PSP is responsible for identifying and delivering returns to SB/SE field exam. Those returns can come from a variety of sources. This section details the planning, monitoring, and coordination of the exam plan inventory.

IRM 1.1.16.3.5.3, Exam Case Selection.

IRM 1.2.1.2.36, Policy Statement 1-236, Fairness and Integrity in Enforcement Selection.

IRM 1.2.1.5.7, Policy Statement 4-9, Highest Integrity Expected.

IRM 1.2.1.5.10, Policy Statement 4-21, Selection of Returns for Examination.

Director, Exam Case Selection (ECS) is the executive responsible for providing policy guidance on the selection of cases and delivery of inventory for SB/SE Examination.

Program Manager, Field Case Selection (FCS) is the program manager responsible for providing policy guidance on the selection of cases and delivery of inventory for SB/SE field exam.

The PSP Territory Manager is the territory manager responsible for the selection of cases and delivery of inventory within an SB/SE Exam Area.

The Program Manager, Field Exam Workload Planning and Analysis develops the Field Exam work plan.

The following are systems and or reports that may be used to monitor the identification and selection of inventory.

At a minimum, PSP should monitor the following results while adhering to the guidelines outlined in IRM 1.5, Managing Statistics in a Balanced Measurement System:

Some inventory comes into PSP without AIMS/ERCS or other controls or tracking system. This type of inventory is required to be entered into the PSP Program Control database:

This is a list of acronyms and their definitions.

The following are common terms used throughout this IRM, IRM 4.1.2, Workload Identification and Survey Procedures, and IRM 4.1.5, Case Building, Classification, Storage and Delivery.

IRM 4.1.2, Workload Identification and Survey Procedures.

IRM 4.1.5, Case Building, Classification, Storage and Delivery.

The staffing allocation methodology SB/SE uses to prepare the exam plan considers the following factors:

PSP Territory Managers are responsible for checking the staffing allocated to the area by computing realizable staff years. Realizable staff years are computed as follows:

Exam front-loaded programs are those activities headquarters has determined are of such importance time must be allocated to them before resources are committed to other activities. The designation of these programs can be found in the annual exam plan. Past year examples of these programs include:

In order to meet long-range coverage objectives, the SB/SE exam starts and closures plans are focused on specific return categories that fall within the purview of SB/SE and provide a framework for return delivery and allocation of revenue agent (RA) and tax compliance officer (TCO) staffing. Resources, inventory, and starts are aligned to accomplish the direct exam staff years (DESYs) and return closures reflected in each fiscal year’s exam plan. Our focus provides coverage across the following categories, but does not preclude examinations of other categories:

In preparing the area response to the SB/SE exam plan, the PSP TM will take the following actions:

The RA and TCO exam plans each include a line for training returns. The PSP Territory Manager, will review the training return plan showing the number of returns to be examined by trainees. This plan should show the training phase, number of RAs/TCOs, activity code(s), number of returns, rates, and direct examination staff years (DESYs) to be applied.

At a minimum, PSP should monitor the following for classification:

To monitor the delivery of Martinsburg Computer Center (MCC) DIF returns for classification and the volume and timing of return orders, PSP (as outlined below) should maintain a spreadsheet showing the date, cycle, and volume of return orders. When MCC DIF orders are posted to master file, the ordered returns will move from the inventory section to the delivery section of the Inventory and Delivery Reports (1040-1,1120-1, etc.). Inventory and Delivery Reports can be obtained from the Control D System through Integrated Document Solutions Enterprise (IDSE). The returns will appear in the Inventory/Aging by Class section of Table 37 when the returns are delivered to classification. A-CIS can also be monitored for new returns established on the Audit Information Management System (AIMS) in Status 06.

To monitor the classification of CDE DIF returns the following reports are available in CDE:

If select rates are less than 50% for any class, the PSP Territory Manager or designee will analyze a sample of the accepted returns and review local instructions to determine the reason for the low selection rates.

PSP should monitor the volume of the surveys and take steps to reduce surveys and/or the number of returns without audit potential entering the examination stream. See IRM 4.1.2.11, Procedures for Surveying Inventory in PSP.

At a minimum, PSP should monitor the following for inventory:

PSP monitors new starts to determine return needs and to monitor the progress in meeting the exam work plan. New starts need to be monitored at the group and POD levels, to help determine the number of returns being started and when to order returns. Consideration should be given not only to the number of new starts but also to the types of returns being started. Factors to consider include aging inventory, front-loaded programs, and activity codes, to ensure the appropriate return mix, consistent with the exam plan, are entering the workstream. New starts data can be derived from the A-CIS Open and Closed Case databases, SSIVL, or ERCS Tableau. Refer to IRM 4.1.2.3, Return Starts Analysis, for more information.

Started and unstarted returns by status code, are shown in the Inventory/Aging Sections of Table 36 (area, territory, and group levels), Table 37 (area level), and can also be shown on the A-CIS Open and Closed Case databases. The PSP TM should determine whether there are adequate returns on hand to accomplish the exam starts plan.

Selected, not assigned inventories (Status 08) should be maintained at minimum levels. As a general rule, the inventory should not exceed the return needs for 2–3 months.

Assigned, no time applied inventories (Status 10), should be kept to a minimum to allow for a quicker change of direction to meet program needs. As a general rule, the inventory should not exceed 2 months of new starts.

