In 2006, the Federal Agency Delinquency program (FAD) was centralized to the Brookhaven Campus, Holtsville, NY- Collection Operation. The intent of the centralization was to ensure overall consistent with handling and monitoring of federal agency entities. In March 2014, a Service Level Agreement was approved and implemented outlining the roles and responsibilities of the three business areas. The three business units consist of: Small Business/ Self Employed (SB/SE), Tax Exempt & Government Entities (TE/GE)- Federal, State, Local Governments/Employment Tax (FSL/ET), and the Chief Finance Officer (CFO) Office.

Federal agency entities receive an initial balance due or nonfiler notice, then the entities cases are accelerated to the Collection stream (Status 26). Once the case is assigned to Status 26 it is immediately assigned to the FAD assignment on the Integrated Collection System (ICS). See IRM 5.19.15.3, FAD Inventory Assignment - Integrated Collection System (ICS), for additional information.

Once assigned to the FAD team, the Federal agency delinquency is assigned to an employee and the initial research and taxpayer contact is made within 5 days. The objective is to identify the cause of the delinquency and assist the government agency with resolution. This could include contacting other areas within the Service, Social Security Administration, etc. with the intent to assist the agency point of contact (POC) with reconciliation of their account.

Leverage for collection on federal agency entities is limited. Unresolved accounts after numerous contact attempts may be raised to the executive / CFO level for intervention towards case resolution. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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The Director of Small Business/ Self Employed (SB/SE) Collection HQ has the executive oversight over the program. The SB/SE Collection Policy Director and Campus HQ Director approves all escalated cases prior to being escalated to the CFO office. See IRM 5.19.15.8, Escalation/Referral Process Overview.

SBSE Collection Policy Analysts have oversight over the program, including serving as a point of contact/collaborating with CFO and TE/GE-FSL/ET on issues/concerns, sensitive case updates, and cases elevated to executive management.

The Campus management has the following responsibilities over the program:

FAD Employees:

All responsible parties are required to adhere to the Service Level Agreement (SLA) originally established in March 2014, outlining the roles and responsibilities between SB/SE, CFO and TE/GE-FSL/ET.

The main objective of the program is to ensure federal agencies are in compliance and address any trends to ensure future compliance for all federal agencies.

FAD team management conducts monthly review of open and closed cases per management guidelines.

A FAD Cause and Resolution report is available on Control D report on the 1st of each month. The captured data and findings are shared with TE/GE-FSL/ET and CFO office to identify possible trends. TE/GE-FSL/ET utilizes the information for future educational seminars, publications, and outreaches to specific federal agencies. Refer to IRM 5.19.15.3.1, ICS - Tracking Cause and Case Resolution, for additional information.

The CFO office forwards a monthly Federal Agency Delinquency report to SB/SE Collection Policy. The report lists all federal agencies in delinquency status identified on the Masterfile from prior month- last cycle (week). The report is analyzed to identify if any cases need immediate assignment to FAD. Since the listing includes delinquent agencies in both notice status and collection status, many of the cases are resolved prior to being assigned to Collection FAD inventory. The listing is forwarded to BSC management to validate the status 26 cases listed on the CFO report against the ICS FAD total inventory.

The following acronyms are mentioned throughout the IRM

The following table lists the primary sources of guidance which can be beneficial to share with the government agencies, when applicable.

ICS database captures and tracks data input by employees in the Maintain Program Name 1 & 2 on ICS. The Program Name tab is located under the Entity Information tab on the Case Screen. The employee must identify and request that a manager, acting manager, clerk or secretary select from the drop down menu of the applicable "Program Name" the item line that best identifies the Cause and Case Resolution on each case assigned.

The monthly results of all case closures are available on Control D report on the 1st day of the following month. The data is recorded by Collection Policy HQ on a quarterly basis and shared with TE/GE-FSL/ET, which is used by them to plan future educational outreaches and forums with federal agencies.

Specific line entries under ICS Approved Program Names 1 & 2 are aligned for FAD reporting. An authorized employee must select the applicable “Program Name” drop-down item line that best identifies the issue and resolution.

