Part 4. Examining Process

Table of Contents

4.1 Planning and Special Programs

• 4.1.1 Planning, Monitoring, and Coordination
• 4.1.2 Workload Identification and Survey Procedures
• 4.1.5 Case Building, Classification, Storage and Delivery
• 4.1.8 Special Examination Features and Programs
• 4.1.9 International Features
• 4.1.10 Return Preparer Program Coordinator
• 4.1.21 LB&I Planning, Reporting and Monitoring
• 4.1.26 Campus Exam Return Selection, Delivery and Monitoring
• 4.1.27 Document Matching, Analysis & Case Selection

4.2 General Examining Procedures

• 4.2.1 General Examination Information
• 4.2.2 Disaster Assistance Relief
• 4.2.3 Technical Advice to Taxpayers and Examination Personnel
• 4.2.5 Disclosure of Official Information
• 4.2.6 Examination of Employee Returns
• 4.2.7 Ex Parte Communication Procedures
• 4.2.8 Guidelines for SB/SE National Quality Review
• 4.2.9 IDRS and Data Security for Examination

4.4 Audit Information Management System (AIMS) – Validity and Consistency

• 4.4.1 Introduction
• 4.4.3 Credit Transfers and Reprocessing Returns
• 4.4.7 Correspondence and Closing Letters
• 4.4.9 Delinquent and Substitute for Return Processing
• 4.4.12 Examined Closings, Surveyed Claims, Partial Assessments, and Closings to Appeals
• 4.4.16 Inventory Control
• 4.4.21 Non-Examined Closures and Deleting AIMS Records
• 4.4.22 Non-Master File (NMF) Processing
• 4.4.23 Openings
• 4.4.26 Reopening/Reclosing/Reinputting Records
• 4.4.27 Reports
• 4.4.33 Transfers
• 4.4.34 Updating/Correcting AIMS Data Base

4.5 TE/GE AIMS Manual

• 4.5.1 TE/GE AIMS Processing
• 4.5.2 TE/GE Examined and Non-Examined Closures
• 4.5.3 TE/GE AIMS Special Processing Procedures
• 4.5.5 TE/GE Reports

4.7 Examination Returns Control System (ERCS)

• 4.7.1 Overview
• 4.7.2 Security
• 4.7.3 Statute of Limitations
• 4.7.4 Planning and Special Programs (PSP)
• 4.7.5 Group and Territory
• 4.7.6 Reports
• 4.7.7 Technical Services
• 4.7.8 Centralized Case Processing
• 4.7.10 AIMS/ERCS Staff

4.8 Technical Services

• 4.8.1 Organization and Responsibilities
• 4.8.2 Case Processing
• 4.8.4 Mandatory Review
• 4.8.5 Post Examination Case Processing Requirements
• 4.8.6 Criminal Restitution and Restitution-Based Assessments
• 4.8.7 Technical Field Support
• 4.8.8 Miscellaneous Responsibilities
• 4.8.9 Statutory Notices of Deficiency
• 4.8.10 Notice of Employment Tax Determination Under IRC 7436
• 4.8.11 Fraud Program Responsibilities

4.9 Examination Technical Time Reporting System

• 4.9.1 Outline of System

4.10 Examination of Returns

• 4.10.1 Overview of Examiner Responsibilities
• 4.10.2 Pre-Contact Responsibilities
• 4.10.3 Examination Techniques
• 4.10.4 Examination of Income
• 4.10.5 Required Filing Checks
• 4.10.6 Penalty Considerations
• 4.10.7 Issue Resolution
• 4.10.8 Report Writing
• 4.10.9 Workpaper System and Case File Assembly
• 4.10.10 Standard Paragraphs and Explanation of Adjustments
• 4.10.11 Claims for Refund and Requests for Abatement
• 4.10.13 Certain Technical Issues
• 4.10.15 Report Generation Software
• 4.10.16 Examination Operational Automation Database (EOAD)
• 4.10.20 Requesting Audit, Tax Accrual or Tax Reconciliation Workpapers
• 4.10.21 U.S. Withholding Agent Examinations - Form 1042
• 4.10.26 Net Rate Netting Procedures for LB&I Cases
• 4.10.27 Identity Theft Case Processing for Field Examiners
• 4.10.28 Designation of Cases for Litigation