PSP is responsible for ensuring statute dates are correctly entered on Examination Records Control System (ERCS) and monitored for statute controls. These roles and responsibilities are listed in IRM 4.7.4.1.3, Responsibilities of Employees in PSP. Specific instructions for dealing with statutes including approval authority requirements, inventory management procedures, and ERCS reports are in IRM 4.7.3, Examination Returns Control System (ERCS), Statute of Limitations. The procedures for working AIMS Table 4.1 and AIMS Table 4.0 are discussed in IRM 4.4.27.5.1.1, Procedures for Working Statute Control Report. These reports need to be worked on a regular basis.

PSP and Field Case Selection (FCS) will analyze program inventory, projected future inventory, and exam plan delivery. If a significant variance is determined in any specific program, the area, Performance, Planning, and Analysis (PPA), FCS and PSP will discuss modifications to workload delivery necessary to achieve the overall exam plan.

At a minimum, PSP should monitor the following for cycle time:

Examination and disposition of income tax returns will generally be completed within 26 months (individuals) and 27 months (business) after the due date of the return or the date filed whichever is later. Many returns are exempt from this requirement. Exceptions for cases are listed in IRM 4.10.2.2.2, 26/27 Month Examination Cycle.

A-CIS Open and/or Closed Case databases can be used to compute all three cycle time measures.

At a minimum, PSP should monitor the following results while adhering to the guidelines outlined in IRM 1.5, Managing Statistics in a Balanced Measurement System:

In addition to the items listed above using Table 37 provides an analysis of results and inventory by strategic priority.

PSP should closely monitor Table 10.1(B) on a monthly basis to ensure duplications are eliminated and corrections are promptly made. The procedures for working Table 10.1(B) are discussed in IRM 4.4.27.4.1.1, Working Table 10.1(B).

The PSP Program Control database provides a tracking system for monitoring incoming inventory that is uncontrolled in ERCS or AIMS or any other inventory system. The PSP staff in charge of the following programs are required to enter the incoming inventory into this database.

The PSP Program Control Database can be useful for other programs. The use is not limited to those programs listed above.

The program coordinator needs to take ownership of all aspects of their assigned programs to make their programs productive and efficient. Some of the general PSP coordinator duties include, but are not limited to the following:

The promoter workload for the area is developed and perfected by the Lead Development Center (LDC) from leads surfaced by the field or other sources. The LDC reviews and approves promoter investigations and assigns a tracking code to the investigation if a client list is case-built. When case building of a client list for an approved promoter investigation is determined to be necessary, the lists are reviewed and filtered by the Abusive Transaction Listkeeper. The Listkeeper obtains case building approval from the appropriate management level for all lists recommended for case building.

The participant workload will generally be developed, perfected, and classified within the Abusive Transaction Support Unit (ATSU). Selected cases are then sent to the area PSP. Please refer to IRM 4.32.2, The Abusive Transactions (AT) Process, for additional information.

The Campus Operation, Centralized Reconsideration Unit (CRU) will screen reconsideration cases for individual income tax returns to determine whether the request meets the exceptions in IRM 4.13.3.1.1, Requests Not To Be Worked. If the audit reconsideration request meets any exception the CRU will forward it to the appropriate location (area office, campus examination function, or appeals) for consideration.

The campus will ensure the request for audit reconsideration meets the criteria for reconsideration under IRM 4.13.1.4, Criteria for Reconsideration, and that the request is not specifically excludable under the provisions of IRM 4.13.1.8, Non-Acceptance of Request.

The following situations will be routed to the area PSP:

The area office will provide appropriate routing points for the shipment of the area office reconsideration requests.

If PSP determines the case does not meet audit reconsideration criteria, PSP will update the examination group code (EGC) back to EGC 1093 for revenue agent (RA) and EGC 2093 for tax compliance officer (TCO) and send the case back to the CRU using the address listed on the employee group code listing found at http://mysbse.web.irs.gov/examination/mis/contacts/default.aspx. Notification of requests being returned to the campuses should be sent to the campus headquarters (HQ) analyst for audit reconsiderations. Information given should include the campus involved and the reason for the case being returned.

This subsection outlines the procedures that must be followed to protect IRS deficiency provisions during bankruptcy. The filing of bankruptcy does not preclude the IRS from beginning or proceeding with an examination, however collectibility should always be considered when selecting a return for audit consideration. Insolvency staff uses the Automated Insolvency System (AIS) and several IDRS command codes to reflect bankruptcy filing. AMDISA will reflect a freeze code U or X.

The PSP bankruptcy coordinator will be coordinating between the field examiner, Technical Services bankruptcy coordinator, and the Collections Insolvency bankruptcy caseworker.

A claim for refund is an amended return or written request that asks for some amount of money to be refunded, whether or not it also involves an abatement. A request for abatement is an amended return or request that decreases tax, decreases a penalty, and/or increases a credit. All prior tax and disputed penalty assessments have NOT been fully paid and a reduction of the module balance is requested. If the taxpayer is disputing a prior examination assessment that remains unpaid, the abatement request is known as an "audit reconsideration." An informal claim is a claim for credit or refund that is submitted in a manner other than on the standard forms but contains the required claim elements, i.e. tax year, identification number, refund requested and reason for the refund.

Claims for refund and abatement requests related to open cases charged to area exam are not classified by the Campus Examination Operations. Per IRM 21.5.3-1, Claims Processing with Examination Involvement, claims not meeting CAT - A criteria in AIMS status of 08 or less will be processed following normal adjustment procedures. Claims for refund or abatement requests meeting CAT – A criteria in AIMS status 08 or less will be forwarded to PSP. For open examinations in AIMS (status 09 to 89) the claim for refund or abatement request will be routed to exam based on the AIMS data. All other claims for refund or abatement request which meet CAT- A criteria outlined in IRM 21.5.3–2, Examination Criteria (CAT-A) – General, are classified by Examination Campus Classification prior to processing. If the claim for refund or abatement request is selected, the original return is secured and forwarded to the appropriate area PSP using Source Code 30.