There will be situations where several issues may have contributed to the delinquent issue. Determine and use the root cause of the delinquency. If agency has both Bal Due and TDI issue(s), balance due is used for reporting purposes under the Cause and Resolution reporting- Program Name 1 & 2.

The cause of the case delinquency issue and case resolutions must be recorded on ICS, which will be used to generate trend reports. Error trends will be shared with FSL/ET for educational purposes. Reports will be generated by ICS programmers and forwarded to management the first week of each month.

Upon case closure, request that a manager, acting manager, clerk or secretary select the appropriate issue type on ICS fields-Approved Program Name 1 & 2 to address the Cause and Case Resolution.

Refer to the table below for drop down menu selections to capture the Cause options captured under - Approved Program name 1:

Refer to the table below for drop down menu selection to capture Case Resolution (Cure) options captured under -Approved Program name 2:

Due to the business structure of many federal agencies, it is important to capture and update appropriate "point of contact" (POC) for each federal agency entity assigned. It is required to update and/ or validate the POC upon initial case review/ contact for each case assigned.

Employees are required to update the POC on ICS upon case assignment. Validate and/ or update via the Entity Detail screen on ICS> select Resp. Person address under “ADD” tab on the Entity Detail screen. During initial contact, you are required to obtain a second POC for the agency. ICS history must be notated that the POC was addressed.

All new POC information must be updated on the Federal Agency Master Log listing, per local management guidelines. The FAD POC log listing is continuously updated and maintained by the FAD team manager for future reference and requests from the CFO office and TE/GE.

This section provides guidelines to follow when working the FAD inventory. The streamline process was designed to ensure cases are worked in the most efficient and effective manner.

Within 5 days from ICS assignment, the following case actions are required:

Two contact attempts must be made and documented within 2 business days from original contact date. If contact is successful, refer to paragraph 7 below.

If callback or telephone contact is not an option, send Letter 2718C, Federal Agency Filer Letter, or appropriate letter requesting response from the agency to resolve issue. Notate ICS of specific actions taken with each contact attempt.

When corresponding with the agency in writing, generally set a 30-day deadline for them to respond in writing. Set follow up date for an additional 15 days past the deadline. When using the Letter 2718-C, Federal Agency Filer Letter, input the date of 29 days from today's date to allow sufficient time for response.

For accounts with an international address, based on their location, additional time must be allowed for mailing and processing payments, returns and correspondence. Refer to IRM 5.19.19.5.3 International Account Time Frames, for additional information.

Follow the guidelines in the table below for telephone contact guidelines:

When communicating with the agency contact, request and document the name of next level contact as secondary contact in ICS entity for future reference.

Document ICS history of all actions taken; including information requested from agency, name of contact, and deadline(s) given.

If contact attempt is successful, refer to the applicable IRM sections to address the cause of delinquency. See IRM 5.19.15.5.1, Resolving Balance Due Issues, and IRM 5.19.15.6.1, Resolving Return Delinquency Issues.

If all contact attempts as stated in previous paragraphs are not successful, and the account cannot be resolved with available information, the next step for resolution needs to be determined. Refer to IRM 5.19.15.8, Escalation/ Referral Process Overview for additional guidance.

CFO referral process will be pursued only after all Campus contact attempts have been exhausted, and approval by SB/SE executives. See IRM 5.19.15.8.3, CFO Referral Process, for additional guidance.

Generally federal agencies balance due issues are a result of the following scenarios listed below:

However, situations may occur whereas the balance due is valid due to underpayment or an Exam assessment. Inform the agency POC of their available payment options.

Generally, federal agencies are not eligible for an Installment Agreement (IA), if the total amount cannot be full paid within 120 days. However, in certain situations management have the authority to consider an extended time to pay via monthly payments.

Federal agencies have the option to make their payments by EFTPS or IPAC- Intergovernmental Payment and Collections. Refer to IRM 5.19.15.5.2, Payment Options Available for Federal Agencies, for additional information regarding payments, including required information to be used when transmitting IPAC payments.

In some situations, agencies may have a balance due to incorrect reporting, and may be required to file an amended return at the end of each year to properly adjust wages due to employee’s various work assignments in other governmental agencies. It is common practice for agencies to file amended returns each year since they don't receive the corrected W-2's from another "associated sister agency" until months after a quarterly Form 941, Employer's Quarterly Federal Tax Return, return is filed.

To resolve the balance due issues on an account in-depth research may be required, including obtaining copies of prior payments or deposits (for credit verification, researching various IDRS command codes such as PMFOL, IRPTR, and SSA data).

Due to the organizational structure of many agencies, it is required to thoroughly research all related EIN(S) to ensure there is not a misapplied payment that posted to another account which may have created the balance due or assessment.

The chart below illustrates guidelines of necessary actions to be taken to resolve certain scenarios once determination is made as to the cause of the liability.

To restrict a remaining credit from offsetting or being refunded, input a TC 570 on the account. A “hold” code may be necessary to ensure a refund is not issued. Document AMS and ICS of actions taken to hold the credit. Documentation must be clear and concise to ensure the TC 570 is not reversed in error. Keep an open control until the account is resolved. Examples of when a TC 570 may be warranted:

Determination of possible escalation referral must be considered if multiple attempts for resolution has expired with no case resolution. This would include incomplete responses, and/or consistent efforts to resolve has been exhausted with no resolution.

If it is determined the CSED is imminent (within 120 days), immediately bring the case to management attention, which will be forward to HQ for guidance. Collection Policy will review the case and determine next actions.

For general guidance on balance due issues which is not addressed in this IRM, refer to IRM 5.19.1, Liability Collection, Balance Due.

Federal Agencies have the option of either utilizing the Electronic Federal Tax Payment System (EFTPS) or Intergovernmental Payment & Collections (IPAC) to transmit payments to the IRS. The following paragraphs provides an overview and general guidance for each payment option.

EFTPS: Federal Agencies are encouraged to use EFTPS for tax deposit payments, which is operated by Bank of America. The EFTPS system enables taxpayers to make electronic deposits and payments for federal taxes. EFTPS provides an immediate acknowledgment, which is a benefit for the Agencies. The system also enables taxpayers to search filing history and archives up to 16 months of EFTPS history by form, year, quarter, date, trace number, or payment total. For additional guidance, see IRM 21.2.1.47, Electronic Federal Tax Payment System (EFTPS), IRM 3.17.277.2.4.16, EFTPS for Federal Agencies (EFT #291), or https://www.irs.gov/ ; keyword EFTPS for guidance.

Inquiries and concerns related to EFTPS can be directed to call 1–800-945-8400 or 877–333–8292. In addition, you may consider referring the agency to IRS Pub 966, Electronic Choices to Pay All Your Federal Taxes, or visit https://www.irs.gov/

Federal agency’s tax payments are processed through the Transaction Reporting System, (TRS) and are driven by the agency location code (ALC). Each payment includes the ALC in the field normally used for the Routing Transit Number. Payments made by federal agencies through EFTPS is identified by the EFT number beginning with 291.

Federal Agencies are encouraged to utilize EFTPS for Federal Agencies to make payments on tax returns listed below:

IDRS Command Code EFTPS can be utilized to research payments made through EFTPS.

Intergovernmental Payment and Collection (IPAC) The IPAC process was established to allow governmental agencies to have the ability and convenience of transferring funds from one federal agency to another. A payment secured via IPAC payment process can take up to two cycles to post on IDRS. Request a copy of the IPAC payment receipt from the agency to confirm or contact IPAC area to request a copy of the IPAC transmittal. Place a copy of the IPAC transmittal, or receipt in the case file. For IPAC payments, the agency must use the following IPAC information when transmitting payment: TAS/BETC code: 20F3885.011 COLLBCA and ALC 20092900 (Ogden Service Center).

Due to various obstacles faced by federal agencies due to their organizational structure, balance due issues exist when there is a discrepancy between wage and SSA/Medicare information reported to the IRS on Form 941, Employer's Quarterly Federal Tax Return, and Forms W-2/W-3 reported to Social Security Administration. Generally, these discrepancies are identified, and an assessment is completed under the CAWR (Combined Annual Wage Reporting) Program.

Due to the structure within many of the federal agencies, W-2/W-3 reporting are not balanced timely, resulting in CAWR assessments. Our role in FAD is to assist the Agencies with reconciling the account. This may require IRS contacts with SSA, CAWR, etc to resolve. CAWR assessments can be identified on CC TXMOD, with a TC 290 blocking series 55.

If there is a CAWR control base open on the account, contact the CAWR employee to discuss the status of the account and inquire if a response was received by the agency. Request any information secured to assist with resolving the CAWR issue. Request CAWR employee to close their control base as you will handle and resolve the issue. There may be situations whereas it may be in the best interest for CAWR to continue normal processing. Document ICS of reason for determination.

If there is no current CAWR assessment on the account, research BMFOL"R" and BMFOL"U" .

Prior to contacting the taxpayer, research CC IRPTRI to view the data online to identify where the discrepancy issue is. You may also order Form W-2/W-2C information using CC IRPTR"R" with doc code WW. This information can also be shared with the agency.

If during research you identify the error that caused the discrepancy, take appropriate actions to the account to resolve the issue. No taxpayer contact is needed unless clarification is needed. The IDRS prints can be used as your supporting documentation for the adjustment.

If the issue cannot be resolved upon review of the information, contact the agency, and discuss the necessary actions required to balance the account. It may be necessary to request the detailed W-2/W-3 information SSA from the agency to assist with reconciling the account. Complete and submit Form 9937, IDRS Unit Request, to Social Security Administration to obtain a copy/ summary of W-2/W-3 information which was submitted from the taxpayer.

If actual copies of W-2/s information are needed, they can be requested by contacting the appropriate CAWR area. Documents can be obtained on the SSA-ORS system (SSA On-Line Retrieval System). For tax years prior to 2009, the information needs to be retrieved by the SSA -ERQY system. Currently the FAD team CAWR coordinator has permissions to the SSA -ORS system. See IRM 4.19.4.2.2, Online Retrieval System (ORS) Data Screening, for additional guidance on resolution of these type of cases.

Once research is completed and information is shared with the agency, request the agency to review their records, in addition to any information you sent them. The agency would need to either submit a Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, or additional W-2s/ W-3, or both, if applicable. Give the agency a deadline up to 10 days to respond back, establishing the time frame based on the complexity of the reconciliation needed to resolve and balance the account.

Upon receipt of the return(s), and/or W-2s from the agency:

Refer to IRM 4.19.4 7.6, Reconsideration (Recon) (previously called Late Reply) Case Processing Procedures, for additional guidance on abating or partially abating CAWR assessment.

After completing the adjustment, inform the agency of the outcome. If a balance is still owed, give a deadline date of up to 15 days to full pay balance. Inform the agency of payment options available, if necessary.

If the agency was required to respond to resolve the account, and did not do so, and or the response is incomplete, make one additional contact attempt. If no resolution after required contact attempts, and or follow up, review of account must be made to determine if the referral process should be considered. IRM 5.19.15.8, Escalation Referral Process Overview.

In all situations, document ICS of actions taken and resolution. Update Cause and Cure report when issue is identified and again when resolved.

Upon initial assignment, research and determine whether or not agency is liable to file. If the agency has never filed or there is indication they are not required to file, close the account with the appropriate TC 59X closure. Refer to IRM 5.19.22.5.3.1, BMF Response With No Returns, for guidance on determining whether or not agency is liable to file.

If the agency is liable to file, determine the period(s) of delinquency and take the appropriate actions per IRM 5.19.22.4, BMF Return Delinquency Research. Provide the agency POC with the IRS website address https://www.irs.gov/forms-instructions, IRS.gov Forms and publications. If internet is not available, it may be necessary to send them the required tax forms or request them through AMS.

Refer to the streamline guidelines for required contact and follow up time frames. See IRM 5.19.15.4.2, Streamline Process and Time Frame Guidelines, for detailed process.

If contact is not successful, send a Letter 2718-C, Federal Agency Filer Letter, using the appropriate paragraphs to advise the agency that failure to file by the specified date, Form 941, Employer's Quarterly Federal Tax Return and Form 945, Annual Return of Withheld Federal Income Tax, employment tax returns may be prepared and processed under IRC 6020(b) if not filed voluntarily.

If contact is successful, inform agency of obligation to file and the consequences they would face if not filed (i.e. 6020(b) assessment and/or issue may be escalated to the next level of their agency by a revenue officer or CFO office). Set a deadline date for the agency to file delinquent return(s), up to 10 business days. Solicit for the return to be faxed to you directly, however if return is being mailed, then allow additional 30 days for follow up. If returns are being faxed, set follow up for up to 2 days. If no response, follow up with agency.

If all attempts to resolve the account have been unsuccessful, and there are no credits on the account, follow the guidelines below for various scenarios:

If all attempts to resolve the account have been unsuccessful and there are credits on the account, and:

Input a TC 570 on an account if there is a concern of a credit offsetting or refunding to agency where the intent is not to refund or offset. A TC 570 will generate a -R freeze which will restrict the credit from offsetting or refunding to agency.

The nonfiler process was developed to address federal entities identified as potentially required to file Form 941, Employer's Quarterly Federal Tax Return. A listing is secured from the CFO office consisting of federal agencies filing history for the last 4 tax quarters immediately preceding the current tax quarter. The listing is forwarded by SB/SE Collection Policy to the FAD team once a year, generally in the beginning of the fiscal year (October).

An initial review of the listing is required to determine whether the agency, after establishing its EIN, is not reporting employment tax, Form 941, Employer's Quarterly Federal Tax Return. Not all entities listed will be in Masterfile and/or in TDI status. If initial research determines the taxpayer has not filed a tax return in the last 3 years, go to paragraph 5.

All closing actions must be notated on the Master CFO Nonfiler listing and forwarded to SB Collection Policy once completed for reporting purposes.

The spreadsheet listing will include two separate tabs, separating the scenarios as indicated below

When initial research has determined there is a balance due issue on another tax period on the account, consider the case as a combo case and address the balance due issue also. If the balance due module is in ST 48 or ST 77 (acceleration status), take the case into inventory accordingly and follow Streamline process, per IRM 5.19.15.4.2, Streamline Process and Timeframe Guidelines, and IRM 5.19.15.5, Balance Due- Overview.

The intent of the FAD IRC 6020(b) Credit process is to assist the agency with resolution of un-filed returns with credits and to take all required attempts to secure the returns. This process should not be confused with IRC 6020(b) process. The FAD IRC 6020(b) Credit process was developed for federal agencies, which the assessment is only considered if the tax period has a credit on the account. The intent is to create a return based on the available credit and balance the account.

All attempts for case resolution must be exhausted prior to considering FAD 6020(b) process. Follow the guidelines in the paragraphs below for guidance on determination criteria and creating a return under the guidelines.

Research credit to ensure they do not belong to another EIN/ Tax period. If there is no indication the payment(s) was applied to account in error, consider Manual IRC 6020(b) process to balance the account. Refer to IRM 5.19.22.5.6, BMF Credit Balance Overview; for additional guidance regarding researching credit balances.

Upon completion of all required contact and research with no resolution, continue with the following procedures:

Process using the following guidelines:

The initial escalation referral process needs to be determined when all research, contact attempts have been exhausted, with no case resolution. If you have determined, the case meets the criteria for escalation, complete the FAD Sensitive Case Report (FAD-SCR). Document the form with all actions taken on the case to support the referral. The FAD Sensitive Case Report (FAD-SCR) along with the case file needs to be forwarded to the manager for review/ approval. A recommendation for type of referral (CFO, SB/SE Field, TE/GE) is to be documented on the FAD Sensitive Case Report (FAD-SCR).

ICS history entry must contain a detailed summary to support your recommendation. Below is supporting documentation which needs to be addressed on FAD Sensitive Case Report (FAD-SCR) and ICS:

The team manager is responsible to review the account to ensure it meets referral process. Once approved, they will sign and forward the case to Operation Manager per local guidelines. Once approved by team manager, the manager will re-assign the case to their Manager ICS inventory assignment.

Update the IDRS control base to M status, and reassign to the FAD team monitoring IDRS number, using the literals CSCO-ESCLTN to indicate case is being elevated. Input a history on AMS indicating the case has been elevated, including the reason for elevation. The AMS will protect the case from being worked by another area.

The CSCO Operation manager is responsible for the final determination for the case to be elevated to HQ. If in agreement they will sign the FAD Sensitive Case Report (FAD-SCR) and forward the form and any supporting documentation to the Campus Chief Planning and Analysis staff and Campus Director.

Escalation cases will be re-assigned and remain in the FAD management ICS inventory for monitoring purpose during the duration the case is being reviewed and handled at a higher level. The manager will be responsible to document ICS case history of all updates while the case is in the escalation process.

Upon approval of the Campus Director and Planning & Analysis staff, the case will proceed to be elevated to SB/SE HQ Collection executives for guidance. Based on the case scenario a recommendation for next action will be included. Once case is escalated to either SB/SE Field, CFO or FSL/ET, Collection Policy will act as a liaison during the escalation process.

Certain situations may require Field RO intervention. The list below is examples which may warrant RO intervention.

If the referral is part of the escalation process, all case documentation and pertinent information must be included to support and assist with escalation process. Supporting documentation includes completed FAD Sensitive Case Report (FAD-SCR), signed, and approved by Campus management, notation of agency contacts which may assist with Field/ CFO contact. Guidance will be given from HQ Collection Policy on Territory RO assignment. Once determination is made based on Area location code, FAD management will keep the case assigned to their monitoring inventory, but create an OI to the referral RO.

The Field RO will attempt to contact the agency and explain the consequences if the delinquency is not resolved. Consequences include the case being elevated to their executive level and CFO office.

SBSE Collection Policy will be the Point of Contact on all Field referrals, unless otherwise directed.

CFO referrals will be considered by SB/SE HQ after all contact attempts for resolution has been exhausted. Contact attempts include Campus employee and Revenue Officer intervention. Referrals to CFO must be reviewed and approved by SB Campus Director and SB/SE HQ. The criteria for referring cases to the CFO office when all contact efforts by SBSE have been exhausted are as follows:

The CFO office will attempt to contact the agency executive office or agency CFO to discuss the agency's unresolved delinquent issue. After CFO completion of contact, SB/SE HQ will be notified of outcome of contact attempts. The case will then be referred back to FAD team to monitor and or take final actions to resolve based on CFO contact. HQ will act as a liaison between the Campus, and CFO office. Resolution will be tracked and monitored by Campus management utilizing the CFO Tracking report. The update report will be shared with HQ on a weekly basis until case(s) are resolved.

The CFO office will contact the agency executives or agency CFO office directly and inform them of the outstanding IRS tax issues. Method of contact will be determined at the discretion of the CFO office (letter, phone, email or face-to-face).

CFO office will communicate the results of the contact with SB/SE HQ. Upon notification from SB/SE HQ, the FAD employee will update the ICS history, and monitor for payment, tax return, or assist with any reconciliation necessary to resolve the delinquency. Update the control base to A status, with the literal CFO-FOLLUP. The FAD employee will assist with any necessary reconciliation and monitor the account for receipt of payment/ return.

If after all contact attempts from the CFO office have been exhausted with no resolution, the case will be escalated by the executives to the IRS Commissioner. The Commissioner of the IRS will then contact the head of the specific agency to achieve resolution. These situations should be rare in occurrence.

IRS and Treasury entities must be treated as priority. The CFO office has oversight over all IRS and Treasury agencies and must be notified within 5 business days upon receipt in the FAD inventory of the cause and status of the account. HQ must be kept updated on the progression of IRS/ Treasury cases on a weekly basis. Upon receipt, HQ will review and forward the weekly updates to CFO office until case resolution.

When an existing IRS/ Treasury agency is in inventory it is required to complete the IRS- Treasury Tracking Report to monitor the status. The report will be completed and forwarded to SB/SE HQ on a weekly basis until issue is resolved. The report must include the cause of the delinquency and pending status. HQ will forward updates to CFO office.

If case cannot be resolved within 90 days or initial contact was not successful, refer the case to HQ via management directives. Management will forward to Campus director for consideration of CFO referral, bypassing RO referrals. Refer to IRM 5.19.15.8.3, CFO Referral Process, for additional guidance.

For identification purposes, agencies under Treasury Bureau are listed below:

Certain government agencies have been assigned to collect wages from employers or federal contractors which were erroneously not paid to their employees. These federal agencies disburse the unpaid wage amounts to the employees concerned, determined from the results of a judicial court decision. Extensive investigations are performed by the federal agencies to determine whether or not claims for back wages or unfair labor practices are valid. Agencies allowed to take this action and some of the provisions which allow such action are:

Research is performed by the appropriate assigned federal agencies to determine if claims for back wages or unfair labor practices are valid. Therefore, a relatively long period of time may elapse between the time employees become entitled to the wages and the time they actually receive payment from the agency involved.

In addition to federal income tax withheld, the assigned federal agency will report wages on the appropriate lines of Form 941, Employer's Quarterly Federal Tax Return, and compute the full amount of FICA taxes. The employer share of FICA is then deducted on one of the adjustment lines of Form 941, Employer's Quarterly Federal Tax Return, as a negative adjustment.

See IRM 21.7.2.5.7.2, Processing of Forms 941-X Filed by Federal Agencies to Report Employer Share of FICA Taxes (Wage Payments Made by Federal Agencies), for additional information.

Employment code of “Q” identifies “quasi- governmental” agencies. These entities are part private in nature and part public by statute, which differs than other federal government agencies. These entities are liable to file and pay FUTA tax (Form 940), as their employees are considered civilian employees, which is not a general rule for federal agencies. Employment code “Q” are assigned to federal reserve banks, federal home loan banks and AMTRAK.

Since they are not employment code of “F”, they are not generally assigned to FAD inventory. However, in rare situations a request may be made by HQ, CFO, or FSL/ET to assist with a case.

There are approximately a total of twelve (12) Federal Reserve Banks. Unlike private commercial banks, Federal Reserve Banks do not provide general banking services such as checking, savings or lending. The Federal Reserve System is a quasi-governmental organization created by Congress that operates in the public interest. After paying its expenses, the FRS turns over its revenue to the U.S. Treasury.

However, if a Federal Reserve bank entity is received in inventory due to incorrect employment code assignment, forward the entity information to FSL/ET (via manager/ lead), requesting for them to validate the employment code. If FSL/ET determines the entity is a quasi-government entity, they will update the employment code and change to “Q”. Monitor for correction. Once the employment code has updated to an employment code Q, close the account off ICS.

U.S. Government agencies are required to withhold and report a 2 percent excise tax on payments made to foreign persons providing goods or services pursuant to certain contracts.

The acquiring U.S. government agency must determine if the excise tax is applicable for each contract with a foreign person. Final regulations provide that certain contracts are exempt from the excise tax including:

The regulations also describe that certain foreign persons or contracting parties are entitled to relief from the 2 percent tax, if:

U.S. Government Reporting: The acquiring agency will report the total excise tax withheld on Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, Line 64b. The acquiring agency will also prepare a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. The Form 1042-S should be furnished to the foreign contracting party and filed with the Internal Revenue Service by March 15 of the year after the payment date.

Refer the agency to https://www.irs.gov/ for additional guidance. Insert "excise tax on federal foreign procurement payments" in the search box.