Any original correspondence prepared by examiners will be approved by the team manager and such approval will be documented in the case file. If correspondence is not individually approved due to an exception, managers must develop an ongoing review process to ensure the quality of correspondence.
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Upon completion of the Form 1900 or Form 14235, the examiner needs to obtain managerial approval to survey the return. This is accomplished by having the team manager sign the Form 1900 or Form 14235. Whenever an examiner considers it necessary to explain why a return was surveyed after assignment, Form 1900 or Form 14235 should be completed. After the examiner and manager sign the Form 1900 or Form 14235, it should be electronically forwarded to the IIC PSP coordinator. In addition, the original should be maintained in the case file.
Prepare and review the case building materials. This includes IDRS (Integrated Data Retrieval System) transcripts, required filing checks, examination of income, and verification on any changes to return as filed (amended return or adjustment made by Service Center).
Adequately explain the items which are examined and the LUQ items which are accepted without examination. The case file's activity record and workpaper will clearly indicate the scope of the examination, the depth of the examination, and the reasons for the decisions.
If during the examination, the scope is expanded to include additional tax period(s), the taxpayer should be notified verbally or in writing of the expansion. If the taxpayer has a power of attorney and it does not cover the tax period(s) being picked up for examination, the taxpayer must be given time to secure a power of attorney for the additional tax period(s). Also, the examiner must allow the taxpayer time to submit records on the newly added year(s). The appropriate appointment confirmation letters should be used by revenue agents, tax compliance officers, and tax examiners as noted in IRM 4.63.4.6.2.1 and IRM 4.63.4.6.2.2.
Secure the prior audit file(s) if applicable, including report(s), from the Correspondence Examination Automation Support (CEAS) database to determine the issues previously proposed and any problems encountered during the examination. If the prior audit file is not available in CEAS, ask the taxpayer for a copy of the report or request the administrative file from the campus.
Revenue agents and tax compliance officers must balance compliance with collectability and should consider transferee liability, future income or denial of future refunds/credits, hidden assets, etc. Examiners should document known accounts and assets during examinations and interviews to ensure case files identify all assets.
The Service may request that certain parties related to a domestic reporting corporation authorize such corporation to act as their agent for purposes of an IRS examination of books and records, or for the service and enforcement of a summons with respect to any transaction that it has with the reporting corporation. If the related party does not authorize the reporting corporation to act as its agent or does not substantially comply with the summons for records or testimony a noncompliance penalty may apply. A reporting corporation authorized to act as an agent may file a petition to quash any summons or subpoena or to review an IRS determination of noncompliance under IRC 6038A(e)(4)(A).
It is imperative that statutes are continually monitored to ensure they are fully protected and that statute control procedures are followed. Both the group manager and examiner are responsible for verifying and protecting the statute of limitations on all assigned cases. As tax returns are received in the group, it is required that the manager verify the accuracy of the assessment statute date (ASED). This verification is required whether there is a filed return or non-filer controls have been established.
When an examiner receives a case file from the manager, he or she must also ensure the accuracy of the ASED. This screening by the examiner is even more important when alpha statutes codes are involved because various circumstances can cause the alpha statute codes to revert to the normal three year statute expiration date, which requires protection.
The manager and examiner will use all available information in the administrative file, including information from internal systems such as IDRS (Integrated Data Retrieval System) and CFOL (Corporate Files On-Line), and application of appropriate Internal Revenue Code sections, Treasury Regulations, and the IRM to ensure the statute of limitations is correctly reflected. When errors are found, established procedures will be followed to update the ASED date.
If more than one special alpha statute may apply, rely on the more conservative alpha statute. For example, if a case involves both a substantial omission of income (6-year statute) and fraud, rely on the 6-year statute first. The facts of the case must be considered in making the determination of which alpha statute to use. Generally the normal statute of limitations should not be updated to an alpha code earlier than 180 days before expiration of the normal assessment period. Alpha code EE (no return filed) is the exception to this general rule and may be entered on AIMS in non-filer situation at the time the AIMS record for the non-filed tax period is established.
The examiner must timely and properly make a request to the taxpayer to extend the normal assessment statute of limitations and document the file accordingly with the request and the taxpayer's response (or lack thereof).
Prior to the expiration of the normal assessment statute, the examiner must discuss with the team manager the decision to allow the normal statute of limitations to expire. This must be documented in writing by the team manager. The memo is then forwarded to the respective territory manager for final approval. The case file will be documented accordingly to include a copy of the final memorandum with all signatures. The memorandum should fully set forth the rationale and risk calculus to support the conclusion to allow the normal assessment statute to expire.
Form 4318 or Form 4318-OA is the cover sheet that indexes the administrative and issue lead sheets, as well as supporting documents (e.g. information document requests, correspondence and case building materials). It pertains to one taxpayer (or both spouses for jointly filed returns) and includes all tax years under audit. If there are more than three years under audit, examiners must also use Form 4318-A, Continuation Sheet for Form 4318, Examination Workpapers Index.
Confidential information related to the case file must be safeguarded from unauthorized disclosure. If an examiner determines that information contained in a file is sensitive, the information should be placed in a confidential envelope inside the case file. If a Freedom of Information Act (FOIA) request is received on a case that contains sensitive information, a Disclosure Officer will determine if any information can be redacted. See IRM 11.3.13.7, Review and Redacting, for additional information.
The term "manual assessment" (also referred to as "prompt" or "quick" assessments) refers to the method used to make an assessment of tax, whether part or all of the tax is assessed. Most tax assessments made for examination cases are done via an AIMS command code. AIMS then sends the assessment information to master file. AIMS will accumulate all assessment amounts done this way and reflects the total on accomplishment reports when the case is closed.
The following project codes are examples of the types of cases currently worked in WIIC which might require the use of the policy and procedures outlined in this IRM, including those referenced. This list is not meant to be all inclusive of the projects worked within WIIC because non-filers can exist within all types of projects worked in the organization and should be identified by the examiner accordingly. 2ff7e9595c
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