This IRM provides an overview of the responsibilities that examiners should understand and apply in the performance of their duties in conducting examinations of claims, abatements, and examination reconsiderations.

Examination of exempt organizations will be conducted to determine whether such entities meet continued qualification of exempt status, compliance, and the causes of noncompliance with the tax laws and applicable resolutions.

Examination of employee benefit plans is regulatory, with emphasis on continued qualification of employee benefit plans. The IRS selects and examines returns to:

Examination of governmental entities will be conducted to determine whether such entities are in compliance with their employment tax filing, reporting, and payment requirements.

The Tax-Exempt Bond Examination Program is to identify and correct noncompliance in tax-advantaged bonds.

TE/GE Examiners should refer to IRM 4.23.3, Exam Program and Procedures, when examining employment tax cases in addition to this IRM section.

The procedures contained in this IRM are not intended to be all inclusive. Examiners must use their professional judgment in completing their exam cases and other compliance activities.

Examinations are conducted according to Policy Statement 1-236 (IRM 1.2.1.2.36), Fairness and Integrity in Enforcement Selection, and the Taxpayer Bill of Rights per IRC 7803(a)(3). The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see Taxpayer Bill of Rights.

Policy Statement 4-4 (IRM 1.2.1.5.2) provides package audit requirements, that:

Under Policy Statement 4-117 (IRM 1.2.1.5.34), examiners and managers:

Policy Statement 4-119 (IRM 1.2.1.5.36) provides that the primary objective of the TE/GE program is regulatory, with emphasis on the continued qualification of exempt organizations and employee benefit plans, and continued compliance of governmental entities (federal, state, and local governmental entities, Indian tribal governments and tribal entities, and entities or organizations that issue tax advantaged bonds). The IRS selects and examines returns to:

IRC 7602 gives examiners the authority to:

IRC 6201 - Assessment Authority, which falls under Chapter 63 - Assessment.

Additional authorities for the procedures outlined in this IRM are:

Directors, EO/GE and EP, are the executives responsible for providing policy and guidance for field employees and ensuring consistent application of policy, procedures and tax law to effect tax administration while protecting taxpayers’ rights. See IRM 1.1.23, Tax Exempt and Government Entities Division, for additional information.

The Directors, EO Examinations, GE, and EP Examinations reports to the Directors, EO/GE and EP respectively, and are responsible for the delivery of policy and guidance that impacts the field examination process. See IRM 1.1.23, Tax Exempt and Government Entities Division, for additional information.

All examiners must perform their professional responsibilities in a way that supports the IRS Mission. This requires examiners to provide top quality service and to apply the law with integrity and fairness to all.

Examiners and their managers should thoroughly acquaint themselves with the examination procedures and information contained in this IRM, as well as other resources.

The examiner must determine what type of request the taxpayer has made to properly examine, close and process the case. The following are the types of requests:

For a claim, examiners are responsible for:

For an abatement request, examiners are responsible for:

For an OIC-DATL case, examiners are responsible for:

CP&C administers examination inventory control.

The FAC coordinates the assignment of examination inventory.

Two review groups make sure examiners conduct examinations per technical, procedural and administrative requirements:

In order to ensure a consistent level of managerial engagement in the process of making key strategic decisions during an exam, the examiner submits requests for approval by their manager through RCCMS.

The manager approves or rejects any request through RCCMS.

The IRS is fully committed to protecting the privacy rights of taxpayers and employees. Privacy laws are included in the IRC, the Privacy Act of 1974, the Freedom of Information Act, and IRS policies and practices. For more information about these laws, visit the IRS Electronic Freedom of Information Act Reading Room.

This IRM uses the following acronyms:

General terms and definitions:

Claims don’t include:

The following are related sources that provide guidance on the procedures outlined in this IRM section:

Refund claim rejections are described in Rev. Proc. 2008-37 section 3.03(2)(b) and 26 CFR 1.148-3(i)(3). Generally, an issuer’s failure to follow proper procedures for filing a refund claim or to provide sufficient information to enable TEB to determine that an overpayment occurred can result in a refund claim rejection.

