This IRM provides procedures and guidance examiners should understand and apply in the performance of their duties.

The IRS has established a Policy Statement (P 25-2) that covers victims of return preparer misconduct. See IRM 1.2.1.16, Servicewide Policies and Authorities, Policy Statements for Special Topics.

The Director, Headquarters Examination, is the executive 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 1.1.16.3.5, Headquarters Examination, for additional information.

The Director, Examination - Field and Campus Policy, reports to the Director, Headquarters Examination, and is responsible for the delivery of policy and guidance that impacts the field examination process. See IRM 1.1.16.3.5.1, Field and Campus Policy, for additional information.

FESP, which is under the Director, Examination - Field and Campus Policy, is the group responsible for providing oversight and policy and procedural guidance on specialized examination processes to SB/SE field examiners and managers. See IRM 1.1.16.3.5.1.2, Field Exam Special Processes.

Periodic program reviews are conducted to:

The following table lists commonly used terms, acronyms and their definitions:

The following table provides definitions of return preparer roles:

The following table contains related IRM sections referenced in this IRM:

Perform complete Integrated Data Retrieval System (IDRS) research to confirm a tax return was filed or the taxpayer does not have a filing requirement. Research should include, but is not limited to, the use of CC TXMOD or CC IMFOLT to review posted information; CC RTVUE, CC TRDBV and/or access of Employee User Portal (EUP) to review MeF original tax return information; CC IRPTR to review income information and so on.

An initial review of the taxpayer’s complaint and account information (IDRS, Account Management Services (AMS), Correspondence Imaging System (CIS)) needs to be performed to determine if the complaint meets Compliance RPM criteria or if the case should be routed to an another area. See IRM 25.24.5.4, Return Preparer Misconduct Criteria Not Met, for further guidance.

If the complaint is mis-routed, route to the correct area.

If there are multiple controls, coordinate with the other area to negotiate ownership.

If the taxpayer alleges a preparer altered tax data on a return or misdirected all or a portion of a refund, the taxpayer must submit sufficient documentation to support the allegation.

Documentation for complaint consideration includes the following:

In a case involving a "ghost" or non-signing preparer, in addition to the documentation in (2) above, at least one additional piece of corroborating evidence that the preparer was in the business or held themselves out as being in the business of preparing tax returns is required. Examples of evidence the preparer held themselves out as being in the business of preparing tax returns includes, but is not limited to, the following:

In addition, one piece of corroborating evidence that the person named on the Form 14157 interacted with the taxpayer and submitted the return filed, is required. The corroborating evidence includes:

Additional documentation relevant to establishing RPM may include the following:

Verification of the preparer is required on all complaints alleging RPM. Research the account to determine whether the original return was signed by a preparer or there was a "ghost" preparer.

The two levels of verification required are as follows:

Verify the identity of the preparer from the following IRS records:

Use the following If/Then table to verify the preparer.

In addition to the required documentation to support the RPM complaint, a refund trace may be required on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡cases. The purpose of the refund trace is to validate the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name.

A refund trace is required as outlined below:

Research refund information via CC IMFOLI, TXMOD, TRDBV, and MeF Return Request Display (RRD) through EUP.

Complete Form 4844, Request for Terminal Action, and forward to the Designated Identity Theft Adjustment (DITA) team to request a refund trace. Upon completion of the refund trace, DITA will forward the results directly back to the requestor. See IRM 25.24.4-1, Form 4844 Example for Refund Trace Request.

Depending upon the RPM category, this information will be used in conjunction with other required information to determine the correct account adjustment. Review available refund trace information for all cases, if applicable, regardless of category for information on the amount of the refund, if any received by the taxpayer.

Refund trace information will reflect a negotiated check or completed Financial Management Service Form 150.1 or Form 150.2, which provide information as to the individual’s name and where the refund was deposited.

On incomplete Category 3 and 4 complaints, initiate the refund trace while continuing to correspond with the taxpayer for additional information.

An official report from a law enforcement agency (such as police department, State AG, CI or TIGTA) is required in RPM Category 3 and 4 cases for the taxpayer to be eligible for an additional refund.

If the taxpayer is unable to obtain an official report from a law enforcement agency the taxpayer will be directed to their local CI office or TIGTA office. Examiners will follow-up with taxpayers if a report has not been received within a reasonable period.

