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Each year the Government Accountability Office (GAO) audits the Service’s financial statements. As a part of this audit, they review documentation for taxpayers whose balance due (including interest and penalties) is over $10 million.

For each tax period where the balance due (including penalties and interest) is $10 million or more, the following documentation must be sent to the Office of Unpaid Assessments Accounting and Analysis when the case is closed.

The information should be submitted via email to *IRS Financial Audit.

Director Exam issued Memorandum “Sensitive Case Report Guidelines” dated March 4, 2022 advising an SCR is needed for every case when the balance due including penalties and interest is $10 million or more per tax year.

For CBWH employees this includes cases for potential assessment.

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CBWH Management will follow the SCR Memorandum for actions needed.

IDRS is a system which enables employees to have access to taxpayers tax accounts.

Capabilities of the system include:

Cases may be controlled on IDRS in several ways. Under IDRS, any type of case may be controlled. TEs may control a case by entering the IDRS Command Code (CC) ACTON into IDRS. Follow the concept of only one TE assigned to an account.

If you receive a call from a taxpayer on the BWH toll-free line and the case is assigned to another CBWH employee, take the information stated by the taxpayer and forward that information via email to the assigned employee. Copy your manager and the employee’s manager on the email. Remember to encrypt the email since it will have taxpayer’s Personally Identifiable Information (PII) included to identify the case.

An open control base on a module indicates control for the purpose of initiated correspondence, and adjustment or other action. An open control base retains the module on IDRS indefinitely. Update it when necessary to reflect changes in status or in action taken. Once the control base closes, it drops from the IDRS data base provided no other criteria exists for retaining the module.

Cases are controlled by various IDRS CCs. Each control base contains several elements of data, fully explained in IRM 2.3.12, IDRS Terminal Responses. The control base and history information is a very important section of TXMODA. If updated properly, the control base and history information section can give you a complete account of what transpired on a case.

CBWH employees are required to use Integrated Automation Technologies (IAT) tools. IAT tools simplify taxpayer account processing by assisting the user with IDRS research and input. The required use of mandated tools applies to all CBWH Program-related telephone and inventory work.

If an IAT tool is not available or an employee has a problem with the IAT Tool Manager, the case should be processed through IDRS following established procedures. It is important that employees follow their established business procedures to report problems with the IAT tools. CBWH employees should refer to the IAT Website for issues such as how to report problems with IAT tools or how to request enhancement to tools.

All IAT tool users can visit the IAT website https://organization.ds.irsnet.gov/sites/WiMttIat/home/default.aspx for known issues on tools, job aids and a variety of tool related issues. Copies of the IAT newsletter (iNews) are available on the website and provide helpful tool tips and information on upcoming IAT tool retirements, pilots and tool roll outs. This site provides the link to subscribe to the newsletters.

This report contains all cases controlled to an IDRS employee number and can be used to:

This report is available on Control-D on Monday mornings, Report Name: "Overage Report" , Job Name: ORCAS Report. The ORCAS coordinator will load the report through the ORCAS delivery database. Then the report will be available to the Manager and TEs.

The Manager or Lead will provide TEs the page(s) of the report where the cases are controlled to their IDRS number. TEs will follow local procedures for using the ORCAS report, documenting case activities, and returning the ORCAS report to the Manager.

The TE should work cases in the following priority order:

Each TE must perform a Quarterly Physical Inventory Review, to ensure their ORCAS Report is verified against each case assigned to them. The results of your quarterly physical inventory reviews must be maintained by your Operation for future reviews.

BWH Shared Drive "Z" gives CBWH examiners, managers, and other staff the ability to review and store information and documentation for the cases.

When an employee needs access to the BWH Shared Drive "Z" , the manager will forward the employee’s name and their SEID to the Administrator of the BWH Shared Drive "Z" .

Employees granted access will be able to access the entire team folder. Access is only authorized to cases assigned to the employee and as needed to facilitate customer service when answering phone inquiries or performing work for another employee as delegated by management. Established unauthorized access (UNAX) restrictions apply.

Quarterly, the BWH Shared Drive "Z" Administrator contacts the manager for them to verify employee access. If new employees arrive in the group or other employees leave the group, the manager must email the BWH Shared Drive "Z" Administrator immediately.

The BWH common drive "S" is maintained by Cincinnati Campus Exam/AUR, Centralized Specialty Tax Operations Cincinnati. Contact that administrator when changes are needed to the "S" Drive.

The BWH SharePoint site where the TEs upload the correspondence numbers received each week is maintained by Exam HQ Performance Planning and Analysis (PPA) so contact them when changes are needed to this site.

Use approved naming conventions for electronic case files (see Exhibit 4.19.26-5, File Naming Conventions) and upload documents timely into the BWH Shared Drive "Z" .

Employees will comply with IRM 6.8002.6.2, Security Requirements, IRM 10.8.1, Information Technology (IT) Security, Policy and Guidance, and IRM 10.8.26, Information Technology (IT) Security, Government Furnished and Personally Owned Mobile Device Security Policy, by closing their computer’s connection to the BWH Shared Drive "Z" and any other IRS shared drives, IRS software, or internet browser windows, at the end of each workday.

The Data Collection Instrument (DCI) is used by management to document the compliance plan and business results. The employees use the DCI to document a case closure.

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For TY2019 DCI, use CBWH DCI TY2019 WS1 or CBWH DCI TY2019 WS2 on SBSE Exam BWH Policy SharePoint Site to record the DCI information. Job Aids are available for each workstream of how to use and enter the data on SharePoint.

Prepopulated fields in the TY2018 Workstream 1:

Prepopulated fields in the TY2018 Workstream 1 from PMFOLB data:

TY2018 Workstream 1 DCI fields to be completed by TE:

The CBWH team uses PDF templates for the cases which are available on the SBSE Exam BWH Policy SharePoint site.

Prioritize any statute imminent cases, unpostable conditions, and cases identified by the Manager or Lead for immediate action.

Use IDRS and IAT to perform IDRS actions.

Forward questions or clarification needed regarding procedures to the Lead.

Status for open IDRS controls-

The TE, Lead or Manager, will input the following activity code on the open IDRS control when a case question is referred, or the case is returned back to the assigned TE:

The TE will document all actions taken on a CBWH case on the Activity Record including incoming correspondence received, telephone calls, discussions with the Payer, signed Form 945 sent to processing, adjustments input, referrals, and so on. Consider the Activity Record as the history record of all actions taken and reasons supporting your decision on the case that documents a good action trail. See Exhibit 4.19.26-1, Activity Record, for a sample activity record for a completed case.

If a case has to be referred to Appeals in the future, the Activity Record will be included as documentation to support the actions taken by the CBWH team.

Section 3705(a) of the IRS Restructuring and Reform Act of 1998 (RRA 98) provides that any “manually generated correspondence” shall include the name, telephone number and unique identifying number of an employee who can be contacted with respect to correspondence. Any other correspondence shall include a telephone number of a person who may be contacted with respect to the correspondence.

On tax-related matters employees are required to provide (at a minimum) the following information:

The term manually generated correspondence is defined as any correspondence issued that is non-systemically generated and must contain certain elements listed in (1) above. The IRS employee issuing the correspondence is:

Manually generated correspondence may include:

If preparing a Form 5260, Quick Note, it must be reviewed and approved by the employee's manager or team leader. See IRM 21.3.3.4.22, Quick Notes and 3064C Letters (C-NOTES), for the requirements of a Quick Note (Form 5260).

Provide an accurate balance due in manually generated correspondence when requested by a taxpayer or the authorized representative. See IRM 21.3.3.4.2.2.1, Required Information for Interim Letters and Closing Letters, regarding accounts with an installment agreement (status 60).

The 10 fundamental steps (or stages) of CBWH compliance cases are:

Manager’s responsibility to prepare a case assignment list.

The manager will provide a case assignment list to the designated CBWH employee.

Designated CBWH employee performing clerk’s duties is responsible to assign cases.

For each case, the designated CBWH employee will:

TE’s responsibilities upon receipt of new case assignment are:

If an indicator of fraud is identified, refer the case to the designated CFC for further development.

Discuss the indicators of fraud with the Manager. If the Manager concurs:

When Form 13549 is first prepared and given to the Manager for review, the TE will input IDRS Activity Code FRCRDMMDD (Workstream 1) or 2FRCRDMMDD (Workstream 2), IDRS Status A and monitor for 37 days for a response from the Campus Fraud Coordinator (the extra 7 days is to allow time for the Form 13549 approval process). The Activity Code may be reinput for an additional 30 days. After 60 days, refer case to Lead for instructions.

The Campus Fraud Coordinator will advise how to refer the case (for example, to Exam or to Criminal Investigation), or will reject the referral. If the case is accepted for referral to another function, TE will close the case using the appropriate Activity Code. See Exhibit 4.19.26-11, TXMOD/ACTON codes. If the case is rejected, TE will discuss next steps with the Lead.

With incidents of Identity Theft (IDT) increasing each year, emphasis is being placed on the ability for programs (such as CBWH) through the IRS to provide expedited handling and to track the number of unresolved IDT cases.

The IRS established Identity Theft Victims Assistance Specialized Teams (IDTVA). An IDTVA TE will be a taxpayer’s single point of contact (SPOC) for IDT and other account related issues.

Referrals to the IDTVA are made through the BMF ID Theft Liaison. All functions have established BMF ID Theft Liaisons to assist in the coordination and working of BMF ID Theft cases. The list of liaisons can be found on the SERP IRM Supplement Tab on the BMF Identity Theft page. See BMF ID Theft Liaison Listing (http://serp.enterprise.irs.gov/databases/who-where.dr/idt-liaison-listing.html).

TEs must make a referral for assistance to the BMF ID Theft Liaison if a taxpayer states they are a victim of identity theft. IRM 25.23.9, BMF Identity Theft Processing, requires extensive research which is beyond the scope and training of CBWH personnel. Under IRM 25.23.9.4(2)I, the case must be referred to the appropriate BMF ID Theft Liaison who will perform the required research, validating the taxpayer’s allegation of BMF identity theft, and provide instructions to the CBWH Manager on needed actions to either close the case to IDTVA (if identity theft is validated) or continue processing the case normally (if identity theft is not validated).

An allegation or claim of identity theft is identified by the presence of Form 14039, Business Identity Theft Affidavit, a police/law enforcement incident report, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

If you receive an allegation of BMF identity theft, prepare Form 14566, BMF Identity Theft Referral, and forward it with a zipped case file, including all case research and any other documents (notices, letters, correspondence, activity record, and so on) to the CBWH Manager for routing to the appropriate BMF ID Theft Liaison. Input IDTL_MMDD (for Workstream 1) or 2IDTL_MMDD (for Workstream 2), Case History Status Code A, to monitor for 30 days. If guidance is not received from the BMF ID Theft Liaison within 30 days, follow up with Manager. The Activity Code may be re-input as needed until guidance is received.