4.11 Examining Officers Guide (EOG)

• 4.11.5 Allocation of Income and Deductions Under IRC 482
• 4.11.6 Changes in Accounting Methods
• 4.11.11 Net Operating Loss Cases
• 4.11.29 Transfer of Returns Open for Examination
• 4.11.51 Return Preparer Program
• 4.11.52 Transferee Liability Cases
• 4.11.55 Power of Attorney Rights and Responsibilities
• 4.11.57 Third-Party Contacts

4.12 Nonfiled Returns

• 4.12.1 Nonfiled Returns

4.13 Audit Reconsideration

• 4.13.1 Introduction
• 4.13.1 Examination Audit Reconsideration Process

4.15 Jeopardy/Termination Assessments

• 4.15.1 Jeopardy and Terminations
• 4.15.3 Assessment Procedures (Centralized Case Processing)

4.16 Special Enforcement Program (SEP)

• 4.16.1 SEP Responsibilities and Case Development

4.17 Compliance Initiative Projects

• 4.17.1 Overview of Compliance Initiative Projects
• 4.17.2 Responsibilities
• 4.17.3 Requirements
• 4.17.4 Procedures

4.18 Exam Offer-In-Compromise

• 4.18.1 Offers in Compromise Received in Exam

4.19 Liability Determination

• 4.19.2 IMF Automated Underreporter (AUR) Control
• 4.19.3 IMF Automated Underreporter Program
• 4.19.4 CAWR Reconciliation Balancing
• 4.19.5 Certification of State Federal Unemployment Tax Act (FUTA)Credits
• 4.19.6 Minister and Religious Waiver Program
• 4.19.8 CAP (CAWR Automated Program) Technical System Procedures
• 4.19.9 FCP (FUTA Case Processing) Technical System Procedures
• 4.19.10 Examination General Overview
• 4.19.11 Examination Classification of Work
• 4.19.12 Centralized Files and Scheduling
• 4.19.12 Classification Support
• 4.19.13 General Case Development and Resolution
• 4.19.14 Refundable Credits Strategy
• 4.19.15 Discretionary Programs
• 4.19.16 Claims
• 4.19.19 Campus Examination Telephone Contacts
• 4.19.20 Automated Correspondence Exam (ACE) Processing Overview
• 4.19.21 Clerical
• 4.19.22 CAWR Control
• 4.19.23 FUTA Control
• 4.19.25 Information Return Penalty (IRP) Procedures
• 4.19.26 Campus Backup Withholding Return Compliance Program Procedures

4.20 Examination Collectibility

• 4.20.1 Examination Collectibility Procedures

4.21 Electronic Filing Program

• 4.21.1 Monitoring the IRS Program

4.22 National Research Program (NRP)

• 4.22.1 National Research Program Overview
• 4.22.2 NRP Case Building
• 4.22.3 Classification of NRP Returns
• 4.22.4 Examination of NRP Returns
• 4.22.5 Campus Compliance Operations Site
• 4.22.6 Examination of Individual Income Tax Returns
• 4.22.8 NRP EITC Component of the Individual Reporting Compliance Study