When you receive a refund claim not meeting the initial processing requirements in IRM 21.7.7.7.4.7.1, Business Tax Returns and Non-Master File Accounts, Exempt Organizations and Tax Exempt Bonds, TEB Claim Procedures, prepare a refund claim rejection.

Also prepare a refund claim rejection when:

A refund claim rejected based on a procedural deficiency or incomplete information is generally not a refund claim denial under Rev. Proc. 2008-37 section 3.03(2)(c). Notify the issuer of any deficiency or incomplete information and provide the issuer at least 21 days to supply additional information to support the claim. A refund claim rejection pursuant to a deficiency or incomplete information permits the issuer to resubmit the refund claim, together with the missing information, in compliance with the initial processing requirements, if they resubmit by the filing deadline under 26 CFR 1.148-3(i)(3)(i), as modified by Rev. Proc. 2017-50.

If the refund claim rejection occurs after the two-year deadline in 26 CFR 1.148-3(i)(3)(i), as modified by Rev. Proc. 2017-50, then the refund claim rejection is functionally a refund claim denial, and the issuer is entitled to appeal rights under 26 CFR 1.148-3(i)(3)(iii). In this case, you must process the refund claim as a fully denied claim under IRM 4.70.17.6.5, Claim Disallowed in Full without Additional Tax Due or Arbitrage Payment Due, allowing the IRS Independent Office of Appeals (Appeals) to review whether the issuer met the deadline requirements in the request for more information.

The examiner discusses the refund claim rejection with the issuer and any authorized representative and secure e-mails to the TEB Exam group manager:

TEB Exam group manager: when you receive the case:

Examiner: when you receive the signed documents from the TEB Exam group manager:

The filing of an original tax return reflecting an overpayment constitutes a claim for credit or refund. Accordingly, a tax return and claim for refund can be filed simultaneously through one document. The taxpayer who files an original tax return reflecting an overpayment is considered to have filed a claim within three years of filing a return, and a refund would be allowed if payment was made within three years of the date the original return/claim for refund is considered filed, as long as no petition is filed with the Tax Court.

Any tax withheld for a wage earner is deemed paid on the fifteenth day of the fourth month following the close of the wage earner’s taxable year (individual returns only) (IRC 6511 and IRC 6513(b)(1)).

Any estimated tax payments made during any calendar year are deemed paid on the last day prescribed for filing the return for that year without considering any extensions (IRC 6513(b)(2)).

If a taxpayer files a tax return more than three years after the due date for the return (including valid extensions), any overpayment amount would be limited to the amount paid in the three years before the return was filed or paid within 2 years of the filing of a claim for refund. See Rev. Rul. 76-511.

Taxpayers can’t carry forward or back barred refund amounts to offset delinquent accounts or future tax liabilities. The overpayments post to an excess collections account using Form 8758, Excess Collection File Addition.

If a taxpayer files a claim for refund after the RSED to perfect a claim filed before the RSED, the claim should be considered. A general claim may be amended after the RSED has expired, provided that the original claim has not been formally disallowed by the IRS at the time the amendment is filed, and the amendment merely makes clear the specific matters the Service has already considered by investigating the original defective claim. The supplemental claim will not generally be considered an amendment if the Service took final action on the original claim by rejecting the original claim or allowing it in whole or in part. A final action disallowing a claim does not occur until the notice of claim disallowance is sent. If no formal disallowance was made, there is no specific time period within which the supplemental claim must be filed.

To close a claim case with a barred refund:

Follow the procedures in this section when the taxpayer/representative send you additional information for a claim, and it proves that the claim should be allowed in full.

Refer to the Joint Committee when the refund of tax, penalties and interest exceeds $2,000,000 ($5,000,000 for C corporations). See IRM 4.70.17.7.7 for Joint Committee procedures.

For EO and EP, prepare and mail Letter 570-A, Claim Allowed in Full, to inform the taxpayer of the allowance of the claim.