Classification checksheets will be prepared by the Campus for returns selected for area examination.

If a claim is selected by the Campus and later surveyed by the area, the area will process the claim and send Letter 570, Claim Allowed in Full, to the taxpayer, if Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, or Letter 96C, Acknowledgment for General Use/Inquiry, was sent by the Campus informing the taxpayer of the selection and status of the return.

Tentative Carryback Allowance Cases with related returns (carryback or carryover years) currently open in area exam will be forwarded to the area. The Campus will take necessary action to update or control selected returns on AIMS. The tentative allowance cases will be classified by the Campus.

In Tentative Carryback Allowance Bankruptcy Cases, the refund application, the loss year return, and any additional returns necessary will be classified by the Campus. Area exam may have already taken action on the bankruptcy case. If not, and the case is selected for examination:

Compliance Initiative Project (CIP) procedures ensure conformity with IRS policies and procedures regarding privacy, security and disclosure. See IRM 10.5.1, Privacy and Information Protection, Privacy Policy for more information. CIPs are characterized by the use of internal or external data to identify, quantify, evaluate, and correct areas of noncompliance. They usually involve a study or other analysis of a group of individuals or businesses such as those within an occupation, industry, geographic area or specific economic activity or event.

CIP procedures do not apply to routine business operations. Refer to IRM 4.17.1.3, Activities Not Subject to CIP Procedures, for a list of activities not subject to CIP procedures.

Employee audits require expeditious handling at all levels to ensure prompt completion of the examinations.

Employee audits are usually generated through eight different sources. This section identifies procedures and reporting requirements for the area PSP staff for each of these different sources of employee examinations.

The examination of an employee's tax return is usually initiated by one of the following eight different sources or events:

All requests (other than regularly classified inventory) for an employee examination will be transmitted to the Director, Examination Case Selection (ECS) or their designee for assignment to the appropriate PSP office.

The area PSP TM (or designee) will determine if an examination of a manager's return can be conducted impartially and objectively within the area, or if the tax return should be transferred to another area.

The tax return examination of an executive or senior manager will be forwarded to the Director, ECS or their designee for transfer to an area office outside of the employee's assigned area.

All other employee tax return examinations will be assigned by the employee tax compliance coordinator (ETC) to an exam group in a post-of-duty (POD) other than where the employee works whenever possible.

On a quarterly basis the Director, ECS (or designee), will forward a monitoring report to the area PSP ETC coordinator, section chief and territory manager to be completed and returned within 14 days.

Pursuant to IRC 6103(d), IRS and state tax agencies exchange tax information to aid the tax administration and enforcement processes, which simultaneously contributes to improved voluntary taxpayer compliance and reduces taxpayer burden. The Governmental Liaison Data Exchange Program (GLDEP) administers much of the data exchange activities between the IRS and state tax agencies through extracts. Extracts are provided electronically via the IRS Secure Data Transfer (SDT) program. Find additional information regarding these extracts in IRM 11.4.2, Governmental Liaison Data Exchange Program (GLDEP).

The audit reports are sent to the IRS through the Secured Data Transfer (SDT) system electronically by each participating state, except for a couple of states that send hardcopy audit reports. All hardcopy reports are mailed to the Brookhaven Campus where they are scanned for electronic delivery. The audit report files are filtered by a Headquarters Campus Case Selection analyst and delivered electronically to the State Audit Report Program (SARP) shared drive. PSP coordinators go into the SARP shared drive and classify the cases electronically. The coordinator completes a classification spreadsheet indicating the selected and non-selected cases. Non-selected cases will be marked with a reason for non-selection. The selected cases will be case built, established on AIMS and sent out to RA or TCO groups with return orders. Case built selected cases include a classification checksheet, state audit report or SARP checksheet and a SARP white paper if appropriate, and IDRS prints.

Federal/state initiatives based on data covered by the fed/state agreement signed by the area director do not require a compliance initiative project (CIP). If PSP requests data from a state or other government agency, for example luxury automobile data; this request is considered "ad hoc" and a CIP is required in order to secure the data. See IRM 4.17.4, Compliance Initiative Projects, Procedures, for CIP requirements.

PSP may receive referrals on various forms requesting SB/SE exam to resolve an identity theft issue. If the referral is incomplete or inaccurate, it should be returned to the sender with an explanation that no actions will be taken by SB/SE exam.

The PSP coordinator should research IDRS to confirm identity of the taxpayer and current status of the identity theft issue. Coordinator’s research should include a review of ENMOD and/or IMFOLE. Refer to IRM 25.23.2, Identity Protection and Victim Assistance - General Case Processing, or IRM 4.10.27, Identity Theft Case Processing for Field Examiners, for additional guidance on how to conduct and interpret identity theft research.

The PSP coordinator will receive referrals from the Identity Protection Specialized Unit (IPSU) via the following forms:

PSP Identity Theft Coordinators may be able to resolve a referral without assignment to an examination group if no taxpayer contact is required based on internal research and other documentation within the case file.

The PSP TM (or designee) should select for examination all returns with Form 5346, Examination Information Report, attached, indicating the taxpayer did not maintain adequate records of business expenses, unless they lack significant examination potential.

An Inadequate Records Notice (IRN) coordinator should be established in each area PSP office to monitor the follow-up investigations.

Returns that are surveyed must have a Form 1900, Income Tax Survey After Assignment, completed and attached to the return.

