IRM 3.0.167, Losses and Shortages, provides guidelines for reviewing the facts and evaluating the circumstances surrounding losses and shortages. These procedures contain requirements for obtaining restitution, resolution and/or relief for losses or shortages.

The authority for these policies are:

The Losses and Shortages Analyst oversees the Losses and Shortages program.

The Remittance Security Coordinator is the individual responsible for centralized control, coordination and protection of the taxpayer for potential embezzlement/theft cases.

The Receipt Loss Coordinator is the individual responsible for the control, coordination and monitoring of receipt loss cases for resolution.

The Lockbox Coordinator is the individual responsible for the control, coordination and resolution of lockbox losses.

An Accountable Officer is any government employee or officer who, by reason of employment, is responsible for or has custody of government funds. Accountable Officers are held accountable for losses occurring within their accounting jurisdictions until restitution is made or relief is granted.

The Losses and Shortages Analyst, as required by Treasury Directive 32-04, maintains a central control record of administratively resolved cases. This information is used to prepare an annual report to the Commissioner, Internal Revenue for review.

See Exhibit 3.0.167-20 for commonly used acronyms and their definitions.

IRM 1.2.2.2.6, Delegation Order 1-6, Certification and Approval of Internal Revenue Collections

IRM 1.2.2.2.15, Delegation Order 1-17, Audit and Settlement of Accountable Officer’s Accounts - Revenue Accounting and Submission Processing

IRM 1.2.2.2.16, Delegation Order 1-18, Settlement of Accounts and Relief of Accountable Officers - Administrative Accounts

IRM 1.2.2.2.17, Delegation Order 1-20, Collections from Employees of the Internal Revenue Service

IRM 1.2.2.2.22, Delegation Order 1-25, Termination of Collection Action against Federal Depositaries

Treasury Directive 32-04, dated February 16, 2007

Treasury Directive 34-02, dated February 25, 2016

All applicable laws relating to funds and appropriations must be complied with; each fund or appropriation can only be used for the purpose authorized by law. Accounting records must be designed to show compliance with this requirement.

The accounting system must provide financial records consistent with standards set by other agencies and the Department of the Treasury in connection with its central accounting and reporting responsibilities. The financial data must be accurate and reported timely to meet the needs of the President and Congress for budget activities.

Each accounting system must maintain complete and reliable records for all funds, property, and other assets, as well as liabilities, obligations, receipts, and revenues. All financial transactions must have documents supporting a summary record and financial report. Procedures implemented in carrying out the operation must be simple, efficient, practicable, and must apply all legal and regulatory requirements. The responsibility for each accounting function, such as preparing documents, preparing journals, posting ledgers, reviewing, and balancing must be performed by separate units within the Accounting Operation to provide internal checks and minimize opportunities for fraudulent, unauthorized, or irregular acts.

The highest standards of truthfulness and honesty must be applied in accounting for the receipt, disbursement, and application of public funds. Management and the Congress must be able to rely on the accuracy of all transactions in future planning. To meet these standards competent leadership and qualified technicians are of prime importance.

An Accountable Officer is any government employee or officer who, by reason of employment, is responsible for or has custody of government funds.

The Federal Accounting Standards Advisory Board (FASAB) establishes accounting concepts and standards. The Federal Financial Management Improvement Act (FFMIA) of 1996 prescribes that agencies’ implementation and maintenance of financial management systems substantially comply with Federal Financial Management Systems requirements, applicable Federal Accounting Standards and U. S. Government Standard General Ledger at transaction level and audits to report compliance.

The Field Director, Submission Processing, is normally the Accountable Officer for the campus accounting system. The Field Director, Submission Processing, usually delegates the authority for carrying out the accounting function. However, the ultimate responsibility remains with the Field Director, Submission Processing who can be held financially responsible if proper controls are not maintained. The Accountable Officer ensures principles and standards are met in maintaining the accounting system.

A Certifying Officer is one of several types of Accountable Officers.

A Certifying Officer is a government officer or employee whose job is or includes certifying vouchers for payment. This means verifying and certifying that payments made by the agency are legal, proper and correct.

A Certifying Officer is different from other accountable officers in one important way: a Certifying Officer does not have physical custody of public funds. Despite this fact, the accountability for public funds rests primarily with the Certifying Officer.

Collecting officers are those who receive or collect money for the government, such as certain officers of the Service. Officers who receive or collect money for the government are accountable to the government for all money collected. Service employees who receive or collect money for the government are responsible for the physical safety of taxes collected. These employees must surrender to the government all taxes collected and repay any money lost, stolen, burned, etc., while in their custody, unless relieved.

