This IRM was created to provide guidance on workload selection criteria for W&I and SB/SE Campus Examination and to ensure the organization is meeting the IRS Mission Statement to, "Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all."

Exam uses the Internal Revenue Code, Regulations, Policy Statements, and Correspondence Examination Policy and Procedures. The IRM has links to the appropriate sources, as necessary.

W&I’s Correspondence Examination audit inventory is primarily selected systemically using risk-based scoring criteria. W&I’s Refundable Credits Program Management (RCPM) Operation has primary responsibility for developing and maintaining these criteria. They also have primary responsibility for developing the W&I Examination work plan which outlines the volumes and timeframes of audit initiations based on existing resources and using the available scored returns. The work plan is meant to be used as a guide which can be modified based on existing priorities. The actual audits are conducted by W&I Refundable Credits Examination Operations (RCEO) and consists of five campus operations located in Andover, MA, Atlanta, GA, Austin, TX, Kansas City, MO and Fresno, CA.

SB/SE Campus Case Selection (CCS) is responsible for the case selection and delivery of SB/SE correspondence examinations. CCS resides under Examination Headquarters and the staff consists of two teams: Campus Workload Identification (CWI) and Campus Workload Delivery (CWD).

RCEO and CCS work collaboratively with their respective workload planning staffs; Refundable Credits Program Management: Program Management (RCPM:PM) for RCEO and Performance Planning & Analysis Examination for CCS, to develop annual audit start plans. Start plans (AKA work plans) outline the estimated volumes by issue and the proposed timeframes for initiation.

Potential available inventories are filtered, prioritized, and introduced into the campus work stream based on the start plan.

Headquarter analysts in both W&I and SB/SE provide campus support and guidance on workload selection and delivery-related issues.

The primary responsibility of all stakeholders in the workload identification and selection processes is to ensure that the organization is meeting the IRS Mission statement to provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Headquarters analyzes audit results, performs program reviews, and monitors rule-based applications to select inventory. The audit results are used to make data-based decisions to improve program quality, improve case selection and to ensure the integrity of the selection methods.

W&I and SB/SE Headquarter analysts provide program support to analyze audit results, perform program reviews, and monitors rule-based applications to select inventory. The selected inventory results are used to make data-based decisions to improve program quality, case selection, and to ensure the integrity of the selection methods.

Most of the acronyms used by Examination can be located on the acronym database at http://rnet.web.irs.gov/Resources/Acronymdb.aspx

See table below for common acronyms used in this IRM.

Examination Employees are responsible for researching and utilizing information contained in all reference materials. Other IRM chapters provide information on single topics that pertain to more than one functional group. The following table provides links to some of the most commonly used research resources. For information on other IRMs refer to http://publish.no.irs.gov/pubsys/irm/numind.html.

To ensure fairness to the taxpaying public, those responsible for workload selection should consider the responsibilities and obligations that all taxpayers share, and pursue those individuals and businesses who do not comply with their tax obligations based purely on eligibility using data provided by the taxpayer or from reliable third parties. In this way, we are being fair to those who are compliant and that, in turn, helps promote public confidence in our tax system for all taxpayers.

To ensure an equitable process for all taxpayers, fairness and integrity are built into the foundation of our return selection process, which is designed to select returns across those submitted with the highest likelihood of noncompliance by relying on a combination of tools. The entire process operates under a comprehensive set of checks, balances, and safeguards, all aimed at delivering and ensuring a process that is fair by design. No one individual can control the examination selection decision-making process, and we limit involvement to only those employees whose duties require participation. This creates a process that is impartial and applied consistently to each taxpayer return.

To ensure fairness to each taxpayer whose return is examined, those responsible for workload identification and selection will work with a focus on taxpayer rights, a responsibility that is a priority for all IRS employees in their work every day. These taxpayer rights are embodied in the Taxpayer Bill of Rights, which outlines the 10 fundamental rights taxpayers have when working with the IRS. Managers and examiners adhere to administrative and legislative procedures, including managerial and quality reviews. Also, IRS employees are managed and evaluated on how well we provide fair and equitable treatment to taxpayers as required by the Restructuring and Reform Act of 1998. Finally, taxpayers may administratively appeal most IRS decisions, including the assessment of additional tax or penalties or the denial of a refund claim. An employee in the Independent Office of Appeals, an independent and impartial function within IRS, will contact the taxpayer, hear the case, and decide whether to sustain the results of the examination. Most taxpayers can also petition the U.S. Tax Court for a pre-assessment review of any proposed additional tax or seek a refund in other federal courts.