If the BMF Identity Theft Liaison instructs you to transfer the case to the IDTVA, input Activity Code CLOSEIDTVA (for Workstream 1) or 2CLOSIDTVA (for Workstream 2) and Case History Status Code C to close the case to the to IDTVA. The designated CBWH employee will send any paper case files to the IDTVA with Form 3210.

For more information about assisting a taxpayer with an identity theft matter by telephone, see IRM 4.19.3.22.1.26.2, IDT Claims – Telephone.

For more information about assisting a taxpayer with an identity theft matter by written correspondence, see IRM 4.19.3.22.1.26.3, IDT Claims – Responses.

Individuals impersonating IRS employees may make unsolicited threatening telephone calls and/or send fraudulent emails or letters to taxpayers. They may use the threat of arrest to obtain money from victims by falsely representing that the victims owe back taxes or other fees. The perpetrators demand that the victims send them money via prepaid debit cards, money orders, or wire transfers from their banks. See https://www.treasury.gov/tigta/docs/IRS%20Impersonation%20Scam%20Flyer.pdf.

If a taxpayer calls the BWH toll-free line to discuss a CBWH letter, but there is no record in IDRS or the shared drive of any notice or letter for the tax year in question, advise the taxpayer to take appropriate actions using the guidance in IRM 4.19.3.5.8.1.1, Online Fraud and Other Scams (PHISHING).

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Workstream 1: The Payer filed information returns for Payees without TINs. The Computed Tax Liability will be primarily or entirely backup withholding. The Computed Backup Withholding amount will be the Payees’ Reportable Payments times the Applicable Backup Withholding rate. See IRM 4.19.26.2.2, Back-up Withholding Rates.

Workstream 2: The Payer reported federal income tax withholding on filed information returns but did not file the relevant taxable return Form 945. The Payer may also have filed information returns for Payees without TINs. The Computed Tax Liability will be:

Run IDRS reports for case EIN as follows:

Place PDF prints of the IDRS research in the electronic casefile on the BWH Shared Drive "Z" prior to closing the case. It is not necessary to place a pdf print of an unavailable report in the electronic casefile.

ENMOD may contain in the upper right hand corner a designation of Potentially Dangerous Taxpayer (PDT) or Caution Upon Contact Taxpayer (CAU) indicator. The IRS has two service-wide employee safety programs to warn employees of taxpayers who have been designated as potentially dangerous or should be approached with caution.

If the PDT or CAU indicator is present, notify the Manager for instructions.

For more information on the PDT and CAU programs, see:

Verify the name and address on INOLES is consistent with all case data.

Check (CC) ENMOD for any pending name or address changes

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Check for an identity theft indicator on ENMOD (TC 971 AC 522 IDTCLM).

If present, notify Lead and consider referral to IDTVA. See IRM 4.19.26.5.4.2, Referral to Identity Theft Victims Assistance Specialized Teams (IDTVA).

If a Payer has an SSN instead of an EIN, search for a cross-reference EIN.

If no EIN is found, discuss with Lead and consider requesting an EIN from Customer Accounts Services and Submission Processing. See IRM 21.7.13.3.8, Receiving EIN Applications from Field Compliance. If an EIN is requested, TE will input Activity Code EINREQMMDD (for Workstream 1) or 2EINRQMMDD (for Workstream 2) and Case Status History Code A to monitor for 7 days for EIN assignment. If the EIN is not assigned within 7 days, discuss with Lead for next steps.

If a Payer has more than one assigned EIN, forward the case to the Lead.

If more than one EIN is confirmed, the Lead will follow IRM 3.13.2.14, Multiple EINs, and forward the case to Entity. BMF Entity is the only section within the campus authorized to consolidate EINs.

Verify that BMFOLI does not show that Form 945 was filed for the year under inquiry under the Payer’s EIN and MFT 16 (Form 945).

Check TXMODA for a pending TC 150 on MFT 16.

If no return is filed for the year under the TIN, then look for a cross-reference (X-REF) TIN. On CC INOLES, look for X-REF EIN in the bottom right hand corner. On CC ENMOD, look for a Parent EIN in the upper left hand corner. INOLEX lists all cross-referenced TINs and whether they are subsidiaries (SB) or a parent (PR).

If a X-REF TIN is found, then input CC BMFOLI to search for a filed Form 945 (MFT 16) under that (X-REF) TIN.

If Form 945 was filed (TC 150 posted or pending), then refer to the chart below.

TEs use MeF to obtain copies of Form 945. Refer to "How to Access MeF" Job Aid on the SBSE Exam BWH Policy SharePoint Site.

Review CC BMFOLZ for prior Form 945 examination (MFT 16) with a TC 300 amount.

Review CC ENMOD and CC TXMOD for prior CBWH cases with a TC 150 amount. Prior compliance "no change" cases may have fallen off IDRS when the dummy TXMOD was closed. Look for evidence of Letter 96-C issued in the prior period, and/or a history note describing the "no change" closing. If a prior CBWH case is found, review the prior case files on the BWH Shared drive "Z."

Review CC PMFOLB for the number of Forms 1099 filed with missing, unassigned and mismatched TINs as well as the years that the Payer received a CP2100 Notice.

Review CC PMFOLD.

If the Payer’s account shows significant continued noncompliance despite prior examinations of MFT 16, or worsening noncompliance, then this may be an indicator of negligence or civil/criminal fraud. For example, the Payer may continuously file information returns without TINs or with improper TINs despite notification from the IRS. Discuss case with Lead who will determine if a possible referral to the field is warranted.

If there was a previous MFT 16 examination (TC 300 present on IDRS), discuss with the Manager or Lead whether to contact Exam to discuss the prior examination and continued noncompliance. Use the PBC, SBC and EGC to locate the correct Exam contact.

Review CC AMDIS for an "-L" Freeze on MFT 01 (Form 941), MFT 10 (Form 940), MFT 11 (Form 943), MFT 14 (Form 944), or MFT 16 (Form 945). Review CC BMFOLT or CC TXMODA for an audit indicator TC 420 or 424, not reversed by TC 421. This indicates the return is currently requested or under audit by Exam.

Refer cases to Field Exam whenever Freeze Code "–L" is present. Do not continue a compliance case if there is an open examination (TC 420 or 424) for Form 945 (MFT 16) in any year. These cases must be referred to Exam. See IRM 4.19.26.5.2, Refer cases with "-L " freeze to Field Exam.

If there is suspicion of fraud or identity theft, see IRM 4.19.26.5.4, Consider Referral for Fraud or Identity Theft.

When a disaster occurs in a particular state, the President may declare a federal disaster or emergency. These freeze codes "-O" or "-S" appear on IDRS.

To verify whether a disaster or emergency freeze is in place, enter the Payer’s zip code in the Integrated Customer Communications Environment (ICCE) IRS Disaster Assistance Program Website to determine if there is a current disaster freeze present. The zip code search tool may provide more timely results than IT systemic programming for an affected taxpayer. See http://www.icce.irs.gov/fema/.

"-O" freeze indicates the U.S. President has declared a federal disaster or emergency in the Payer’s area [ENMOD TC 971 AC 086 or 087]. An "-O" freeze provides systemic filing and payment relief to taxpayers with a filing or payment due date or extended due date, by postponing those due dates. The "-O " freeze also suspends collection and examination activities, including under reporter activity. Generally, an affected taxpayer is eligible for compliance relief unless certain conditions necessitate the continuation of compliance activity, such as imminent statute. For more information, see IRM 25.16.1.7.2, "-O" freeze.

-S freeze identifies tax returns filed within a declared disaster area ENMOD TC 971 AC 688. For more information, see IRM 25.16.1.7.1, "-S" freeze.

If Payer has not been contacted, and an "-O" or "-S" freeze are present, close the case as a Screen Out. See IRM 4.19.26.13.2, Close Case - Screen-Out.

If after you have started the case, you identify a"-V" freeze indicating the Payer has filed for bankruptcy, for example, TC 520, refer the case to the Lead.

Bankruptcy proceedings impose deadlines for action for both the debtor (taxpayer) and the creditor (IRS). The deadline for filing proofs of claim is called the "bar date." The IRS will not receive payment for unfiled returns or open exam cases unless they are listed as estimates on a proof of claim. The IRS’ failure to meet the bar date (or bar date extension) may result in the IRS’ claim being disallowed. This means the IRS may not recover from the debtor personally upon discharge. Thus, the IRS must ensure that it files accurate claims with the court in a timely manner.

The Lead will contact the in Technical Services Bankruptcy Coordinator to obtain the name of the Insolvency Bankruptcy Specialist. The Technical Services Bankruptcy Coordinator can be found athttps://portal.ds.irsnet.gov/sites/vl051/Lists/Technical%20Services%20Bankruptcy%20Coordinator%20Listing/Bankruptcy%20Coordinator%20by%20State.aspx .

Input RFRLDMMDD (for Workstream 1) or 2RFRLDMMDD (for Workstream 2) and Case History Status Code A and monitor the case for 7 days. The Activity Codes may be re-input if a response has not been received from Insolvency within 7 days.

Generally, the CBWH program does not work bankruptcy cases, so the Insolvency Bankruptcy Specialist must tell the Lead where to close the case. The Lead will close the IDRS base.

For the proof of claim, the Lead will provide to Insolvency any potential deficiencies, and a copy of the 6020(b) package (if any) including the Stampted/Signed Form 945, 6020(b) Certificate, and Explanation of Backup Withholding with List of Payees.

The "-W" freeze, in combination a TC 520 and (CC) (closing code) other than 81 indicates litigation other than bankruptcy.

Discuss the case with the Lead before transferring the case and then transfer the case to the Lead. The Lead will coordinate discussion of the case with the Manager and Counsel. The CBWH Manager will send an email inquiry to the TE/GE Area Counsel in whose jurisdiction the Payer is located based on the address of record as shown in INOLES. The CBWH Manager will describe the CBWH case, including taxpayer (Payer) name, EIN, and freeze code, and ask whether the CBWH compliance activities can continue or if the case should be closed as a screen out or no change or transferred to another IRS compliance function or unit. See Area Counsel contact information.

Input RFRLDMMDD (for Workstream 1) or 2RFRLDMMDD (for Workstream 2) and Case History Status Code A and monitor the case for 14 days. The Activity Codes may be re-input if a response has not been received from Counsel within 14 days.

Counsel will provide instructions to continue processing or to transfer or close the compliance case. If the case is transferred or closed, document the action on the Activity Record and close as a Screen Out or No Change, whichever is applicable. For more information for closing as a Screen Out see IRM 4.19.26.13.2, Close Case - Screen Outs, and for closing as a No Change see IRM 4.19.26.13.3, Close case – Any Non-Appealed Case (Excluding Screen Outs).

The "-Z" or "Z-" freeze indicates the taxpayer’s account is currently being reviewed by Criminal Investigation (CI) function.