Information reports and referrals are sent to PSP offices by examiners, other business units, and the public. These leads may include information related to returns for tax years not yet required to be filed, also known as intercept files. The referrals may be received by email, a letter from the taxpayer, or on the following forms:

The referrals will be screened in PSP office using the procedures and applying the substantial noncompliance factors (SNiF) criteria in IRM 4.1.1.6.21(2). Referrals are also called leads for examination.

PSP staff must ensure AIMS/ERCS controls have been perfected and the appropriate project code is applied to the case prior to assignment to the field.

For SEP leads on Form 5346 see IRM 4.1.1.6.21.1, Special Enforcement Program (SEP) Coordinator, for lead processing information.

Information referrals involving one or more specialty taxes (employment, excise, estate, and gift tax) will be sent to the Cincinnati Campus.

All approved Form 5346, Examination Information Reports, relating to LB&IlC returns should be referred to LB&I PAIR at the Ogden campus.

An approved Form 5346 that relates to a non-LB&I taxpayer will be mailed to the appropriate business unit (W&I or TEGE).

Under IRC 6015, a spouse may be relieved of income tax liability in some cases when he or she files a joint return but is not aware the return is inaccurate as to items generated by the other spouse. In these cases, "relief from joint and several liability" provisions are applied.

Taxpayers file the claim using Form 8857, Request for Innocent Spouse Relief.

Refer to IRM 25.15, Relief From Joint and Several Liability, for detailed procedures.

Innocent Spouse cases meeting the criteria listed in IRM 25.15.6, Field Examination Procedures, with open field exam controls are transferred to PSP for distribution to the field.

A Joint Committee case can arise either from an examination or the campus forwarding to the area PSP office unpaid claims or tentative allowances in excess of the jurisdictional amount. The examiner is responsible for determining whether a case falls under Joint Committee jurisdiction. The examiner can either examine or survey the claim or tentative allowance.

Joint Committee tentative carryback allowances (in excess of $5,000,000 for C Corps and in excess of $2,000,000 for all others) to the same taxpayer will be selected and referred to area exam after the allowance has been made.

For cases meeting Joint Committee criteria, PSP must ensure all returns in the case file have project code 0077 on ERCS/AIMS.

Please refer to IRM 4.36, Joint Committee Procedures, for detailed procedures and information. The LB&I Joint Committee website https://irssource.web.irs.gov/LBI/Lists/KMNECPA/AllItems.aspx is another excellent resource for up to date information on joint committee cases.

The area PSP office may need to enlist the cooperation of LB&I to examine returns related to a Joint Committee case in order to address the Joint Committee issues on an SB/SE taxpayer.

The National Research Program (NRP) is a comprehensive effort by the IRS to measure compliance for different types of taxes and various sets of taxpayers. The NRP approach to measuring reporting compliance balances research quality, efficiency, and the reduction of taxpayer burden. It establishes a tax return sample that is representative of the taxpayer population. NRP uses case building data to determine if the return should be considered accurate as filed. The NRP cases are selected and distributed to the area PSP offices as directed by the NRP Headquarters office. See IRM 4.22, National Research Program (NRP), and the NRP website at https://nrp.web.irs.gov/.

Non-Filer (NF) workload originates from various sources:

Offers In Compromise (OIC) based solely on doubt as to liability (DATL), are filed with Brookhaven Campus on Form 656-L, Offer in Compromise (Doubt as to Liability).

Offers in compromise (OIC) based solely on doubt as to liability (DATL), are forwarded from the DATL unit in Brookhaven Campus to area examination for investigation. See IRM 5.19.24.6, Processability, for detailed information about requirements for OIC-DATL processability.

The statute of limitations on offers in compromise is 24 months from the date that IRS receives the offer. This date is known as the Tax Increase Prevention and Reconciliation Act (TIPRA) date.

OIC-DATL cases must be started as soon as possible due to the 24 month statute.

All offers in-compromise are mandatory review and must close through Technical Services. Technical Services must issue an offer closing letter prior to the expiration of the TIPRA statute.

There are 3 possible resolutions to an offer in compromise case:

Acceptances will be very rare. Acceptances should only be considered when there is no ability to make a determination of correct tax, e.g. the taxpayer’s records were destroyed and cannot be reconstructed. If an examiner reaches out to the coordinator for assistance with an offer acceptance, the coordinator should contact the HQ analyst for guidance. All potential offer acceptances must be reviewed by Collection Policy.

Generally, offers are either withdrawn or rejected. For withdrawals, the taxpayer and examiner agree to what the correct tax liability should be, and the examiner will request the taxpayer to provide a written withdrawal request. If the taxpayer and examiner do not agree on a corrected liability, the offer is rejected. Technical Services issues a rejection letter that provides the taxpayer an opportunity to request an Appeals conference.

Offers are loaded on the Automated Offer in Compromise (AOIC) system - the case management system for both DATL and Doubt as to Collectibility (DATC) offers.

Taxpayers cannot file both offer types simultaneously.

Once IRS has accepted a DATC offer, the tax module is closed for the years covered by the offer, and no further assessments or abatements can be made. See Treas. Reg. section 301.7122-1(e)(5).

The Voluntary Disclosure Practice is a compliance option for taxpayers who may have criminal exposure due to their willful tax and tax-related noncompliance. It has evolved over time, resulting in the updated Voluntary Disclosure Practice per the Interim Guidance Memo ("IGM" ) dated November 20, 2018. Refer to IRM 9.5.11.9 , Voluntary Disclosure Practice, for submission and eligibility information. Refer to IRM 21.1.3.22 , Voluntary Disclosure Practice, for an overview on issues that come up on general taxpayer contacts.