4.23 Employment Tax

• 4.23.1 Employment Tax - Employment Tax Objectives, Organization, and IRM 4.23
• 4.23.2 Employment Tax Responsibilities and Coordination with Other Functions.
• 4.23.3 Employment Tax - Examination Programs and Examination Planning Procedures
• 4.23.4 Employment Tax - General Procedures and Workpapers
• 4.23.5 Technical Guidelines for Employment Tax Issues
• 4.23.6 Classification Settlement Program (CSP)
• 4.23.7 Employment Tax on Tip Income
• 4.23.8 Determining Employment Tax Liability
• 4.23.9 Employment Tax Penalty, Fraud, and Identity Theft Procedures
• 4.23.10 Report Writing Guide for Employment Tax Examinations
• 4.23.11 Prompt Action in Tax Underpayment and Overassessment Cases
• 4.23.12 Delinquent Return Procedures
• 4.23.13 Adjusted Returns, Abatements and Claims
• 4.23.14 Statute Control and Extension
• 4.23.15 Technical Advice From the Office of Chief Counsel
• 4.23.17 Preparer Penalty Procedures for SB/SE Employment Tax
• 4.23.18 Coordinating Worker Classification Determinations Between SS-8 Program and Exam
• 4.23.19 Employment Tax Case Assignment and Grading Criteria
• 4.23.20 Voluntary Classification Settlement Program (VCSP) Procedures
• 4.23.21 Tax Compliance Officer Employment Tax Procedures
• 4.23.22 Unagreed Employment Tax Case Procedures
• 4.23.23 Employment Tax Workload Selection and Delivery
• 4.23.25 Voluntary Closing Agreement Process - Employment Tax (VCAP - ET)
• 4.23.26 Campus Employment Tax Non-Filer Program

4.24 Excise Tax

• 4.24.1 Introduction to Excise Taxes
• 4.24.2 Form 637 Excise Tax Registrations
• 4.24.5 Large Business and International (LB&I) Examination Program Procedures for Excise Employees
• 4.24.6 Technical Guidance and Information Processing for Excise Tax Examination Issues
• 4.24.8 Examination Guidance for Excise Claims for Refund or Abatement
• 4.24.9 Excise Tax Penalties Guidance
• 4.24.10 Appeals Referral Procedures
• 4.24.13 Overview of Excise Fuel Compliance Program
• 4.24.14 Excise Fuel Compliance Safety, Uniform, and Motor Vehicle Requirements
• 4.24.15 Excise Fuel Compliance Inspection, Sampling and Shipping
• 4.24.16 Excise Fuel Compliance Report Writing, Case Processing and Appeals Procedures
• 4.24.17 Excise Summary Terminal Activity Reporting System (ExSTARS) Compliance Examination Procedures
• 4.24.18 Excise Case Selection
• 4.24.20 Excise Tax Report Writing Guide
• 4.24.21 Case Closings
• 4.24.22 Campus Procedures for Excise Taxes
• 4.24.23 Operational Procedures and Responsibilities for Form 637 Excise Tax Registrations and Secure Airport Terminals (SATs)
• 4.24.24 Form 637 Registration Files: Administrative Procedures for Initial Applications and Case Reviews
• 4.24.25 Issue Management System (IMS), Notebook and Workpapers
• 4.24.26 Excise Summary Terminal Activity Reporting System (ExSTARS) Coordinator Procedures

4.25 Estate and Gift Tax

• 4.25.1 Estate and Gift Tax Examinations
• 4.25.2 Campus Estate and Gift
• 4.25.3 Planning, Classification, and Selection
• 4.25.4 International Estate and Gift Tax Examinations
• 4.25.5 Technical Guidelines for Estate and Gift Tax Issues
• 4.25.6 Report Writing Guide for Estate and Gift Tax Examinations
• 4.25.7 Estate and Gift Tax Penalty and Fraud Procedures
• 4.25.8 Delinquent Returns and SFR Procedures
• 4.25.9 Requests for Abatement, Claims for Refund, and Doubt as to Liability Offer in Compromise in Estate and Gift Tax Cases
• 4.25.10 Case Closing Procedures
• 4.25.11 Special Examination Procedures
• 4.25.12 Valuation Assistance
• 4.25.13 Appeals, Mediation, and Settlement Procedures
• 4.25.14 Miscellaneous Procedures