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When this freeze code is present, close the case as a Screen Out if prior to sending a letter. For more information regarding closing as a Screen Out see IRM 4.19.26.13.2, Close Case - Screen Outs. If CI involvement is identified after the letter is sent, close as no change with IDRS Activity Code CLOSETOCI (for Workstream 1) or 2CLOSETOCI (for Workstream 2). For more information regarding closing as a no change see IRM 4.19.26.13.3, Close case – Any Non-Appealed Case (Excluding Screen Outs).

TEs must ensure that the person contacting the IRS is the Payer. In most cases, the Payer will be a business entity, and the contact must be either an officer of the Payer (such as the Chief Financial Officer of a Corporation) an owner, partner, member, or authorized under Form 2848 to discuss the Payer’s tax matters.

If an unauthorized individual wants to discuss the tax matter, then request the individual submit a Form 2848 or Form 8821 and do not discuss the tax matter with that individual until they do.

If the Payer or representative submits a Form 2848 or Form 8821, verify that it is completed correctly. If incomplete or improperly prepared, return the form to the Payer with Letter 3064-C, selecting paragraph I. See IRM 21.3.7.5.1, Essential Elements for Form 2848 and Form 8821, for instructions. TE will input Activity Code 3064C (for Workstream 1) or 23064C (for Workstream 2), Case History Status Code A.

If the Form 2848 or Form 8821 is completed correctly, prepare fax coversheet and EEFax the form to the Central Authorization File (CAF) unit.

Place an electronic PDF print of the annotated Form 2848 or Form 8821, and electronic PDF print of the EEFax confirmation, in the case file on the shared drive.

Update the activity record that the Form 2848 or Form 8821 to reflect actions taken. See Exhibit 4.19.26-1, Activity Record.

For representatives not yet on CFINK, when sending Power of Attorney Correspondex letters through the IAT Letters tool select "Y" under CAF Copy. This will allow manual entry of the name and address of the representative.

If you are preparing a template letter, enter the POA information manually and save the letter to the BWH Shared Drive "Z" in the PAYER (PR) folder under the appropriate EIN folder, for example, Letter 937.

The initial contact is the first contact with the Payer. ALL initial Payer contacts must be made by mail using approved form letters.

All responses that would potentially reduce the amount of backup withholding under consideration or otherwise materially affect the compliance adjustment must be provided in writing. If the Payer or representative wants to provide payee TINs, or make a statement, request that information in writing by mail, fax, or email. See Pub 1281, Backup Withholding on Missing and Incorrect Name/TINs, for more guidance.

Return a Payer's telephone call within two business days, and if possible, within 24 hours.

When returning the Payer’s phone call and leaving a voice mail message, do not mention the tax matter. Simply state "This is Ms. [Surname] returning your phone call. Call the backup withholding toll-free line for more information (state the number)." This ensures unauthorized persons will not know it is the IRS calling.

All telephone discussions with a Payer or the Payer’s representative, including voicemail from and/or attempts to contact the Payer or representative, must be documented contemporaneously in the electronic case activity record.

Enter a history note in AMS to describe what was discussed with the Payer.

Taxpayer responses may occur at any time during compliance procedures, and the nature of responses and procedures will be similar no matter when the response occurs.

The recipient will scan and upload all correspondence received from a Payer (mail or EEFax) to the Payer (PR) folder for the Payer’s TIN on the shared drive. The recipient will place the paper correspondence in the Payer’s case file.

The recipient will input Activity Code REPLYMMDD (for Workstream 1) or 2REPLYMMDD (for Workstream 2), Case History Status Code A, to notify the assigned TE that Payer correspondence is available for review. The purge date MMDD is seven business days from the date the Payer’s response is received in the CBWH Unit.

If it can be determined that a Payer has submitted original documents, the recipient will make a copy for the paper case file and mail the originals back to the taxpayer with Letter 96-C, Acknowledgement Letter for General Use/Inquiry. The recipient will update the Activity Record to indicate the originals were mailed back to the Payer.

In general, you must respond to Payer correspondence within 30 days from receipt. See Exhibit 4.19.26-6, Timely Actions. Exceptions include:

Issue Letter 2645-C, Interim Letter, if unable to respond to correspondence within 30 days from the earliest stamped IRS received date. Select paragraphs A, B, E and/or K, X, and k. Populate paragraph X with an expected date the correspondence will be resolved. The promised resolution date may be any number of days and can vary depending on workload.

If a Form 2848 or Form 8821 is on file for the Payer, prepare and mail Letter 937 to the representative with a copy of any correspondence including enclosures sent to the Payer. Use the prepopulated Letter 937 available on the shared drive.

If the representative is not listed on (CC) CFINK, forward Correspondex letters by selecting Y under CAF copy in the IAT Letters tool and fill in the representative’s information. For detailed instructions, see IRM 2.4.6.6.2, CAF Indicator.

Place a copy of all correspondence (including Letter 937) in the electronic case file on the shared drive.

Document all correspondence to or from a Payer or the Payer’s representative in the activity record.

Faxing and/or Enterprise Electronic Faxing ("EEFax" ) of tax information to taxpayers and/or their authorized representatives within the United States, U.S. possessions, commonwealths, and territories, is permitted consistent with existing internal rules.

As a general rule, copies of case documents or transcripts should be mailed and not faxed or EEFaxed to taxpayers, since faxing presents more security vulnerabilities than mailing of tax information. The facts and circumstances of each case and the requirements of IRC 6103 should be considered prior to making a disclosure via facsimile transmission.

If the Manager in writing approves faxing or EEFaxing copies of case documents to the taxpayer or the taxpayer’s representative, follow the procedures for facsimile transmissions of tax information to taxpayers and their authorized representatives in IRM 21.1.3.9, Mailing and Faxing Tax Account Information.

USPS provides mail forwarding orders for a period of 12 months, after which time the order will expire. For six months immediately following expiration, mail sent to the taxpayer at the old address will be returned to the sender with a yellow label showing the new address and the reason for non-delivery.

USPS sends all undeliverable First Class Mail to the IRS return address on the envelope.

The address on the yellow label ("Yellow Label" ) is the taxpayer’s current address of record in the USPS system and indicates that the taxpayer provided the USPS with a Change of Address (COA) that differs from the address used by the IRS.

The National Change of Address (NCOA) program links with the USPS change of address requests received from postal customers. The NCOA run updates Master File with the address provided by the postal customer/taxpayer. The DLNs from these changes will be shown on CC ENMOD:

It is important that all undeliverable mail is worked as a priority to ensure that correspondence is mailed to the taxpayer’s current address. A taxpayer could challenge an assessment in the appeals process or in the courts if the IRS did not attempt to locate the taxpayer’s last known address.

Upon receipt of undelivered correspondence, the recipient will scan the envelope without opening it, and place the electronic image in the case file on the BWH Shared Drive "Z" in the PAYER (PR) folder under the appropriate EIN folder.

The recipient will update the TXMOD activity code as follows for undelivered correspondence:

The purge date is seven days from the date the undeliverable was received in CBWH.

The recipient will review CC INOLES, ENMOD, and NAMEE to see if there is a new address on file.

If the taxpayer’s name printed in the letter and what is shown on the "Yellow Label" affixed by the USPS to the envelope are exactly the same, but the address is different, use the "Yellow Label" address.

Discuss the following unusual situations with the Lead:

If you are unable to find a current address, the Lead or Manager will provide guidance.

Staple the two pages of Form 8822-B together with the instruction page on top and highlight the following paragraph on the instruction page. "The use of this form is voluntary. However, if you fail to provide the IRS with your current mailing address, you may not receive a notice of deficiency or a notice and demand for tax. Despite the failure to receive such notices, penalties and interest still continue to accrue on the tax deficiencies."

If there is more than 15 days remaining in suspense period for the returned correspondence, then leave the original purge date. If the purge date has expired, then suspend the case for an additional 15 days after re-mailing.

Update the activity record to indicate the actions taken to resolve undeliverable letters.

Taxpayers have a right to receive information concerning any federal taxes assessed against them. The IRS is required to exercise due diligence to find and use a taxpayer’s last known address.

A taxpayer’s "last known address" is defined in 26 CFR 301.6212-2(a) as the address on the taxpayer’s most recently filed and properly processed return unless the IRS has been given clear and concise notification of a different address.

Generally, the last known address is the address on Master File. However, under 26 CFR 301.6212-2(b)(2), an address may be changed by information received from the United States Postal Service, National Change of Address (NCOA) database, unless the taxpayer provides clear and concise notification of a change of address (as set out in Rev. Proc. 2010-16) or the IRS properly processes a taxpayer’s federal income tax return with a different address.

“"Clear and concise notification" ” is defined in Rev. Proc. 2010-16, and can be written, electronic, or oral. TEs are most likely to encounter written or oral notification of a change of address.

Clear and concise written notification includes:

Clear and concise oral notification is a statement made by a taxpayer in person or directly via telephone to an IRS employee who has access to the IRS Master File informing the IRS employee of the address change. The taxpayer must provide the new and old address, full name, and TIN. The IRS employee must follow established procedures to verify the taxpayer’s identity, and inform the taxpayer that the new address, and not the former address, will be used by the IRS for all purposes, not just the Form 945 compliance matter.

A Payer's mailing address will not be updated unless clear indication of a change from the Payer or the Payer’s representative is received.

Any correspondence from a Payer requesting an address change must be signed by the Payer or their authorized representative before the TE will consider updating IRS records.

Before updating any field of the Entity module, research to determine if an Identity Theft Indicator (IDT) indicator is present.

IDT is identified by TC 971 AC 522 IDTCLM posted to TXMODA.

If IDT indicator is present, refer the address change and documentation to support the request to BMF IDT Campus Mailboxes at http://serp.enterprise.irs.gov/content/irm-supplements/identity-theft-bmf.html.

Ensure the email clearly states an IDT indicator is present, the taxpayer has requested an address change, and CBWH not authorized to input the address change.

Enter the action taken on the Activity Record for the CBWH case.

If a taxpayer requests an address change while the case is open in CBWH, then the assigned TE will be responsible for updating the address.

(CC) BNCHG is used to update a taxpayer’s address of record. See Exhibit 4.19.26-12, IDRS Command Codes (Job Aid), for graphic of screen layout. Required fields are:

After verifying the input is correct as entered on the screen, press [Page Up] to submit. Print the confirmation screen as an electronic PDF document and save in the Payer’s electronic case file in the shared drive.

When an EIN has employment tax filing requirement codes (FRC) and an address change occurs, CP 148A generates to the taxpayer’s new address and CP 148B generates to the taxpayer’s previous address. Unless instructed to do so by your Manager, do not suppress notices by entering a "Z" in the PARA-SEL-CD> field.

The Payer's address will be updated from every return received per Rev. Proc. 2010-16.

Take care not to update the BMF address to a previous address. For delinquent returns, ensure the address has not changed in more recent years.

If a secured delinquent return has not yet received a DLN, then it is not necessary to update Master File with the address on the return as Submissions Processing will update the address from the return.

