This IRM provides IRS guidance on processes and procedures when working Federal Tax Deposit (FTD) Alerts.

Purpose: This IRM section provides instructions for working Federal Tax Deposit (FTD) Alerts.

Audience: The primary users of this IRM are Revenue Officers in Field Collection.

Policy Owner: Director, Collection Policy, SB/SE .

Program Owner: Collection Policy, SB/SE, Employment Tax (ET) is the program owner of this IRM.

Primary Stakeholders: Field Collection

Program Goals: Federal Tax Deposit (FTD) Alerts are used to determine an employer's compliance with employment tax deposit requirements for the quarter of the Alert issuance, and for subsequent quarters until the taxpayer is brought into full compliance. The FTD Alert process identifies, at an early stage (i.e., before the return is due), taxpayers who have fallen behind in their deposits.

Contact Information: Recommendations and suggested changes to this IRM should be emailed to the content product owner. The owner is indicated on the Product Catalog Information page which is found in the Forms and Publications, IRM Numerical Index of the Media and Publications Electronic Publishing website.

FTD Alerts are issued on taxpayers who are classified as semiweekly depositors and who have not made FTDs during the current quarter or who have made them in substantially reduced amounts. They may be identified by the presence of TC 971 AC 046 on a tax module.

The selection model analyzes past compliance history and current deposit patterns to identify taxpayers who are least likely to self-correct their tax deposit issues.

There are three types of Alert issuances that are assigned for field contact. They are identified by the following systemically generated codes:

The FTD Alert priority code will be present on the ICS FTD Alert Case Summary Screen.

Master File conducts the FTD Alert analysis in the twelfth cycle week of each calendar quarter. The FTD Alerts generate in the thirteenth week of each calendar quarter, in the months of March, June, September, and December.

Revenue Officer inventories should be at a level that will allow for the immediate assignment of the Alerts; however, under no circumstances should the assignment date exceed seven calendar days from the date the Alert arrives in the group designation hold file.

Ensure the case sub code is listed as FTD Alert 105, per IRM 5.2.1.7.1, Field Collection Procedures and IRM 5.2.1.9(2), ICS and Entity Subcodes (Field Collection Area only). If the sub code is not listed as 105, immediately update ICS. FTD Alert sub codes are automatically changed by ICS when the FTD module closes, see IRM 5.2.1.9(5).

Pre-contact analysis must be conducted on all Alerts prior to making contact on the FTD Alert.

If pre-contact research and analysis reveals:

Schedule Field contact on your calendar.

Clearly document a plan of action.

Contact the taxpayer within 15 calendar days of assignment of the FTD Alert. If timely contact is not possible, notify the group manager. The group manager will decide if reassignment of the FTD Alert is appropriate. If contact is delayed for more than 15 calendar days, note the reason for the delay in the case history.

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When the taxpayer has a representative, make initial contact with the POA of record. Procedures outlined in IRM 5.1.10.3(5) and (7) and IRM 5.1.10.7.2, Right to Representation should be followed.

Make contact with the taxpayer or taxpayer’s representative at the taxpayers place of business to discuss the FTD Alert. Making initial contact in the field allows the RO the opportunity to view the business/operation, assets, make informed decisions regarding collectability and educate the taxpayer regarding their filing and deposit requirements.

Additionally, a face-to-face visit can be an effective opportunity to provide and explain the TBOR (www.irs.gov/taxpayer-bill-of-rights), Taxpayer Advocate Service (TAS) (http://tas.web.irs.gov/) discussed in IRM 5.1.1.1.7, Related Resources, and the consequences of non-compliance, such as penalties, including the Trust Fund Recovery Penalty. Refer the taxpayer to the irs.gov website for additional information about TBOR.

In those rare instances where the RO determines initial contact in the field is not possible, a telephone call is the next option for initiating contact with the taxpayer.

If the initial contact with a taxpayer is not in the field, document the case history outlining the circumstances supporting this determination.