4.26 Bank Secrecy Act

• 4.26.1 Introduction and Program Structure
• 4.26.3 Examination Case Selection (ECS)
• 4.26.4 FinCEN Query (FCQ)
• 4.26.5 Bank Secrecy Act History and Law
• 4.26.6 Bank Secrecy Act Examiner Responsibilities
• 4.26.7 Bank Secrecy Act Penalties
• 4.26.8 Special Procedures
• 4.26.9 Examination Techniques For Bank Secrecy Act Industries
• 4.26.10 Form 8300 History and Law
• 4.26.11 BSA Examiner Responsibilities for Form 8300 Examinations
• 4.26.12 Examination Techniques for Form 8300 Industries
• 4.26.13 Structuring
• 4.26.14 Disclosure
• 4.26.15 General Program
• 4.26.16 Report of Foreign Bank and Financial Accounts (FBAR)
• 4.26.17 Report of Foreign Bank and Financial Accounts (FBAR) Procedures

4.27 Bankruptcy

• 4.27.1 Examiner Responsibilities and Procedures

4.29 Partnership Control System (PCS)

• 4.29.1 Overview of the PCS
• 4.29.2 Maintaining the PCS Database
• 4.29.3 PCS Database Elements
• 4.29.4 PCS Reports
• 4.29.5 PCS TEFRA/ILSC Notices and Cover Letters

4.30 LMSB General Procedures

• 4.30.1 Pre-Filing Agreement Program
• 4.30.4 LB&I Industry Program

4.31 Pass-Through Entity Handbook

• 4.31.1 Introduction
• 4.31.2 TEFRA Examinations - Field Office Procedures
• 4.31.3 TEFRA Examinations - CPF Procedures
• 4.31.4 TEFRA Administrative Adjustment Request (AAR)
• 4.31.5 Investor Level Statute Control (ILSC) Examinations - Field Office Procedures
• 4.31.6 Investor Level Statute Control (ILSC) Pass-Through Examinations - CPF Procedures
• 4.31.7 TEFRA Bankruptcy
• 4.31.8 TEFRA and ILSC Examinations - Campus Identity Theft (IDT) Procedures
• 4.31.9 Centralized Partnership Audit Regime (BBA) Field Examination Procedures
• 4.31.11 Other PTE Topics

4.32 Abusive Transactions

• 4.32.1 Process Guide for Combating Abusive Tax Avoidance Transactions
• 4.32.2 The Abusive Transactions (AT) Process
• 4.32.3 Coordination and Roles of Cross-Functional Units

4.33 Electronic Business

• 4.33.1 Managing Electronic Records from Taxpayers and Third Parties

4.34 SB/SE Emerging Issues

• 4.34.1 SB/SE Emerging Issues Process

4.36 Joint Committee Procedures

• 4.36.1 Joint Committee Review Program Overview
• 4.36.2 Identification of Joint Committee Cases
• 4.36.3 Examination Team Responsibilities
• 4.36.4 Joint Committee Review Team Procedures
• 4.36.5 Reports

4.37 Financial Products and Transactions

• 4.37.1 Financial Products Specialty

4.46 LB&I Examination Process

• 4.46.1 General Information and Definitions
• 4.46.3 Planning the Examination
• 4.46.4 Executing the Examination
• 4.46.5 Resolving the Examination
• 4.46.6 Workpapers and Reports Resources
• 4.46.10 Outside Expert Program

4.47 Computer Audit Specialist

• 4.47.1 Computer Audit Specialist Program (CAS)
• 4.47.2 CAS Technical and Procedural Information
• 4.47.3 Statistical Sampling Auditing Techniques

4.48 Engineering Program

• 4.48.1 Overview of Engineering Program
• 4.48.2 Valuation Assistance for Cases Involving Works of Art
• 4.48.3 Tangible Personal Property Valuation Guidelines
• 4.48.4 Business Valuation Guidelines
• 4.48.5 Intangible Property Valuation Guidelines
• 4.48.6 Real Property Valuation Guidelines