26 CFR 301.6109-1(d)(2)(ii) requires any entity with an EIN to report a change in its responsible party on lines 8 and 9 of Form 8822-B within 60 days of the change. Use of Form 8822-B is voluntary for purposes of reporting a change of address, but the EIN entity must include its current mailing address and telephone number on its filed returns, pursuant to 26 CFR 20.6011-1.

Entities using BMF SSNs -- filers of Form 706 and 709 series, which are estate, gift, and generation-skipping transfer tax returns - may use Form 8822, Change of Address, to request an address change, as will IMF taxpayers (individuals). Use of Form 8822 is voluntary by these taxpayers.

Every field of Form 8822-B must be completed before it is considered processable. However, a location address is not required of every taxpayer. Required fields are:

An individual TIN (SSN or ITIN) must be provided for the responsible party. Business entities cannot be considered the responsible party of a business entity other than a government entity.

Signatures on Form 8822-B, on Form 8822, and on other written request for address change, will be accepted prima facie. "Prima facie" means at first appearance, at first view, or before investigation. If there is no contradicting evidence to dispute the authority of that person, the signature must be accepted. See IRM 3.13.2.2(10), BMF Entity – General. This policy applies to signatures accompanied by titles such as owner, president, and so on. This authority does not apply to third party requests. A Form 2848 is required for a third party not listed on CC CFINK. See IRM 3.13.2.2 for definitions of an authorized representative.

Written requests for change of address that are not on Form 8822-B may be accepted if they contain the same information as required on Form 8822-B. These include:

The designated CBWH employee or TE will scan all written requests for change of address and place the electronic scans in the appropriate case file in the shared drive.

Written requests for change of address that have been processed have a defined retention period and will be stored in the Files Operation in an Alpha File. Each request must be name controlled and contain an audit trail in the lower left margin of the document. The designated CBWH employee will forward all processed forms to Files Operation on a Form 3210 indicating "Alpha File." If the written request was not processed (for example, because it was rejected back to the taxpayer or referred to the Identity Theft Liaison) it is not sent to Files.

A hard copy of the written request for change of address, including audit trail is placed in the paper case file.

Written requests for change of address may be evaluated as follows:

If a Payer makes an oral request for change of address, follow the guidance below:

If an address change is necessary and the taxpayer requests an address change using oral statement, the IAT Address Tool is highly recommended for both research and inputting a change of address request.

If the taxpayer cannot pass the authentication, the address change cannot be updated via oral statement. Request they complete Form 8822-B, Change of Address or Responsible Party – Business, and mail to the address on the form based on their state. Advise the taxpayer they can get this form at "www.irs.gov."

Oral Statements by a Payer that it was for any reason not required to backup withhold or is not liable for backup withholding, are not sufficient return information.

If a Payer wants to make a statement, advise the Payer to provide that statement in writing.

Sufficient return information is a signed Form 945 reporting the applicable tax as shown in the LOP. If the Payer wants to show there is no liability for the tax, the Payer must provide additional sufficient return information.

For Missing Payee TINs, additional sufficient return information consists of a written statement, signed by the Payer, that the Payee TINs were on hand at the time the Reportable Payment was made, accompanied by the missing Payee TINs.

For FITW, additional sufficient return information consists of a credible written statement, signed by the Payer, explaining why FITW is not due, accompanied by copies of amended information returns correcting FITW reported by the Payer, that the Payer filed before the end of calendar year in which the reportable payments were made, along with a statement that FIT actually withheld from payees was refunded before the end of the calendar year. See IRM 4.19.26.10.7.5, The Payer withheld federal income tax in error or incorrectly reported federal income tax as withheld on the information return.

If the Payer provides an incomplete response (for example, the Payer provides a written statement but does not provide the missing return information such as Payee TINs), the TE will issue Letter 3064-C to explain why the response cannot be accepted to reduce backup withholding liability and describe the missing information.

Generally, the case will not be suspended to provide additional time for the Payer to provide a more complete response, unless the Payer requests a one-time 30-day extension of time to respond.

Payers may not truncate TINs that they provide to CBWH Program. If a Payer tries to provide missing return information, but provides a truncated TIN, it should be rejected as insufficient.

If the Payer submits additional return information on or by the Letter 6112 or Letter 6112-A purge dates, then the TE will consider it and make any adjustments necessary. It is not necessary to wait until the expiration of the purge date to communicate the results of the TE’s determination.

If a response is received and additional return information is still needed, the TE may telephone the taxpayer to explain the missing return information.

The TE will process additional return information provided by the Payer as follows:

Do not re-send the first or second notice or extend the response dates for the notices. Provide revisions as described above and move continually toward the next step in the compliance process. However, the Payer’s request for a one-time 30-day extension of time to respond will be accommodated at any time during the compliance case, unless there is a statute issue that requires Quick Assessment (see IRM 4.19.26.12.3, Quick Assessment).

TEs will conform to Policy Statement P-21-3 requirements to respond to the Payer. See IRM 1.2.1.13.3, Policy Statement 21-3 (Formerly P-6-12), Timeliness and Quality of Taxpayer Correspondence.

The general guidelines of Policy Statement P-21-3 / Action 61 are:

CBWH TEs issue interim Letter 2645-C by the 30th day from the earliest stamped IRS received date on all open replies, Reworks if 30 days have passed since the Payer’s correspondence was received.

CBWH TEs also issue a follow up Letter 2644-C, Second Interim Response, on all open replies and Reworks if the promised response date in Letter 2645-C will not be met.

CBWH TEs will issue Letter 288-C, Interim Reply: Adjustment Request Considered, if the Payer’s response has been accepted and account will be adjusted within five days. The letter notifies the Taxpayer that there will be a delay between adjusting the account and receiving a notice of the adjustment and instructs the Taxpayer to ignore any notices the Taxpayer might receive that don’t include the adjustment.

If a Payer calls Customer Account Services (CAS) and the account has an open control in any status beginning with 02803, the employee will direct the taxpayer to call the BWH toll-free line 833-534-3075. If the Payer does not want to call CBWH, the employee will prepare a Form 4442, Inquiry Referral, and EEFax 855-386-1138.

If CAS identifies taxpayer correspondence relating to the proposed and/or assessed backup withholding or federal income tax withholding, the employee will EEFax the correspondence to CBWH at 855-386-1138.

See IRM 21.7.2.4.10, Form 945, Annual Return of Withheld Federal Income Tax.

If the Payer provides a written or oral response that indicates that the Payer does not understand the law or the adjustment, contact the Payer by telephone to explain the compliance issue and how to resolve it. Refer the Payer’s issue to the Lead or Manager if necessary.

You may provide the following information sources to the Payer:

The Payer will not be subject to backup withholding if the Payer provides a written statement that it was in possession of the Payee(s) TIN(s) at the time the reportable payments were made. This statement is only sufficient where the Payer also provides the Payee(s) TIN(s).

A Payer may state that a missing TIN was omitted from an information return in error for various reasons such as: a glitch in their accounting software, change in accounting software, or change in a member of their accounting department. These statements alone do not indicate that the TIN(s) were on file at the time the reportable payment was made.

The Payer may provide the Payee(s) TIN(s) in any format (for example, as a list of Payee names and TINs, copies of information returns as originally filed by the Payer, amended information returns, or copies of Form W-9, Request for Taxpayer Identification Number and Certification).

The Payer is not required, and the TE must not ask the Payer, to provide the missing return information in a particular form such as Form W-9.

TE must not research Payee transcripts or base a determination of whether the Form W-9 will be accepted on the Payee’s transcript. See discussion of unauthorized access and unauthorized disclosure in IRM 4.19.26.10.7.13, Payer Submits Form 4669 for Relief of Liability Under IRC 3402(d).

If the Payer responds that it was not required to backup withhold because the payee was exempt or because the payment was exempt, then TE should review the Payer’s statement to see if it is reasonable.

Refer to the instructions on Form W-9, for a description of payees who may be exempt from BWH and for which information reporting may not be required. In some cases, the payer may only treat the payee as exempt if it certifies to the exemption on Form W-9.

If warranted, the TE can perform internet research to confirm the payee likely is an exempt payee.

If the Payer cites the Code or Regulations as support for claimed exemption from information return reporting and/or backup withholding, discuss the Payer’s citations with the Lead or Manager.

If the Payer actually withheld income tax from payments to the Payee and reported the income tax withholding on an information return, the fact that the Payee or payments is or are exempt is irrelevant. The Payer must report such voluntary withholding on Line 1 of Form 945 and must deposit the tax.

A Payer may state that a missing TIN was omitted in error from an information return for various reasons including:

Pertaining to a Payee’s TIN, an "error" as defined in the Treasury Regulations can only exist where a TIN was actually entered incorrectly on an information return. See the examples discussed in 26 CFR 31.3406(d)–5(c)(3)(iii), in which a TIN was actually obtained but was entered incorrectly on an information return. An "error" , regardless of its type, does not pertain to missing TINs, and cannot excuse the Payer from obtaining a TIN before or at the time the reportable payment was made.

While software, staff, or representatives may make errors and omit TINs from information returns, the assertion that the TIN was omitted in error does not automatically relieve the Payer from backup withholding. Instead, the Payer must affirm in writing and by providing the missing return information that the Payer was in possession of the Payee(s) TIN(s) at the time the reportable payment was made.

26 CFR 31.6413(a)–3(b) governs refunds of amounts erroneously withheld by a Payer or broker under IRC 3402 and IRC 3406. These regulations provide that if a Payer or broker withholds from a payee in error (including withholding more than the correct amount, as described in paragraph (a) of this section), the Payer or broker may refund the amount erroneously withheld to the payee if the refund is made prior to the end of the calendar year and prior to the time the payer or broker furnishes a Form 1099 to the payee with respect to the payment for which the erroneous withholding occurred.

The purpose of this regulation is to ensure that a payee is not incorrectly provided an information return that reports income tax withholding which can be used by the payee to offset their income tax liabilities.

Once a Form 1099 is issued to the payee and filed with the Service, the income tax reported as withheld from the payee is considered to have been withheld and is available for use by the payee for income tax liability purposes under IRC 31.

If the Payer does not reimburse the payee nor file a corrected Form 1099 with the IRS before the close of the calendar year in which the remuneration was paid, the Payer is obligated to file a Form 945 reporting the amount of income tax withholding reported on Form 1099 and is liable for the tax pursuant to IRC 3403.

Other documents, such as cancelled checks, general journals, or check ledgers, presented as evidence that an error was made in the preparation of the Form 1099; are insufficient. Absent a corrected information return the backup withholding taxes and the federal income tax withholding on filed information returns should be reported on Form 945.

When the Payer asserts that it made an error on information returns, TE’s should inquire whether and when the Payer filed corrected information returns. Document the Payer’s answer.

Request a copy of the corrected information returns from the Payer and compare them to IDRS CC IRPTRI. Discuss any inconsistencies with the Lead or Manager.

PMFOLD will provide the date information returns were filed.