Under Delegation Order 1-20 (formerly DO 152, Rev. 4), IRM 1.2.2.2.17, the Commissioner has delegated to the Field Directors, Submission Processing, the authority to certify and approve Internal Revenue Collections as an Accountable Officer. Other officials can be designated by a Division Commissioner.

Accountable Officers who have physical custody of Government funds are held to a standard of strict liability. They are, in effect, insurers of the public funds in their custody and are excusable only for losses due to acts of God or the public enemy.

An Accountable Officer is automatically liable when either a physical loss occurs, or an erroneous payment is made. The fact that a loss or deficiency has occurred raises a presumption of liability on the part of the accountable officer, and the burden of proof to rebut this presumption rests with the officer who has sustained the loss.

Treasury Directive 32-04, dated February 16, 2007, establishes requirements and responsibilities.

When entrusted with or statutorily made responsible for public funds, government employees are, in effect, trustees for the taxpayers. These "accountable officers" encompass such officials as authorized certifying officers, civilian and military disbursing officers, collecting officers, and other employees who, by virtue of their employment, are responsible for or have custody of government funds. These officials are personally liable for the loss or improper payment of the funds for which they are accountable.

Directors are held accountable for losses occurring within their accounting jurisdictions until employee restitution is made or relief is granted.

It is important to distinguish between liability and "relief." The basic legal liability of the accountable officer is strict, and automatic. Lack of fault or negligence does not remove liability but may provide a basis for "relief" under the relief statutes discussed.

Exhibit 3.0.167-1, List of Accountable Officers, contains a list of directors who have been designated under Delegation Order 1–18 (formerly DO-125, Rev 5, DO-185, Rev 1 and DO-235, Rev 1), IRM 1.2.2.2.16 as Accountable Officers.

These instructions provide the minimum requirements and general guidelines for Losses and Shortages.

The Field Director, Submission Processing, is authorized to sign memorandum to request relief of irregularities in the account of Accountable Officers, administrative resolution of physical/disbursement losses and deficiencies and/or reimbursement from an appropriation of funds available for the activity in which the loss occurred.

Memorandum requesting relief and/or resolution, with the required supporting documentation/attachments (case file, history sheets, checklists, account transcripts, correspondence, case listing, etc.), must contain a written or digital signature when submitted to the Director, Submission Processing for review and approval (for example, Deposit Discrepancies, Employee Embezzlement, Employee Fraud, Disbursement Losses, 7804(c) Assessment, etc.).

Memorandum requesting more information, assistance and/or providing notification of an irregularity, may be digitally signed by the Field Director, Submission Processing (for example, Internal Controls, Preliminary Report, Supplemental Report, Counsel, etc.). These documents are generally considered supporting documentation for relief and/or resolution requests.

Each Submission Processing campus selects a member of the Planning and Analysis (P&A) staff as the Remittance Security Coordinator (RSC).

The RSC is the individual responsible for centralized control, coordination and protection of the taxpayer for potential embezzlement/theft cases.

The RSC ensures reporting of any losses of personally identifiable information (PII) to the Office of Privacy, Governmental Liaison and Disclosure (PGLD)/Incident Management (IM) Office (PGLD/IM) for cases reported on the Remittance Security Report. The RSC ensures when a potential loss is identified, PGLD/IM is immediately notified.

Report lost remittances that contain no Personally Identifiable Information (PII), to Situational Awareness Management Center (SAMC) using SAMC’s Incident Reporting Link and selecting the button, Report a New Physical Incident. The Incident Type must be one of the following:

Report lost remittances that contain PII, using the PGLD/IM PII Breach Reporting Form.

Submit the PGLD/IM Breach Report via the website. You will receive a confirmation email with a Breach Tracking Number. Forward the email with a brief explanation of the breach to the Losses and Shortages Analyst.

The following are examples of situations that could potentially involve loss of PII.

The Remittance Security Coordinator Information page provides contacts for each campus. RSC changes must be sent to the Headquarters Losses and Shortages Analyst.

The Remittance Security Coordinator will ensure that cases are controlled (Hardcore Payment Tracer Unit) while potential embezzlement/theft cases are investigated.

The Remittance Security Coordinator (RSC) coordinates cases and potential cases with the Treasury Inspector General for Tax Administration's (TIGTA) Office of Investigations, Headquarters Losses and Shortages Analyst, Receipt Loss Coordinator, local Lockbox Field Coordinator, Field Office Payment Processing Campus Manager, Erroneous Refund function and the Hardcore Payment Tracer function.