4.50 LB&I Compliance Integration

• 4.50.1 Campaign Development Process
• 4.50.2 Other Workload Selection and Research – Non-Campaign Compliance Programs
• 4.50.3 Large Corporate Compliance Program
• 4.50.5 Office of Tax Shelter Analysis (OTSA)

4.51 LB&I Case Management

• 4.51.2 LB&I Administrative Guidance
• 4.51.4 LB&I/Appeals Fast Track Settlement Program (FTS)
• 4.51.8 Compliance Assurance Process (CAP)

4.52 Global High Wealth Industry

• 4.52.1 Global High Wealth Program Processes and Procedures

4.54 LB&I Subject Matter Experts (SMEs)

• 4.54.1 Roles and Responsibilities of SMEs

4.60 International Procedures

• 4.60.1 Exchange of Information
• 4.60.2 Mutual Agreement Procedures and Report Guidelines
• 4.60.3 Tax Treaty Related Matters
• 4.60.11 International Compliance Assurance Program

4.61 International Program Audit Guidelines

• 4.61.3 Development of IRC 482 Cases
• 4.61.11 Development of IRC 367 Transactions and Issues
• 4.61.12 Foreign Investment in Real Property Tax Act
• 4.61.13 Dual Consolidated Losses
• 4.61.14 Guidelines for Handling Delinquent Forms 1120-F and Requests for Waiver

4.62 International Relations

• 4.62.1 International Visitors Program
• 4.62.3 Requests for Representation Funds and Gifts for Foreign Officials

4.63 Withholding and International Individual Compliance

• 4.63.1 Overview of the Withholding Exchange & Individual International Compliance (WEIIC) Practice Area
• 4.63.2 LB&I WEIIC Practice Network Knowledge Management
• 4.63.3 Offshore Voluntary Disclosure Program, Streamlined Filing Compliance Procedures and Voluntary Disclosure Practice
• 4.63.4 International Individual Compliance Examination Procedures
• 4.63.5 International Penalties and Procedures – Individuals

4.64 Central Withholding Agreement (CWA) Program

• 4.64.1 Case Development and Processing Guidelines

4.65 FATCA Foreign Financial Institution (FFI) Operational Procedures and Compliance

• 4.65.1 IRS FFI List Publishing Process

4.70 TE/GE Examinations

• 4.70.1 Affordable Care Act (ACA) Hospital Compliance Review
• 4.70.3 Promoter Investigations
• 4.70.5 Issue Identification and Research
• 4.70.6 Classification and Case Assignment (C&CA) Procedures
• 4.70.7 Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures
• 4.70.11 Administrative Matters
• 4.70.12 Planning the Examinations
• 4.70.13 Executing the Examination
• 4.70.14 Resolving the Examination
• 4.70.15 Discrepancy Adjustments
• 4.70.16 TE/GE Technical Assistance, Technical Advice Requests and Requests for 7805(b) Relief
• 4.70.17 Claims and Abatements
• 4.70.18 Tip Compliance Agreements
• 4.70.19 Church Tax Inquiries and Examinations Under IRC 7611
• 4.70.20 Bondholder Identification and Referrals

4.71 Employee Plans Examination of Returns

• 4.71.21 Examination Procedures for Plans in U.S. Territories
• 4.71.23 Bankruptcy Procedures

4.75 Exempt Organizations Examination Procedures

4.80 Government Entities Examinations

4.81 Tax Exempt Bonds (TEB) Examination Program and Procedures

• 4.81.12 Compliance Review of Form 8038-CP

4.82 Tax Exempt Bonds Examination Guidelines

• 4.82.3 Direct Pay Bonds

4.86 Indian Tribal Governments (ITG) Procedures

4.88 Indian Tribal Governments Examination Issues and Procedures

4.103 Compliance Data Environment (CDE)

• 4.103.1 CDE Application and Procedures

4.119 BMF Liability Determination

• 4.119.1 BMF Underreporter (BUR) Control
• 4.119.3 BMF Underreporter (BUR) Manager and Coordinator Handbook
• 4.119.4 BMF Underreporter (BUR) Program