The official law enforcement agency report must be signed by a law enforcement agency officer or equivalent, depending on the report received (or otherwise demonstrably accepted by the law enforcement agency) and contain the following:

If signing preparer information is present, the individual named on the law enforcement agency report must match the name of the preparer named in the complaint and on the original return. If signing preparer information is not present, the preparer name on the law enforcement agency report must match the preparer named in the complaint.

If the preparer name does not match, the taxpayer is not entitled to an additional refund. The taxpayer may still be eligible for an account adjustment and removal of the preparer portion of the refund depending on the refund verification results.

Category 1 is defined as a taxpayer who was in contact with a preparer and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ did not sign or authorize the filing of a return, but a return was filed with their name and TIN.

Potential relief/resolution: The IRS will resolve these cases using RPM procedures and may result in the taxpayer receiving a refund.

Some information that can assist with the determination may include:

Complaints that are determined to be Category 1, if allowed, will result in treating the original return filed as a nullity. The complaint will be treated with procedures similar to identity theft procedures. However, identity theft indicators will not be applied for the first year RPM is verified. Any subsequent years in which the preparer files without the taxpayer’s knowledge and consent will be considered identity theft. The account will be adjusted to match the taxpayer’s return and a subsequent refund may be issued barring any other issues.

Category 1 requires specific documentation to qualify for relief. The required documentation is outlined in the chart below:

Consider the documentation complete if the ≡ ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included. In some circumstances all the required documentation is not required as outlined below:

Also consider the documentation complete if the preparer’s ≡ ≡ ≡ ≡ ≡ ≡ ≡ or first and last name and business address are included on other documentation. Form 14157 is not required.

Consider the documentation incomplete if the ≡ ≡ ≡ ≡ required documents above are not included, or are included, but the information provided within the documentation is incomplete.

If complaint is considered incomplete refer to IRM 25.24.5.9, Incomplete or Missing Documentation, for additional information. Suspend case following normal procedures. If reply received or suspense period ends refer to IRM 25.24.5.9.1, Evaluating Taxpayer Response to Missing Documentation Request.

Verify the preparer information. Refer to IRM 25.24.5.6.3, Verification of the Preparer, for additional information.

For Category 1 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace will only be required to be initiated when the claim is disallowed. This is necessary to determine the appropriate handling of the actual return provided with the claim. However, if a refund trace was previously performed and the trace information is currently available on a ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund, the information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

Verify whether a refund was issued or deposited into an account in the taxpayer’s name.

If complaint is considered complete, all required documentation, including 3rd party documentation (if applicable), is present and the preparer information is considered verified, the complaint is accepted.

The IRS will determine the type of relief to which the taxpayer is entitled. The actual return presented by the taxpayer (unaltered by the preparer) in an allowed claim is considered the taxpayer’s return of record. The IRS will consider the original return a nullity.

For Category 1 cases, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, this amount would be considered part of the preparer portion of the refund. If the taxpayer did not authorize the filing of the tax return, the taxpayer would not be held responsible.

Category 1: Treatment Stream for Accepted Complaints:

Category 2 is defined as a taxpayer who was in contact with a preparer and authorized a return filing, but states tax data (exemptions, income, expenses, deductions, credits) on their return was altered before the return was filed or the return otherwise includes items which they did not authorize.

Potential relief/resolution: The IRS will administratively adjust the taxpayer’s account to reflect the correct information and remove the portion of the refund attributable to preparer misconduct. If refund trace shows taxpayer received more than entitled, taxpayer may be liable for the erroneous refund amount. See IRM 25.24.5.8, Erroneous Refund Procedures.

Complaints that are determined to be Category 2, if allowed, will result in treating the original return filed as a nullity.

Category 2 requires specific documentation to qualify for relief. The required documentation is outlined in the chart below:

Consider the documentation complete if the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included. In some circumstances all the required documentation is not required as outlined below:

Form 14157 is not required if the preparer’s first and last name and business address is included on other documentation.

Consider the documentation incomplete if the ≡ ≡ ≡ ≡ required documents above are not included, or are included but the information provided within the documentation is incomplete.

If complaint is considered incomplete refer to IRM 25.24.5.9, Incomplete or Missing Documentation, for additional information. Suspend case following normal procedures. If reply received or suspense period ends refer to IRM 25.24.5.9.1, Evaluating Taxpayer Response to Missing Documentation Request.

Verify the preparer information. Refer to IRM 25.24.5.6.3, Verification of the Preparer, for additional information.