The Remittance Security Coordinator will ensure that taxpayers are protected while potential embezzlement/theft cases are investigated.

To protect taxpayers from incorrect notices, the Remittance Security Coordinator will:

Losses that are the responsibility of the Receipt Loss Coordinator (formerly the 7600 Coordinator) require a Preliminary Report of Loss from the Field Director, Submission Processing. The report is due within 10 days of receipt of the memorandum from TIGTA.

Preliminary Report information can be found in IRM 3.0.167.5.8, Preliminary Reports.

When TIGTA discovers more embezzlements or perpetrators and when full employee restitution is received after the Preliminary Report has been forwarded, a Supplemental Report is submitted by the Field Director, Submission Processing to the Director, Submission Processing W&I.

Supplemental Reports information can be found in IRM 3.0.167.5.9, Supplemental Report.

The Remittance Security Coordinator will provide the Headquarters Losses and Shortages Analyst an immediate email report of all lockbox or direct deposit refund (employee fraud) losses and Campus or Field Office losses of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

The Remittance Security Coordinator will provide the Headquarters Losses and Shortages Analyst a quarterly report by the fifth (5th) workday of the following months: April, July, October, and January. See Exhibit 3.0.167-18, Remittance Security Coordinator (RSC) Report.

Receipt losses are controlled in the following general ledger accounts:

Employees identifying a revenue receipt shortage must immediately notify their supervisor of the shortage.

Supervisors upon receiving notification of a revenue receipt shortage, must immediately contact their Manager, Department Manager, TIGTA and the local Remittance Security Coordinator.

Losses of tax collections involving these specific circumstances must also be reported in writing immediately:

The supervisor must record differences, overages and shortages of each employee engaged in handling currency dealing with collections. The supervisor must report the shortages to the Submission Processing Campus Receipt and Control function by memorandum with the daily deposit. The memorandum includes the amount of the loss and identifies the type of tax (Tax Class) and injured taxpayer, if known, and where the loss appears to have occurred. When the TIGTA memorandum identifies an injured taxpayer or requests the transfer, the Manager, Accounting Control/Services Operation will satisfy the injured taxpayer's loss using the 7610 Account.

Supervisors must require the responsible employee(s) to write a detailed report within five days after the loss occurred. The report must contain the office location, functional area, date occurred or discovered, the name(s) and position title(s), amount, kind of tax or fund, circumstances and proper documents.

The supervisor will determine if there was negligence on the part of any employee regarding the loss or shortage. If the employee was negligent, they will be requested to make restitution. Supervisors must forward their employee's loss report with their own report, within 10 workdays to the Field Director, Submission Processing through the Remittance Security Coordinator. The report will include a summary of internal controls, procedures and supervisory responsibilities in effect at the time the loss occurred.

Submission Processing Field Directors must report employee embezzlement losses to required officials and other agencies. All lost cash receipts will be referred to TIGTA regardless of the dollar amount. Forward preliminary reports of losses, within 10 days of the receipt of TIGTA's memorandum, as well as subsequent follow-up reports to the Director, Submission Processing W&I. See Exhibit 3.0.167-2, Sample Receipt Loss Preliminary Report.

A taxpayer complains that a remittance, sent or given to the IRS has been altered. The matter is referred to TIGTA when a photocopy of both sides of the original negotiating instrument was endorsed and/or made payable to someone other than the IRS. In the case of money orders, cashier's checks, etc. the taxpayer provides a photocopy of the customer's receipt and a written statement that the original instrument was payable to the Treasury and/or sent to the IRS. The taxpayer is encouraged to provide sufficient identifying data, including a telephone number where they may be contacted at home and work.

In these cases, the employee/unit handling the complaint must input Transaction Code (TC) 470 with no closing code and forward the taxpayer's correspondence to the nearest TIGTA Special Agent.

If the remittance was mailed to the IRS but is taken by a Postal or other government employee, the Service is not legally obligated to credit a taxpayer's account under such circumstances. Therefore, the 7610 Account is not used. The taxpayer's recourse is against the payor bank as it is held strictly liable to the true owner if it pays on a forged instrument.

Do not use the 7610 Account if the remittance was processed through a lockbox bank. Contact the Lockbox Field Coordinator.

Supervisors, based on the TIGTA Report of Investigation (ROI), will determine if there was negligence on the part of the employee regarding the loss or shortage. If the employee was negligent, the supervisor must request the employee make restitution. Supervisors must forward their employees' loss report with their own report about their knowledge of the loss and determination regarding negligence to the Department Manager and Operation Manager. The report will include a summary of internal controls, procedures and supervisory responsibilities in effect at the time the loss occurred. Management is held accountable for internal controls. Management is liable for losses where they failed to provide or enforce proper internal controls.