Voluntary disclosure cases are identified by the following project, tracking, and source codes:

If the voluntary disclosure involves multiple types of disclosure (checked on Form 14457, Voluntary Disclosure Practice Preclearance Request and Application, Part 1, Line 3), the following default rules will apply in determining the tracking code:

Project and tracking codes should be applied to all related cases (additional years and related taxpayers).

Rev. Proc. 2006-24 provides the procedures to be followed by a trustee (or debtor-in-possession) representing the bankruptcy estate when requesting a prompt determination by the IRS of any unpaid tax liability of the estate.

Rev. Proc. 2010-27 provides the procedures to be followed by a trustee (or debtor-in-possession) representing the bankruptcy estate to properly request a tax refund from the IRS.

Prompt determination requests are received by the Centralized Insolvency Operation (CIO), Philadelphia Campus. All requests should be date stamped by the CIO to reflect the date of receipt. CIO will screen each request to ensure it meets the requirements in Rev. Proc. 2006-24 or Rev. Proc. 2010-27.

If the prompt determination request package meets the requirements of Rev. Proc. 2006-24 or Rev. Proc. 2010-27, CIO will overnight the package to the appropriate Planning and Special Programs (PSP) office.

If the prompt determination request package is incomplete, CIO will return the incomplete request package to the trustee and provide them the opportunity to resubmit a completed request package. Once a complete request is received; CIO will forward the completed package to the appropriate PSP office

The IRS has 60 days from the date of receipt of a completed request package to advise the trustee of the decision to examine a tax return or accept it as filed.

The IRS must notify the trustee within 180 days of receipt by IRS of any tax, interest and penalties due or within 120 days for a prompt refund.

In the case of Chapter 12 Bankruptcy Plan - 11 USC Section 1231(b) requests, if CIO determines the package is processable, they will forward the package to the appropriate PSP office. See IRM 5.9.9.5.1, Determinations of Tax Implications of Chapter 12 Plans, for CIO processing guidelines. The plan proponent must be notified of the determination within 270 days from receipt of a processable application.

Return Classification for field case selection involves four main decision making steps:

Through this decision making process, return classification conducts the important task of selecting only the best work to proceed to the field for examination, and helps route the return to the most appropriate examiner to handle the identified issues. Thoughtful classification should result in the following:

Each area PSP TM will designate staff members to coordinate all SB/SE compliance aspects of the Return Preparer Program (RPP). Please refer to IRM 4.1.10, Return Preparer Program Coordinator, for detailed procedures and information to develop preparer program action cases(PAC) for distribution to the field (RA & TCO) exam groups.

A preparer program action case (PAC) is a preparer penalty investigation in which clients of a questionable preparer are examined to determine whether preparer penalties and/or an injunction is warranted.

SEP agents may not develop their own cases from leads received from internal or external sources. SEP leads are forwarded to the SEP coordinator in the area PSP office. Leads will be case built in Brookhaven Service Center (BSC) and classified by Fraud Technical Advisors (FTAs) using a shared drive. All selected leads will go back to BSC and the Area SEP coordinator for assignment. All non-selected referrals will be surveyed by BSC.

These leads and information items will be screened in the area PSP office using the following substantial noncompliance factors (SNiF) criteria. These factors will be considered in selecting a lead to be case built and classified:

Criminal Investigation forwards Form 6544, Request for Cooperating Examiner, directly to the responsible examination territory manager for distribution to SEP or general program groups. These requests are not processed through the area PSP.

There is a service level agreement (SLA) between the National Taxpayer Advocate and the Commissioner, Small Business/Self-Employed (SB/SE). This agreement outlines the procedures and responsibilities for processing Taxpayer Advocate Service (TAS) casework when the authority to complete case transactions rests outside of the TAS. The SLA identifies the priority of TAS casework and the time frames for assigning TAS cases to exam field groups.

TAS uses the operation assistance request (OAR) process to refer a case to SB/SE when TAS lacks either the statutory or delegated authority to affect the resolution of the taxpayer's problem. TAS utilizes Form 12412, Operations Assistance Request (OAR), to initiate the OAR process.

Each area PSP Territory Manager will appoint a taxpayer advocate liaison who will be responsible for accepting the OARs from TAS, acknowledging receipt of the case, reviewing the case for appropriate assignment, assigning the case to the appropriate employee within the function, and monitoring the case through its conclusion.

Please visit the Taxpayer Advocate website at http://tas.web.irs.gov/policy/sla/default.aspx for the current SLA, updated procedures and other information.

Generally, the examination of any income, estate, or gift tax return is the responsibility of the area in which the taxpayer resides, conducts its business, or maintains its principal office. The examination will generally be assigned to an examiner at the post-of-duty nearest to the taxpayer's residence for a non-business return or place of business for a business return.

Transfer of returns for examination from area to area and between posts-of-duty in the same area will be governed by Treas. Reg. 301.7605–1 (26 CFR 301.7605-1),Time and Place of Examination. By observing the regulatory guidelines on time and place of examination, the convenience of the taxpayer will be balanced with the requirements of sound and efficient tax administration.

In addition to the general guidelines noted below, examiners must be familiar with all details of Treas. Reg. 301.7605–1.

When an income, estate, or gift tax return is transferred from one area to another for examination, the following procedures should be followed:

The overall impact on compliance should be considered when determining if a return should be transferred for examination or should be surveyed.

Examiners should strictly adhere to the "case-by-case" standard contained in regulation Treas. Reg. 301.7605-1 for determining if a transfer is appropriate. No additional criteria should be developed by examiners or area offices.

Under no circumstances should the case be returned to the transferring area office without prior telephone contact and agreement between the areas. See IRM 4.11.29, Transfer of Returns Open for Examination, for additional guidance.

