 886-Z is a listing of all investors linked to a particular key case. The form lists each investor with their name, address, TIN, and Schedule K-1 income/loss percentage.

Subsequent Form 886-Z may be generated via CC TSNOT, notice type Z.

Letter 3904 is generated to all investors using notice type "A" .

The Letter 3904 is used when the TMP files an AAR requesting substituted treatment. The law requires all partners be given the opportunity to object to the partnership changes if those changes will result in additional tax to them. The letter is generated to all linked partners. If a partner objects, a determination needs to be made as to whether that partner is subject to an assessment and therefore allowed to object.

See IRM 4.31.4 for more information of substituted AARs.

The Letter 2513, TMP Settlement Notification Letter, provides the TMP with a list of investors that have entered into a settlement agreement.

The letter and list of investors are generated weekly and includes investors that have had a settlement date input with CC TSCHG during the prior week cycle.

Letter 2513, will generate for partnership key case records.

PCS will generate a letter to notify ILSC investors of an audit of an ILSC pass-through entity in which they invested. The Letter 3457, Pass-Through Audit Notification Letter, is used for pass-through examinations of partnerships not subject to TEFRA, partnerships electing out of the Bipartisan Budget Act (BBA) and S-corporations.

The letter is not required by law, but was created to inform investors when an examination is beginning. This way, the investors first contact from us will not be an audit report or a request to extend the statute.

It is recommended that the letter be issued to all investors controlled by the campuses, and all field controlled investors that may not be aware of the pass-through examination.

The letter should not be sent by certified mail.

PCS will generate the letter by using CC TSLODK. The CPF will send letters to all partners if requested when the linkage package is submitted. CC TSLODK is also used to issue the NBAP on TEFRA investors. PCS recognizes the PICF Code of 2 on the ILSC key case and will generate the appropriate Letter 3457.