The Field Director, Submission Processing, based on the TIGTA ROI and the case file, will determine whether the loss was a result of negligence on the part of the accountable officer. Although the principles of law involved are simply stated, their application to a given case requires a careful analysis of the particular facts. Several factors may bear on the conclusion in any given case, and the results will be determined by the interrelationship of these factors. The Field Director, Submission Processing and the Director, Submission Processing W&I ensure that the proper factors have been considered.

In evaluating the facts to determine whether the accountable officer was negligent for purposes of applying the relief statute, apply the standard of "reasonable care" . This is the standard of simple or ordinary negligence, not gross negligence. This standard has been stated as what the reasonable, prudent and careful person would have done to take care of their own property of like description under like circumstances. This is an objective standard, that is, it does not vary with such factors as the age and experience of the particular accountable officer.

If the facts indicate negligence on the part of an employee, then the employee is ordered to make restitution. If the negligent employee does not make restitution or a court case against the employee is not pursued, the employee is assessed using IRC 7804(c) procedures. See IRM 3.0.167.5.6, IRC 7804(c).

Embezzlement of tax collections can occur at any point within the Service. Caution must be taken to ensure that adequate internal controls exist to minimize or prevent instances of embezzlement. Adequate security, equipment, and facilities must be provided for the safeguarding of money, securities, etc. handled in the Deposit Function.

Local TIGTA controls and coordinates embezzlement cases. The Special Agents Handbook contains detailed instructions for "Recovering Unjust Enrichments" and for "Coordination with the Service in Theft or Embezzlement Cases." TIGTA sends a memorandum to the Campus Field Director, Submission Processing on embezzlement cases, involving both Field Office and Campus employees. Injured taxpayer's account(s) are credited from the 7610 Account. The 7610 Account is debited for the loss amount. If the "injured" taxpayer is not identified, credit the Unidentified Account. The TIGTA "memorandum" provides the assigned case number, taxpayer's name, identification number, type of tax, period ending, amount and date of payment and the name and telephone number of the Special Agent conducting the investigation.

At the proper time when an employee has been identified as having embezzled government funds, and in concurrence with the Department of Justice/Assistant United States Attorney (DOJ/AUSA), TIGTA sends a memorandum to flag the employee's retirement. TIGTA keeps the U.S. Attorney's office informed so that criminal prosecution is not impacted.

TIGTA sends the Final Case Information Report of Investigation (ROI) to the Field Director, Submission Processing. TIGTA will provide the U.S. Attorney's office the Submission Processing Campus Accounting addresses for application of restitution payments. Mailing labels will be provided. These addresses are in the Special Agent's Handbook.

The Field Director, Submission Processing is authorized by the TIGTA memorandum to debit Account 7610 and credit the injured taxpayer's account(s). The case number provided on the memorandum must be used on the case file and as the Document Identification (ID) when opening the case on the Redesigned Revenue Accounting Control System (RRACS). See IRM 3.17.64, Accounting Control General Ledger Policies and Procedures, for the specific journal instructions. The Field Director, Submission Processing forwards a copy of the memorandum to the Director, Submission Processing Wage and Investment (W&I) as part of the preliminary notification. The case is suspended until the ROI is received. The case is reviewed monthly by the Receipt Loss Coordinator and followed-up as needed with TIGTA.

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Upon receipt of the TIGTA Final Case Information Report, the Receipt Loss Coordinator will initiate recovery.

The Receipt Loss Coordinator sends a memorandum from the Field Director, Submission Processing to the area that has the loss requesting a copy of the internal controls in place when the loss occurred. See ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, for a sample memo. The response must include deficiencies or changes made and copies of the controls in place.

IRC 7804(c) assessment is for a case that does NOT go to trial and court cases where the court sentence orders restitution by 7804(c) assessment. IRC 7804(c) imposes liability against any officer or employee of the Department of Treasury who does not account for and pay over any amount of money or property collected or received by him/her in connection with the Internal Revenue laws. Management is held liable for lack of proper internal controls. The statute does not require any specific intent or intentional misconduct such as willfulness. Thus, the Service will issue a notice and demand and a resulting assessment as soon as there is evidence of loss of money or property and evidence that the employee had a duty to account and pay over such money or property. If the employee does not make payment, the Service will exercise its broad administrative powers to collect the amount owed as if it were a tax.

The rights of the employee are not violated by such summary collection action since they can challenge the assessment by filing a claim and suit for refund of any amount collected under IRC 7804(c).