Returns identified as training returns may be selected as a normal part of classification and are assigned project code 0204. If the returns were identified using DIF criteria and are not used for training, the project code should be removed. All related, subsequent year, and/or prior year returns secured in connection with the training return will also have project code 0204 assigned, regardless of when the related examination was started. If returns were identified using criteria other than DIF (such as CDE filters) they cannot be converted to non-training returns. The returns should be surveyed or returned to PSP.

Training returns are assigned aging reason codes depending on the phase of training. The codes are as follows:

CDE may be used to secure training returns with specific issues, based on the training needs. A CDE research request form will need to be completed and approved before filtering for training returns.

Refer to the Field Case Selection site, New Hire Training, at https://organization.ds.irsnet.gov/sites/SBSEfeEPD/NewHireTraining/SitePages/Home.aspx.

The PSP TM (or designee) will receive IRC 7623(a) claims through the Informants' Claim Examiner (ICE) at the Ogden Campus. The campus is responsible for establishing on AIMS the returns related to the claim for reward.

The PSP TM (or designee) will usually receive IRC 7623(b) through the Informants' Claim Examiner at the Ogden Campus. In these situations the campus is responsible for establishing on AIMS the returns related to the claim for reward. In some situations the IRC 7623(b) claims will be received directly from the whistleblower analyst assigned to the claim. When the claim is received in PSP it should be established on AIMS using source code 70 and tracking code 7894.

Tracking code 7882 has been assigned to IRC 7623(a) claims cases while tracking code 7894 is assigned to IRC 7623(b) claims. The area PSP coordinator will ensure the informant claims (ICE) indicator has been established on these cases by the campus and verify that the applicable tracking code has been placed on the module.

The PSP TM (or designee) may accept or survey these claim cases if the available information indicates an examination is not warranted. If the claim case is accepted or surveyed, the PSP TM (or designee) should complete a Form 11369, Confidential Evaluation Report on Claim for Reward, and must inform the Ogden ICE Unit expeditiously so the ICE indicator can be released.

The PSP TM (or designee) will promptly assign any claim cases deemed worthy of examination to the appropriate group. Please refer to IRM 10.5.1.6.7.3, Shipping, for information on proper data protection when shipping personally identifiable information.

The identity of persons who furnish information regarding possible tax violations must be protected. All employees must handle such information in strict confidence. Special handling must be given to avoid disclosure to other than those employees having a "need to know." Follow IRM 10.5.1.3.2.5, Strict Confidentiality, for guidance in disclosing Sensitive But Unclassified (SBU) data to persons with a need to know the information.

Refer to IRM 25.2, Information and Whistleblower Awards, for detailed procedures.

Generally, nonresident alien returns, Form 1040-NR, U.S. Nonresident Alien Income Tax Returns, will be examined by Large Business & International, International Individual Compliance (LB&I:IIC). Under certain circumstances, some may be referred to the appropriate area PSP TM (or designee) for follow-up action. Returns on which an election under IRC 6013(g) (election to treat nonresident alien individual as resident of the United States) or IRC 6013(h) (joint return, etc., for year in which nonresident alien becomes resident of United States) has been taken, and returns falling under IRC 879 (tax treatment of certain community income in the case of nonresident alien individuals), should be examined in the area office having jurisdiction over the spouse who is a resident or citizen of the United States. Exceptions are as follows:

Form 1040 and Form 1040A filed and examined in domestic area offices will not be transferred to LB&I:IIC merely because the taxpayer has left the United States. However, if the examination will need to be conducted overseas, the books and records are maintained overseas, or if the issues are sufficiently complex to warrant an international examination, returns may be transferred. Questions should be directed to the LB&I:IIC Planning & Special Programs (PSP) TM.

A case may be referred to exam from appeals (where appeals jurisdiction is not released) where the taxpayer challenges the following:

These cases should be assigned for examination within 30 days of receipt. These cases must be worked in the area and cannot be referred to any centralized Audit Reconsideration or Innocent Spouse units in the campus.

Certain individual, corporate, partnership, and fiduciary returns are identified as automatic. Tax returns designated as "automatic" (Source Code 01) must be classified and either selected for examination or accepted as filed on classification. See IRM 4.19.11, Examination Classification of Work, for the criteria used to categorize these returns.

Certain individual returns are identified as "specials" (non-automatics) based on specific features on the return. These returns are not put on AIMS but can be ordered by the area PSP. They are then held in the campus for classification. For definititions see IRM 3.11.3-3, Audit Codes for individual, IRM 3.11.14.10.1, Audit Codes for estate or trust,IRM 3.11.15.19.1, Audit Codes for partnership, IRM 3.11.16.9.1, Audit Codes for corporate, and IRM 3.11.217.13.1, Audit Codes for S-corporation.

The campus may identify other types of cases (special projects) that need further consideration and classification by the area PSP staff. These are forwarded to the area PSP. Please refer to IRM 4.19.10, Examination General Overview.

Automatics come to PSP in status 06 and should be classified in the same manner as DIF sourced work.

When Chief Counsel issues a letter to a taxpayer authorizing a change in accounting method, a copy is sent to the appropriate Area Director for follow-up action. The PSP territory manager will prepare Form 5346, Examination Information Report, for subsequent (unfiled) years.

On a quarterly basis, copies of letters issued should be sent via Form 3210, Document Transmittal, to the following address:

Follow-up action is necessary when PSP is unable to ascertain the taxpayer is complying with the terms, conditions, and adjustments upon which permission is predicated. If the change in accounting method is denied, the PSP coordinator should review the return to confirm the taxpayer did not implement the change in accounting method. If neither can be confirmed, the return should be assigned for examination.