SB/SE supports administration of tax law by selecting returns to audit. The primary objective in selecting returns for examination is to promote the highest degree of voluntary compliance on the part of taxpayers while making the most efficient use of finite examination staffing and other resources.

SB/SE Examination program-level objective addressing fairness in returns selection is as follows: Ensure examinations are initiated based on indicators of noncompliance or on other criteria (such as selection for the National Research Program) identified in the Internal Revenue Manual. In addition, ensure a review of the decisions to survey a return (i.e., not initiate an examination) are based upon factors outlined in the Internal Revenue Manual and approved by an appropriate level of management.

SB/SE employees must exercise their professional judgment, not personal opinions, when making return selection decisions. As explained in Policy Statement P-1-236, IRS employees are expected to carry out their duties with integrity and fairness.

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The Discretionary Exam Business Rules (DEBR) are a subset of the workload selection rules built into the Dependent Database (DDB) programming.

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The rule filters are programmed by IT and applied against all returns as they are filed. Each processing cycle, IT provides the business unit with an analysis, via Business Objects, of the number of returns meeting the business rules. As inventory is needed to meet the work plan, Exam CWI selects the volume and type of cases to deliver to the campuses. IT runs these through standard screening filters and then establishes the cases on the Audit Information Management System (AIMS). Certain types of cases require additional screening by a Headquarters Analyst before being assigned to a campus. These are specified in the annual rules package. Any cases researched/screened in this manner can be established on AIMS by the analyst themselves, submitted to IT through an ad hoc AIMS request, or sent to CWD.

Compliance Data Environment (CDE) is a workload identification, planning and delivery system that operates in a web-based environment. It can be used to filter, order, classify, and deliver returns for examination. In CCS, CDE is primarily used to analyze return data meeting specified criteria (rules) to produce a population of returns having audit potential. SB/SE CCS analysts gather CDE output and perform further classification and filtering to make the final case selections. More information on CDE functionality may be found in IRM 4.103, Compliance Data Environment (CDE).

Referrals are cases identified by functions other than Examination that have audit potential. Cases are referred from the Lead Development Center (LDC) for Criminal Investigation (CI), Treasury Inspector General for Tax Administration (TIGTA), Collections, Return Integrity and Verification Operations (RIVO), Submission Processing (SP), and other areas.

A taxpayer can make a change to an originally filed Form 1040, U.S. Individual Income Tax Return, using Form 1040-X, Amended U.S. Individual Income Tax Return. A taxpayer can change income, exemptions, deductions, credits, filing status, etc., reported on the original tax return, including claiming tax credits and deductions that were not previously claimed. Under Sec. 6511. Limitations On Credit Or Refund (bloombergtax.com), the general rule is that a claim for refund must be filed within three years from the time the original tax return was filed or two years from the time the tax was paid, whichever is later.

The DUPTIN program identifies returns where a TIN is used more than one time for a dependent exemption in the same filing year. During the filing of the original tax return an entry is recorded on the DupTIN database every time a TIN is used as a Primary, Secondary, Dependent, EIC qualifying child, etc. The first use of the TIN is not flagged. Second and subsequent uses of the TINs are flagged. The duplicated taxpayers are identified with applied treatment logic.

Generally, taxpayers that have duplicated a TIN for more than one year are considered for audit. Identified DupTIN audit inventory is sorted by tax changes and business rules. Exam issues a notice to the taxpayer requesting documentation to verify the qualifying dependents(s). If after the audit process a determination is made to no-change the case, then the related taxpayer that also duplicated the use of the dependent TIN is opened for audit.

Inventory for audit is occasionally identified through resources and referrals that are not part of the normal inventory selection processes. Inventory such as this may carry varied selection criteria and filtering requirements specific to that case type. By its nature, this is often unplanned work and coordination between Examination and the work plan staff is required before audits are started. Typically, potential cases are further vetted by the Exam Headquarters analysts. An agreement to process audits on this type of inventory rests with Examination Headquarters management. Examples of these miscellaneous inventories are listed in the subsections below.