Where a court has ordered restitution on an employee embezzlement case (7610 Account), a memorandum is sent to the Kansas City Department of Justice Lockbox Coordinator at:

The memorandum provides the name and social security number (SSN) of all persons ordered to make restitution, amount of restitution payments and the case number. Employee embezzlement cases are monitored monthly by the Receipt Loss Coordinator to ensure that payments are made. If payments are not received, contact TIGTA Special Agent in Charge (SAC). If payments are made but not transferred from Kansas City Department of Justice Lockbox, secure the payment information from the probation officer (use the TIGTA SAC) and contact the Kansas City Department of Justice Lockbox Coordinator at 816-499-5953.

When the court does not order restitution, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

When the court orders administrative recovery, IRC 7804(c) assessment procedures are followed. See IRM 3.0.167.5.6.2, IRC 7804(c) Assessment Payments.

Preliminary reports are sent from the Field Director, Submission Processing to the Director, Submission Processing W&I. See Exhibit 3.0.167-2, Sample Receipt Loss Preliminary Report.

Preliminary reports require documentation that all injured taxpayers accounts were corrected. A managerial review is required 120 days after the credit is transferred from the 7610 Account to insure that injured taxpayer's accounts are properly corrected.

Include documentation showing correction of all identified "injured" taxpayers accounts.

The signed Preliminary Report must be sent via email to JoAnna.M.Oropeza@irs.gov.

The Losses and Shortages Analyst will open a case file for the preliminary report.

Supplemental reports are submitted by the Field Director, Submission Processing to the Director, Submission Processing W&I when TIGTA discovers more embezzlements or perpetrators and when full employee restitution is received after the Preliminary Report has been forwarded. If TIGTA issues another memorandum, this information is sent forward. See Exhibit 3.0.167-5, Sample Receipt Loss Supplemental Report.

The signed Supplemental Report must be sent via email to JoAnna.M.Oropeza@irs.gov.

It is the responsibility of the Receipt Loss Coordinator to obtain all documents required for the case file, as applicable. The case file documents the case and attempts to collect the loss. Documents include:

Relief is requested upon determination that the loss amount is not collectible. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Relief is granted to a present or former accountable officer for the physical loss or deficiency of public money (or securities) when the head of the agency (or their designee) determines:

Within the scope of jurisdiction, the Director, Submission Processing W&I is authorized by Delegation Order 1-17 (formerly DO-115, Rev. 10), IRM 1.2.2.2.15, and Treasury Directive 32–04 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td32-04.aspx to administratively resolve irregularities (including embezzlements) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

The 7610 Account is monitored to ensure timeliness of relief requests.

A Form 843, Claim for Refund and Request for Abatement, for repaid loss or embezzlement is coordinated with TIGTA on a case by case basis for processing. These claims are not processed without authorization from Office of Chief Counsel.

When a claim is received for a repaid loss or embezzlement, prepare a memorandum to counsel requesting an opinion be rendered concerning the individual claim.

Unexplained losses or shortages are controlled in the following general ledger accounts:

Relief is requested upon determination that the loss amount is not collectible. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Relief is granted to a present or former accountable officer for the physical loss or deficiency of public money (or securities) when the head of the agency (or their designee) determines: the accountable officer was carrying out official duties when the loss or deficiency occurred, or the loss or deficiency occurred because of an act or failure to act by a subordinate of the accountable officer; the loss or deficiency was not the result of fault or negligence by the accountable officer; and the loss or deficiency was not the result an illegal or incorrect payment.

Within the scope of jurisdiction, the Director, Submission Processing W&I is authorized by Delegation Order 1-17 (formerly DO-115 Rev. 10), IRM 1.2.2.2.15, and Treasury Directive 32–04 to administratively resolve irregularities (including embezzlements) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

The 7620 Account is monitored to ensure timeliness of relief requests.

Deposit discrepancies are controlled in the following general ledger accounts:

The external subsidiary record for these accounts are reports and case history files covering the details of each recorded collection loss or shortage. Case history files must include complete documentation.

There are basically three types of deposit discrepancies:

Treasury Directive 34–02 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td34-02.aspx authorizes the Commissioner to compromise, suspend or terminate collection action against federal depositaries for deposit discrepancies of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. In Delegation Order 1-25 (formerly DO-229 Rev. 3), IRM 1.2.2.2.22, the Commissioner has delegated this authority to the Director, Submission Processing W&I.