For Category 2 ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace will only be required to be initiated when the claim is incomplete or disallowed. This is necessary to determine the appropriate handling of the actual return provided with the complaint. However, if a refund trace was previously performed and the trace information is currently available on a ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund, the information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an erroneous refund received by the taxpayer.

Verify whether a refund was issued or deposited into an account in the taxpayer’s name.

If complaint is considered complete, all required documentation, including 3rd party documentation (if applicable), is present and the preparer information is considered verified, the complaint is accepted.

The IRS will determine the type of relief to which the taxpayer is entitled. The actual return presented by the taxpayer (unaltered by the preparer) in an allowed RPM complaint is considered the taxpayer’s return of record. The IRS will consider the original return a nullity.

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

Category 2: Treatment Stream for Accepted Complaints

Category 3 is defined as a taxpayer who was in contact with a preparer and authorized a return filing, but alleges tax data (exemptions, income, expenses, deductions, credits) on their return was altered after they signed it or the return otherwise includes items they did not authorize, and taxpayer states either they received no refund or only a portion of the refund they expected.

Potential relief/resolution: The IRS will administratively adjust the taxpayer’s account to reflect the correct information and remove the portion of the refund attributable to preparer misconduct. The taxpayer may receive a refund plus interest, as provided by law, for the amount not received.

Complaints that are determined to be Category 3, if allowed, result in treating the original return filed as a nullity.

Category 3 requires specific documentation to qualify for relief. The required documentation is outlined in the chart below:

Consider the documentation complete if the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included. In some circumstances, all the required documentation is not required as outlined below:

Consider the documentation incomplete if the ≡ ≡ ≡ ≡ ≡ ≡ ≡ required documents above are not included or are included but the information provided within the documentation is incomplete.

If complaint is considered incomplete refer to IRM 25.24.5.9, Incomplete or Missing Documentation, for additional information. Suspend case following normal procedures. If reply is received or suspense period ends refer to IRM 25.24.5.9.1, Evaluating Taxpayer Response to Missing Documentation Request.

Verify the preparer information. Refer to IRM 25.24.5.6.3, Verification of the Preparer, for additional information.

For Category 3, ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required and used to verify whether a refund was issued in the taxpayer’s name. The trace information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

If complaint is considered complete and all required documentation, including 3rd party documentation, if applicable, is present and the preparer information is considered verified, the complaint is accepted.

The IRS will determine the type of relief to which the taxpayer is entitled. The actual return presented by the taxpayer (unaltered by the preparer) in an allowed claim is considered the taxpayer’s return of record. The IRS will consider the original return a nullity.

Category 3 involves both a RPM complaint and a claim for refund. If complaint is disallowed, the claim for refund must be disallowed using claim disallowance procedures.

Category 3: Treatment Stream For Accepted Complaints

Category 4 is defined as a taxpayer who was in contact with a preparer and authorized a return filing, but states only the direct deposit information or address was altered, diverting the refund to the preparer and no refund or only a portion of the refund was received.

Potential relief/resolution: The IRS will administratively remove the portion of the refund attributable to preparer misconduct and the taxpayer may receive a refund.

Complaints determined to be Category 4 will not result in treating the original return filed as a nullity.

Category 4 requires specific documentation to qualify for relief. The required documentation is outlined in the chart below:

If the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:

Consider the documentation incomplete if the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are not included or are included but the information provided within the documentation is incomplete.

If complaint is considered incomplete refer to IRM 25.24.5.9, Incomplete or Missing Documentation, for additional information. Suspend case following normal procedures. If reply received or suspense period ends refer to IRM 25.24.5.9.1, Evaluating Taxpayer Response to Missing Documentation Request, for additional information.

Verify the preparer information. Refer to IRM 25.24.5.6.3, Verification of the Preparer, for additional information.

For Category 4, ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required and used to verify whether a refund was issued in the taxpayer’s name. The trace information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

If complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, the complaint is accepted.

The IRS will determine the type of relief the taxpayer is entitled to. For Category 4 cases the original return is considered valid and not considered a nullity.

Category 4: Treatment Stream For Complaints:

When the taxpayer responds to a request for missing information, re-evaluate the complaint and determine if the additional information is sufficient to provide relief.

Although not all inclusive, follow the If/Then Chart below upon receipt of the taxpayer’s response to the missing information request.

For specific categories, depending upon the facts and circumstances, an otherwise complete claim may not be allowed.

Disallow complaints in full in any category if:

If the taxpayer’s actual return is included in the documentation and the complaint is disallowed, a refund trace is required to determine the treatment of the taxpayer’s actual return.

Disallowing Complaint of Return Preparer Misconduct & Taxpayer’s Actual Return is Present:

Suggested language for the Complaint Disallowance letter is outlined below. Include the reason(s) for the complaint disallowance.

When guidance states to treat taxpayer’s return as an amended return, suggested verbiage: Refund trace information shows that the entire original refund was deposited into an account in your name and/or it has been determined that you received the benefit of the entire original refund. We have adjusted your account to reflect the tax return you provided with your complaint as an amended return. A notice of adjustment will be issued.

For Category 4 disallowances include:

When guidance states "Do not process actual return." Suggested verbiage: No adjustments are being made to your account at this time. If you need to make any changes to your original return, please file a Form 1040X, Amended U.S. Individual Income Tax Return.

Provide Pub 4134, Low Income Taxpayer Clinic (LITC) List. This publication provides information on LITCs.

Partial disallowance procedures can occur in RPM Categories 1,3, 4 and may apply if there are RSED implications.

Depending upon the facts and circumstances, including the refund trace results, the taxpayer may have received more than they stated in the RPM complaint which would impact the amount of the refund issued and partial disallowance procedures would apply.

If the law enforcement agency report contains inconsistent information but the complaint was otherwise complete, the taxpayer is not eligible for a refund but is eligible for an account adjustment.

Issue Letter 569, Full/Partial Preliminary Claim Disallowance, when partially disallowing a claim.

Provide IRS Pub 4134, Low Income Taxpayer Clinic (LITC) List. This publication will provide information on LITCs.

This applies to Categories 1-3: For the purposes of applying the RPM procedures, the filing of an altered return by a preparer may not meet the definition of a valid return. When a claim is allowed, the posted return is considered a nullity and the statute of limitations does not start until a signed return is received from the taxpayer regardless of whether the taxpayer authorized the filing of the initial return.

Returns filed in Category 4 cases are not considered nullities and the ASED will begin to run based on the filing of those returns.

If complaints are received after the ASED, the complaint must be evaluated to determine whether the posted return is a valid return.

When returns are received with a taxpayer’s allegation of preparer misconduct and the claim is allowed, with the exception of Category 4, Misdirected Refund, the ASED must be updated based upon the received date of the signed return (return as intended to be filed). The ASED must be updated prior to routing to DITA, if applicable.

Use the received date of the taxpayer’s signed return as intended to be filed to reflect the date of the return of record for allowed complaints.

If a return is submitted but unsigned, correspond for signature. If not received, disallow the complaint. Do not change the ASED on disallowed complaints.

Although a return submitted with an accepted RPM complaint for Categories 1, 2, or 3 is timely filed for purposes of the RSED, the taxpayer may not be entitled to a refund. See IRC 6511(b).Returns submitted as part of an accepted RPM complaint for Categories 1, 2, and 3 will be considered original returns, unless otherwise noted.

Generally, prepaid credits must be claimed within three years of the due date of the return with regard for extensions. Therefore, if a return is received more than three years from the due date with regard to extensions, a refund of prepaid credits should not be made.

If the RSED has expired, send a claim disallowance letter for the RSED issue only on an otherwise allowed claim.

Category 4 cases involve a claim for refund only. Normal RSED procedures will apply.

The ERSED is two years from the date of the erroneous refund or direct deposit. However, a five-year statute will apply if the IRS can show the erroneous refund was induced by fraud or misrepresentation of material facts by the taxpayer. Generally, for purposes of RPM, the two-year statute will apply to the taxpayer.

Accuracy-related penalties must be considered when reviewing RPM complaints.

If audit issues remain on the return after a RPM complaint has been accepted, accuracy-related penalties may be assessed.

If accuracy-related penalties were assessed based upon items inflated by a preparer, the associated penalties should be removed/abated if the items are removed from the account.

Once the examiner determines the taxpayer is a victim of RPM, the examiner completes Form 4442, Inquiry Referral, as follows:

Request DITA to – "Inform the examiner by secure e-mail at [insert your full e-mail address, for example, Mary.Doe@irs.gov] when the account corrections are complete."

The Form 4442 package sent to DITA should contain:

Mail, fax, or e-mail the Form 4442 package, along with Form 3210, Document Transmittal, to the DITA team.

Incomplete referrals will be rejected back to the originating group.