For TEB, prepare Letter 5761, TEB Arbitrage Claim Allowed in Full, notifying the issuer that the claim for refund has been allowed in full, and any required Letter 937, Transmittal for Power of Attorney.

Upload all workpapers, forms and letters you prepared in the RCCMS Office Documents folder using the RCCMS Naming Convention.

Close claims allowed in full electronically (100% paperless). Complete the RCCMS closing record by inputting the following on each tab:

The group manager will close the case to the TE/GE Closing Group, using status code 51.

When allowing a claim in full, if proposing offsetting adjustments which reduce the amount refundable, treat the claim as a partially or fully disallowed claim. Follow the procedures for claims disallowed in full or in part as applicable.

See IRM 25.6.1.10.2.5.6.1, Claim for an Amount Paid Before the ASED, for the offset of a refund with a time-barred upward adjustment from the same time period.

Issue the report and the following letter proposing partial disallowance of the claim.

Prepare Form 886-A, Explanation of Items, if the case is unagreed. Include the issue, a description of the facts surrounding the issue, an explanation of the law for the issue, an explanation of the government’s position, including calculations clearly showing how you determined the partial disallowance, the taxpayer’s position and a conclusion.

Prepare Form 2297, Waiver of Statutory Notification of Claim Disallowance. See IRM 4.70.17.6.8 for instructions on completing Form 2297.

Prepare Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit. See IRM 4.70.17.6.9 for instructions on completing Form 3363.

Prepare the applicable report of examination changes and waiver form based on the type of tax. See IRM 4.70.14, Resolving the Examination.

Update the RCCMS case status to 13 (30-Day Letter) and hold the case file for up to 45 days pending the taxpayer’s response or until a signed Form 2297 and Form 3363 are received, if earlier.

In the table below, substitute Form 870, Waiver of Restrictions on Assessment & Collection of Deficiency in Tax & Acceptance of Overassessment, Form 870-E, Waiver of Restriction on Assessments and Collection of Deficiency and Acceptance of Overassessment, Form 870-EP, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, Form 2504-E, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, or other waiver form for Form 4549, Report of Income Tax Examination Changes, as appropriate.

If the taxpayer agrees, issue Letter 2841-A, Agreed Claim Disallowance Closing Letter, and attach a copy of the examination report with a copy of the signed Form 2297, Waiver of Statutory Notification of Claim Disallowance, and Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit.

If the taxpayer files a protest to Appeals, issue a rebuttal to the protest, and close the case as unagreed - protest to Appeals. Follow the closing procedures in IRM 4.70.14, Resolving the Examination.

If no response is received after 30 days, close the case as unagreed without protest. All unagreed claim disallowances (full or partial) without protest to Appeals are closed to Mandatory Review for issuance of the final claim disallowance letter. On the RCCMS 3198-A Checksheet:

Close claims allowed in full electronically (100% paperless). Complete the RCCMS closing record by inputting the following on each tab:

Process partially disallowed claims with additional amounts due the same way as partially disallowed claims without additional amounts as described in IRM 4.70.17.6.3, Claim Partially Disallowed without Additional Tax or Arbitrage Payment Due, with the following exceptions for EO:

In the table below substitute Form 870, Waiver of Restrictions on Assessment & Collection of Deficiency in Tax & Acceptance of Overassessment, Form 870-E, Waiver of Restriction on Assessments and Collection of Deficiency and Acceptance of Overassessment, Form 870-EP, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, Form 2504-E, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, or other waiver form for Form 4549, Report of Income Tax Examination Changes, as appropriate.

Complete the following fields of the "Individual/Bus.Tab" (1 of 3) in the closing record:

Issue the report and the following letter proposing claim disallowed in full.

Prepare Form 886-A Explanation of Items, if the case is unagreed. Include the issue, a description of the facts surrounding the issue, an explanation of the law for the issue, an explanation of the government’s position, including calculations clearly showing how you determined the partial disallowance, the taxpayer’s position, and a conclusion.