If the TE determines that the Payer is still liable for reported FITW (for example, because the Payer did not file corrected information returns and refund any withheld taxes prior to the calendar year end for which the Payer reported the tax withheld, IRC section 3402(d) relief may apply. The Payer will qualify for IRC section 3402(d) relief from liability for the taxes that have been reported as withheld if the Payer can demonstrate that:

The Payer can have the tax abated by providing Form 4670 and Form 4669 signed under penalties of perjury by the payees. IRC 3402(d) does not provide relief of liability from penalties and interest; the Payer would still be liable for interest and penalties for failure to file and failure to pay the tax that should have been deposited and reported on the Form 945.

If the information returns were paper-filed, request that the Payer provide a copy of the Form 1096 and the information returns that appear on the LOP.

Compare the information returns to IRPTRI and PMFOLD. If there any questionable items (for example, if the copy provided by the Payer appears to have been altered):

Prior to making any reduction to the LOP due to transmission or processing errors, discuss with your Lead or Manager whether to make a referral to the Campus Fraud Coordinator. See IRM 4.19.26.5.4, Consider Referral for Fraud or Identity Theft.

If the information returns were filed electronically, refer the case to Employment Tax Policy via your Manager. See IRM 4.19.26.5.3, Consider Referral to Employment Tax Policy.

Filing corrected information returns with CCBWH will not automatically relieve the Payer of liability for backup withholding or non-payroll federal income tax withholding under IRC 3403.

Corrected information returns filed with CCBWH must be sent to Submission Processing. If the Payer provides corrected information returns, the TE will:

Corrected information returns filed after the Payer received Letter 6112 may be fraudulent. Discuss with Lead or Manager whether to make a referral to the Campus Fraud Coordinator. See IRM 4.19.26.5.4, Consider Referral for Fraud or Identity Theft.

Information returns do not report federal income tax withholding and backup withholding separately. When reported on Form 945 Federal income tax withholding is reported on line 1 and backup withholding is reported on line 2. Total taxes, Line 3, equals the totals of lines 1 and 2.

A Payer may assert that what the TE has characterized as backup withholding is actually income tax withholding, or vice versa. TEs will not revise the LOP based on this assertion.

For Payees without TINs, backup withholding at the appropriate rate is required. If backup withholding was required because the Payer did not possess a Payee’s TIN at the time a reportable payment was made, and if the Payer failed to withhold or withheld less than the required amount of backup withholding computed using the appropriate backup withholding rate, the Payer will be liable for the backup withholding that was not withheld.

FIT that was actually withheld will be considered backup withholding to the extent it does not exceed the backup withholding rate. Any amount above the backup withholding rate will be treated as voluntary FITW.

Workstream 1 focuses primarily on failure to file Form 945 for backup withholding on Payees with no TINs. For Workstream 1, most if not all tax will be reported on Form 945 Line 2, Backup withholding. However, there may be voluntary FITW agreements in this Workstream, where withheld taxes in excess of backup withholding will be reported on Form 945 Line 1.

Workstream 2 focuses primarily on failure to file Form 945 for voluntary Federal income tax withholding reported on information returns. For Workstream 2, most if not all tax will be reported on Form 945 Line 1, Federal income tax withheld from pensions, annuities, IRAs, gambling winnings, etc. However, there may be backup withholding in this Workstream reported on Form 945 Line 2.

Do not research the Payee’s account to see if they reported income tax withholding or paid the tax. See discussion of unauthorized access and unauthorized disclosure in IRM 4.19.26.10.7.13, Payer Submits Form 4669 for Relief of Liability Under IRC 3402(d).

If the Payer states that the Form 945 was filed under a different EIN, and provides a signed copy of the Form 945, or the EIN under which the Form 945 was filed, then research IDRS for the different EIN using (CC) BMFOLI and (CC) BMFOLT.

Under (CC) BMFOLT - look for a return filed (TC 150) under MFT 16 for that tax year. Compare the tax due on the TC 150 to the tax computed on the list of payees or the amount of reportable payments multiplied by the applicable backup withholding rate.

Obtain a copy of the Form 945 from MeF and place it in the paper case file and electronic case file on the shared drive.

A Payer may refuse to participate in a compliance check without penalty. The IRS has the option of opening a formal investigation, whether or not the Payer agrees to participate in a compliance check.

If the Payer declines to participate in the compliance check, or to provide missing return information, continue with the compliance process as though there was no response from the Payer.

If the Payer submits a Form 945 that the Payer prepared, the recipient will stamp it with an “IRS Received Date” stamp, and scan and upload it to the appropriate Payer’s TIN folder Payer (PR) Folder on the shared drive.

The recipient will place the original paper return in the paper case file or route it to the TE to do so. This return will be sent by the designated CBWH employee with Form 3210 to Submission Processing after the TE reviews it.

If the Form 945 is signed, the recipient will input Activity Code RTNRCMMDD (for Workstream 1) or 2RTNRCMMDD (for Workstream 2), with Case History Status Code A, to notify the assigned TE that a signed Form 945 has been received. The purge period for reviewing and, if applicable, processing the Form 945 with Submission Processing is 5 days from the date the Form 945 was received in the CBWH Unit.

TEs will review the Form 945 and follow these review procedures:

If the Payer submits a Form 945 tax return that the TE prepared, the recipient will stamp it with an "IRS Received Date" stamp, and scan and upload it to the appropriate Payer’s TIN folder Payer (PR) Folder on the shared drive.

The designated CBWH employee will place the original paper return in the paper case file or route it to the TE to do so. This return will be sent by the designated CBWH employee with Form 3210 to Submission Processing after the TE reviews it.

If the Form 945 is signed, the designated CBWH employee will input Activity Code RTNRCMMDD (for Workstream 1) or 2RTNRCMMDD (for Workstream 2), with Case History Status Code A, to notify the assigned TE that a signed Form 945 has been received. The purge period for reviewing and, if applicable, processing the Form 945 with Submission Processing is 5 days from the date the Form 945 was received in the CBWH Unit.

TEs will review the Form 945 and follow the procedures below:

If the Payer deducts less than the correct amount of backup withholding, it is nevertheless liable for the correct amount of tax that it was required to withhold, unless and until the Payee pays the tax. Under IRC 3402(d), the Payer may avoid liability if the Payee has filed an income tax return and paid the tax due. Under IRC 3406(h)(10), backup withholding is treated as if deducted and withheld under IRC 3402.

IRC 3402(d) relief from liability for backup withholding tax does not extend to penalties and interest and is not available for employers who actually deducted and withheld federal income tax withholding or backup withholding from payments to Payees but failed to report and/or deposit the withheld taxes with the IRS. See IRM 4.23.8.4, IRC 3402(d) - Relief for Employer When Employees Have Paid Income Tax on Wages.

Payers are required to use Form 4670, Request for Relief from Payment of Income Tax Withholding, along with one or more Form 4669, Statement of Payments Received, to obtain this relief. "Relief from payment" means that the Payer has not paid the tax yet.

The Payer must secure signed Form 4669 from the Payees and payments that are the subject of the compliance check. The Payer must obtain a separate Form 4669 from each Payee for each tax year. The Payer then prepares, and signs Form 4670 indicating the tax year and the number of Form 4669 secured and submits the forms together to the IRS to request section 3402(d) relief from payment.

The Forms 4669/4670 submission can be considered by CBWH unless Form 945-X is submitted with the request. If Form 945-X is included in the taxpayer’s response, the request for IRC 3402(d) relief must be submitted with the Form 4669 and Form 4670 and forwarded to Ogden Submission Processing, as required by IRM 1.2.1.6.18, Policy Statement 5-133, Delinquent returns—enforcement of filing requirements, which specifies that all delinquent returns submitted by a taxpayer, whether upon their own initiative or at the request of a IRS representative, will be accepted. See IRM 4.19.26.14.4.3, Specific Guidelines for Abatements.

Where IRC 3402(d) relief applies, tax will be assessed in a "two-step" process-

IRC 3402(d) relief should not be offered where the Payer has failed to report on Form 945 and deposit tax that was actually withheld (Workstream 2 cases).

A 30-day extension of time to secure and return the forms will be granted if the Payer has not already received a 30-day extension. The Payer may return the forms with the response to Letter 6112-A, or subsequently.

It is common for a Payer to discontinue doing business with a Payee for consecutive years.

Where the Payer failed to secure the Payee’s TIN, a continuing business relationship is not a factor in determining the Payer’s liability for backup withholding.

A Payer is required to secure the Payee’s TIN at the time of a reportable payment and backup withheld at that time if the Payee’s TIN was not secured, under IRC 3406(a)(1). IRC 3406(h)(10) requires the Payer’s liability for backup withholding to be treated as if it were required to be deducted and withheld under IRC 3402. Under IRC 3402(d), if the Payer was required to backup withhold on the reportable payment, but did not, the Payer nevertheless remains liable for the backup withholding.

In contrast, for a name/TIN mismatch, the Payer would be required to start backup withholding on payments to a Payee thirty days after receiving notice CP2100 from the IRS to begin backup withholding, or if there were either no responses to the B-Notice solicitations from the Payer, or if the Payer never sent the B-Notices to the Payee. If the Payer failed to start backup withholding under these circumstances, the Payer would remain liable for any backup withholding it failed to withhold from reportable payments. Going forward, if the Payer discontinues the business relationship and makes no further payments to that Payee, then there would be no remuneration on which to backup withhold.

Where the Payer withheld income tax from the Payee and reported the income tax withholding on an information return, the Payer should have deposited and reported the withholding on Form 945. It is irrelevant if the Payee is either out of business or the Payee no longer does business with that Payer.

Indicators that the Payer is out of business should be seen while conducting preliminary IDRS research. See IRM 4.19.26.7.2, Perform IDRS Research.

If a Payer responds that they are no longer in business, corroborate the Payer’s statement by IDRS research or verify that the Payer has checked the “final return” box on Forms 1120, 1120-S, or 1065.

If the Payer is also an employer, the Payer’s employment tax returns may also indicate a final return:

Despite being out of business, the Payer will generally remain liable for backup withholding in any year they were in business, and they did not secure a Payee TIN at the time of making a reportable payment. The Payer will also remain liable for income tax actually withheld from payments made to Payees, whether that tax is backup withholding or federal income tax withheld under a voluntary withholding agreement.

If the Payer indicates their records were lost, destroyed or not accessible due to a disaster, close the case as No Change. See IRM 4.19.26.13.3, Close Case – Any Non-Appealed Case (Excluding Screen-Outs).

Document the Activity Record with the explanation received from the Payer.

If the Payer claims hardship and/or asks for a referral to the Taxpayer Advocate, perform the procedures under IRM 4.19.26.5.5, Consider Referral to the Taxpayer Advocate Service.

If assigned, perform the procedures under Form 12412, Operations Assistance Request (OAR), from Taxpayer Advocate Service. Refer to IRM 4.19.26.14.4.5, Specific Guidelines for Form 12412, Operations Assistance Request (OAR) from Taxpayer Advocate Service (TAS).