Sometimes it is necessary to request information from another IRS office or request the examination of another taxpayer in another IRS office in order to properly develop the issues being examined. A collateral request is used for this purpose. This is not intended to replace the specialist referral system, where participation of a specialist, such as an international examiner, engineer, or employee plans specialist is being requested.

A collateral request is made when an exchange of information between business operating divisions or area offices of the same operating division is essential to resolve issues of material tax consequence. A collateral request is not limited to a request for information, but also includes a request for examination of returns that cross area offices or operating divisions.

A collateral request for exchange of information is used only when the information cannot be obtained from the taxpayer, the taxpayer's representative, or third parties.

Before making a collateral request, IDRS research must be conducted to determine if the taxpayer located within the jurisdiction of the other office is currently under examination (Status 12 through 18). If the taxpayer is under examination, the examiner located in the other jurisdiction will be contacted directly to exchange information pertinent to the issues.

Form 6229, Collateral Examination, will be used to make a request for a collateral examination between operating divisions or area offices, or a request for collateral information. All collateral requests must receive priority treatment.

Coordination and routing of requests for collateral examination will be coordinated through PSP:

SB/SE high income individuals related to LB&I cases should be worked by LB&I. See IRM 4.46.3-6, Inspection of Corporate Officers and Key Executive Returns.

Criminal Investigation (CI) may request information on a taxpayer prior to starting its initial investigative activity. These inquiries generally require an IDRS search to determine whether there is a pending or previous examination or investigation relating to a specific taxpayer.

PSP office will perform the necessary research and respond to CI regarding its inquiry.

U.S. taxpayers who give up their citizenship to avoid tax are subject to special tax treatment for a 10 year period after expatriation under IRC 877. The Philadelphia Campus maintains a database of taxpayers who have expatriated. Some of these taxpayers meet the tax avoidance criteria based on their assets and prior U.S. tax liability.

When taxpayers leave the U.S. they are considered non-resident aliens. In the year they relinquish their U.S. citizenship, they file a dual status return. A dual status return contains special rules and is a blend of a regular Form 1040, U.S. Individual Income Tax Return, and a Form 1040-NR, U.S. Nonresident Alien Income Tax Return. In subsequent years, they file a Form 1040-NR.

The Philadelphia Campus screens the expatriate database and the Form 8854, Initial and Annual Expatriation Information Statement, submitted by the taxpayer. The expatriate cases that meet the IRC 877 definition of tax motivated abandonment of citizenship are sent to Large Business and International Individual Compliance (LB&I, IIC) for classification. The expatriate returns all fall under the jurisdiction of LB&IIC.

All loose Form 8854, Initial and Annual Expatriation Information Statements, are to be routed to the Philadelphia Campus at the address below. If the taxpayer is required to file a tax return and the Form 8854 is attached to a Form 1040/1040-NR, then the Form 8854 remains attached to the tax return

IRC 7518 authorizes the fishing vessel capital construction fund. This program is co-administered with the Department of Commerce, National Marine Fisheries Services (NMFS) and the Department of Transportation, Maritime Administration.

IRC 7518 allows owners of eligible vessels, by agreement, to establish a capital construction fund. The owner of the eligible vessel may deposit income from fishing into this account and reduce taxable income by the amount of the contribution. Income can be withdrawn, tax free, to purchase or repair a qualified vessel. A withdrawal for any other purpose is non-qualified and subject to tax at the highest marginal tax rate. The fisher is required to submit an annual report to NMFS.

The NMFS submits reports to the SB/SE ECS Senior Program Analyst detailing all account activity based on the fishers’ report.

The analyst assigned to the program identifies potential issues. Cases meeting specified criteria are case built and classified in Western Area. Returns selected for examination are sent to the area PSP for assignment to the field. Project code 0120 and tracking code 9599 are used to identify fishing industry capital construction fund cases.

An Exchange of Information analyst will forward foreign initiated requests to the jurisdictional SB/SE examination area for action. These requests are generally referred to the area PSP office for assignment to a revenue agent (RA).

The foreign collateral is required to be added to the PSP Program Control Database. See IRM 4.1.1.5.5, PSP Program Control Database for more information.

Please refer to IRM 4.60.1.2.2.3, Procedures for Cases Involving IRS Civil or Criminal Assistance, for specific procedures.

It is imperative the request is assigned to an examiner on a priority basis. A response to the IRS Tax Attaché or Exchange of Information program analyst is required within 60 days.

The receipt and processing of all frivolous documents has been consolidated Servicewide at the Ogden Compliance Center (OCC).

The criteria for considering a tax return frivolous is found in IRC 6702 and also listed in IRM 25.25.10-1, Frivolous Arguments.

Documents deemed frivolous should be referred to OCC as listed in IRM 25.25.10, Frivolous Return Program.

The rehabilitation tax credit is 20% of qualified rehabilitation expenditures with respect to historic property and 10% for non-historic property as authorized in IRC 47. The National Park Service (NPS) Office of Historic Preservation must certify a rehabilitation of a property to qualify for the historic tax credit on behalf of the Secretary of Interior. Certification is also required for an easement under IRC 170(h). This type of easement is often referred to as a façade easement. A copy of the correspondence sent to the property owner during the certification process is provided to the IRS as well as a copy of the first page of each application part of the NPS Form 10-168. The parts provide the following information:

Twice annually the NPS provides a report from their database to the HQ analyst in SB/SE assigned to the credit. The report contains data extracted from the applications. Copies are provided to the Midwest PSP, the manager of the LB&I Energy and Investment Tax Credit Team, and the Technical Services contact assigned to the late certification provision. Annually the SB/SE HQ analyst will:

IRC 183(e), Activities Not Engaged in for Profit, suspends a case open on AIMS/ERCS in which the taxpayer has executed Form 5213, Election to Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit. The IRS will generally postpone the determination until after the end of the 4th consecutive tax year (6th consecutive tax year for an activity that consists mainly of breeding, training, showing, or racing horses) after the tax year in which the taxpayer first engaged in the activity. An electing taxpayer may file returns in the interim on the assumption that the activity is conducted for profit.