The Director, Submission Processing W&I authorizes termination, compromise, or suspension of collection on claims for deposits when records indicate that credit is due from the depositary but can't be proven because of the unavailability of bank records and the amount is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, Office of Chief Counsel's recommendation is needed for amounts ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

IRM 3.17.10, Dishonored Check File (DCF) and Unidentified Remittance File (URF), establishes the time frames for resolving deposit discrepancies. Encoding errors, piggy backs and improper chargebacks are resolved within 45 calendar days of identification. Slipped blocks require all avenues of research exhausted within 150 calendar days of identification. At the end of these periods, unresolved debits are transferred into the 7650 Account.

Once the deposit discrepancy is transferred to the 7650 Account effort is taken to correct errors and/or recover the loss. The following actions must be taken within 30 calendar days of transfer to the 7650 Account.

The Field Director, Submission Processing is not accountable for Electronic Check Processing (ECP) Deposit Discrepancy losses. Therefore, authorization for termination, compromise, or suspension of collection by the Director, Submission Processing is not required. Authority is delegated to a level no lower than the Accounting Operation manager.

Erroneous refunds resulting from administrative errors such as, misapplied payments, issuing duplicate refunds, direct deposit errors, and incorrect tax adjustments are classified as Category "D" Erroneous Refunds and are maintained in the Erroneous Refund function.

Erroneous refunds are controlled in the following general ledger accounts:

The external subsidiary record for these accounts is Form 3809, Miscellaneous Adjustment Voucher, which will be used to debit and credit the accounts as needed to control and track erroneous refunds.

Each case is controlled with a unique document number on Form 3809. This document number allows for the tracking of an individual case from its inception to completion.

The unauthorized movement of money, filing of returns, making of adjustments, or requesting refunds that is calculated to cause illegitimate gain to an employee is fraud. The Field Director, Submission Processing ensures reporting of these erroneous refunds.

Employee fraud is the only preliminary report required for disbursement losses. If fraud is suspected, contact TIGTA immediately.

The preliminary reports will contain a statement of facts, including type of irregularity, date and amount. Include the name of the Accountable Officer and information on any repayments already made. See Exhibit 3.0.167-13, Sample Employee Fraud Preliminary Report.

Preliminary reports from the Field Director, Submission Processing are sent to the Director, Submission Processing W&I.

The signed Preliminary Report must be sent via email to JoAnna.M.Oropeza@irs.gov.

When TIGTA discovers more disbursement losses or perpetrators and when full employee restitution is received after the Preliminary Report has been forwarded, a Supplemental Report is submitted by the Field Director, Submission Processing to the Director, Submission Processing W&I. See Exhibit 3.0.167-14, Sample Employee Fraud Supplemental Report.

Administrative resolution/relief is requested when the erroneous refund is not recoverable, including employee fraud and identity (ID) theft. The civil suit statute expiration date will determine that the account is not recoverable for most non-court cases.

Management ensures administrative resolution for erroneous refunds is requested monthly.

Management is ensures administrative resolution for identity (ID) theft cases is requested at the expiration of the 5-year statute period.

Management ensures relief for employee fraud is requested timely.

The Government Losses in Shipment Act, 40 USC 17303, provides for reimbursement to federal agencies suffering loss, damage or destruction of valuables in transit to the consignee designated to receive their shipment.

The Government Losses in Shipment Act (GLISA), 40 USC 17306, authorizes the issuance of indemnity agreements by the Bureau of Public Debt (BPD) to replace negotiable securities or instruments, such as cashier's checks, money orders, Treasury Bonds, etc. if the taxpayer has actually paid the money.

Most situations occur in a TAC when the taxpayer presents payment for tax, and it is lost by an IRS employee or by UPS in route to the Submission Processing Campus. TAC employees are responsible for notifying the taxpayer of the loss and aiding in recovering the payment. If form of payment was made by cashier's checks, money orders, Treasury Bonds, etc., an indemnity agreement may need to be signed to assist the taxpayer in recovering the lost payment.

Commercial banks are requesting signatures on indemnity for cashier's checks. These requests are sent for replacement cashier's checks that were not received by IRS or lost by IRS and have not been submitted for payment to the issuing institution. The bank will not issue a replacement check until an indemnity agreement is issued by BPD.

Submission Processing or Area Office receives notice or determines that a deposit was lost, destroyed or damaged in transit to the federal depository and the deposit contains ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, a report by wire is transmitted to the Bureau of Public Debt (BPD) followed by a written report. The report includes date of shipment, amount and kind of valuables lost, destroyed or damaged, name and address of the consignee, method of transportation, name of carrier and location from which shipped. Also, provide the registry or receipt number of the carrier bill of lading and cause of the loss, destruction or damage, if known.

Submission Processing or Area Office immediately reports the loss, destruction or damage to TIGTA. If you suspect or know of a potential loss of PII also report it to the Office of Privacy, Governmental Liaison and Disclosure (PGLD) Incident Management (IM) Office (PGLD/IM). Call 267-466-0777 if you have any problems with the online form or have questions about completing the online form. See IRM 10.5.1, Privacy Policy, for more details on privacy policy and protections.

A copy of the wire or report is used by the Accounting Operation as the authority to establish a control while the deposit is being reconstructed.

The Secretary of the Treasury is authorized to replace lost, destroyed or damaged valuables, or their value, under GLISA. Claims for replacement for losses are sent through proper administrative channels to the Commissioner W&I.

A claim under GLISA is sent to the Director, Submission Processing W&I. The request for replacement is accompanied by a copy of the report of the loss, proof of shipment, copy of the receipt, bill of lading or other record and proof of loss, destruction or damage including a statement of the circumstances and condition in which a shipment was received. Also needed are affidavits about the loss from the depository and carrier, statement and recommendation of the investigating officers, statement regarding all actions taken to recover the loss and a copy of depository and carrier contract, if available.

Accounting must follow up with the depositary on any deposits not confirmed within nine calendar days. A second contact will be made five days after the first contact.

If the deposit is still unconfirmed five days after the second contact, the Accounting Operation managers will notify Supervisors; the Field Director, Submission Processing; Receipt and Control function, and the area office that an area office deposit is missing. TIGTA and the Director, Submission Processing W&I are also contacted.

If the deposit is traced to the depositary via receipt of transmittal, the loss is the responsibility and liability of the bank. 7650 Account is not debited. The W&I Staff will coordinate with the bank representatives to resolve. If necessary, Office of Chief Counsel is contacted for assistance in receiving proper credit from the bank. Bureau of Fiscal Service (BFS) can aid in problems arising with financial institutions. BFS has an automated system that assesses interest to the financial institution when the deposit ticket date differs from the current date. Therefore, IRS must verify that the financial institution is reporting the date correctly on the confirmed deposit tickets. IRS does not receive this payment of interest. This could also apply when resolving "routine" deposit discrepancies.

If the deposit cannot be traced to the depositary bank, take the following recovery actions; credit the Revenue Receipt Accounts in the General Ledger for the amount of each missing SF-215A and debit the 7650 Account (Losses and Shortage) and request returns or payment documents from files. DLNs are determined from the accounting package. Returns pulled from files are timely released upon completion of research. While the returns are charged out, they are maintained in a searchable order so that other requesters can have access to the return information when necessary. If some items are missing from these blocks, initiate special search procedures to locate them.

Request MFTRA to determine account status. Command Code (CC) IMFOL/BMFOL is used to research account status also. Check IDRS for payments which did not post. This identifies rejected or unpostable items. Alert the Reject or Unpostable functions on any items discovered. All credits post before they are moved to satisfy the 7650 Account.

Prepare a list of taxpayers' names, DLNs, and the credits remitted that are reflected on each return or payment document. Balance the individual amounts on the list to the applicable Form 813 and the deposit tickets. Determine whether the remittances were made by check, money order, or cash.

When it is determined that cash was tendered, contact the Director, Submission Processing W&I, do not debit the taxpayer's account for lost cash deposits.

When the remittance is a cashier's check or money order, follow the indemnity agreement procedures to secure a replacement.

When the remittance is a personal check, send a letter to each taxpayer explaining that their check was lost prior to deposit, the taxpayer must stop payment on the original check and reissue a new check. Furnish the taxpayer with a name, telephone number and mailing address of the person to contact for more assistance.

Freeze the taxpayer's account so that no notices or refunds are sent. Replacement remittances must be deposited daily on a separate deposit ticket and the amounts of the deposit controlled.

When taxpayers reduce their remittances for expenses incurred for the "stop payment" action, or if they claim reimbursement for these expenses, but have not reduced their remittances, the procedures for Form 8546, Claim for Reimbursement of Bank Charges, is followed.

Replacement checks may become dishonored because of the "stop payment" action. Contact the taxpayer by phone, or by letter and request that the bank be advised to remove the "stop payment" on the replacement check. Hold the dishonored checks three days if contact is by phone, or seven days if contact is by letter and redeposit.

If a replacement check is not received within 60 days of the date of the first letter, or if it is dishonored for other than "stop payment" , debit the taxpayer's account and remove freezes etc. to allow issuance of a balance due notice.

Because of the possibility of litigation or future correspondence, each taxpayer involved must have a folder prepared to receive all information pertaining to their account. These will be retained 3 years and disposed of according to the Document 12990 (Wage and Investment Records), Records Control Schedule.

If an accounting package is lost, an exhaustive search of the Submission Processing Campus or Area Office, as needed, will be conducted. If the package is not found, it will be reconstructed from the documents, by contact with the area office and with the bank, as necessary.

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If a loss in shipment occurs, the agency must first explore the possibility of filing a claim under the GLISA and must consider requesting relief only if this fails. Denial of a claim under GLISA will cause deeper inquiry upon request for relief since it suggests the possibility that someone at the point of shipment may have been negligent, but it will not automatically preclude the granting of relief.

Responsibility for controlling and working indemnity agreements is in the Accounting Operation Submission Processing, Taxpayer Advocate Service or Area Office.

Once a formal request for an indemnity is received from the bank, notify the taxpayer that it will take 60 to 90 days to process an indemnity agreement.

Prepare a memorandum, addressed to the Chief, Accounting and Tax Payment Branch, requesting an indemnity Agreement. The memorandum must be signed by the Field Director, Submission Processing, Taxpayer Advocate Service or Area Office Director and must contain the following information:

A formal request for an indemnity must also include:

Control the case, input Transaction Code (TC) 470 with no closing code and monitor the account until it is properly credited.

Submit the complete package to the Headquarters Losses and Shortages Analyst by scan and email toJoAnna.M.Oropeza@irs.gov.

The replacement check must be issued payable to the United States Treasury. Under no circumstance will it be reissued payable to the taxpayer.

Delegation Order 1-6 (formerly DO-29, Rev. 5), IRM 1.2.2.2.6, delegates to Field Directors, Submission Processing the authority to certify and approve as accountable officers Internal Revenue Collections.

Deposit Tickets prepared by Submission Processing Campus, Taxpayer Assistance Centers and Lockbox Banks use the Agency Locator Code for the campus. Field Directors are accountable for all tax collections received within their accounting jurisdiction. They are accountable for Losses and Shortages of collections, Treasury Bond Deposits, as well as debit vouchers and assets seized in lieu of tax payments.

Area offices must provide information on Losses and Shortages, Seized/Acquired Property and Collateral Held to Submission Processing to ensure that proper accountability is maintained.

Transfer of Field Director accountability occur at the highest executive levels of the organization and, although month-end processing is considered, it is not a determining factor when these executive changes are made.

If the transfer of accountability coincides with the end of the month:

If the transfer of accountability does not occur at the end of the month:

A representative is designated to ensure that the procedures necessary to transfer accountability are followed and documented.

Support Services must change vault/safe combinations the outgoing director had access to, replace form letters bearing the outgoing directors name, change signature stamps and review Delegation of Authority Orders.

Accounting Operation must ensure all debits and credits are journalized under the correct director's accountability.

These instructions provide the minimum requirements and general guidelines for Accounting.

(Ogden only) 3200 Account (Collateral Held), 3300 Account (Seized Property, and 7100 Account (Property Acquired in Payment of Taxes) must be balanced before the end of the month of the date of transfer and included on Form 3997 even if it is not at the end of a quarter.

After assuring that all transactions have been posted to RRACS, prepare an Accountability Package. This package must include information for both outgoing and incoming directors. The following documents are required for the package:

Prepare a memorandum from both Field Directors to the Director, Submission Processing W&I with a statement that both officials have reviewed their records of accountability. Provide a concurrence line for both officials' signatures on the memorandum. A copy of the documents in the accountability package will be provided to either official, if requested.

A complete original accountability package will be maintained in the GAO Site Audit File.

Prepare a copy of the accountability package for the Director, Submission Processing W&I. Upload the accountability package to the SharePoint site.

Send an email to the Headquarters Losses and Shortages Analyst at JoAnna.M.Oropeza@irs.gov when the upload is complete.

Completed accountability packages must be received by the Headquarters Losses and Shortages Analyst within 60 days of the date of transfer.

Public support, understanding and cooperation are vital to the successful administration of our self-assessment tax system. Certain public ceremonies tend to promote our objectives. The incoming director will discuss ceremonial options with the Commissioner W&I.

Informal induction may be limited to an informal meeting with the Division Commissioner swearing in the new appointee. Generally, the audience will be made up of the local staff with possible attendance of heads of professional groups. News coverage would be limited to distribution of a prepared news release. However, the extent of planned coverage will be on a case-by-case basis.

Formal induction includes a formal swearing in by a Federal Judge in a courtroom setting. An appropriate guest list and media coverage are necessary.