Prepare Form 2297, Waiver of Statutory Notification of Claim Disallowance. See IRM 4.70.17.6.8 for instructions on completing Form 2297.

Prepare Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit. See IRM 4.70.17.6.9 for instructions on completing Form 3363.

Prepare the applicable report of examination changes and waiver form based on the type of tax, see IRM 4.70.14, Resolving the Examination. The taxpayer doesn't need to sign an agreement/waiver form (Forms 870, 870-E, 870-EP, 2504-E, 4549, 4549-E, or 5384) for an agreed closure. However, the Closing Unit needs the form for input onto IDRS.

Update the RCCMS case status to 13 (30-Day Letter) and hold the case file for up to 45 days pending the taxpayer’s response or until a signed Form 2297 and Form 3363 are received, if earlier.

If the taxpayer agrees:

If the taxpayer files a protest to Appeals, issue a rebuttal to the protest, and close the case as unagreed - protest to Appeals. Follow the closing procedures in IRM 4.70.14, Resolving the Examination.

If no response is received after 30 days, close the case as unagreed without protest. All unagreed claim disallowances (full or partial) without protest to Appeals are closed to Mandatory Review for issuance of the final claim disallowance letter. On the RCCMS 3198-A Checksheet:

Close claims allowed in full electronically (100% paperless). Complete the RCCMS closing record by inputting the following on each tab:

Process claims disallowed in full with additional amounts due the same way as claims disallowed in full without additional amounts as described in IRM 4.70.17.6.5, Claim Disallowed in Full without Additional Tax Due or Arbitrage Payment Due, with the following exceptions:

In the table below substitute Form 870, Form 870-E, Form 2504-E, Form 5384, or other waiver form for Form 4549 as appropriate.

Complete the following fields of the "Individual/Bus.Tab" (1 of 3) in the closing record:

See IRM 4.23.13.7, Adjusted Returns, for when there is an adjustment to an amended employment tax return (Forms 94x-X) which results in a credit balance.

If the “Claim box” is checked (Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, Part 1, box 2), or if the examination results will not create a credit balance (refund), the case will be processed using normal procedures.

The procedures in IRM 4.23.13.7, Adjusted Returns, will only apply when:

You will inform the taxpayer that the credit request will NOT be applied to the quarter for the tax period in which they filed the Form 94x-X until the examination is completed, and NOT to rely on the credit as a payment toward any taxes due.

If an amended return is received on which Line 1, Adjusted Employment Tax Return, is checked and is related to a quarter of an on-going exam, the examiner should explain to the taxpayer that this may affect the credit requesting to be applied to the quarter the Form 94x-X was received.

Upon completion of the examination:

If you determine that the credit is no longer needed to pay an employment tax liability in the quarter to which the money was moved, then an additional Form 3870, Request for Adjustment, will be needed to release the credit. TC 290 for $0 will be used.

Complete Form 2297, Waiver of Statutory Notification of Claim Disallowance, for cases that have a full or partial claim disallowance.

Attach Form 2297 to the applicable claim or amended return.

When completing Form 2297:

Complete Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, for cases in which you disallowed a claim in full or in part and don’t have other adjustments to the tax liability.

When completing Form 3363:

If a claim is received on a case that was previously closed by Appeals, the examiners will need to determine whether the claim issue is related to the issues considered by Appeals.

If Appeals has not previously considered a matter raised in the claim, process the refund claim according to the procedures in this IRM.

If the refund claim relates to a matter that Appeals fully or partially sustained, but the matter was not resolved under a closing agreement, treat the refund claim as a reconsideration of a disallowed claim.

For employment tax claims, see IRM 4.23.13.5, Claims Received or Cases Previously Considered by Appeals.

Don’t treat requests for reconsideration as original claims.

A request to reconsider a disallowed refund claim generally results in one of the following actions:

For employment tax claims, see IRM 4.23.13.6, Request for Reconsideration of Disallowed Employment Tax Claims.