Under IRC 183(e)(4), the statute of limitations for the IRC 183 activity (183 issue and any income or expense item within the activity) is extended by the taxpayer executing Form 5213 until 2 years after the due date (determined without regard to extensions) of the last presumptive year’s return. The extension also applies to partners or shareholders in the activity.

The filing of Form 5213 automatically extends the period of limitations for assessing any income tax deficiency specifically attributable to the activity during any year in the presumption period. Non-hobby loss issues are not automatically extended. See IRM 4.1.1.7.12.3, Classify the Return with Form 5213 for IRC 183 Issues and LUQ for more information.

All IRC 338 Elections, Certain Stock Purchases Treated as Asset Acquisitions, completed packages should be forwarded to the PSP territory manager by the LB&I Office Tax Shelter Analysis (OTSA) function.

For all elections on Form 8023, Election Under Section 338(g) Corporate Qualified Stock Purchase, the PSP TM (or designee) in the area where the purchasing corporation is located will be responsible for securing all relevant returns and coordinating examinations of the returns by using collateral requests or support requests on cases with Coordinated Industry Cases (CIC). More detailed information can found on Form 8883, Asset Allocation Statement Under Section 338, a newer form that requires the purchase price, selling price, etc. of the transaction. Request the returns to review Form 8883 for all parties involved in the transaction. Relevant returns include the following:

Taxpayers may be identified for consideration through internal analyses, referrals, or reports of noncompliance filed by state housing agencies using Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition, which are processed at the Philadelphia Campus.

Selected Forms 8823 and other information are forwarded to the Midwest Area PSP office where they are associated with the return and classified. If the return is selected for examination, the complete file, (including a LIHC specific classification check sheet and case building information) is sent to the appropriate area PSP office for distribution to the field. The following codes are applicable to LIHC returns:

Ogden Campus Compliance Examination Field Support Operation conducts the Form 8282, Donee Information Return, Match Program under direction from Exam Case Selection (ECS). Returns are categorized by type of asset donated and are classified by a team of classifiers rom SB/SE. Classification assistance may be provided by subject matter experts from LB&I as well as real estate appraisers and business valuations specialists.

Cases are selected for examination when non-cash contribution deductions do not meet the criteria established for substantiation. Selected cases are sent to area PSP offices directly from the campus.

Any returns referenced in a request for prompt assessment or prompt examination selected for examination by the Campus Classification Section will be controlled on AIMS by the Campus to the appropriate Area office. The Campus will use Letter 621C, Prompt Assessment Request; Acknowledgment/Reply/Additional Information Requested, or another appropriate letter, to notify the requester the request has been transferred to the Area for consideration.

Upon receipt of requests for prompt assessments, Examination will proceed at the earliest possible date to close the returns which have not already been administratively closed. If an Area is not in possession of the original returns for the taxable years needed in a prompt assessment request and such returns have not been administratively closed, the examination should proceed using the taxpayer's retained copies. The original returns should subsequently be requisitioned.

If the statutory period for assessment as prescribed in IRC 6501(d) is about to expire and the taxable years covered in the request cannot be closed prior to the expiration date, the taxpayer will be given an opportunity to file a consent. In no case should the taxpayer be requested to withdraw the request for prompt assessment.

When a request is received by an Area involving a case that is pending before Appeals, a copy of the request will be sent to the Appeals office having physical possession of the returns.

The PSP TM will then assign the return(s) to the appropriate function, Office or Field.

Technical Services will transfer cases to PSP offices for assignment for field resolution of specific issues.

These may include the following types of cases:

Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR), may be sent to the area PSP for consideration via the campus.

Please refer to IRM 4.31.4, Administrative Adjustment Request (AAR), for campus criteria for sending AARs to the area PSP and PSP responsibilities on receipt of the AAR.

Each year the PSP Territory Manager or designee may make corrections, deletions, or additions to the ZIP POD lookup table. These corrections, deletions, or additions may be used to realign the area; add, delete, or expand a POD; or correct ZIP Codes designated as POD 999. SB/SE Performance, Planning, and Analysis will make requests for changes to the ZIP POD lookup table.

Separate Individual Master File (IMF) and Business Master File (BMF) ZIP POD listings are produced annually from the lookup table and distributed to area offices for updating. The validity of these lists must be maintained to accurately identify examination workload by geographic areas. The PSP Territory Manager or designee is responsible for correcting those ZIP Codes which appear in POD 999. If the ZIP Codes are valid, they should be incorporated into regular POD’s.

When the ZIP POD tables are updated the PSP Territory Manager or designee can take the following actions:

Specific instructions for updating the ZIP POD files are provided by Performance, Planning, and Analysis annually.

The examination POD is assigned based on the taxpayer's zip code. Zip codes and their designated PODs are contained in the zip POD lookup table at https://organization.ds.irsnet.gov/sites/SBSEfeMySBSE/WorkloadID/ZipPOD. The POD will be assigned from the zip POD lookup table when a return is initially created on AIMS and will be shown on Form 5546, Examination Charge-Out, or on the CDE Taxpayer Information Sheet.