IRC 7803(a)(3), Execution of duties in accordance with taxpayer rights, provides the taxpayer the right to appeal an IRS decision in an independent forum. The actions required by CCBWH employees to forward a case to the Independent Office of Appeals are outline in IRM 4.19.26.13.4, Close Case - Appealed Case.

TEs will not solicit payment of any kind, including tax, penalties, and/or interest.

If the Payer provides a payment, cash, checks or other remittance, immediately give to the Manager for processing with the Teller Unit. Document the payment/remittance in the Activity Report.

If at any time during the inquiry the Payer submits a request for an Installment Agreement (Form 433-D, Installment Agreement, Form 433-B, Collection Information Statement for Businesses, or written statement requesting a payment plan), EEFax the documentation to CSCO Memphis at 855-381-6514.

If the Payer verbally requests an installment agreement, instruct the Payer to call the telephone number on the balance due notice or they may call 1-800-829-4933 to request an installment agreement.

After assessment, if a collection hold is not input, the IRS will send a series of notices or letters and take other actions to collect the debt.

If the taxpayer’s account is in the collection process and the taxpayer requests a correction of the backup withholding adjustment, you must determine the collection status of the account and input a Collection Hold or contact Collections to do so. See IRM 4.19.26.14.3, Inputting a Collection Hold (STAUPS).

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At each notice purge date, if the Payer has not responded the TE will proceed to the next step in the compliance process. See Exhibit 4.19.26-6, Timely Actions, for a job aid of Timely Actions that must be taken in the CBWH program.

A SFR IRC 6020(b) return must be prepared before penalties can be considered.

Penalties to be considered if no return is filed:

A secured delinquent return is a Form 945 prepared and filed by a taxpayer. An IRC 6020(a) return is a Form 945 prepared by an IRS employee and filed by a taxpayer (whether that filing is the Form 945 return signed by the CBWH Manager or filed in another manner).

Penalties to be considered on secured delinquent returns and IRC 6020(a) returns are:

TEs will consider the Fraudulent Failure to File penalty (IRC 6651(f)), instead of the Failure to File Penalty (IRC 6651(a)(1)), where there are significant indications of fraud.

If the Payer has withheld either federal income tax withholding or BWH tax but failed to deposit the taxes withheld (for example, Forms 1099 show federal income tax withheld in box 4) but there were no deposits made to the MFT 16 (Form 945 module), then the failure to deposit penalty (and not the failure to pay penalty) will apply to the taxes that were withheld but not deposited.

It is the employee’s responsibility to have a fair and consistent approach to penalty administration. See IRM 20.1.1.2.2, Fair and Consistent Approach to Penalty Administration. Employee’s responsibilities in penalty cases include, but are not limited to:

Employees should use each penalty case as an opportunity to educate the taxpayer, help the taxpayer understand their legal obligations and rights, assist the taxpayer in understanding their appeal rights, and in all cases, observe the taxpayer’s procedural rights.

The CBWH program encourages voluntary compliance by supporting the standards of behavior required by the IRC, specifically preparing an accurate return, filing it timely, and paying any tax due. Penalties are asserted on behavior that fails to meet any or all of these obligations.

In most cases, failure to file and failure to pay penalties will be considered for cases when the Payer fails to file Form 945 and fails to pay backup withholding (Workstream 1). Where the Payer actually withheld federal income tax, failure-to-file and failure-to-deposit will be considered (Workstream 2). However, there may be cases where both failure-to-pay and failure-to-deposit penalties are assessed if the Payer fails to pay backup withholding and also fails to deposit withheld tax.

Most of the cases in Workstream 1 and 2 will involve returns that have not been filed and taxes have not been paid. IRC 6651 provides for additions to tax for failure to file returns required to be filed to report tax, and for failure to pay tax required to be reported on those returns. See IRM 20.1.2.2(2), Failure To File/Failure To Pay Penalties – Overview.

If the Payer filed a return or paid tax, evaluate whether the return was timely filed and/or the tax was timely paid using the criteria under IRC 7502. See IRM 20.1.2.2.1, When Timely Mailing Equals Timely Filing or Paying (Received Date vs. Filing/Payment Date).

The failure-to-file penalty under IRC 6651(a)(1) is 5% per month for each month or part of a month the return is late, for up to five months. The penalty is computed on the tax required to be shown on the return that the Payer didn’t pay by the original return due date, without regard to extensions.

The failure-to-pay penalty under IRC 6651(a)(2) is ¹/₁% for each month or part of a month. The penalty is computed on the net unpaid non-withheld tax at the beginning of each penalty month following the payment due date for that tax.

When the failure-to-pay penalty applies for the same month as the failure-to-file penalty, the amount of the penalty for filing late for that month is reduced by the amount of the penalty for paying late for that month. This reduction is not made if the tax was actually withheld, and both the failure-to-file and failure-to-deposit penalties apply.

The failure-to-deposit penalty applies to any failure by the Payer to timely and properly remit withheld taxes. IRC 6656 provides the applicable percentage for failure to deposit:

For most but not all penalties, written supervisory approval must be obtained prior to issuing any written communication of penalties to a taxpayer that offers the taxpayer an opportunity to sign an agreement, or consent to assessment or proposal of the penalty. IRC 6751(b)(1).

Where supervisory approval is required, the initial determination of the penalty must be personally approved in writing by the immediate supervisor, dated, and retained in the case file. Supervisory approval may be documented on a penalty approval form, in the form of an email, memo to file or electronically. The approval must cover all tax years and penalties.

The Manager’s signature may be handwritten or electronic. Managers should use Adobe Acrobat to create digital signatures that meet the requirements of IRM 10.10.1.3.1, Requirements for Legally Binding Electronic Signatures. Department of the Treasury digital certificates must be used when digitally signing per IRM 10.8.52.4(2), Certificate Usage. See the IT4U guide, How to Identify, Personalize and Use Adobe Acrobat Department of the Treasury Certificates to Sign Documents in Adobe Acrobat DC and Reader DC.

With respect to penalties asserted in the Campus Backup Withholding Program, under IRC 6751(b)(2), any penalties automatically calculated through electronic means. do not require supervisory approval.

A penalty is only considered to be "automatically calculated through electronic means" if an IRS employee did not make an independent determination with respect to the applicability of the penalty. Therefore, CBWH employees will not manually compute or suppress penalties so the system will automatically calculate them. The exception is Failure to File penalty must be manually computed when preparing Form 2859, Request for Quick or Prompt Assessment, for prompt/quick assessment.

If the failure-to-file (FTF) penalty under IRC 6651(a)(1) is automatically calculated through electronic means Managerial approval is not required for the FTF penalty. If the FTF penalty must be manually computed that managerial approval is required.

If the failure-to-deposit (FTD) penalty is computed solely with CC FTDPN without any independent judgement, the penalty does not require supervisory approval All manual FTD penalty assessments require managerial approval.

If a taxpayer submits a response, written or otherwise, that challenges the penalty or the amount of tax to which the penalty is attributable, and a TE reviews the case, written supervisory approval under IRC 6751(b)(1) is required before any subsequent written communication that includes the penalty. The exception for penalties automatically calculated through electronic means no longer applies once an IRS employee makes an independent determination to assert a penalty or to assert adjustments to tax on which a penalty is applicable.

The fraudulent-failure-to-file penalty requires both supervisory and IRS Counsel approval. See IRM 20.1.2.3.7.5.1, FFTF Penalty Assessment-Procedural Requirements.

There are some situations where the taxpayer may be entitled to relief from penalties.

Penalty relief due to First Time Abatement and/or Reasonable Cause should only be considered if the Payer provides a written request.

Payers may request correction of the penalty computation which may be a statutory exception, First Time Abatement, and/or waiver of the penalty due to reasonable cause.

TEs will consider first whether the penalty is accurately computed, second whether there is a statutory or regulatory exception (which includes consideration of whether the return is timely filed), third whether the Payer qualifies for First Time Abatement, and fourth whether reasonable cause applies.

Penalty relief may be considered either before or after assessment of the penalties. If a request for relief is received before sending the return for processing, then it should be considered before the tax is assessed.

Penalty and interest computation and assessment will normally be automatically generated when the tax is assessed through delinquent return or 6020(b) assessment procedures. TEs must use IAT for penalty and interest abatement if IAT is available. Use of the IAT Reasonable Cause Assistant is required for all cases requesting penalty and interest abatement.

If the Payer requests penalty relief and the penalty has been manually computed, the TE will review the computation to verify it is accurate.

A penalty that has been automatically generated does not require manual recomputation. However, if tax has been assessed incorrectly, then the penalty will be adjusted if the tax is adjusted.

If the Payer requests penalty relief and the penalty is correctly computed, the TE will consider whether a statutory exception applies by reviewing the timeliness of filing or payment and other statutory considerations. See IRM 20.1.1.3.3.1, Statutory and Regulatory Exceptions. Applicable exceptions may include:

If the Payer has proof of timely filing and/or paying from a designated private delivery service, then it must be one that is defined by the IRS. At the time of this guide, the designated private delivery services are DHL Express, FedEx and UPS.

See IRM 20.1.2.2.1 through IRM 20.1.2.2.3.3 for other guidelines for timely filing and timely payment.

If the Payer requested penalty relief and statutory exception does not apply, the TE will consider First Time Abatement (FTA). See IRM 20.1.1.3.3.2.1, First Time Abate (FTA).

The FTA is an administrative waiver for penalty abatement available for failure-to-file, failure-to-pay, and failure-to-deposit penalties to a taxpayer with a clean compliance history.

FTA may apply on every backup withholding case with a Payer-filed Form 945. These include secured delinquent returns and 6020(a) returns (Forms 945 prepared by the TE and signed and return (or filed) by the Payer).

Criteria for allowing First Time Abatement of penalties:

A Payer is not eligible for FTA of the FTD penalty if any of the following is true:

To determine eligibility for the FTA waiver or abatement, use the command codes SUMRY, TXMOD, BMFOLI and BMFOLT:

Also review in the three prior years for a TC 290 with Penalty Reason code of 018. The TC 290 with a Penalty Reason code of 018 means that FTA was already given, and the taxpayer would therefore not be eligible in this year.

If the Payer asks for abatement of penalties and it does not meet the criteria for First Time Abate, then the TE may consider if the Payer has reasonable cause. See IRM 20.1.1.3.2, Reasonable Cause.

A taxpayer may establish reasonable cause by providing facts and circumstances showing the taxpayer exercised ordinary business care and prudence (taking the degree of care that a reasonably prudent person would exercise), but nevertheless was unable to comply with the law. Ordinary business care and prudence includes making provision for business obligations to be met when reasonably foreseeable events occur.

A taxpayer has the burden of showing that a failure to file timely returns was due to reasonable cause and not willful neglect. A mere showing that the delinquency in filing the returns was not due to willful neglect is not sufficient. There must also be reasonable cause. See IRM 20.1.2.3, Failure to File a Tax Return or to Pay Tax—IRC 6651.