For TEB, generally, under Rev. Proc. 2008-37, Section 3.03(2)(c), an issuer may not refile a refund claim after a refund claim denial becomes final. However, a refund claim that has been disallowed (denied) in whole or in part may be reconsidered if the issuer submits additional facts, if those facts are received before the filing deadline under 26 CFR 1.148-3(i)(3)(i), as modified by Rev. Proc. 2017-50, and (if the time for filing a claim has not run) the time to institute a suit under IRC 6532.

If the request for reconsideration concerns a refund claim that Appeals previously considered and disallowed in whole or in part, the request and the refund claim case file are forwarded Appeals.

If a taxpayer files a request for withdrawal of a claim, the only action required is issuance of a certified notice of claim disallowance, Letter 906, Final Full Claim Disallowance, which starts the two-year statute (For EP, use Letter 906-A, Unagreed Claim: 30 Day Letter Issued and No Response from Taxpayer).

If the taxpayer advises that they filed the claim for the sole purpose of instituting suit and that they don't wish to exercise appellate rights, state this in the "Other Information" section of the examination report.

Close the case to Mandatory Review to issue Letter 906, Final Full Claim Disallowance (For EP, use Letter 906-A, Unagreed Claim: 30 Day Letter Issued and No Response from Taxpayer). In the letter, Mandatory Review lists as the reason for disallowance "the taxpayer withdrew the claim request" .

Use DC 01 (210). The following RCCMS fields, in addition to normal examination fields, need to be completed:

For EO, if this is a church tax inquiry, create a memo to the file to explain the circumstances of the closing. Approval from TEGEDC, area manager, Mandatory Review manager, and the group manager is required on the memo. Also, when the TE/GE Closing Unit receives the file, the manager of the TE/GE Closing Unit initials the use of DC 01 (210).

There are instances where claims will not be considered. Requests for Reconsideration of Disallowed Claims, and Requests for Withdrawal of a Claim, are the two that will most likely be encountered by examiners. For other instances, refer to IRM 4.23.13.6, Request for Reconsideration of Disallowed Employment Tax Claims.

The IRS is prohibited from any levy or court proceeding for the collection of the 100% tax under IRC 4971 or IRC 4975 pending the final resolution of court proceedings on the first-tier tax under those Code sections if the taxpayer timely pays the first-tier tax and files a claim for refund (IRC 4961).

IRC 6512(a) provides that where a taxpayer has filed a timely Tax Court petition, the IRS can’t make a refund or allow a credit for the tax that was ever an issue in the Tax Court petition unless there were a mathematical error reference IRC 6513.

If you determine that the first tier tax under IRC 4971 or IRC 4975 should be imposed, solicit a delinquent Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, and request payment of the tax.

If the IRC 4971 or IRC 4975 issue hasn’t been corrected, advise the taxpayer that even if they don’t timely correct, the IRS can’t levy or have a court proceeding to collect the 100% tax when there is a pending court proceeding to resolve the first-tier tax if the taxpayer both.

IRC 4971(b) tax may be waived in certain situations.

If a claim under examination is placed in suspense pending adjudication of an issue upon which the claim was based, and Counsel or a Campus processes the claim outside of the examination process as ordered by the federal courts, there is no further examining of the claim issue. Assuming there are no other issues, close the examination as follows:

You are responsible for determining whether a claim case falls under Joint Committee (JC) jurisdiction. A case with a refund or credit in excess of $2 million ($5 million for C corporations) is a JC case. Refer to IRM 4.36.2, Identification of Joint Committee Cases.

See IRM 4.36.1.1.1, Joint Committee Process Overview and following subsections for background information on the Joint Committee Review (JCR) program.

The JCR Knowledge Base Homepage can be accessed at Joint Committee Cases. Tools are available on the JCR Knowledge Base Homepage to help the examiner determine if the case meets JC criteria. These tools should be used before making referrals.

You are responsible for the SOL. If a case has a short statute, the JC Specialist won't be able to update the case to their status code. Consequently, the case stays in AIMS status 12 while the JC Specialist works the case.

Refer to IRM 4.36.1, Joint Committee Process Overview, which describes the entire process.

Additional sources for information on Joint Committee procedures include the following:

Close all JC cases to Mandatory Review. Mandatory Review doesn't review these cases unless you indicate on the RCCMS 3198-A Checksheet that the case is subject to review for one of the other reasons.

Claims for refund of arbitrage rebate, yield reduction or penalty in lieu of rebate are not subject to Joint Committee review, however, claims in excess of $2,000,000 are subject to mandatory review by TEB Technical. See IRM 4.70.14.2.4.5.4, TEB – Cases Subject to Mandatory Review.

To meet examination reconsideration criteria, the IRS must have assessed currently unpaid amounts, or the IRS reversed tax credits the taxpayer is disputing, and the taxpayer must:

Consider a request for reconsideration if any of the following apply:

Don't consider a request for reconsideration if:

Per Policy Statement 4-103, (IRM 1.2.1.5.31, Policy Statement 4-103 - Abatement claims considered only in exceptional circumstances) where we made an assessment of excise or employment tax as a result of an examination action, the taxpayer generally must pay the assessment and file a claim for refund prior to any further consideration of his/her case. Consider abatement requests only if:

A claim for abatement of an employment tax examination assessment (Examination Reconsideration) will be considered on its merits after employment taxes have been assessed and the circumstances in IRM 4.23.13.4, Audit Reconsideration And Requests for Abatement, have been met. When it is determined that an examination reconsideration request should be considered on its merits, the taxpayer will be afforded consideration by Appeals. Refer to IRM 4.23.13.4, Audit Reconsideration And Requests for Abatement.

When it is determined that an abatement (or Examination Reconsideration) request should not be considered on its merits, or there has been no previous examination action, the taxpayer will be issued a no-consideration letter and will not be afforded consideration by Appeals. Use Letter 924, No Consideration Letter on Abatement Claim, for all claims for abatement of employment taxes that are not considered. Never use Letter 5376, Form 3363 and Form 2297, or any other letter that explains appeal rights. The customer has no appeal rights beyond the group level without paying the tax and filing a formal claim. This should be explained to the customer with the following paragraph: "If you do not agree with our determination, you may, after paying the additional tax due, file an amended return or claim for refund. If you file a claim or amended return, you should do so within three years from the date your return was filed or, if later, two years from the time the tax was paid,"

If a taxpayer files a request for withdrawal of an abatement request:

The IRS has discretionary authority under IRC 4962(a) to not assess, or to abate or refund, any "qualified first-tier tax" (including interest) as long as the taxable event was:

Qualified First-tier Chapter 42 Excise Taxes described under IRC 4962(b) include the sections listed below:

A taxpayer’s requests under IRC 4962 must be worked as an abatement, whether the tax has or hasn’t been paid.

Taxpayers file these requests for abatement by filing a Form 843, Claim for Refund and Request for Abatement, or an amended return. The taxpayer may also make an informal request as long as we have all the necessary information including the tax year, issue, and amount.

A taxpayer can't file a claim for abatement of income tax under IRC 6404(b). However, because the IRS has the authority to abate the unpaid portion of tax under IRC 6404(a), the IRS may still consider an informal request filed by a taxpayer, for abatement of income taxes. See IRM 25.6.1.10.1, Requests for Abatement. This informal request should include the tax period involved, issue, and request to abate the tax.

When assigned, the case has a SC of 30, Claims for Refund.

Verify on IDRS any payments the taxpayer made. If the taxpayer paid all of the prior assessments, follow the regular claim procedures.

The project code is 8089 Claims (EO), 6070 Claims (EP), 4300 FSL Claims (FSL/ET), 4164 ITG-Claims (ITG), and 4111 Claims for refund of Arbitrage (TEB). For EO, use project definer code 8499 for Request for Abatement.

Contact the taxpayer and obtain any necessary additional information.

Evaluate the information and make a determination. Document your work in your workpapers.

Prepare Form 4549, Income Tax Examination Changes, to reflect any adjustments to be made. If you determine there was an overassessment, your report should reflect a reduction in the unpaid tax. Clearly explain to the taxpayer that the overassessment won't be refunded and that it will only reduce or eliminate the existing balance due.

If there is a reduction in any penalties, the "Other Information" section of the report should clearly explain the reduction:

The taxpayer receives no judicial rights because IRC 6404(b) indicates the taxpayer can't file a claim for abatement of income taxes. The taxpayer's recourse if the tax isn't abated is to pay the tax, and then file a claim for refund, or file an amended return.

Prepare and issue Letter 693, Reply to Request for Reconsideration of Assessment. Select the appropriate box. No signature is required on the Form 4549, Income Tax Examination Changes, because any adjustments are in the taxpayer's favor.

If making an adjustment:

If disallowing the request for abatement, use DC 01 (210), No Change with Adjustments.

Interest on deficiencies or payments may be abated when the IRS makes an error or delays performing a ministerial or managerial act (IRC 6404(e)(1)).

A "ministerial act" is a procedural act or mechanical act that doesn’t involve the exercise of judgment or discretion and occurs when the IRS processes a taxpayer’s case after we’ve completed all prerequisites to the act, such as conferences and reviews by supervisors.

A "managerial act" is an administrative act that occurs during the IRS’s processing of a taxpayer’s case. It involves the temporary or permanent loss of records or the exercise of judgment or discretion of the IRS management.

The IRS has the authority to abate the amount of interest that accrued during the period in which the unreasonable error or delay in performing a ministerial or managerial act occurred (IRC 6404(e)(1)).

The IRS has discretionary authority to allow claims for abatement of interest when all of the following conditions are met:

IRC 6651(a)(1)and IRC 6651(a)(2) penalties may be abated for reasonable cause. See IRM 20.1.1, Introduction and Penalty Relief.

All penalty abatement or waiver requests must be in writing and, if not part of the return, must be signed by the taxpayer. See IRM 20.1.3.3.2.1, Evaluating Claims for Abatement or Waiver of Estimated Tax.

The taxpayer may request the refund or abatement of penalty assessments in a written letter and/or on Form 843, Claim For Refund and Request for Abatement. Find Form 843 instructions at the Find a product (irs.gov).

If the taxpayer provides evidence that the penalty was computed incorrectly, verify the penalty computed by the taxpayer and adjust as necessary.

To prepare the case for penalty abatement:

For EP, see the Penalty Relief - Reasonable Cause Lead Sheet to help you determine whether penalties should be waived or abated. See Employee Plans Examination Exhibits for an example of the Penalty Relief - Reasonable Cause Lead Sheet, which you may also incorporate into the examination workpapers.

General OIC-DATL terms and definitions:

Exam Group Manager:

Examiner:

The IRS is required under IRC 7122(e) to provide an independent administrative review of all proposed rejections of an offer in compromise before communicating the rejection to the taxpayer. Mandatory Review serves in this role.

The Mandatory Review Manager will assign the case to a reviewer within 15 days of receipt of the offer case file.

For FSL/ET, notify the FSL/ET Staff Assistant of the case assignment.

Track case time as follows:

The Patient Protection and Affordable Care Act (ACA), P.L. 111-148, Section 1421 added IRC 45R.

The Treasury Department and IRS issued the following guidance on IRC 45R:

Requests for the 45R credit are similar to claims. Therefore, in addition to the information below, consider claim and abatement procedures when working these cases.

Refer to IRM 4.70.17.4, Statute of Limitations for Claims, for, and IRM 4.70.17.4.2, Refunds Barred by Statute of Limitations, for barred statute requirements.

Use the following documents when reviewing Forms 8941 and 990-T for the Small Employer Health Care Tax Credit. This package allows you to do a pre-exam review and prepare the examination report, workpapers, letters, IDRs and forms you need to close the case. The package contains: