The TS TE with responsibility for working the CR mailbox will create a collateral record within three business days of receiving a properly completed CI closing package with assessable restitution. The ERCS "date in review" will be the date a CI closing package is received in the CR mailbox. A collateral record will not be built if there is no restitution to assess or no restitution payable to the IRS, or if there is insufficient information for TS to rely on to make an accurate assessment.

The TE will pull Integrated Data Retrieval System (IDRS) command code (CC) INOLES to verify / confirm the accuracy of the name and taxpayer identification number (TIN) provided on Form 14104.

Collateral records are for TS inventory purposes only. These records do not get established on Audit Information Management System (AIMS) and should never be updated to a field, Planning and Special Programs (PSP), Campus or Appeals status.

The TE will complete the following actions for each CI closing package in creating the collateral record on ERCS.

The collateral record will be updated to the next appropriate status code, review type, and suspense type as reflected in Exhibit 4.8.6-1.

The CI closing package will be reviewed for completeness. A complete package contains the following items at a minimum.

The TE in the CRC group will print the CI Closing package, create a case file, attach a Form 9984, Examining Officer’s Activity Record, and pull the appropriate IDRS information.

IDRS research of CC SUMRY and / or IMFOLI should verify the CI Z freezes have been released. If a Z freeze exists, the TE logs the case information onto a Z freeze listing and contacts the CI analyst weekly. The manager’s involvement is required if after three follow ups to the release of the Z freeze have taken place without results or action. The CR collateral record is not built on ERCS until the Z freeze is released. The CR case is not assigned to a CRC reviewer until the Z freeze is released.

The collateral record will be assigned on ERCS to the CRC.

The collateral record will be updated, as appropriate, to reflect all steps taken in the CR assessment process. See Exhibit 4.8.6-1 for current review types, suspense types, etc. to be used for CR cases.

The current revision of Form 14104 must be used.

Section I - Approval at the top of Form 14104 should have the box checked for final adjudication to indicate all appeal deadlines have expired and no appeals are outstanding. Restitution cannot be assessed if the subject has submitted an appeal or has an open appeal which is pending in the federal court system. If the case is still in Independent Office of Appeals, the closing package should be returned to CI for re-submission when all appeals have been exhausted and there is restitution payable to the IRS.

Section II - Taxpayer / Defendant information must be properly completed. Review IDRS CC INOLE to confirm the name in Item 1 and TIN in Item 2 match the subject identified.

The date in Section III - Restitution Information, Item 5 must correspond to the J&C date and MUST be after August 16, 2010 to be assessable.

The amount in Section III - Restitution Information, Item 6, Restitution Payable to the IRS MUST tie to the grand total amount in Section 14 AND to the amount payable to the IRS per the J&C.

For cases where the J&C and / or Form 14104 indicate that the restitution ordered is joint and several (J&S) with other Co-Defendant(s), the following actions should be taken:

Section III - Restitution Information, Item 8, Type of Case, must indicate CI’s determination on the assessability of the restitution under IRC 6201(a)(4).

If Section III - Restitution Information, Item 10 Restitution is joint and several is selected, then CI must provide at least one co-defendant's name and SSN.

If the restitution is based on a corporate liability or any other return that is not the SSN of the defendant, Section V, Restitution To Be Assessed As Tax, Item 14a, Column 1 should contain the related EIN(s) for the corporate, employment tax or other module(s). All applicable periods and restitution amounts MUST be reflected.

If some of the restitution is based on a penalty, the nature or code section of the penalty should be verified. Restitution assessed as a penalty is assessed using matching manual input transaction codes such as TC 160 for Failure to File Penalty, TC 170 for Estimated Tax Penalty, TC 270 for Failure to Pay Penalty, or Reference Number 721 for Failure to Deposit Penalty, etc.

The total amounts in Section V - Restitution To Be Assessed As Tax, Item 14 shown by CI for restitution as tax, interest and penalty should total the restitution ordered payable to the IRS in the J&C and the amount shown in Item 6. In many instances, other documents provided by CI (i.e., information / indictment, plea agreement, government sentencing document, court document, court transcript, etc.) will support the figures reflected by CI in this section.

If any of the information reflected above is missing, not complete or raises questions about making the RBA, the package is not accurate. See IRM 4.8.6.2.2.1.2 below.