26 CFR 301.6651-1(c)(1) provides that if a taxpayer exercises ordinary business care and prudence and is nevertheless unable to file the return within the prescribed time, then the delay is due to a reasonable cause. Although the regulation does not explain what constitutes "ordinary business care and prudence," at a minimum, it must mean an absence of fault. A taxpayer must prove that their failure to file on time is the result neither of carelessness, reckless indifference, nor intentional failure.

Under 26 CFR 301.6651-1(c)(1), if a taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time, then the delay is due to a reasonable cause. Although the regulation does not explain what constitutes "ordinary business care and prudence," the Supreme Court in United States v. Boyle, 469 U.S. 241, 245 (1985), emphasized that, at a minimum, it must mean an absence of fault (“neither … carelessness, reckless indifference, nor intentional failure”).

IRM 1.2.1.4.2, Policy Statement 3-2 (Formerly P-2-7), Reasonable cause for late filing of return or failure to deposit or pay tax when due, provides specific examples of reasonable cause, including but not limited to:

Acceptable explanations of delinquency are not limited to the examples in Policy Statement 3-2, since any reason for delinquency in filing or making deposits or payments which established that the taxpayer exercised ordinary business care and prudence but was nevertheless unable to comply within the prescribed time will be accepted as reasonable cause. See IRM 1.2.1.4.2(3) and (4).

Explanations that generally do not meet the ordinary business care and prudence standards of reasonable cause include (see IRM 20.1.1.3.2, Reasonable Cause):

The taxpayer faces a “heavy burden” to show that it exercised ordinary business care and prudence. See United States v. Boyle, 469 U.S. 241, 245 (1985). The facts and circumstances required to establish reasonable cause must be particularly compelling.

In determining if the taxpayer exercised ordinary business care and prudence in providing for the payment of their tax liability, consideration will be given to the nature of the tax that the taxpayer has failed to pay. A heightened standard for reasonable cause applies when trust fund taxes are at issue.

Because corporations act only through their employees and agents, they cannot rely upon those agents or employees, acting within the scope of authority, to escape responsibility for the nonperformance of nondelegable tax duties.

Forgiveness of penalty assessments levied against taxpayer who could exert greater controls and exercise greater levels of personal responsibility would only encourage late filings and payments to the IRS. As noted by the Supreme Court in Boyle, “prompt payment of taxes is imperative to the Government, which should not have to assume the burden of unnecessary and ad hoc determinations. Id., citing Boyle, 469 U.S. at 249.

See IRM 20.1.1.3.2.2, Ordinary Business Care and Prudence, for additional discussion of reasonable cause factors to consider.

Update the activity record to describe consideration of penalty relief and the results of that consideration:

If the Payer provided a completed signed Form 945 to TE, and the return has not been sent to Submission Processing- then sent the return to be processed and monitor for it to post.

After the return is posted, then process the taxpayer’s written request for penalty abatement.

Underpayment (debit) interest, at the underpayment rate established under IRC 6621, is charged on an outstanding liability from the due date of the unpaid liability to the date fully paid. Since taxpayers are required to pay the tax due on or before the due date of the return, any interest charged is computed from the return due date.

IRC 6621 provides the interest rates on overpayments and underpayments of tax, which are tied to the federal short-term interest rate. Interest rates are determined quarterly based on changes to the federal short-term rate. Underpayment interest rates are determined quarterly.

Interest on the failure to file penalty assessed under IRC 6651(a)(1) begins to accrue on the return due date (including extensions).

Interest on the failure to pay penalty begins to accrue on the date of notice and demand for payment of that penalty.

Interest will accrue on a liability (tax, penalties, additions to tax and/or interest) until it is fully paid.

Interest accruals are not assessed (recorded) on the transcript [Command Code (CC) TXMOD/IMFOL/BMFOL] until one of the following conditions occurs:

The input of TC 290 for zero and Priority Code 5, with the appropriate hold code on an unrestricted (not blocked from systemic calculation) tax module, will post any accrual of interest. When adjusting with ADJ54, use Hold Code 0, so notices are issued. Refer to Section 8C.2(3) of Document 6209, IRS Processing Codes and Information, for information on hold codes. This information can be found on-line at http://serp.enterprise.irs.gov/content/6209/section-8c-2-3.html.

If the Payer returns the signed the Form 945, whether it is a Form 945 prepared by the Payer (for any amount of $0.00 or more) or prepared by the TE, it will be reviewed and sent to Submission Processing as soon as possible, but not more than 5 days after the received date of the tax return.

The recipient will date stamp the return and notify the TE that it has been received.

The TE will review the return. If the return appears complete and is signed under penalties of perjury by the Payer, the TE will accept the return as required by IRM 1.2.1.6.18, Policy Statement 5-133, Delinquent returns—enforcement of filing requirements, which specifies that all delinquent returns submitted by a taxpayer, whether upon their own initiative or at the request of a IRS representative, will be accepted.

After the return has been reviewed and accepted by the TE, the designated CBWH employee will:

It is possible that the tax return may take 6-8 weeks to post. If the return unposts, then the TE must resolve the unpostable. Refer to Section 8B.4 of Document 6209, IRS Processing Codes and Information, for BMF Unpostable Codes and Definitions. This information can be found on-line at http://serp.enterprise.irs.gov/content/6209/section-8b-4.html. For detailed instructions on resolving unpostable conditions, see IRM 3.11.6.12, Unpostable Conditions, and IRM 21.5.5, Account Resolution – Unpostable Conditions.

At the purge date, if the return has posted close the case using the appropriate closing procedure found in IRM 4.19.26.13, Step 9: Close Case. If the return has not posted at the first purge date (60-days), re-input the activity code to monitor for an additional 30 days.

Due to the COVID-19 impact, social distancing, and evacuation order, the IRS is taking all measures possible to protect the employees. This can cause longer delays in getting the returns processed so it can take 12 - 16 weeks for Submission Processing to work through their inventory of processing these returns

For a case that is an assessment of $1 million or more, the TE will refer the case to the Manager. The Manager will discuss with the Operations and Department Managers. Update the TXMODA Activity control to REF$1M for Workstream 1 and 2REF$1M for Workstream 2 when referring to the Manager.

Prepare the Form 945 for IRC 6020(b) processing, by writing the following statements on the bottom of the return: "This return was prepared and signed under the authority of Section 6020(b) of the Internal Revenue Code. Apply condition code 4."

Complete section 1 of the IRC Section 6020(b) Certification Form. See Exhibit 4.19.26-10, IRC Section 6020(b) Certification Form for BWH.

The TE will follow local procedures to route the 6020(b) return package for Manager review and signature.

The Manager will review the Letter 6112-A date, the TE’s activity record, and the electronic case file, to ensure that a signed Form 945 has not been received. The Manager will electronically sign the Form 945, complete Section 2 of the IRC Section 6020(b) Certification Form. The Manager will follow local procedures to route the completed and signed 6020(b) return package for Submission Processing.

The TE will place a copy of the Manager-signed Form 945 and the completed IRC 6020(b) Certification Form in the Payer (PR) TIN Folder on the BWH Shared Drive "Z." .

The TE is responsible for ensuring that a complete Form 945 6020(b) package is retained in case workpapers and case electronic files. A complete Form 945 6020(b) return package consists of:

The designated CBWH employee will prepare Form 3210, Document Transmittal, associate it with the complete Form 945 6020(b) package, and send it to Submission Processing at:

The Form 945 6020(b) package must be shipped to Submission Processing within five days from the Letter 6112-A purge date.

Input Activity Code WT150MMDD (for Workstream 1) and 2WT150MMDD (for Workstream 2), with Case History Status Code A, to monitor posting for 30 days. If the return has not posted at the first purge date, reinput the Activity Code to monitor posting for an additional 30 days.

It is possible that the tax return may take 6-8 weeks to post. If the return unposts, then the TE must resolve the unpostable. Refer to Section 8B.4 of Document 6209, IRS Processing Codes and Information, for BMF Unpostable Codes and Definitions. This information can be found on-line at http://serp.enterprise.irs.gov/content/6209/section-8b-4.html. For detailed instructions on resolving unpostable conditions, see IRM 3.11.6.12, Unpostable Conditions, and IRM 21.5.5, Account Resolution – Unpostable Conditions.

Due to the COVID-19 impact, social distancing, and evacuation order, the IRS is taking all measures possible to protect the employees. This can cause longer delays in getting the returns processed so it can take 12 - 16 weeks for Submission Processing to work through their inventory of processing these returns.

When the return posts, close the case using the appropriate closing procedure found in IRM 4.19.26.13, Step 9: Close Case.

Cases that close "no change" (no tax adjustment is made) will occur in certain circumstances (for example, if the Payer provides missing return information so that the backup withholding is reduced below Tolerance).

The TE will forward a PDF copy of the "no change" case to the designated CBWH employee to have a folder created and the paper case stored in a locked cabinet in the office.

This will allow "no change" case information to be physically retrieved at a later date, and complies with requirements the Federal Records Act of 1950, as amended, pursuant to 44 USC 3102. See IRM 1.15.2, Types of Records and Their Life Cycles. Also refer to Document 12990, Records Control Schedules 29, for guidance on the retention and disposition of CBWH cases.

For procedures see IRM 4.19.26.12.1, Pre-Assessment Review.

Only the first page is to be completed on Form 2859, Request for Quick or Prompt Assessment.

The following items and actions must be completed.

Prepare Form 3210, Document Transmittal, electronically.

One Form 3210 should be prepared for up to 20 Forms 2859 with the same 23C date and same tax period.

Do not combine Forms 2859 with different 23C dates or different tax periods. If there are more than 20 Forms 2859, or more than one 23C date and/or tax period, prepare the appropriate number of Forms 3210 listing only one 23C date, one tax period, and up to 20 Forms 2859 on each Form 3210.

Enter on Form 3210:

Save and name the Form 3210 in the same folder as the Forms 2859 to be signed by the Manager. For Form 3210, use the naming convention:
NCTL TTIN 20XX12 MMDDYYYY Multi, where NCTL is the first name control on the Form 3210, TTIN is the last four digits of the EIN for the first Payer entered on Form 3210, 20XX12 is the tax period of the adjustment, MMDDYYYY is the 23C date, and "Multi" one Payer is included on the Form 3210 (if applicable).

Email the Manager that Forms 2859 are waiting for signature on the "S" drive.

The Manager will electronically sign Form 2859 the same or next day and will change the filename to end with a "1" indicating that the form has been signed.

Move each signed Form 2859 to the Payer’s electronic case file on the shared drive and print an electronic PDF copy to your desktop so that it can be combined with other Forms 2859 to be processed.

Move the signed Form 3210 to your desktop. Combine the Forms 3210 and 2859 in Adobe Acrobat, placing Form 3210 on top. Uncheck the box for Save as PDF Portfolio. Verify that all listed Forms 2859 are included in the combined file.

After combining, use the same file name for the Form 3210 to re-save the Form 3210/2859 package.

Map to the Ogden Accounts Management shared folder using the instructions in the Shared Drive (X) for Uploading Manual Assessments job aid.

Open the Cincinnati folder using the following pathway:
CFM (\\VP0SENTSHRCMN60.ds.irs.net.gov\Common) (X:)
> RACS_Xtml
> Ogden
> Manual Assessments (F2859) EXAM-STATUTE
>Exam
>Cincinnati

Select the current month’s folder. Within the current month’s folder are folders for each day of the month. You may upload files into the current day’s folder until 5 p.m. ET, when Ogden stops pulling files to process:

Ogden employees will rename the Form 3210/2859 package by adding RCVD to the end of the file name. This means they have received the file and it has been pulled to be processed.

If after two business days RCVD has not been added to the file name, notify the Lead TE to contact Ogden for follow up.

TEs will monitor their own quick assessments every workday. When RCVD is added to the end of the file name, update the Activity Code to 2859MMDD (for Workstream 1) or 22859MMDD (for Workstream 2) with Case History Status Code A to monitor for 7 days for receipt of quick assessment DLN. This Activity Code will distinguish the assessment from a Form 945 that was sent to Submission Processing.

If the adjustment has not posted or has rejected at the end of 7 days, you must follow up with Ogden to resolve, as discussed below. If the submission rejects, you must immediately correct any errors and resubmit. If the adjustment is resubmitted, reinput the Activity Code and monitor for posting for 7 days.

Posting the assessment will generate a DLN, which the Ogden employee will add next to the Payer’s name control and EIN on Form 3210. The first Payer listed will have the full DLN (all digits). Only the last digits will be included for the remaining Payers on the same Form 3210. Any missing digits are the same as listed for the first Payer’s DLN.

The Ogden employee will upload the completed Form 3210 in the 23C date folder shown on the Form 3210/2859 package. To access the file, open the Cincinnati folder, the month folder of the 23C date, and the 3210 folder. Save an electronic copy of the 3210 in the shared drive in folder "3210 with DLN."

If the F3210/2859 file in the 23C date folder shows the submission was rejected, copy the electronic copy to your computer and make the necessary corrections to Form 2859. Save the corrected F3210/2859 package using the same naming convention as before but adding CORR to the end of the file name to indicate it is correction. Upload the corrected F3210/2859 file to the Ogden folder for today’s date (if before 5 p.m. ET) or the next day’s date (if after 5 p.m. ET). Never load the corrected file to a date earlier than the date on which you upload the corrected file.

Upon receipt of the F3210/2859 file with DLN(s), input Activity Code WTG370MMDD (for Workstream 1) or 2WT370MMDD (for Workstream 2), with Case History Status Code A, to monitor posting of TC 290 and TC 370 for 14 days. Quick assessments generally take 4 to 6 weeks to post to IDRS but can take up to 8 weeks. If posting has not occurred by the purge date, reinput the Activity Code to extend the monitoring period for 14 days. You may extend the monitoring period twice. If the assessment has not posted after three monitoring periods, notify the Lead to contact Ogden personnel to resolve the delayed posting.

If applicable, prepare Form 945 6020(b) Substitute for Return package. See IRM 4.19.26.12.2.2, Form 945 6020(b) Substitute for Return, for what is a complete Form 945 6020(b) package. Obtain electronic signature of Manager.

Once the TC 290 and TC 370 post to the account, associate the signed Form 945 and 6020B with the DLN of the TC 290 and close the case.

A TC 150 indicates a return was filed and posted to the Master File. The TC 150 amount is the tax assessed when an original return, delinquent return, or 6020(b) substitute for return is filed.

TC 29X indicates a non-examination adjustment to the tax after the original return was filed (for example, TC 150). TC 290 indicates additional tax assessment, and TC 291 indicates abatement of previously assessed tax. These amounts are added or subtracted from the original assessment (i.e., TC 150) to determine the total tax on the return.

TC 976 indicates a duplicate return has posted to a module already containing a return (TC 150). IDRS generates an -A freeze which prevents any refund or offset from the module until an adjustment (TC 29X) is made.

If the duplicate return is an amended Form 945, there will be a posted TC 150, TC 971 Action Code (AC) 010, and -A freeze. An amended return requires an adjustment to release the -A freeze. The adjustment will be a TC 29X with the appropriate Credit Reference Numbers (CRNs), Item Reference Numbers (IRMs), and Hold Code.

A 6020(b) return is identified on TXMOD by Computer Condition Code (CCC) 4 and the literal "6020b" at the end of the TC 150 assessment DLN.

The most common reasons for filing duplicate or amended returns related to CBWH compliance include:

TEs should obtain and review copies of any unknown returns, preferably by using CIS. If the image is not available in CIS, TEs should contact the Payer to request a copy of the unknown return.

The Correspondence Imaging System (CIS) is used to manage scanned images of amended returns and incoming correspondence for Accounts Management (AM) to work.

When a duplicate/amended return (TC 976) is present, IDRS CC: TXMODA will display an indicator 1 in the CIS-IND field indicating that a CIS document is available.

If a CIS document is indicated, TEs should obtain the image by accessing AMS and downloading a copy of the CIS case for their case file.

In each case, TEs will evaluate the duplicate returns to determine which return is correct. TEs may use the following table as a guide. Please note that a "valid" Form 945 is a return that is complete and is signed by the taxpayer under penalties of perjury. A valid Form 945 is not necessarily correct.

TE must retain a copy of the duplicate return in the electronic case files.

TEs must document all activities related to duplicate return resolution on the case Activity Record.

TEs should prioritize closing work, using the following general guidelines:

These priority guidelines are subject to change as determined by CBWH Management.

After submitting a quick assessment SFR/6020(b) package to Campus Case Processing (CCP), or forwarding a delinquent Form 945 to Submissions Processing, the TE will keep the case in the TE’s IDRS number until it closes.

TEs will monitor and verify posting of normal assessment or quick assessment in ORCAS, prior to closing the base control. Normal assessment is any assessment or adjustment, other than a quick assessment, that has been submitted to CCP or Submissions Processing for posting of assessment

For normal assessments, Activity Code WT150MMDD (for Workstream 1) or 2WT150MMDD (for Workstream 2), monitor assessment by running a weekly ORCAS report and checking TXMOD for the TC 150 assessment at the expiration of the monitoring period.

For quick assessments, there are two monitoring periods. The first, Activity Code 2859MMDD (for Workstream 1) or 22859MMDD (for Workstream 2), monitors 7 days for assignment of a DLN. The second, Activity Code WTG370MMDD (for Workstream 1) or 2WT370MMDD (for Workstream 2), monitors 14 days for posting of Transaction Codes 370 and TC290.

After assessment posts, if the balance due is $10 million dollars or more including penalties and interest, email a PDF copy of the Signed Form 945 and 6020(b) certification form to the Office of Unpaid Assessments Accounting and Analysis at *IRS Financial Audit (irsfinancialaudit@irs.gov). Update the Activity Record that the copy has been sent to the IRS Financial Audit office.

If the taxpayer provided a response during the monitoring period, IRM 4.19.26.10, Step 6: Review Payer’s Responses and Make Determination, and input any Rework adjustments (see IRM 4.19.26.14, Step 10: Perform Rework.)

The Form 945 submitted by CBWH does not have a Record of Federal Tax Liability (ROFTL) attached so the Failure to Deposit (FTD) penalty is calculated on the assessed TC 150 amount.

If the assessment posted through prompt/quick assessment procedures with TC 370 and TC 290, a FTD penalty is not assessed so you do not need to manually calculate the FTD penalty when inputting a TC 291.

If the assessment posted with TC 150, then you must manually calculate and decrease the FTD (TC 186) penalty with a TC 181 when inputting a TC 291.

If there is only one TC 186, then the penalty was calculated at 10%. The abatement (TC 181) amount would be 10% times the tax decrease (TC 291) amount. If there is a second TC 186, then the additional 5% was assessed. The abatement (TC 181) amount would be 15% times the amount of tax decrease (TC 291) amount.

The other method to calculate the FTD amount is to use IDRS CC FTDPN. IRM 20.1.4-9, Instructions for Command Code FTDPN, provides the instructions for IDRS CC FTDPN.

ITM has Course 17300 (rev 11/22/2021), BMF Introduction to FTDPN, that Tax Examiners can take to learn about input of IDRS CC FTDPN.

It is not necessary to close the control base and then reopen it prior to inputting adjustments.

If posting has been completed, and if there are no further known taxpayer responses to be considered or adjustments or abatements to be input, check TXMODA for duplicate returns or freeze codes that would prevent closing.

If there is a posted or pending TC 150 on TXMODA that is neither the SFR/6020(b) adjustment nor a delinquent return assessment known to CBWH, or if there is an -A freeze on TXMOD, indicating an amended or duplicate return has posted, secure a copy of the unknown return:

If the return is different from the SFR/6020(b) adjustment or delinquent return assessment or has caused or will cause an erroneous or duplicated adjustment or assessment, return to IRM 4.19.26.10, Step 6: Review Payer’s Responses and Make Determination and IRM 4.19.26.12.4, Duplicate Return Procedures, and input any Rework adjustments (see IRM 4.19.26.14, Step 10: Perform Rework).

If the return is the same as the SFR/6020(b) adjustment or delinquent return assessment (duplicate return), and if the TC 150 adjustment or assessment has posted and there has been no erroneous or duplicated assessment or adjustment, continue to close normally.

After closing your control on TXMODA, print the complete TXMODA detail to PDF and upload to the casefile.

If there is any other freeze code on TXMOD that was not previously addressed in compliance procedures, perform the appropriate procedures under IRM 4.19.26.7, Step 3: Case Building, to address the freeze code. If the freeze code is not addressed in procedures, discuss with the Lead how to proceed.

Verify that all case file documents are present in the electronic case file, that they are appropriately named and complete, and that they are signed by the Manager if required (for example, Form 945 and 6020(b) certification, if applicable).

Ensure that the PDF of the DCI screen is completed if TY2018.

The designated CBWH employee inputs all DCI information from the PDF DCI screen into the BWH Database (DCI) for TY2018.

The Tax Examiner will input the DCI data on CBWH DCI SharePoint for TY2019 and subsequent years. There are separate CBWH DCIs on SharePoint for Workstream 1 and Workstream 2.

This step will be performed by the designated CBWH employee when working remotely due to Campus closure, and by the TE when working at the Campus Post of Duty.

Print the case documents that are not already printed. If there is an original paper document, such as taxpayer correspondence, there is no need to print the scanned copy. Include the original in the case file.

Definition of Rework. In the CBWH Program, any adjustment to increase or abate tax, penalty, and/or interest, that a TE makes after the original return assessment is considered a Rework. Among other reasons, adjustments often occur when:

A Rework occurs when any Payer response is received that might change the original assessment.

The designated CBWH employee, Lead, or Manager will assign a Rework to the TE who was most recently assigned to the case, unless impracticable.

If a Rework is received before the case control base has closed, it is not necessary to close the control base before assigning the case Rework to the TE.

Update the IDRS control base activity with REWORK.

Use the earliest stamped IRS received date for the open control.