If the initial contact is not at the taxpayer’s place of business, a field visit to the taxpayer’s place of business must still take place. See IRM 5.1.10.3(7). If a subsequent field contact is not practical, document the case history outlining the circumstances.

If the Revenue Officer makes the initial taxpayer contact by telephone, the contact will be considered timely as long as the phone call is made within 15 calendar days from the date of receipt of the FTD Alert.

Prior to making an attempt to contact a FTD Alert taxpayer by telephone, Letter 5857, FTD Alert Telephone Contact Letter must be sent to the taxpayers address on record to inform them that a Revenue Officer will call the taxpayer by the specified date entered on the letter.

Letter 5857 is not required prior to making initial contact in the field.

Complete the table at the bottom of Letter 5857. See the example below:

The above table provides an example of the tax on the return, deposits made and penalties assessed on the prior and current quarters.

On Letter 5857, complete the boxes as follows:

The table illustration will assist the taxpayer to understand the purpose of the phone call and assist the RO when explaining the specific decrease in deposits made and the cost associated with making late deposits.

A telephone call that does not result in taxpayer contact will not meet the timely contact requirements. Leaving a message within this period is also not considered a timely contact. All attempted contacts should be documented in the case history.

Follow the procedures in IRM 5.1.10.3.2 Initial Contact.

Explain the reason for the visit/call. Recognize that FTD Alerts generate based on the probability that the taxpayer has fallen behind in deposit payments.

Provide the taxpayer with Publication 1, Your Rights as a Taxpayer.

If the FTD Alert is a "stand alone" Alert, meaning there are no associated modules on IDRS, it’s possible that the taxpayer has not been provided with advance notice that third party contacts may be made. See IRM 25.27.1, Third-Party Contacts (TPC).

If the RO is not able to meet with or discuss the FTD Alert directly with the taxpayer or POA, leave Form 2246, Field Contact Card at the taxpayer’s place of business, per IRM 5.1.10.3(6), Initial Contact.

If the taxpayer provides documentation or other substantiating information confirming full compliance, verify that the amount deposited is accurate based on prior quarter deposits. The only way to verify complete compliance for the FTD Alert quarter is to keep the FTD Alert open until the Form 941 return is secured.

If the amount of the deposits are less than prior quarters, ask additional questions regarding possible reduced payroll or wages.

If the taxpayer is no longer required to deposit (e.g., out-of-business, no employees), ensure there are no other outstanding modules. Secure final return, if out of business. Promptly request input of TC 591 and close the FTD Alert.

If the taxpayer is in compliance, but due to sporadic or seasonal payrolls the Alert programming analysis is unable to predict deposit compliance, request input of TC 136. During the contact, briefly review Federal Tax Deposit requirements with the taxpayer and provide Notice 931, Deposit Requirements for Employment Taxes, or other documents outlining the deposit rules to help explain the requirements. This may help ensure the taxpayer maintains future compliance.

FTD Alerts on delinquent taxpayers provide an early opportunity to assist and educate taxpayers before their liability pyramids and the growing debt becomes more difficult to resolve.

Review Federal Tax Deposit requirements with the taxpayer. Give the taxpayer Notice 931, Deposit Requirements for Employment Taxes, Publication 15, Circular E, Employer's Tax Guide, Publication 3151-A, The ABCs of FTDs or other documents outlining the deposit rules to help explain the requirements.

If the taxpayer claims to be in compliance because they use a third-party payer (payroll service provider, reporting agent, professional employer organization), secure information about the third-party arrangement and verify compliance. Explain that the employer is ultimately responsible for withholding, reporting, and paying federal employment taxes (see IRM 5.1.24.5, Collection Actions in Cases Involving Third-Party Payers). Revenue Officer questions or concerns about third-party payer issues should be directed to the appropriate Area PSP/PEO Coordinator. A list of coordinators can be found at Collection PSP/PEO Coordinators by Area.

Discuss the cost for failing to make timely deposits. Explain the FTD penalty to the taxpayer. Show the taxpayer the penalties incurred in the prior quarters.

Ensure that the taxpayer understands the consequences of continued noncompliance. Discuss the Notice of Federal Tax Lien (NFTL), levy and seizure provisions. When applicable, discuss the provisions for the Trust Fund Recovery Penalty (TFRP).

Monitor and document the taxpayer’s compliance with deposits for the FTD Alert quarter and subsequent quarters until the account is resolved. If the taxpayer cannot satisfy past due deposits while meeting current deposits, encourage the taxpayer to make current deposits first while working to resolve past due deposits.

After contacting the taxpayer, document the case history to show FTD requirements and penalty assessment were discussed with the taxpayer. Also, document that the taxpayer was informed of the consequences of non-compliance.

If the taxpayer is unable to make the required deposits or become compliant, after initial contact, see IRM 5.7.1.8, Working FTD Alerts.

If the taxpayer is unable to make required deposits or become compliant, at initial contact, secure a Collection Information Statement and follow the procedures listed in IRM 5.1.10.3.2, Effective Initial Contact.

Secure the Form 941 return for the FTD Alert quarter. Use the appropriate closing code with TC 599 for the return secured.

If full payment of tax, including penalties and interest, is not received with the return, determine if it is in the best interest of the government to prompt assess the return.

Explain the TFRP provisions, provide Notice 784, Could you be Personally Liable for Certain Unpaid Federal Taxes? and make TFRP determination.

Ensure ICS histories are clearly documented. See IRM 5.1.10.8, Case Histories.

Ensure timely follow-ups are met. See IRM 5.1.10.9, Timely Follow-ups.

If the FTD Alert is assigned with no related Bal Dues and the RO is unable to locate the taxpayer during the field call to the FTD Alert address, all available internal and external locator sources should be exhausted in an effort to locate the taxpayer.

If the RO determines the business is OOB, then the FTD Alert can be closed as Not Required to Deposit. Make sure all business return filing requirements are closed.

If there are deposits made on the module and the RO determines the business is OOB, the RO must make an effort to secure the FTD Alert module Form 941 return before closing the FTD Alert.

Consider all possible resolutions for the unfiled FTD Alert return on a case-by-case basis, including 6020(b).

If the RO determines, after contact, the business is in bankruptcy litigation, see IRM 5.7.1.9, Alert Closing Procedures.

If the RO determines that enforcement should not be pursued for the unfiled Form 941 return for the FTD Alert module, close the FTD Alert as "Bal Due/Due Ret Received," open an ICS only Del Ret and follow the procedures in IRM 5.1.11.6.1, Enforcement Determination, to close the Del Ret.

Close the FTD Alert when the taxpayer is brought into full compliance. Full compliance includes, filing of all tax returns on or before the required due date; making appropriate tax deposits in the proper amount, by the appropriate due date; and paying any tax due with the return at the time the return is filed.

If the taxpayer is not in compliance and there is a Bal Due, or Del Ret open on IDRS, request assignment of the case.

Once the STAUP request has been submitted, document the case history that the STAUP request was input, close the FTD Alert as "Bal Due/Del Ret Received" and create a ICS Only Bal Due or Del Ret on ICS to control the case and continue working the entire case.

If a Bal Due or Del Ret is received on the FTD Alert module, prior to requesting assignment, the FTD Alert will systemically close and will be assigned to the RO.

The only way to open a ICS Only Bal Due or Del Ret on the FTD Alert module is to close the FTD Alert first.

The following ICS options are available to close an FTD Alert:

If a new FTD Alert is issued while an FTD Alert from a prior quarter is still open in inventory, the old Alert will be systemically close and be replaced with the new Alert.

If the taxpayer is in another area, the FTD Alert can be transferred without a prior Courtesy Investigation.

Due to the time-sensitive nature of FTD Alert contacts, call and advise the receiving office of the transfer.

Transfer FTD Alerts only if the business itself, not merely one or more officers or partners, is located in the transferee area.