Assess restitution under the defendant’s SSN if the defendant is an individual. Assess restitution under the defendant's EIN if restitution was ordered against a business entity, such as a corporation and not an individual.

MFT 31 will be used to assess all restitution when the defendant is an individual.

The applicable corporate or BMF MFT will be used to assess the restitution when the defendant is NOT an individual (e.g., corporation, etc.). The RBA can be made on a defendant's BMF MFT 02, 01, or 06, etc. module.

When a criminal restitution case involves a foreign defendant, whether individual or corporation, that does not have a TIN, a request must be made to have a TIN assigned to the individual/entity so that a RBA may be made under a TIN of the defendant. Before taking the following actions, e-mail the CI SA and ask them to confirm the entity does not have a TIN.

When the determination is made by CI that a restitution assessment is warranted under IRC 6201(a)(4), an RBA will be made under the SSN or EIN of the defendant. The tax returns that were the basis for the restitution order will not reflect the RBA. For example, an individual defendant is ordered to pay restitution to the IRS based on a tax loss and may or may not reflect the civil tax liability actually owed. All of the restitution ordered will be assessed on MFT 31 accounts created under the defendant’s SSN not on MFT 30 or MFT 02.

Prior to preparing / submitting the restitution assessment forms, the applicable assessment modules should be reviewed to determine if an assessment statute expiration date (ASED) is reflected. Generally, a recently created MFT 31 module will not reflect an ASED. However, when the MFT 31 account was previously used for another reason, there may be an ASED present. Prior to submitting the restitution assessment paperwork, all MFT 31 modules that will be used for the restitution-based assessment should be reviewed. When two or more Form 3870s will be forwarded to post multiple assessments in the same period, the ASED must also be updated before submitting the Form 3870 to Memphis CCP since the first assessment posted will set an ASED three years from the due date of a timely filed return for the tax period. The new ASED date should be a date one year from the current month ending date (e.g., 7/31/2018, if the update is done in July 2017).

Form 3870s for the RBA assessments will be processed by Memphis CCP. Linkage Form 3177s and RBA GII spreadsheets are submitted to CCO for input.

After 35 days, if no assessments are pending or if the receipt of the Form 3870 is not recorded in the history section of a TXMOD, follow up actions are required with Memphis CCP.

In addition to sending the Form 3870s to Memphis CCP, the RBA Update Form 3177s with its RBA GII Spreadsheet for duplicate assessment linkages will also be sent to Memphis CCP for command code RAPID input.

The ERCS collateral record suspense type will be updated to 555 when all Form 3870s are submitted to Memphis CCP.

After confirming that all RBAs and respective linkages have been posted correctly and the Notice and Demand letters have been issued, the ERCS collateral record suspense type will be updated to 556.

TC 971 AC 18X action codes are used to define and link RBA and associated fraud penalties to duplicate and non-duplicate RBA, civil and fraud penalty assessments and / or to underlying tax liabilities for a specific TIN, MFT, and tax period except when TC 971 AC 187 is used.

IMF RBAs posted on the MFTs 31 may be duplicated civilly and posted on taxpayer MFTs 30 and BMF RBAs can be duplicated on the respective BMF tax modules (e.g., MFT 02, 01, etc.)The linkages are applied to the accounts in pairs in most instances (i.e., TC 971 "points" to a TIN / MFT / tax period and the corresponding TIN / MFT / tax period "points" back.) When TC 971 AC 187 is used, there is no corresponding account or tax module that points back to the restitution module.

The Memo Money Amount (MMA) field of the TC 971 AC 18X is used to identify the amount of the RBA and / or court ordered penalty that is a duplicate. The dollar amount of the MMA is displayed on CC TXMOD, IMFOLT and BMFOLT only when an amount greater than $.00 has been entered. The MMA is always the lower duplicate amount.

The transactions for the RBA, MMA amount, and associated TC 971 AC 18Xs are initiated by TS and input by Campus Collection Operations (CCO) located in the Ogden Campus. All completed Form 3177s and RBA GII spreadsheets are sent to CCO e-mail box at *SBSE Ogden RBA.

Upon confirmation that the restitution assessment correctly posted, the TC 971 AC 18X linkages are correctly posted, and the Notice and Demand letters have been issued, the CRC will notify Collection Advisory at their dedicated COP / Restitution e-mail address: *SBSE EEF Dallas Restitution. The following will be included in the e-mail:

To capture what was reflected on the Form 14104 and what was assessed as restitution, the restitution collateral record will be updated to reflect the restitution assessment. The following should be updated on the restitution collateral record:

The ERCS collateral record should be updated to the appropriate local Technical Services Fraud Coordinator (LTSFC) as described in IRM 4.8.6.3 for civil disposition. The LTSFC and group manager will be contacted via e-mail that the restitution collateral record has been transferred to the group. There should be no need to transmit any documents to the LTSFC since they should have already received the same information that the CRC received from CI. This will serve as the notification for the LTSFC to proceed with appropriate civil actions.

Once a notice and demand is issued after the restitution assessment, the IRS may receive an inquiry from the taxpayer recipient.

TS will address taxpayer inquiries if the problem is related to the following:

CCO will address taxpayer inquiries that relate to the following:

If TS needs to refer a question to CCO, Form 4442, Inquiry Referral may be used to send the referral. Phone and e-mail inquiries received by TS can be documented using Form 4442 and sent to CCO by secure e-mail to: *SBSE Ogden RBA. Written inquiry correspondences may be forwarded to CCO along with Form 4442 to the following address: Internal Revenue Service, 1973 N. Rulon White Blvd., Ogden, UT 84404, ATTN: CSCO RBA / MS 5300.

In some instances, the assessment of restitution will generate an inquiry from a power of attorney (POA). To discuss the case with the POA, a Form 2848 should be secured. Section 3 of the Form 2848 should reflect in the Description of Matter section either: restitution assessment or RBA. All RBA years / periods should also be reflected in Section 3 as well. No entry is required in the Tax Form Number section.

Appeals, upon resolution of the COP / Restitution case, will notify a designated CI and Collection employee. They will also notify the TS CR mail box (*SBSE TECH Svs Criminal Restitution) that the case has been resolved. Upon notification in the TS CR mailbox, the centralized tax examiner will forward the information to the LTSFC. The LTSFC will research IDRS for all applicable and related modules (MFT 31, 30, 02, 10, 01, etc.) to determine if there are duplicate assessments on Master File.

The LTSFC will follow the procedures outlined in IRM 4.8.11.5.5, Case File Maintained in Suspense. The LTSFC will also determine whether or not the case should be returned to the originating group manager. If the case cannot be returned to that group for civil resolution, the fraud coordinator will consult with PSP to determine which group is to receive the case file. Refer to IRM 4.8.11.5.8, Routing of Case From Technical Services.

Prior to forwarding a case for civil resolution, the LTSFC will ensure the following actions are taken (assistance from PSP may be needed):

The LTSFC will prepare a memorandum as described in IRM 4.8.6.3.2.4, and IRM 4.8.11.5.7.

LTSFC will follow the procedures in IRM 4.8.11.5.6, Case File Not Maintained in Suspense. The LTSFC will prepare two memorandums. The first memorandum is to transmit the CI closing package to PSP for further case building and assignment. Refer to IRM Exhibit 4.8.11-8 as an example. Using this specific memo in the exhibit is not required, but the memo used needs to cover the same basic information.

The LTSFC will prepare a second memorandum, Civil Resolution Cover Memo to Field Examination as described in IRM 4.8.6.3.2.4. Refer also to IRM Exhibit 4.8.11-7 as an example. Using this specific memo in the exhibit is not required, but the memo used needs to cover the same basic information.

In some instances, the basis for the restitution ordered is preparation of false returns by the defendant. When considering the appropriate civil actions on the client returns of a RPP defendant, the statute of limitations of the client returns should be considered.

Client returns with more than 18 months remaining on the clients’ statute of limitations may be sent to PSP / the return preparer coordinator for civil actions if the evidence available supports an examination.

PSP should be advised that restitution was assessed against the return preparer and all returns that are selected for examination should contain an AIMS Freeze Code "P" to ensure the client returns audited are returned to the LTSFC.

At the conclusion of the audit of the client returns, the LTSFC will be responsible for the input of the TC 971 AC 18X to identify the client return modules and the preparer's MFT 31 restitution assessment modules as duplicate assessment modules. See IRM 4.8.6.3.3.3 (4) for instructions on the completion of the RBA Update, Form 3177 and the RBA GII spreadsheet.

If at the conclusion of the audit of a client return, the client is going to Appeals, the LTSFC will be responsible for the input of the TC 971 AC 180 on the preparer’s MFT 31 module and a TC 971 AC 181 on the client’s MFT 30 module to "link" the two modules together. The LTSFC will review the module to ensure the correct TC 971 AC 18X codes are on the modules of the return preparer and client. If no assessment is posted on the client’s tax module, the TC 971 AC 180 and the TC 971 AC 181 must be reversed.

The LTSFC will prepare a memorandum to transmit the case for civil resolution. The memo should be tailored based on the specifics of the case. See IRM 4.8.11.5.7, Technical Services Memorandum Regarding Civil Action.

When a case is forwarded for civil resolution, the LTSFC should forward the following documents as applicable:

A copy of the civil disposition memo(s) and CI closing package will be maintained by the fraud coordinator in a dummy file until the civil examination has concluded. When the field completes the civil examination, the case will be closed by TS. The dummy file maintained will be included with the civil case file upon final closure by TS unless that file is needed for the dummy COP file. See IRM 4.8.11.6.2, Responsibilities of Technical Services Monitor Examination-Related Conditions of Probation.

The LTSFC is responsible for case monitoring and the ERCS actions as described below. Prior to closing any ERCS restitution collateral record, the LTSFC will confirm that the restitution was assessed and the required TC 971 AC 18X linkages are present. The collateral record updates reflected below are only applicable to the restitution collateral record not to the COP collateral record if one is established. Review Types 91 through 97, as described in Exhibit 4.8.6-1 are only to be used on the restitution collateral record.

If cases are open on AIMS or a civil examination is warranted:

If a civil examination is NOT warranted:

RPP Cases:

The Form 14104 should be reviewed to ensure the appropriate amount of restitution was assessed on MFT 31 for ALL cases where restitution was assessable per Section 8 of Form 14104. If the assessment is believed to be incorrect or if there are questions on the payments, the centralized restitution group should be contacted. The MFT 31 restitution assessment should never be corrected by anyone other than the CRC.

The revenue agent report (RAR) should be reviewed to ensure the report is correctly prepared reflecting all civil adjustments. The RAR should be prepared following the current report preparation procedures and should have no reference to restitution on the report or attachments. See IRM 4.10.8, Report Writing, and other relevant sections.

All other required review actions should be performed as appropriate for the case being reviewed including but not limited to the following:

The RAR should be reviewed to ensure the IRC 6663, Fraud Penalty, or the IRC 6651(f) Fraudulent Failure to File Penalty, was asserted. If not asserted, the case file should fully document the reason for not asserting the penalty and if needed, Counsel's concurrence should be included in the case file. See IRM 25.1.6.2. Procedures. Any other applicable IRM sections should be addressed as well.

Form 5344 should be reviewed to ensure it was properly completed and is processable. For example, ensure the proper fraud code was entered in Item 38. See IRM 25.1.6.5(1), Case Closing. Form 5344 may need to be adjusted by the LTSFC as discussed in IRM 4.8.6.3.3.2.

Prior to closing the case to Memphis CCP or Appeals, the AIMS Criminal Restitution Code of "1" should be updated to "2" . Refer to IRM 4.8.11.7.2(5), AIMS Criminal Restitution Code, If needed, AIMS freeze code "P" should be removed.

For all COP cases, copy the RAR and SNOD, if applicable, and place the copy in the COP "dummy" file. Follow all other required monitoring responsibilities discussed in IRM 4.8.11.6.2.

Since the MFT 31 module should NEVER contain a duplicate assessment, processing of civil assessments on a MFT 31 module with a restitution assessment should be made with caution. When a restitution assessment is already on a MFT 31 module and a civil assessment is needed on the same MFT 31 module which would in effect duplicate the restitution assessment the actions outlined in the following paragraphs must be taken.

The case should be closed to Memphis CCP following current procedures.

The account should be monitored until the civil assessment(s) has posted, if applicable. If there will be a duplicate assessment after the assessments post, the LTSFC can prepare linkages update and submit Form 3177s and GII spreadsheet as described in IRM 4.8.6.3.3.3(4) below while waiting for the assessment to post.

If the case includes COP, notify CI and Collection Advisory per IRM 4.8.11.6.2 (1)(h).

Once the assessment(s) posts, there will be duplicate assessments: an assessment of the restitution on MFT 31 and civil tax on MFT 30 (or 01, 02, 10, etc.). Certain TC 971 AC 18X transaction codes are required to identify the two accounts as duplicate assessment accounts. An RBA Update, Form 3177 and an RBA GII Spreadsheet should be prepared to cross reference the MFT 31 account(s) to the related MFT account(s) (i.e., MFT 30, 02, 01, 10). Each separate tab in the RBA GII Spreadsheet represents one tax period with one respective TC 971 AC 18X combination. Once input, this will direct any IDRS account viewer to the applicable restitution account and other related accounts. See Exhibit 4.8.6-4.

All completed TC 972 Form 3177s, and the correct / updated RBA GII Spreadsheet with the applicable RBA Update Form 3177 should be e-mailed to Ogden CCO at *SBSE Ogden RBA (sbse.ogden.rba@irs.gov). The RBA Updates, Form 3177 and the RBA GII Spreadsheet should also be e-mailed to Memphis CCP at *SBSE HQ RAPID (sbse.hq.rapid@irs.gov). The e-mails should use the following subject line: "EXPEDITE: Criminal Restitution Linkage / Duplicate Assessment Updates - NAME CONTROL."

The LTSFC will monitor all affected modules for the posting of the corrected TC 971 / 972 AC 18X cross referencing. When the civil assessment and TC 971s correctly post, the LTSFC responsibilities for criminal restitution monitoring and if applicable, COP monitoring are finished. If the cross referencing TC 971 AC 18Xs do not appear on the module within three weeks (as shown on TXMODA), the reviewer should follow up with Ogden CCO.

If duplicate assessment linkages (TC 971 AC 184 / 185 or AC 188 / 189) are not reflected on IDRS correctly, Form 3177s should be prepared as described in IRM 4.8.6.3.3.3 (4) (a) and (b) to enter a TC 972 AC 18X to reverse the incorrect codes. The RBA Update Form 3177 and the RBA GII Spreadsheet should be prepared as described in IRM 4.8.6.3.3.3 (4) (c) and (d) to enter the correct TC 971 AC 18X and MMA. The latter should also be sent to Memphis CCP at *SBSE HQ RAPID (sbse.hq.rapid@irs.gov) for CC RAPID input. See IRM 4.8.6.3.3.3 (5).

There will be instances when something happens to the MFT 31 module or to the related civil module after restitution is assessed. An amended return may be filed or the civil module may post assessments without the cases going through TS. When this happens, CCO will notify the CRC group of changes made to the RBA or related modules for possible TC 971 AC 18X corrections. When the restitution collateral record is open in the hands of the LTSFC or was closed by the LTSFC, the CCO inquiry will be forwarded to the LTSFC to address possible linkage and/or duplicate assessment issues.

The LTSFC will review all affected modules to determine if linkage and/or assessment corrections are warranted. If linkage and/or assessment corrections are needed based on the IDRS research, the LTSFC will ensure needed corrections are made to all impacted modules.

Close appealed and petitioned cases following all existing Appeals / Tax Court procedures. For all RBA (and tax-related COP) cases transferred to Appeals the LTSFC will ensure that Appeals, CI, and Collection Advisory are notified of the transfer to Appeals. Follow the same procedure as detailed in IRM 4.8.11.6.2.5, Procedures for Transferring COP Cases to Appeals.

The LTSFC criminal restitution and COP responsibilities for the case are suspended until the case has been resolved by Appeals or Tax Court.

When the COP / Restitution case has been resolved, Appeals will notify TS, CI, and Collection Advisory, via secure e-mail. The notification to TS is made to the CRC group mailbox (*SBSE TECH Svs Criminal Restitution). Refer to Appeals IRM 8.7.1.11.4(5), Civil Actions on Cases with Restitution-Based Assessments.

When the notification is received in the TS criminal restitution mailbox, the centralized tax examiner will forward the information to the LTSFC. The LTSFC will do the following: