Internal Revenue Manual
IRM 4.2.1 — Miscellaneous Examination Information
Part 4. Examining Process
Chapter 2. General Examining Procedures Section 1. Miscellaneous Examination Information 4.2.1 Miscellaneous Examination Information Manual Transmittal September 10, 2025 Purpose (1) This transmits revised IRM 4.2.1, General Examining Procedures, Miscellaneous Examination Information. Material Changes (1) Significant changes to this IRM are listed in the table below. Prior Reference New Reference Description of Change IRM 4.2.1, General Examination Information IRM 4.2.1, Miscellaneous Examination Information Title updated from "General Examination Information" to "Miscellaneous Examination Information" . Title changed to more accurately reflect the content in the IRM. N/A IRM 4.2.1.1, Program Scope and Objectives; IRM 4.2.1.1.1, Background; IRM 4.2.1.1.2, Authority; IRM 4.2.1.1.3, Roles and Responsibilities; IRM 4.2.1.1.4, Program Management and Review; IRM 4.2.1.1.5, Program Controls; IRM 4.2.1.1.6, Terms and Acronyms Updated internal control framework to incorporate content from IRM 4.2.3, Technical Advice to Taxpayers and Compliance Personnel; 26 CFR 601.201, Rulings and determination letters; and 26 CFR 601.105, Examination of returns and claims for refund, credit for abatement; determination of correct tax liability added to IRM 4.2.1.1.2, Authority. IRM 4.2.1.18, Reporting Misconduct of IRS Employees or Officials N/A Updated TIGTA contact methods for reporting misconduct of IRS employees or officials. IRM 4.2.1.21, Witness Security Program N/A Updated content to reflect the Witness Security Coordinator (WSC) as part of the Office of Fraud Enforcement. N/A IRM 4.2.1.26, Forms of Advice Provided to Taxpayers Added subsection to summarize types of advice provided to taxpayers. IRM 4.2.3.1, Furnishing Advice to Taxpayers IRM 4.2.1.26.1, Informal Advice Content updated and moved. N/A IRM 4.2.1.26.2, Information Letters Added subsection to provide an explanation and resources for Information Letters. N/A IRM 4.2.1.26.3, Letter Rulings Added subsection to provide an explanation and resources for Letter Rulings. IRM 4.2.3.2, Taxpayer's Request for Determination Letters; IRM 4.2.3.2.1, Determination Letters Issued; IRM 4.2.3.2.2, Determination Letters Not Issued; IRM 4.2.3.2.3, Guidelines to Request a Determination Letter; and IRM 4.2.3.2.4, Employee Responsibilities IRM 4.2.1.26.4, Determination Letters Content updated, consolidated, and moved. Some guidance was removed, as it is found in the first revenue procedure of the year (e.g., Rev. Proc. 2024-1). IRM 4.2.3.1.1, Guidelines for Furnishing Advice, and IRM 4.2.3.1.2, Furnishing Advice on Filing Claims for Refund and Appeal Rights Questions IRM, 4.2.1.27, Providing Advice to Taxpayers Content updated, consolidated, and moved. IRM 4.2.3.3, Securing Advice for Compliance Personnel, and IRM 4.2.3.3.1.2, Informal Advice IRM 4.2.1.28, Forms of Advice Provided to Examiners Content updated, consolidated, and moved. IRM 4.2.3.3.1, Assistance Available from Area Counsel, and IRM 4.2.3.3.1.1, Examples of Area Counsel Assistance IRM 4.2.1.28.1, Area Counsel Advice Content updated, consolidated, and moved. IRM 4.2.3.3.1.3, Procedures for Requesting Area Counsel Assistance IRM 4.2.1.28.1.1, Procedures for Examiners to Request Area Counsel Advice Content updated and moved. N/A IRM 4.2.1.28.2, Procedures for Examiners to Request Chief Counsel Advice Added subsection to provide guidance to examiners for requesting Chief Counsel advice. IRM 4.2.3.4, Technical Advice Memorandum; IRM 4.2.3.4.1, Definition of Technical Advice; IRM 4.2.3.4.2, When to Request a Technical Advice Memorandum; IRM 4.2.3.4.2.1, Circumstances That Warrant a Technical Advice Memorandum; IRM 4.2.3.4.2.2, Circumstances That Do Not Warrant a Technical Advice Memorandum; IRM 4.2.3.4.3, Guidelines to Request a Technical Advice Memorandum; IRM 4.2.3.4.4, Conferences; IRM 4.2.3.4.4.1, Pre-Submission Conferences; IRM 4.2.3.4.4.2, Conferences for Taxpayer Adverse Decisions; and IRM 4.2.3.4.5, Replies to Requests for Technical Advice IRM 4.2.1.29, Technical Advice, and IRM 4.2.1.30, Technical Advice Memoranda Content updated, consolidated, and moved. N/A IRM 4.2.1.31, Methods of Reporting Examiner-Identified Issues Added subsection to include content that distinguishes between emerging issues, potentially abusive transactions, and the Technical Coordination Reports Program. N/A IRM 4.2.1.31.1, Potentially Abusive Transactions Added subsection to include content that provides procedures and resources for examiners regarding potentially abusive transactions. N/A IRM 4.2.1.31.2, Emerging Issues Added subsection to include content that provides procedures and resources for examiners regarding emerging issues. IRM 4.2.3.6, Technical Coordination Reports; IRM 4.2.3.6.1, General Information; and IRM 4.2.3.6.4, Procedures for Technical Coordination Reports IRM 4.2.1.31.3, Technical Coordination Reports Program; IRM 4.2.1.32, Technical Coordination Reports; and IRM 4.2.1.32.1, Preparation of Technical Coordination Reports Content updated, consolidated, and moved. Removed mention of abusive transactions, which is covered under IRM 4.2.1.31.1, Potentially Abusive Transactions. Removed duplicate content. IRM 4.2.3.6.2, Technical Coordination Reports that Merit the Commissioner's Attention IRM 4.2.1.32.2, Technical Coordination Reports That Merit the Commissioner's Attention Content updated and moved. IRM 4.2.3.6.3, Technical Coordination Reports That Do Not Merit the Commissioner's Attention IRM 4.2.1.32.3, Technical Coordination Reports That Do Not Merit the Commissioner's Attention Content updated and moved. Removed tax abuses, which is covered under IRM 4.2.1.31.1, Potentially Abusive Transactions. Throughout N/A Minor editorial changes have been made throughout this IRM. Website addresses were reviewed and updated, as necessary. Updates made to names of BODs (W&I to Taxpayer Services). Effect on Other Documents This IRM supersedes IRM 4.2.1, Miscellaneous Examination Information, dated September 23, 2022. IRM 4.2.3, Technical Advice to Taxpayers and Examination Personnel, has been obsoleted and incorporated into IRM 4.2.1, Miscellaneous Examination Information. Audience Small Business/Self-Employed (SB/SE), Large Business and International (LB&I), and Taxpayer Services employees. Effective Date (09-10-2025) Heather J. Yocum Director, Examination Field and Campus Policy CTCO:S:E:HQ:EFCP Small Business/Self-Employed
Program Scope and Objectives
4.2.1.1 (05-29-2019) Program Scope and Objectives Purpose. This IRM section provides information on various topics and provides an overview for taxpayers and employees requesting advice. References to other resources, such as related IRMs and websites are included when applicable and provide additional guidance as needed to ensure a thorough understanding of the topic. Audience. These procedures apply to employees in SB/SE Field Examination, SB/SE Specialty Examination, LB&I, and Taxpayer Services. Policy Owner. The Director, Examination Field and Campus Policy, who is under the Director, Headquarters Examination, owns the policy in this IRM. Program Owner Field Examination General Processes (FEGP), which is under the Director, Examination Field and Campus Policy. Primary Stakeholders Employees in SB/SE Field and Specialty Examination, LB&I, and Taxpayer Services are the primary stakeholders for this IRM. Contact Information. To recommend changes or make any other suggestions related to this IRM section, see IRM 1.11.6.5, Providing Feedback About an IRM Section - Outside of Clearance.
Background
4.2.1.1.1 (05-29-2019) Background This IRM provides information for miscellaneous examination procedures that employees should understand and apply in the performance of their duties. This IRM also provides guidance for taxpayers and employees requesting advice.
Authority
4.2.1.1.2 (05-29-2019) Authority By law, the IRS has the authority to conduct examinations under Title 26, Internal Revenue Code, Subtitle F – Procedure and Administration, Chapter 78, Discovery of Liability and Enforcement of Title, Subchapter A, Examination and Inspection. The following IRC sections, Revenue Procedures (Rev. Procs.), Treasury Regulations, and Delegation Orders provide the authority for various topics as referenced within this IRM: Citation Title IRC 332(b) Complete liquidations of subsidiaries IRC 905(c) Applicable rules IRC 6501(a) Limitations on assessment and collection IRC 6532(b) Periods of limitation on suits IRC 7121 Closing agreements IRC 7405 Action for recovery of erroneous refunds IRC 7430 Awarding of costs and certain fees IRC 7508 Time for Performing Certain Acts Postponed by Reason of Service in Combat Zone or Contingency Operation IRC 7605(b) Time and place of examination 26 CFR 301.7508-1 Time for performing certain acts postponed by reason of service in a combat zone 26 CFR 601.105 Examination of returns and claims for refund, credit or abatement; determination of correct tax liability 26 CFR 601.201 Rulings and determination letters. Rev. Proc. 64-22 Statement of some principles of Internal Revenue tax administration Rev. Proc. 2005-32 Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability Rev. Proc. 2010-11 Forms and Instructions Rev. Proc. 2012-18 Ex Parte communications between appeals and other Internal Revenue Service employees Rev. Proc. 2016-22, Appeals Functions Rev. Proc. 2018-58, Time for Performing Certain Acts Postponed by Reason of Service in a Combat Zone or a Federally-Declared Disaster Rev. Proc. 2024-1 Rulings and Determination Letters Rev. Proc. 2024-2 Examination of Returns and Claims for Refund, Credit or Abatement; Determination of Correct Tax Liability Delegation Order 4-7(Rev 1) (IRM 1.2.2.5.7) Notice of Additional Inspection of Books of Account Delegation Order 4-47(New) (IRM 1.2.2.5.36) Compliance Reviews of Economic Sanctions Program SB/SE Delegation Order 1-23-33 (IRM 1.2.65.4.14 ) Authority to Grant Extensions of Time to Replace Involuntarily Converted Property Under Section 1033 of the Internal Revenue Code -
Roles and Responsibilities
4.2.1.1.3 (05-29-2019) Roles and Responsibilities The Director, Examination Headquarters, is the executive responsible for providing guidance for employees in Field, Specialty, and Campus Exam Operations, and for ensuring consistent application of procedures and tax law to effect tax administration while protecting taxpayers' rights. See IRM 1.1.16.5.5, Examination Headquarters, for additional information. The Director, Examination Field and Campus Policy, reports to the Director, Examination Headquarters, and is responsible for the delivery of guidance that impacts the field examination process. See IRM 1.1.16.5.5.1, Examination Field and Campus Policy, for additional information. Field Examination General Processes (FEGP), which reports to the Director, Examination Field and Campus Policy, is the group responsible for providing procedural guidance on standard examination processes to field employees. See IRM 1.1.16.5.5.1.1, Field Examination General Processes, for additional information. All employees must perform their professional responsibilities in a way that supports the IRS Mission. This requires employees to provide top quality service and to apply the law with integrity and fairness to all. Employees and their managers should thoroughly acquaint themselves with examination procedures and information contained in this IRM, as well as other resources, such as those listed in IRM 4.2.1.1.7, Related Resources, below.
Program Management and Review
4.2.1.1.4 (09-10-2025) Program Management and Review Periodic program reviews are conducted to: Assess the effectiveness of specific programs within Examination or across the organization, Determine if procedures are being followed, Validate policies and procedures, and Identify and share best/proven practices.
Program Controls
4.2.1.1.5 (09-10-2025) Program Controls FEGP is responsible for developing, maintaining, and publishing procedures in this IRM. The program owner will: Review the IRM for procedural, operational, and editorial changes at least annually. Revise the IRM when content vital to administration of the tax laws is no longer accurate. Incorporate all permanent interim guidance content into the next IRM revision.
Terms and Acronyms
4.2.1.1.6 (09-10-2025) Terms and Acronyms See Exhibit 4.2.1-1, Table of Terms, for terms used throughout this IRM and their definitions. See Exhibit 4.2.1-2, List of Acronyms, for acronyms used throughout this IRM and their definitions.
Related Resources
4.2.1.1.7 (05-29-2019) Related Resources Helpful information can be found on websites, including, but not limited to the following: AUR HQ Payer Agent Coordinator EA Routing Instructions Office of Employee Protection Office of Foreign Assets Control TIGTA Employee Security The first revenue procedure of the year (e.g., Rev. Proc. 2024-1, its predecessors, and successors) contains comprehensive guidance on letter rulings and determination letters, including, but not limited to: Section 5. Under What Circumstances do the Associate Offices Issue Letter Rulings? Section 6. Under What Circumstances does the Service Not Issue Letter Rulings or Determination Letters? Section 7. What are the General Instructions for Requesting Letter Rulings and Determination Letters? The second revenue procedure of the year (e.g., Rev. Proc. 2024-2, its predecessors, and successors) contains comprehensive guidance on requests for technical advice (i.e., Technical Advice Memoranda), including, but not limited to: Section 5. Initiating a Request for Technical Advice Section 6. Pre-Submission Conferences Section 7. Submitting the Request for Technical Advice Section 9. Taxpayer Conferences Section 11. Withdrawal of Requests for Technical Advice
Identification and Control Numbers
4.2.1.2 (04-23-2014) Identification and Control Numbers The similarity of taxpayers' names and the voluminous flow of documents require the use of permanent identifying numbers coupled with taxpayers' names. These numbers are necessary for automated data processing (ADP) purposes to ensure control of each tax account and all related transactions. Some standard titles and abbreviations used are as follows: Social security number (SSN)—the number assigned to an individual for social security purposes, tax account purposes, or both. Employer identification number (EIN)—the number assigned for any tax purpose to identify an entity. Also means the identification number which is assigned to an individual who is required to file a return with respect to their liability for any tax other than income, estate, or gift taxes. Document locator number (DLN)—the number assigned to each return or other document introduced into processing for control and file reference purposes. Individual taxpayer identification number (ITIN)—the number assigned to individuals who are required, for U.S. tax purposes, to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain an SSN issued by the Social Security Administration. Internal Revenue Service Number (IRSN)—the number used in place of a required Taxpayer Identification Number (TIN) during processing. The spacing of the digits in identifying numbers is an integral part of the number. The proper spacing must be observed in all instances. The spaces may be indicated by using hyphens, blank spaces, etc. For example, EIN as 00-0000000 and SSN as 000-00-0000. The foregoing identification and control numbers do not preclude the use of reference or control numbers such as Tax Court docket numbers, Criminal Investigation (CI) case numbers, reference numbers used in connection with the collection of delinquent accounts, or other numbers or codes used for control or reference purposes.
Safety and Security Resources
4.2.1.3 (09-23-2022) Safety and Security Resources The IRS takes security very seriously. The safety and welfare of every employee is very important. This section provides links to resources for guidance on employee safety in the workplace and in the field. Note: Some of the guidance below is from (or refers to) guidance in IRMs that are not specific to employees in examination functions. For example, Collection's IRM 5.1.3, Safety, Security, and Control, was written specifically for revenue officers (ROs). However, other employees may also refer to these procedures (see IRM 5.1.3.1, Program Scope and Objectives, and IRM 1.11.2-2, Most Common Reasons to Review the IRM). Potentially dangerous taxpayers - Employees must be alert to Potentially Dangerous Taxpayer (PDT) or Caution Upon Contact (CAU) designations on an IDRS transcript. If present, refer to: IRM 4.2.1.3.1, Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) Indicators IRM 25.4.1, Potentially Dangerous Taxpayer IRM 25.4.2, Caution Upon Contact Taxpayer Office of Employee Protection (OEP) Pseudonyms - Section 3706 of the IRS Restructuring and Reform Act of 1998 (RRA 98) from 26 USC 7804, dated July 22, 1998, provides that any employee of the IRS may use an IRS Pseudonym if adequate justification for the use of a pseudonym is provided by the employee, including protection of personal safety; and such use is approved by the employee's supervisor before the IRS pseudonym is used. Refer to: IRM 4.10.1.2.2.3, Pseudonyms IRM 5.1.3.2.2, Use of a Pseudonym IRM 10.5.7, Use of Pseudonyms by IRS Employees Weapons - Employees, excluding law enforcement positions, are prohibited from carrying a weapon in IRS facilities (see IRM 10.2.18.2, Prohibited Items) or the field. Even though some positions involve some potential for risk when contacting a taxpayer (or a third-party), employees, excluding law enforcement positions, are not authorized to carry and/or use a firearm in the performance of official duties. This restriction includes pepper spray, "Halt!" , dog repellent, or any "intermediate" weapon (see IRM 5.1.3.2.1, Weapons Restriction). Armed escorts - When an employee feels they need an armed escort, they must immediately report the facts causing the need to their group manager. Armed escorts may be requested by IRS employees when they intend to meet with taxpayers who have been designated by the OEP as PDT or CAU, or in other circumstances where the employee and the group manager believe any interaction during the performance of duties may pose a risk of injury to the employee. For additional guidance, see: IRM 4.2.1.3.2, Request for Armed Escort IRM 5.1.3.5, Armed Escort to Contact a Taxpayer Assaults and Threats - Occasionally, a taxpayer (or a third-party) will assault, threaten, or intimidate an IRS employee. Refer to the following for guidance: IRM 5.1.3.4.1, Definition of Terms, for the definitions of assault, threat, and intimidate IRM 5.1.3.4.2, Assault Procedures, for applicable guidance for assaults during the performance of official duties IRM 5.1.3.4.3, Threat / Intimidation Procedures, for applicable guidance including threats of harm, suicide threats, written or other non-verbal threats, and reporting procedures IRM 5.1.3.4.4, Assault / Threat / Intimidation — Reporting Procedures, for information on reporting assaults and threats to TIGTA as well as other resources IRM 21.3.4.5.2, Threats, Assaults, and Bribes, for additional information Threat and Assault Reporting, for instructions on how and when to report a threat and/or an assault Safety in the workplace - Violence in the workplace includes, but is not limited to, an actual or perceived threat of force, abuse, damage, physical battery, assault, bomb threat/event or terrorist attack. The workplace includes federal facilities, telework locations, alternate work sites and locations where IRS employees conduct official business. Refer to the following for guidance: Document 13402, Desk Guide for Workplace Violence Prevention and Response IRM 21.1.3.10, Safety and Security Overview, and all IRM 21.1.3.10 subsections related to Personal Safety, Bribery Attempts, Assault/Threat Incidents/Abusive Practitioners, Reporting Assault/Threat Incidents, Written Assault/Threat Report, Significant Incidents, Bomb Threats, Suspicious Packages and Letters, Other Incidents to report to TIGTA IRM 21.3.4.5.1, Workplace Violence (WPV) IRM 21.3.4.5.2, Threats, Assaults, and Bribes Safety in the field - Field employees face an inherent level of risk because of the nature of their work. There are important steps employees can take when planning field visits to minimize risk. Be alert for PDT or CAU indicators on IDRS transcripts (see (2) above). If there is a PDT/CAU indicator or other information indicating a risk to safety, consider an armed escort (see (5) above) or meet with the taxpayer in the office. Consider advising local law enforcement where you will be conducting official business (do not name the taxpayer). Ensure your manager knows, and consider letting other office staff know, when you will be in the field. Use your official IRS ID Media when identifying yourself. See IRM 4.10.3.18, Verification of Field Employee Identification, if the authenticity of your employee credentials is questioned by police, taxpayers, or representatives. Consider pairing with a manager or co-worker if you have concerns about your safety in the field. Refer to IRM 5.1.10.6.2, No Trespassing Signs, for guidance on entering areas with posted "No Trespassing" signs. If you do not feel safe in the taxpayer's place of business, home, or representative's office, immediately leave the site and call your group manager or contact TIGTA. For additional safety information and guidance see: IRM 5.1.3.2.3, Safety Do's and Don'ts IRM 5.1.3.2.3.2, Safety Issues in the Field and Office Office Resources If You See Something, Say Something Recognize the Signs SAMC Incident Reporting Emergency and Safety Information Document 12963, A Guide to the Office of Employee Protection (OEP) Programs
Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) Indicators
4.2.1.3.1 (04-23-2014) Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) Indicators The IRS has two Servicewide employee safety programs designed to warn employees of taxpayers who have been designated as potentially dangerous and/or should be approached with caution: Potentially Dangerous Taxpayer (PDT) Program Caution Upon Contact (CAU) Taxpayer Program The Office of Employee Protection (OEP) has sole responsibility for administering the PDT and CAU programs. The OEP enhances the safety of IRS employees by taking the following actions: Making PDT and CAU determinations. Maintaining the PDT and CAU indicator databases. Providing information and feedback to employees, managers, and executives. OEP maintains two IRMs that provide guidance and information: IRM 25.4.1, Potentially Dangerous Taxpayer, provides procedures and guidelines for referring and designating taxpayers under the PDT program. See IRM 25.4.1-1, Display of PDT Indicator, for a listing of documents and systems that display the PDT indicator. IRM 25.4.2, Caution Upon Contact Taxpayer, provides procedures and guidelines for referring and designating taxpayers under the CAU program. See IRM 25.4.2-1, Display of CAU Indicator, for a listing of documents and systems that display the CAU indicator. The OEP performs PDT and CAU five-year reviews, which consist of reviewing the taxpayer against established five-year renewal criteria. See IRM 25.4.1.8, Five-Year Review of PDT Records, and IRM 25.4.2.7, Five-Year Review of CAU Records, for additional information. The OEP Office of Employee Protection website provides additional guidance and information such as the following: Definition of assaults, threats, and intimidation Process of reporting assaults, threats, and intimidation Criteria for PDT Criteria for CAU Explanation of relationship between TIGTA and the OEP "A Guide to the Office of Employee Protection Programs" desk guide Spotlight on Safety brochure Spotlight on Safety newsletter Frequently asked questions
Request for Armed Escort
4.2.1.3.2 (04-23-2014) Request for Armed Escort The TIGTA Office of Investigations (OI) has primary responsibility to provide armed escorts for IRS personnel who in the course of their official duties have been threatened with bodily harm indicating the need for such protection. See IRM 9.5.11.10, Armed Escort Assignment. Exception: CI has primary responsibility for the protection of the Commissioner of Internal Revenue. When an employee feels they need an armed escort, they must immediately report the facts causing the need to their group manager. Armed escorts may be requested by IRS employees when they intend to meet with taxpayers who have been designated by the OEP as PDT or CAU, or in other circumstances where the employee and the group manager believe any interaction during the performance of duties may pose a risk of injury to the employee. If the group manager determines that an armed escort is necessary, they must request such protection in writing via a memorandum, not to exceed two pages, to the TIGTA-OI special agent in charge (SAC) of the appropriate TIGTA-OI field division. To ensure the safety of IRS and TIGTA-OI personnel, as well as guarantee the operational integrity of the armed escort, a request must be submitted at a minimum one week prior to the scheduled appointment date. If a request is submitted with less than a one week notification, it may require a postponement of the appointment or an alternate meeting location. All armed escort requests will be reviewed by the respective TIGTA-OI SAC. Armed escorts will be provided on a case-by-case basis. If the TIGTA-OI SAC determines that an armed escort is not warranted, IRS management may seek a reconsideration of the denied request by contacting the TIGTA-OI SAC who rendered the decision. If a resolution cannot be reached and the requesting IRS management official still believes an armed escort is warranted, the IRS management official can request a final reconsideration from the TIGTA-OI, Deputy Assistant Inspector General for Investigations (DAIGI)-Field Operations. Since TIGTA-OI has primary responsibility for providing armed escorts, IRS management may not request or alternatively seek assistance from CI if the request for an armed escort has been denied. If CI receives a request for an armed escort from an IRS employee or management official, CI will refer the IRS employee or management official to the nearest TIGTA-OI office. Note: Unless specifically asked for assistance by TIGTA-OI, CI will no longer be responsible for providing armed escorts to IRS employees except as noted in paragraph (1) above. If CI assistance is needed, the TIGTA SAC will forward the request in writing to the appropriate CI Director, Field Operations, for concurrence. If an armed escort is being considered for a taxpayer designated a PDT, contact TIGTA-OI directly. The memorandum should contain the following information: Taxpayer name, social security number, contact number(s), and home address Assigned IRS employee name, position, and contact information Supervisor name, position, and contact information Description of the tax issue Description of activity to take place Phone number of IRS employees or others who will attend Location of activity Any contacts or statements related to the taxpayer that caused concern Any other information related to the subject that would indicate an armed escort is warranted If an armed escort is being considered for a taxpayer designated as CAU, the requesting employee or management official must contact the OEP and obtain the basis for the OEP's designation. IRS management must evaluate this information and if it is decided an armed escort is still needed, proceed with the memorandum. The memorandum should contain the following information: Taxpayer name, social security number, contact number(s), and home address Assigned IRS employee name, position, and contact information Supervisor name, position, and contact information Basis for the OEP CAU designation Description of the tax issue Description of activity to take place Number of IRS employees or others who will attend Location of activity Any contacts or statements related to the taxpayer that caused concern Any other information related to the subject that would indicate an armed escort is warranted If an employee is requesting an armed escort for reasons other than PDT and CAU, IRS management must evaluate the situation. If IRS management concurs with requesting an armed escort, prepare a memorandum. The memorandum should contain the following information: Taxpayer name, social security number, contact number(s), and home address Position, grade, function, and POD information, if the taxpayer is an IRS employee or contractor Assigned IRS employee name, position, and contact information Supervisor name, position, and contact information Background information concerning the taxpayer Description of activity to take place Number of IRS employees, management officials, and or others who will attend Location of activity Any contacts or statements related to the taxpayer that caused concern Any other information related to the subject that would indicate an armed escort is warranted When an actual threat or assault has been made, TIGTA has primary jurisdiction and must be contacted. For contact information, refer to the TIGTA-OI website.
Combat Zone
4.2.1.4 (09-23-2022) Combat Zone Certain taxpayers in a combat zone are provided tax relief and require special processing. A combat zone is an area designated in an Executive Order by the President of the United States. For additional information on combat zones, refer to IRM 4.2.1.4.3, Combat Zone - Additional Resources. IRC 7508 postpones the deadlines for certain acts performed by taxpayers and the IRS. The acts covered by IRC 7508 generally include: Filing any return of income, estate, gift, employment or excise tax Payment of any income, estate, gift, employment, or excise tax Filing a petition with the Tax Court for redetermination of a deficiency Allowance of a credit or refund of any tax Filing a claim for credit or refund of any tax Bringing suit upon any such claim for credit or refund Assessment of any tax Collection of the amount of any liability in respect of any tax Note: No penalties or interest will be imposed for failure to file a return or pay taxes during the postponement period. Note: Rev. Proc. 2018-58 supplements the list of postponed taxpayer acts identified in IRC 7508(a)(1) and 26 CFR 301.7508A-1(c). The postponement primarily applies to individuals who serve in the Armed Forces in a combat zone or qualified hazardous duty area (and to persons performing qualifying services outside such area), or who participated in a contingency operation. Refer to IRM 25.6.1.10.3.5.6.3, Individuals Covered, for additional information on individuals covered. Generally, the postponement period (also referred to as the "time to be disregarded" ) starts when a combat zone participant enters a combat zone and ends 180 days after their exit from the combat zone/qualified hazardous duty area (or the last day they have qualifying service outside of the Combat Zone/qualified hazardous duty area).
Substantiation of Combat Zone
4.2.1.4.1 (09-23-2022) Substantiation of Combat Zone The taxpayer's Master File account may reflect combat zone indicators. See IRMs referenced below for additional information: IRM 4.4.1-1, Reference Guide, for information on combat zone participant indicators displayed on AMDISA IRM 4.19.13.23, Combat Zone, for information on combat zone –C freeze and indicators located on IMFOLE IRM 5.1.7.10.3, Combat Zone Freeze Codes Caution: The –C freeze stays on the account even after the taxpayer is no longer in the combat zone. When working an account that contains a –C freeze, additional research is required to determine the taxpayer's combat zone status. When Master File does not indicate the taxpayer is a combat zone participant, written substantiation, such as a copy of the military or civilian orders or a statement issued by the Department of Defense (DOD) attesting that the combat zone qualifications are met, is acceptable. See IRM 5.19.10.6.2(12) through IRM 5.19.10.6.2(13), Combat Zone Qualified Individuals and Areas, for additional examples of acceptable documentation. The examiner must document the case file for the substantiation of the combat zone requirements.
Examination Guidance for Combat Zone Participants
4.2.1.4.2 (09-23-2022) Examination Guidance for Combat Zone Participants When it is determined that a taxpayer is entitled to a postponement period under IRC 7508, the examiner should suspend all examination activity. The examiner must then evaluate the case to determine if it should be closed, or if a "compelling reason" exists for continuing to suspend the case for the remainder of the postponement period. A compelling reason to suspend the examination exists when one of the following is present: There is evidence of fraud, malfeasance, collusion, concealment or misrepresentation of fact. There is a clearly defined substantial error or large, unusual, or questionable item warranting the suspension of the case. No-changing/surveying the case would result in serious criticism of the IRS's administration of the tax law. No-changing/surveying the case would establish a precedent that would seriously hamper subsequent attempts by the IRS to take corrective action. If a compelling reason exists, the examination should be suspended until the end of the postponement period. The decision to postpone the examination must be approved in writing by the territory manager and a copy of the written approval must be maintained in the case file. The examiner must document the case fie with all actions taken and conclusions reached related to the decision. Refer to IRM 4.2.1.4.2.1, Compelling Reason Suspense Procedures, for guidance on how to suspend the case. If a compelling reason does not exist to suspend the case, document the case file with all actions taken and conclusions reached related to the decision to close the case, and refer to the table below for case closing guidance based on the status of the case. This guidance applies to open cases with a status code less than status 90 (even if a signed report has been received). Case Status Closing Guidance Not started Survey the case according to the applicable IRM section: IRM 1.4.40.4.6.3.2, Survey Before Assignment. IRM 1.4.40.4.6.3.2.3, Survey Before Assignment - Claims for Refund and Requests for Abatement. IRM 4.10.2.5, Decision to Survey a Return. IRM 4.10.11.2.5, Claims for Refund - Survey After Assignment. Started - books and records have not been reviewed Survey the case according to the applicable IRM section: IRM 4.10.2.5, Decision to Survey a Return (including procedures for issuing Letter 1024). IRM 4.10.11.2.5, Claims for Refund - Survey After Assignment (including procedures for issuing Letter 570). Started - books and records have been reviewed (includes cases where the 30-day letter was issued, or a signed agreement was received) Close the case as follows: Unless (b) or (c) applies, close the case No-Change. See IRM 4.10.8.3.1, No-Change (No Adjustments) (including procedures for issuing Letter 3401). For claims for refund or requests for abatement, allow the claim or request in full. See the applicable procedures in IRM 4.10.11, Claims for Refund and Requests for Abatement. For non-filer cases, close the case Disposal Code 33 - Opened in Error. If contact was made with the taxpayer, issue Letter 4392. Started - closed to Technical Services and a notice of deficiency was issued Technical Services should prepare a supplemental report to reduce the deficiency to zero and issue a no-change report to the taxpayer. Rescission procedures should not be used because rescission procedures require the consent of the taxpayer.
Compelling Reason Suspense Procedures
4.2.1.4.2.1 (09-23-2022) Compelling Reason Suspense Procedures After the territory manager has approved the decision to postpone the examination, the following procedures apply. If contact was made with the taxpayer, the examiner must notify the taxpayer the examination is being suspended in accordance with IRC 7508. The examiner should also explain that the deadline for the IRS to make an assessment of tax is extended and the taxpayer's deadline for taking certain actions with the IRS will also be extended (e.g., filing any return of income, estate, or gift tax; paying any income, estate, or gift tax; filing a claim for credit or refund of any tax, etc.). The examiner should ask the taxpayer to notify the IRS when they return from the combat zone, by sending an email to combatzone@irs.gov (as instructed on IRS.gov). The examiner should refer the taxpayer to Pub 3, Armed Forces' Tax Guide, for additional information. The case must be forwarded to Technical Services for suspense (see IRM 4.8.2.11.5, General Suspense; IRM 4.8.2.11, Suspense Cases; and IRM 4.8.2-1, Technical Service Status Codes and Related Review and Suspense Type Codes). Technical Services will hold the case in suspense until the end of the postponement period, at which time it will be returned to the examination group for continuation of the audit.
Combat Zone - Additional Resources
4.2.1.4.3 (09-23-2022) Combat Zone - Additional Resources IRC 112, Certain Combat Zone Compensation of Members of The Armed Forces, for identification of military income that is not taxable. IRC 7508, Time for Performing Certain Acts Postponed by Reason of Service in Combat Zone or Contingency Operation. 26 CFR 301.7508-1, Time for Performing Certain Acts Postponed by Reason of Service in a Combat Zone. Pub 3, Armed Forces' Tax Guide. IRS Questions and Answers on Combat Zone Tax Provisions. Combat Zones Approved for Tax Benefits. Refer to the IRMs in the following table for additional information: IRM For information on: IRM 4.4.1-1, Reference Guide AIMS guidance for combat zone cases IRM 5.1.23.4.5, Military Power of Attorney (POA) for Representation of Deployed Military Personnel Representation before the IRS IRM 5.19.10.6.3, Combat Zone Freeze Code Procedures on setting or releasing the combat zone indicator IRM 5.19.10.6.5.1, Combat Zone IMF Procedures, and IRM 5.19.10.6.5.2, Combat Zone BMF Procedures Master File identification of combat zone cases IRM 5.19.10.6.1, Combat Zone Exclusion of Income Military income that is not taxable IRM 5.19.10.6.2, Combat Zone Qualified Individuals and Areas Taxpayers who qualify for the tax exclusions and a list of current combat zones IRM 5.19.10.6.4, Combat Zone Computation of Suspense Period Time periods allowed for the combat zone suspense period and computation of the suspense period IRM 25.6.1.10.3.5.6.2, Deadlines Postponed Penalties and interest calculations from the postponed due date or actual filing date IRM 25.6.1.10.3.5.6.3, Individual Covered Combat zone participants IRM 25.6.23-3, Instructions for Updating the Statute on AIMS Using AIMS alpha code RR for special statute situations
1254 Suspense
4.2.1.5 (04-23-2014) 1254 Suspense Technical Services holds cases pending a court decision or business unit guidance. Cases may be held in 1254 suspense under the following circumstances: The facts in the case to be suspended are the same or similar to an issue pending in a federal court. The issue is similar to one that is under consideration in District Court in another jurisdiction, but only if a Form 906, Closing Agreement on Final Determination Covering Specific Matters, has been secured, by the IRS Independent Office of Appeals (Appeals). Chief Counsel or another business unit has identified the issue as a suspense issue. For cases held in 1254 suspense pending a court decision, the facts in the case to be suspended must be so similar to those in the pending case that a decision in one will ultimately decide the other. The examiner must discuss any case being considered for 1254 suspense with the group manager. The group manager must contact the area Technical Services function to determine whether the case meets the criteria for 1254 suspense. Prior to forwarding a case to Technical Services for 1254 suspense, the examiner must: Develop the case to the fullest extent possible. Ensure a partial agreement is secured and assessed if the taxpayer agrees to all other issue(s) that do not meet 1254 suspense criteria. If a partial agreement is not secured, see note below. See instructions for preparing partially agreed reports in IRM 4.10.8.6, Partially Agreed Cases. The only issues that may be placed in 1254 suspense are unagreed issues meeting the 1254 suspense criteria. Note: If a partial agreement cannot be secured, the case should not be sent to 1254 suspense. Prepare an unagreed report for all issues pursuant to the instructions in IRM 4.10.8.12, Unagreed Case Procedures (SB/SE Field and Office Examiners only). If the taxpayer fails to file a protest, close the case for issuance of a statutory notice of deficiency. Ensure an examination report addressing the unagreed issue(s) being suspended is shared with the taxpayer and a copy is retained in the case file, for purposes of IRC 6404(g). Ensure a claim disallowance that addresses the unagreed issue(s) being suspended is in the case file, if applicable. A claim allowance must also be included in the case file should the taxpayer's position prevail. Ensure there are at least 24 months remaining on the statute of limitations. If not, secure an extension prior to sending the case to Technical Services for 1254 suspense. Complete Form 1254, Examination Suspense Report, and ensure the key case is identified. See IRM 4.8.2.11, Suspense Cases, for additional guidance.
Reopening of Closed Cases
4.2.1.6 (09-23-2022) Reopening of Closed Cases There may be times when an examiner should consider reopening a tax year that was previously examined and closed. IRC 7605(b), Restrictions on Examination of Taxpayer, provides that "No taxpayer shall be subjected to unnecessary examination or investigation, and only one inspection of a taxpayer's books of account shall be made for each taxable year unless the taxpayer requests otherwise or unless the Secretary, after investigation, notifies the taxpayer in writing that an additional inspection is necessary." Note: Reopening procedures do not apply when the taxpayer requests the reopening, such as an audit reconsideration or claim for refund. Rev. Proc. 2005-32 provides information on reopening closed cases. The following sections provide information the examiner must consider prior to the reopening of a closed case: Rev. Proc. 2005-32, Section 4.01, Closed Case - provides definitions of a closed case. Rev. Proc. 2005-32, Section 4.02, Reopening - defines what constitutes a "reopening" . Rev. Proc. 2005-32, Section 4.03, Taxpayer contacts and other actions that are not examinations, inspections or reopenings - provides a list of four categories of contacts the IRS makes with taxpayers and certain other actions taken by the IRS that are not examinations, inspections, or reopenings. Note: A prior examination is indicated by a Transaction Code (TC) 300. A TC 290 is not a prior examination. Note: No audit occurs if a return is selected for examination but then is closed by survey. A subsequent audit would not be considered a reopening. The IRS will not reopen any case closed after examination by an area office or campus to make an adjustment unfavorable to a taxpayer unless specific criteria are met, see Rev. Proc. 2005-32, Section 5.01 and IRM 1.2.1.5.1, Policy Statement 4-3, Cases closed by District Directors or Service Center Directors will not be reopened except under certain circumstances, for additional guidance. All IRS initiated reopenings to make adjustments unfavorable to a taxpayer must be approved by the territory manager. The examiner must prepare Form 4505, Reopening Memorandum, for approval by the group manager and territory manager prior to starting the examination. See IRM 1.2.2.5.7, Delegation Order 4-7 (Rev. 1), Notice of Additional Inspection of Books of Account. When a reexamination of the taxpayer's books and records is necessary, Letter 939 (DO), Reopening Letter, must be prepared by the examiner and sent with Form 4505 to the territory manager for signature. The examiner must issue Letter 939 (DO) to the taxpayer at the time the reexamination is started. Note: When a reopening does not require the reexamination of the books and records, Letter 939 (DO) is not needed. Once the approval has been obtained to reopen a closed case and Letter 939 (DO) is issued (if required), the examiner should contact the taxpayer using the appropriate initial contact letter. See IRM 4.10.2.8.1, Making Initial Contact. For guidance on report writing procedures, see IRM 4.10.8.9, Reports For Cases Reopened By Examination.
Collateral Referrals
4.2.1.7 (09-23-2022) Collateral Referrals A collateral referral is made when an exchange of information between business operating divisions (BOD) or areas within the same BOD, is essential to resolve an issue of material consequence. A collateral referral is not limited to a request for information but also includes a request for an examination of returns that cross area offices or BODs. A collateral referral is only made when the information cannot be obtained from the taxpayer, the taxpayer's representative, or third parties. The examiner must make every reasonable effort to secure the information rather than to routinely make a collateral referral. Examples of collateral referrals include: Interviewing a taxpayer, in-person, when summonsing a taxpayer or obtaining sworn testimony. Obtaining documents that cannot be acquired via mail or a secure electronic transmission method. Reminder: Check the Search Interim Guidance website for active guidance regarding permissible electronic transmission methods for communicating with taxpayers. Serving a summons. Examining returns. Before making a collateral referral, the examiner must perform IDRS research to determine if the taxpayer located within the jurisdiction of the other office is currently under examination (ERCS/AIMS status 12 through 18). If the taxpayer is under examination, the examiner (with the approval of their group manager) should directly contact the examiner located in the other jurisdiction to exchange information pertinent to the issues. SB/SE Planning and Special Programs (PSP) coordinates the routing of a collateral request, see IRM 4.1.1.7.5(6), Collateral Referrals.
Collateral Referral Procedures: Initiating Area
4.2.1.7.1 (09-23-2022) Collateral Referral Procedures: Initiating Area Form 6229, Collateral Examination, is prepared as early as possible in each examination to request or exchange information between areas to resolve an issue(s) of material consequence. The examiner assigned the return must prepare Form 6229, per the instructions below. The examiner must maintain a copy of the completed/approved form in the electronic case file. The narrative section of Form 6229 must include sufficient background information to clearly state the issue(s). The examiner should attach additional information, if needed, and a copy of the out-of-area return, if available. The information requested must be specific to the issue(s). The form must include the examiner's name and telephone number so the receiving area has the correct examiner to contact for clarification of the issue, if needed. The group manager must review Form 6229, to ensure it is complete and includes all necessary documents. The group manager must then send it to their territory manager along with a completed Form 3210, addressed to the PSP territory manager. If the territory manager concurs with the referral, they must forward both forms to the PSP territory manager in the originating group's area. PSP contacts are listed on the virtual library under PSP Territory Managers. The area PSP submits Form 6229 to the appropriate PSP office having jurisdiction for the out of area/operating division taxpayer, see IRM 4.1.1.7.5(6)a, Collateral Referrals. Collateral referrals involving tax shelter cases must be identified as such on the top of Form 6229.
Collateral Referrals: Receiving Area
4.2.1.7.2 (09-23-2022) Collateral Referrals: Receiving Area All collateral referrals receive priority screening by the receiving PSP office. A decision will be made within 20 days of receipt, whether or not the receiving office will work the collateral referral, see IRM 4.1.1.7.5(6)b, Collateral Referrals. If the collateral referral requires an examination of a return(s), the receiving PSP office will secure the relevant returns and establish AIMS controls, see IRM 4.1.1.7.5(6)d, Collateral Referrals. The receiving area must acknowledge receipt of the request by completing Part 3 of Form 6229 and return it to the initiating area. The receiving examiner must include their name, address, telephone number and date received. If the case is reassigned, the new examiner must notify the initiating area of the change. Part 4 of Form 6229 is used for subsequent communications with the initiating area. The receiving examiner must provide a clear, concise response to each question raised. If the receiving area believes the results of the collateral referral would not justify the time and cost involved, the following steps are taken: The receiving group manager prepares a declination memo setting forth the basis of the decision and forwards it to the territory manager for approval. The group manager attaches the approved declination memo to the Form 6229 and forwards it to the respective PSP office who will route it to the initiating office. Territory managers should attempt to resolve disagreements between the initiating and receiving areas. Area Directors must resolve any disagreements between the respective territory managers. If the collateral referral results in a finding of nationwide interest, the receiving area must furnish the information to Technical Services who will share it with Headquarters using Technical Coordination Report procedures. See IRM 4.8.8.12.3, Technical Coordination Report, for additional information. For collateral referrals involving tax shelter cases, the receiving area will acknowledge receipt of the collateral referral and provide a status report to the requesting group within 45 days and provide subsequent status reports every 30 days.
General Appeals Guidelines
4.2.1.8 (04-23-2014) General Appeals Guidelines This section provides general information related to how Appeals works an examination case and the formal procedures for Examination staff to voice concerns about a case settled by Appeals.
Cases Not Fully Developed
4.2.1.8.1 (04-23-2014) Cases Not Fully Developed Appeals will not return cases to Examination when the case is not fully developed and the taxpayer has not presented new information or evidence. Instead, Appeals will attempt to settle the case on factual hazards.
New or Reopened Issues
4.2.1.8.2 (04-23-2014) New or Reopened Issues The appeal process is not a continuation or an extension of the examination process. Appeals will not raise new issues and will focus dispute resolution efforts on resolving the points of disagreement identified by the parties. A new issue is a matter not raised during an examination. In resolving disputes, Appeals may consider new theories and or alternative legal arguments that support the parties' positions when evaluating the hazards of litigation in a case. However, the Appeals officer will not develop evidence that is not in the case file to support the new theory or argument. The discussion of new or additional cases or other authorities (e.g., revenue rulings or revenue procedures) that supports a theory or argument previously presented does not constitute consideration of a new issue. A change in computation is not a new issue. Appeals will not reopen an issue on which the taxpayer and the IRS are in agreement. Exception: See IRC 7121. The restrictions on raising a new issue do not apply to new issues raised by taxpayers. For this purpose, the term "new issue" means issues identified by Appeals in non-docketed cases. Appeals will not raise a new issue in a docketed case. A new issue in a docketed case is any adjustment to or change to an item that affects the petitioner's tax liability that was not included in the notice of deficiency and is raised or discussed during consideration of the case. However, Appeals will consider any new issue the government raises in its pleadings and may consider any new evidence developed by Examination or Counsel to support the government's position.
Disagreements With Appeals Determinations
4.2.1.8.3 (09-10-2025) Disagreements With Appeals Determinations This section provides formal procedures for Examination to voice concerns about a case settled in Appeals. These procedures are not intended to replace any informal procedures currently in use at the area level. Management in Examination and Appeals can continue to address and resolve disagreements over case resolution at the lowest possible level. These formal procedures are used when the informal process results in Examination still having unresolved significant concerns about the disposition by Appeals of an issue. Formal disagreement is expressed by written dissent. The written dissent must clearly state the reason(s) for dissent, the rationale supporting the reason(s) for the dissent, and whether Examination requests a conference with the appropriate Appeals Area Director. See IRM 8.6.4.2.10(4), Disagreements with Appeals Determinations, for more information. Note: Formal dissents by Examination are not appropriate in a case settled by Appeals where "hazards of litigation" were considered in the settlement of the case. Appeals clearly identifies within the Appeals Case Memorandum (ACM) those cases resolved by considering the "hazards of litigation" . Note: The decision to hold a conference is at the discretion of the appropriate Appeals Area Director. If a conference is held, the parties must follow the ex parte communication guidelines set forth in Rev. Proc. 2012-18, Section 2.03(11). Dissents should be e-mailed to the appropriate Appeals Area Director via the *AP Formal Dissents centralized mailbox within the applicable timeframe. See IRM 8.6.4.2.10(5). Upon receipt of the dissent, the Appeals Area Director will determine whether Appeals will reply to the dissent. See IRM 8.6.4.2.10(6). Dissents, which occur only on closed cases, may also include a request to reopen a case. See IRM 8.6.4.2.10(7). The above procedures do not preclude the exchange of non-case specific information that occurs through advisory boards or between analysts in Examination and Appeals.
Docketed Case Examination Assistance
4.2.1.8.4 (11-23-2016) Docketed Case Examination Assistance Rev. Proc. 2016-22 describes the practices for the administrative appeals process in cases docketed in the United States Tax Court (Tax Court). See IRM 8.4.1, Procedures for Processing and Settling Docketed Cases, for additional information. These procedures do not apply to cases docketed in United States District Court or the United States Court of Federal Claims. Jurisdiction of a docketed case must remain with the Office of Chief Counsel (Counsel) or Appeals. Therefore, when Appeals receives "new information" (see IRM 4.2.1.8.4.1, New Information Received in Appeals) from a taxpayer, representative or counsel of record for a docketed case that merits analysis by Examination, Appeals can request examination assistance (EA). Appeals retains jurisdiction of the case while the new information is under review by Examination. Note: When Appeals receives new information in a non-docketed case, Appeals generally releases jurisdiction of the case and returns it to the originating function to examine the new information and make an audit determination. See IRM 8.2.1.7.2, Verification of New Material or Request for Further Development - ATE. Note: In docketed Tax Court cases, a power of attorney is not required from the counsel of record. An attorney who is admitted to practice before the court becomes the counsel of record by filing a petition or entering an appearance in the case. A counsel of record is authorized to act on behalf of the taxpayer in the court proceedings, access the tax information of the person they represent and represent the taxpayer before the Internal Revenue Service. In a case docketed in the Tax Court, anyone other than the counsel of record must be eligible to practice before the IRS and, to be recognized, must present a Form 2848, Power of Attorney and Declaration of Representative, or other power of attorney. Standardized docketed case EA procedures ensure: Examination is able to provide EA to Appeals by analyzing new information provided by petitioning taxpayers, consistent with its mission, and All petitioning taxpayers receive consistent treatment when they provide new information not previously made available to Examination. Examination Assistance from Certain Campus Functions. If the docketed case originated with IMF AUR or a Correspondence Examination group in Taxpayer Services or SB/SE, Appeals will generally refer the case and the new information to the originating function, unless the new information relates strictly to a penalty determined in the statutory notice of deficiency (SND) or does not relate to the issues determined in the SND.
New Information Received in Appeals
4.2.1.8.4.1 (11-23-2016) New Information Received in Appeals "New information" is information received in Appeals from the taxpayer, representative or counsel of record not previously made available to Examination for consideration prior to issuance of the IRS Notice, relating to issues: Previously examined, Raised in the petition, or Raised by the Government in its pleadings. Note: For this purpose, an IRS Notice includes a Notice of Deficiency, a Notice of Final Determination, Final Partnership Administrative Adjustment (FPAA), a Notice of Determination of Worker Classification, or any similar document that outlines the IRS' position on the particular tax matter and provides Tax Court rights. New information includes: New information, evidence, or documentation. A relevant new issue for which Counsel has provided advice indicating that the issue does not require a formal amendment to the Tax Court petition. A new theory or alternative legal argument presented by the taxpayer that warrants analysis by Examination before Appeals can fully evaluate the hazards of litigation. Note: Appeals must physically secure the new information and review it to determine if it merits analysis by Examination. Analysis may include categorizing, sorting or reviewing taxpayer records, or requiring additional steps or reasoning to reach a conclusion.
Examination Assistance Request Package
4.2.1.8.4.2 (11-23-2016) Examination Assistance Request Package Appeals will prepare an EA request package and forward it via encrypted email to the EA Point of Contact (EA POC) within the appropriate originating function. The EA request package will include the following electronic files: Form 14361, Docketed Examination Assistance Request – Jurisdiction Not Released, completed by Appeals. Form 14362, Docketed Examination Assistance Issues and Results, partially completed by Appeals and used by Examination to approve or deny the EA request and provide EA results to Appeals. IRS Notice and relevant attachments to the IRS Notice, if available. For EA requests on cases originating from a group in IMF AUR, or a Correspondence Examination group in Taxpayer Services or SB/SE, a scanned copy of the new information received from the taxpayer must be included with the EA request package. Note: There must be at least 60 calendar days remaining before the Tax Court calendar date on the date Appeals sends the EA request package. Appeals will use the EA Routing Instructions posted on the Appeals website to determine the correct EA POC based on guidance in IRM 4.2.1.8.4.5, Examination Assistance Point of Contact.
Examination Assistance Point of Contact Actions
4.2.1.8.4.3 (11-23-2016) Examination Assistance Point of Contact Actions Generally, within five (5) business days of receiving the EA request package from Appeals, the EA POC will review Form 14361 and Form 14362 to ensure: There are at least 45 calendar days from the date Appeals sent the request to the due date shown on Form 14361, Part F, Explanation. There are at least 60 calendar days from the date Appeals sent the request to the Tax Court calendar date shown on Form 14361, Part F. The issues to consider are identified on Form 14362, Part C, Issues and Results. The EA POC must communicate the decision to approve or deny the EA request to the Appeals Team Manager (ATM) within 30 calendar days or less. If the EA request is approved, the EA POC completes Form 14362, Part B, Examination Assistance Approved/Denied, indicating approval, and sends the digitally signed form to the ATM via encrypted email. The EA POC will personally provide the EA or assign and forward the EA request package to the examiner, via encrypted email. See IRM 4.2.1.8.4.5, Examination Assistance Point of Contact. If the EA request is denied, the EA POC completes Form 14362, Part B, by using the drop-down menu to indicate the reason the request was denied and sends the digitally signed form to the ATM via encrypted email. Note: If the EA POC denies an EA request, Appeals (concerned that a significant risk to taxpayer compliance exists) can elevate the EA request to the Appeals Area Director for discussion with the EA POC's manager.
Examiner Secures New Information and Related Case File
4.2.1.8.4.4 (11-23-2016) Examiner Secures New Information and Related Case File After the Appeals Technical Employee (ATE) is notified of the examiner assignment, they will promptly contact the examiner using available means (e.g., phone, email, Teams, etc.) to arrange for timely and efficient delivery of the new information and relevant administrative file information. Note: When the statutory notice was issued by a group in IMF AUR, or a Correspondence Examination group in Taxpayer Services or SB/SE, the ATE will not contact the assigned examiner to provide the new information, as the new information was included in the EA request package. The ATE and examiner will coordinate and agree upon a method of delivery of the new information and related administrative file information. The method of delivery may include, but is not limited to: Providing workspace in the Appeals office for the examiner to perform EA. Mailing/shipping using standard procedures, including Form 3210, Document Transmittal. Using available electronic means of transmitting information, such as encrypted email, Enterprise e-Fax (EEFax), etc. Note: The ATE will maintain physical possession of original tax returns, executed statute extensions, and required Tax Court-related documents. If the examiner needs any of these documents to perform the requested EA, the ATE will provide copies. If the examiner is providing EA in Appeals workspace, the ATE may provide the entire original administrative file to the examiner and secure the file from the examiner at the end of the business day.
Examiner Responsibilities
4.2.1.8.4.4.1 (11-23-2016) Examiner Responsibilities The examiner must: Appropriately charge time for EA activities. LB&I and SB/SE field examiners must charge time to activity code 822, Details out of Industry or Area to: Appeals Division. Campus correspondence examiners must charge time and volume to Organization Function Program (OFP) code 91969. Campus AUR examiners must charge time to the applicable OFP code. Complete the assigned EA by the due date specified on Form 14361, Part F. Note: Examiners can request additional time to complete the EA, but Appeals can deny the request and require the immediate return of the EA package based on the needs of the case (e.g., Tax Court calendar date, Counsel requests return of case for trial preparation, etc.) Review and analyze the EA issues using the information received from Appeals. Caution: The examiner must not contact the taxpayer, representative or counsel of record without the written concurrence (i.e., email) of the assigned Counsel attorney; see IRM 4.2.1.8.4.4.1 (3). Note: If the new information affects a related FBAR case, consult with an Operating Division FBAR Coordinator. Prepare workpapers to support the EA findings (as applicable). Record the findings and EA time charged on Form 14362, Part C. Note: The ATE will have entered the issues to be addressed on Part C of Form 14362, including the issue name, year/period, and per return amount. The examiner must enter the corrected amount, adjustment and explanation. Complete Form 14362, Part D, Examiner's Information. Obtain manager's approval, if required, on Form 14362, Part E, Manager's Approval. Send the approved Form 14362 and any related electronic workpapers to the ATE via encrypted email or other electronic method agreed upon by the ATE and examiner. Return applicable items to the ATE. See IRM 4.2.1.8.4.4.2, Examiner Returns New Information and Related Case File. Conduct any communications with Appeals in accordance with the ex parte rules. Appeals will invite the taxpayer, representative or counsel of record to participate in any substantive discussion of the disputed issues between Exam and Appeals. See IRM 4.2.7, Ex Parte Communication Procedures. Note: Appeals will issue Letter 4642, Docketed Case Examination Assistance, to inform the taxpayer, representative or counsel of record that Appeals requested EA from Examination and will\ share any information provided by Examination with the taxpayer, representative or counsel of record for review and comment. The examiner must not: Prepare tax computations or create an examination report. Issue an IDR. See IRM 4.2.1.8.4.4.1 (3). Provide a summary of the results to the taxpayer, representative or counsel of record. Provide any assurances as to the final tax impact of the EA to the taxpayer, representative or counsel of record, as Appeals may base final settlement on additional factors, such as the hazards of litigation. Pursue the development of any issues not currently before the Tax Court for the specific case without written concurrence (i.e., email) of the assigned Counsel attorney. Although not required, the examiner has the discretion to: Contact the assigned Counsel attorney at any time during the EA process. Note: Appeals will identify the assigned Counsel attorney on Form 14361 Part E, Area Counsel Contact Information. If the assigned Counsel attorney is not identified on Form 14361, the examiner should contact the ATE for the identity of the assigned Counsel attorney. Verbally ask questions or request additional information from the taxpayer, representative or counsel of record to clarify the new information received from Appeals but only after receiving the written concurrence (i.e., email) of the assigned Counsel attorney. To avoid potential Tax Court discovery issues, the examiner must not issue an information document request (IDR). The examiner must document the conversation as well as information requested, date requested, date due, and requested method of delivery on Form 9984, Examining Officer's Activity Record, or a workpaper. Caution: If the examiner opts to interact with the taxpayer, representative or counsel of record as outlined above, the examiner must first contact the assigned Counsel attorney to secure the name of the appropriate party for such interaction in writing (i.e., email). Note: Prior to requesting EA, the ATE will inform the taxpayer, representative or counsel of record of the critical importance of providing all information in support of their position to the ATE at the beginning of the Appeals process. Appeals will only request EA once on a case; therefore, the taxpayer, representative or counsel of record should have provided all necessary information to the ATE prior to the examiner receiving the EA request.
Examiner Returns New Information and Related Case File
4.2.1.8.4.4.2 (11-23-2016) Examiner Returns New Information and Related Case File All administrative case file information including original documents and electronic files (e.g., CD-ROM, flash drive, etc.) provided by the taxpayer, representative, or counsel of record through the ATE to the examiner must be returned to the ATE in the manner they were received. Note: Information provided to the examiner electronically (e.g., email, Skype, etc.) does not need to be returned to the ATE since the ATE has the original documents. The examiner must not provide Appeals with any new information received and retained by the examiner from the taxpayer, representative, or counsel of record during the EA. The examiner must not use Form 3210 to track and acknowledge receipt of information returned to the ATE.
Examination Assistance Point of Contact
4.2.1.8.4.5 (11-23-2016) Examination Assistance Point of Contact Appeals will use the EA Routing Instructions posted on the Appeals website to determine the correct EA POC. The following table provides the general business rules for determining the EA POC by Primary Business Code (PBC). Primary Business Code Originating Function and EA POC Information 190—195 Taxpayer Services Campus Cases—Forward EA requests to the appropriate, designated Campus Liaison (CL). Depending on the specific Campus (by PBC) there may be different CL EA POCs for the following programs: ASFR—Automated Substitute for Return CORR—Campus Correspondence Examination EITC—Earned Income Tax Credit The CL will review and approve/deny the initial request. If approved, the CL may personally provide the EA or assign the EA work to another examiner. 201—207 SB/SE Field Examination Cases—Forward to the appropriate, designated EA POC as follows (based upon information in the case file and AIMS/IDRS): If the Exam group is known, the EA POC will be the current Exam group manager. If approved, the EA POC may assign the EA to the original examiner or another examiner. If the Exam group no longer exists or cannot be determined, the EA POC will be the Territory Manager. If the Territory no longer exists or cannot be determined, Appeals will contact the Area PSP office for assistance in determining where to route the EA request. The Area PSP will not decide whether to approve or deny the EA request. 212 SB/SE Field Employment Tax Cases—Forward to the appropriate, designated EA POC as follows (based upon information in the case file and AIMS/IDRS): If the Exam group is known, the EA POC will be the current Exam group manager. If the Exam group no longer exists or cannot be determined, the EA POC will be the Territory Manager. If the Territory no longer exists or cannot be determined, the EA POC will be the Chief Employment Tax. 213 SB/SE Field Estate & Gift Tax Cases—Forward to the appropriate, designated EA POC as follows (based upon information in the case file and AIMS/IDRS): If the Exam group is known, the EA POC will be the current Exam group manager. If the Exam group no longer exists or cannot be determined, the EA POC will be the Territory Manager. If the Territory no longer exists or cannot be determined, the EA POC will be the Chief, Estate and Gift. 214 SB/SE Field Excise Tax Cases—Forward EA requests to the appropriate, designated PBC 214 (Excise Tax) EA POC. If the Exam group is known, the EA POC will be the current Exam group manager. If the Exam group no longer exists or cannot be determined, the EA POC will be the Territory Manager. If the Territory no longer exists or cannot be determined, the EA POC will be the Chief Excise Tax. 217 SB/SE Field Bank Secrecy Act Cases—Forward EA requests to the appropriate, designated PBC 217 (Bank Secrecy Act) EA POC. If the Exam group is known, the EA POC will be the current Exam group manager. If the Exam group no longer exists or cannot be determined, the EA POC will be the Territory Manager. If the Territory no longer exists or cannot be determined, the EA POC will be the Chief Bank Secrecy Act. 295—299 SB/SE Campus Cases —Forward EA requests to the appropriate, designated CL. Depending on the specific Campus (by PBC) there may be different CL EA POCs for the following programs: ASFR—Automated Substitute for Return AUR—Automated Underreporter CORR—Campus Correspondence Examination EITC—Earned Income Tax Credit The CL will review and approve/deny the initial request. If approved, the CL may personally provide the EA or assign the EA work to another examiner. 3XX LB&I Examination Cases—Forward EA requests to the appropriate, designated EA POC as follows (based upon the PBC): If the Examination Group Code is known, the EA POC will be the current Examination/Compliance Manager (Group/Team Manager). If the Examination group no longer exists or cannot be determined, the EA POC will be the Compliance Territory Manager. If the Territory no longer exists or cannot be determined, Appeals will contact the Compliance Function Director Field Operations (DFO) for assistance in determining where to route the EA request. The DFO will not decide whether to approve or deny the EA request.
New Issues Raised by Counsel
4.2.1.9 (04-23-2014) New Issues Raised by Counsel In general, Counsel will not raise new issues, unless the grounds are substantial and the potential effect on tax liability is material. See Chief Counsel Directives Manual (CCDM) 35.4.1.2, Raising New Issues in Tax Court Cases.
Litigation Affecting the IRS
4.2.1.10 (04-23-2014) Litigation Affecting the IRS The legal work of the IRS is performed by the Office of Chief Counsel. Referrals to the Associate Area Counsel office should be considered in unrelated tax issue matters.
Notification to Area Counsel in State Court Suits
4.2.1.10.1 (04-23-2014) Notification to Area Counsel in State Court Suits The IRS ordinarily will not intervene in litigation in state courts between private litigants even though the purpose of the parties is to obtain a decree or judgment affecting the federal tax liability of one or the other of the parties to the litigation. In those cases arising in state courts between private litigants, to which officials of the IRS have not been made a party but which may have a direct bearing upon the construction of an internal revenue code, or upon the government's title or right to possession to property which has been seized, the IRS may intervene or take other appropriate steps in connection with the proceeding. See IRM 1.2.1.5.8, Policy Statement 4–10, Service ordinarily will not intervene in litigation in State courts between private litigants; exceptions provided, and CCDM 34.6.2.6, Intervention. When pending proceedings come to the attention of examiners, a memorandum report of the proceeding should be made to the Associate Area Counsel office. Area Counsel will determine whether the IRS should intervene or take any steps in connection with the proceeding.
Suits for Recovery of Erroneous Refunds
4.2.1.10.2 (04-23-2014) Suits for Recovery of Erroneous Refunds Examiners may determine a taxpayer erroneously received a payment of money in the form of a tax refund. IRC 7405 provides that any portion of tax which has been erroneously refunded may be recovered by civil action. IRC 6532(b) provides that a general suit under IRC 7405 may be brought within two years. Begin computing the two-year period from the day after issuance of the refund check or the date the direct deposit cleared. Examiners should contact Chief Counsel, Procedure and Administration, if there is a potential statute problem. If any part of the refund was induced by fraud or misrepresentation of a material fact, suit may be brought at any time within five years from the day after issuance of the refund check or the date the direct deposit cleared. See IRM 5.1.8.8.1.1.2, Unassessable Erroneous Refunds, and IRM 21.4.5.15, Collection Methods for Category D Erroneous Refunds, for additional information. Assessable erroneous refunds may also be recovered by administrative action within the applicable period of limitation upon assessment and collection. The type of tax involved is determinative of the type of administrative action available. Ordinarily, recovery by suit is utilized because administrative recovery is barred by the statute of limitations on assessment. Any contemplated collection activity based on administrative recovery should be coordinated with Counsel. The erroneous refund suit is limited to erroneously refunded amounts that exceed the litigating threshold established by the Department of Justice (DOJ). A recommendation for an erroneous refund suit to the Associate Area Counsel should be accompanied by the administrative file, a copy of any request made to the taxpayer for voluntary payment, a copy of the taxpayer's refusal to make voluntary payment, transcript of account, and a narrative report containing the following information: The type of tax involved and the amount of money expected to be recovered. The date the period of limitations on collection will expire. A brief statement that administrative remedies are impractical or have been exhausted, including the reasons that administrative actions have not been effective. Facts, evidence, and other matters necessary for development of the case. Brief personal history of the taxpayer or other facts that might have a bearing on the suit. Location of the principal executive office, date of incorporation, state of incorporation, and the name and address of the statutory agent for service if the taxpayer is a corporation. A statement of the exact legal premise for recovery of the erroneous refund. After the narrative report and other related documents are prepared, the examiner must submit the entire case file to the group manager for review. If the manager agrees, the case must be referred to Area Counsel using locally established procedures. For example, the manager may request Technical Services conduct a further technical review and prepare the advisory request, or an area may have an agreement with its Area Counsel and Technical Services to send requests for technical assistance directly to Area Counsel (Technical Services should receive a copy of the request if bypassed).
Assistance to Chief Counsel or U.S. Attorney
4.2.1.11 (08-24-2017) Assistance to Chief Counsel or U.S. Attorney When examiners are needed to assist Area Counsel or the Office of the United States Attorney, the Area Director will honor requests and assign an examiner to provide the services needed in the litigation of cases. Examiners must not discuss the merits of the case with the taxpayer or the taxpayer's attorney when consulting with them or examining pertinent books and records. Every effort must be made to comply with a request by the date specified. If is not possible to comply with the request for assistance, the party who initiated the request must be notified.
Chief Counsel or U.S. Attorney Requests for Civil Suit Data
4.2.1.11.1 (04-23-2014) Chief Counsel or U.S. Attorney Requests for Civil Suit Data In suits initiated by or against the IRS, the Disclosure Office or Field Collection-Advisory receives and processes requests from U.S. Attorneys or Chief Counsel for data or documents. Basic data in refund suits, other than suits involving Trust Fund Recovery Penalty assessments, is requested directly from the campus. For additional information, see IRM 25.3.6.1.1.1, Types of Litigation Controlled by CEASO Advisory. A DOJ attorney may request assistance prior to or during a trial resulting in Counsel requesting a supplemental investigation by an examiner. See CCDM 34.7.1.2.2, When Supplemental Investigation Is Warranted. The request may be formal or informal. If formal, Counsel will request a supplemental investigation by preparing a memorandum to the Area Director (or comparable level of management) for the area in which the case arose. See CCDM 34.7.1.2.3, Procedure for Supplemental Investigation. Electronically stored information (ESI) is subject to discovery in litigation if it is relevant to the case. ESI includes, but is not limited to, email and other electronic communications, word processing documents, spreadsheets, electronic calendars, telephone logs, Internet usage files, metadata, voice mail, text messages, and network access information. For additional information regarding ESI, see IRM 25.3.1.7, Preserving Electronically Stored Information (ESI) In Litigation Cases.
Awards of Litigation and Administrative Costs in Tax Cases
4.2.1.12 (04-23-2014) Awards of Litigation and Administrative Costs in Tax Cases IRC 7430 provides for the award of costs, attorneys' fees and other expenses to a "prevailing party" in any civil tax action brought in a federal court of the United States, if the taxpayer has met the requirements of IRC 7430(b) and the IRS does not establish that its position was "substantially justified" . The position of the IRS will be "substantially justified" if it had a reasonable basis both in law and in fact. A party who meets the requirements of IRC 7430(b) may also qualify as a "prevailing party" if the liability of the taxpayer as determined by a judgment in the proceeding is equal to or less than the liability of the taxpayer which would have been determined if the United States had accepted a qualified offer of the party under IRC 7430(g) and none of the exceptions of IRC 7430(c)(4)(E)(ii) apply. If the qualified offer rule applies, a showing of substantial justification by the United States does not preclude the taxpayer from receiving an award under IRC 7430. This paragraph is not applicable to litigation in state courts. The law also applies to taxpayer suits for refunds as well as a wide variety of litigation such as suits to reduce a tax claim to judgment, to enforce a levy, to foreclose a tax lien, to recover an erroneous refund, to establish transferee liability, or to enforce a summons. The law provides that an award may be made only if the taxpayer has exhausted all available administrative remedies within the IRS, did not unreasonably protract the proceeding, has substantially prevailed with respect to the amount in controversy or has substantially prevailed with respect to the most significant issue or set of issues presented, and satisfies the net worth requirements. Even if the taxpayer satisfies all of the above requirements, the taxpayer will not be treated as the prevailing party if the United States establishes that the position of the United States in the proceeding was substantially justified, unless the qualified offer rule of IRC 7430(c)(4)(E) applies. IRC 7430 also allows a taxpayer who prevails before the IRS in an administrative proceeding to request reimbursement of reasonable administrative costs incurred in defending the taxpayer's position. Taxpayers must file their requests with the IRS personnel who have jurisdiction over the tax matter underlying the claim for costs. If the taxpayer does not know who has jurisdiction over the tax matter, the taxpayer may send the request to the IRS office that considered the underlying matter. See Treas. Reg. 301.7430-2(c)(2). Administrative cost awards under IRC 7430 are considered by Appeals in non-docketed cases. Therefore, requests for IRC 7430 administrative cost awards in non-docketed cases should be routed to the Appeals office personnel who considered the taxpayer's matter. Administrative cost awards under IRC 7430 are considered by Counsel in docketed cases. Therefore, requests for IRC 7430 administrative cost awards in docketed cases should be routed to Counsel. Regardless of whether the case is docketed or non-docketed, all requests for IRC 7430 administrative cost awards with respect to an administrative proceeding related to requests for damages for Bankruptcy Code violations should be routed pursuant to the instructions in Treas. Reg. 301.7430-2(c)(2). There is no IRS form for requesting an IRC 7430 administrative cost award. Taxpayers and their representatives may file a request for an IRC 7430 administrative cost award by mailing a letter or Form 843, Claim for Refund and Request for Abatement, to the IRS. If the examiner is unsure if a Form 843 is requesting an IRC 7430 administrative cost award, they should consult with the lead or group manager. Note: Taxpayers must file a motion with the Tax Court consistent with Tax Court Rule 231 for reimbursement of litigation costs.
Statute Expiration Reports
4.2.1.13 (04-23-2014) Statute Expiration Reports A statute expiration report is required when the period for assessment or the assessment period that was extended by consent has expired. See IRM 25.6.1.13, Barred Assessments/Barred Statute Cases, for guidance and a list of exceptions to the reporting requirement. SB/SE area office employees should refer to IRM 25.6.1.13.2.8, Statute Expiration Reporting Responsibilities and Procedures for SB/SE Area Office Involved Directly With or Providing Support for Tax Return Examinations, for guidance. LB&I field operations and campus employees should refer to IRM 25.6.1.13.2.9, Statute Expiration Reporting Responsibilities and Procedures for LB&I Field Operations and LB&I Campus Employees, for guidance. Taxpayer Services campus examination employees should refer to IRM 25.6.1.13.2.7.2, Responsibilities of Taxpayer Services Examination Operations at Campuses, for guidance.
Taxpayer Notification of Assessment Statute Expiration and Acceptance of Voluntary Payments on Expired Statute Returns When Taxpayer Was Contacted for Examination
4.2.1.14 (09-23-2022) Taxpayer Notification of Assessment Statute Expiration and Acceptance of Voluntary Payments on Expired Statute Returns When Taxpayer Was Contacted for Examination IRM 1.2.1.5.20, Policy Statement 4-65, Voluntary payment of barred deficiency or account shall not be solicited, provides that the IRS shall not make any effort, real or implied, to solicit voluntary payments of a deficiency or taxpayer delinquent account barred by statute. However, payments made by the taxpayer completely of their free will shall be accepted. Taxpayers must be notified in writing of assessment statute expiration if they were contacted for examination. The appropriate notification letter depends on whether a deficiency can be determined. See IRM 4.2.1.14.1, Guidelines for Cases with Expired Statutes Where the Deficiency Cannot Be Determined, and IRM 4.2.1.14.2, Guidelines for Cases with Expired Statutes Where the Deficiency Can Be Determined or there is No Change to Tax, for additional guidance. The responsibilities for preparing the notification letter, mailing and routing are the following: The undated notification letter, signed by the designated manager within the responsible Area, along with the completed Form 3999, Statute Expiration Report, are forwarded to the Area Director (or comparable level of management) via second-level management. The Area Director (or comparable level of management) signs the Form 3999 and the letter is date-stamped and mailed by their secretary or staff assistant. The date of taxpayer notification is entered in Box 7 of Form 3999. A copy of the notification letter and the Form 3999 are forwarded back to the manager via second-level management. The Area Director (or comparable level of management) retains a copy of the Form 3999 and the applicable taxpayer notification letter. The final Form 3999 and a copy of the taxpayer notification letter are sent forward to the Director, Examination (or comparable level of management). In multi-year and related examinations, it is not necessary to separately process the year in which the statute expired. The return can follow the case file through the normal examination process. However, a copy of the final approved Form 3999 must be in the case file.
Guidelines for Cases with Expired Statutes Where the Deficiency Cannot Be Determined
4.2.1.14.1 (04-23-2014) Guidelines for Cases with Expired Statutes Where the Deficiency Cannot Be Determined If the examination has not reached the point where the deficiency can be determined, prepare Letter 5318, Deficiency Case Discontinued Due to Statute Expiration-Deficiency Undetermined. Letter 5318 explains that the examination has been discontinued because the statutory period in which the IRS can legally issue a refund or assess a deficiency has expired.
Guidelines for Cases with Expired Statutes Where the Deficiency Can Be Determined or there is No Change to Tax
4.2.1.14.2 (04-23-2014) Guidelines for Cases with Expired Statutes Where the Deficiency Can Be Determined or there is No Change to Tax If the deficiency can be determined or the case is a no-change, prepare Letter 5321, Deficiency Case Discontinued Due to Statute Expiration-Deficiency Determined, and an unagreed or no-change examination report. The report can be a copy of a report previously furnished to the taxpayer, a revision of that report or an initial report prepared after statute expiration. However, adjustments that give the taxpayer a beneficial "double deduction" are prohibited as discussed in 26 CFR 1.161-1, e.g., capitalizing an item previously expensed and allowing a depreciation deduction in subsequent years. IRC 6401(a) provides that the term overpayment includes any payment of any internal revenue tax which is assessed or collected after the expiration of the period of limitation applicable. It will generally be possible for the taxpayer to file a timely claim within two years and have any payment refunded. This permits a double deduction if a report includes issues that involve subsequent returns. See IRM 4.10.8.12.2, Unagreed Report Forms, for guidance on unagreed reports. The report should reflect the deficiency or no change to tax resulting from issues that have been developed to a point where the IRS's position is reasonably sound. Letter 5321 advises the taxpayer "you have no legal obligation to pay the amount shown on the enclosed report." Note: To show the statute has expired and the taxpayer is under no legal obligation to pay the deficiency, include the following statement in the "Other Information" section of the report: "You will not be assessed a deficiency for (year) and are under no obligation to pay the deficiency shown on this examination report." The purpose of the report is to help the taxpayer in filing subsequent returns and to furnish the amount of the deficiency if the taxpayer elects to make a voluntary payment.
Guidelines for Cases with Expired Statutes Where the Taxpayer Makes a Voluntary Payment
4.2.1.14.3 (04-23-2014) Guidelines for Cases with Expired Statutes Where the Taxpayer Makes a Voluntary Payment If the taxpayer inquires about making a voluntary payment, they should be informed the payment will be accepted and can be mailed to the office contacted. The subject of voluntary payments should not be discussed unless the taxpayer inquires about voluntary payments. If the taxpayer makes a voluntary payment: Prepare and process Form 3244-A, Payment Posting Voucher-Examination, treating the payment as an advance payment. See IRM 4.20.1.3.1.2, Complete Form 3244-A, Payment Posting Voucher, and IRM 4.70.14.2.1.4.8.3, Completing Form 3244-A for IRC 6603 Deposits. Prepare Form 3198, Special Handling Notice for Examination Case Processing, following the instructions in IRM 25.6.1.13.2.8.3(1), Closing Cases Involving Expired Statute Returns, and submit the case for normal processing. Voluntary payments are sent to Excess Collection File. Prepare and issue Letter 5319, Deficiency Case-Voluntary Payment Received After Statute Expiration, acknowledging receipt of the payment.
Processing Returns and Accounts of the President and Vice President
4.2.1.15 (04-23-2014) Processing Returns and Accounts of the President and Vice President The individual income tax returns for the President and Vice President are subject to mandatory examinations and cannot be surveyed. See IRM 3.28.3.5.3, Mandatory Examination. Copies of the returns to be examined will be transmitted by the Chief Tax Compliance Officer to the SB/SE, Director, Examination. The area responsible for the examination will be determined by the SB/SE, Director, Examination or their designee. After a determination is made as to the area having jurisdiction, copies of the returns will be transmitted to the area planning and special programs (PSP) territory manager for control and assignment to the appropriate field group. The transmittal memorandum will contain the following instructions: Regardless of discriminant index function (DIF) score, the returns will be examined. IRS personnel, including specialists, will be assigned to the examination as appropriate. The Examination Area Director, or their designee, will arrange for contact with the authorized representative of the President and or Vice President for the examination. All relevant IRM procedures will apply to these returns. Upon receipt, the group should ensure Project Code 0207, Treasury Mandates, and Source Code 46, have been input for the primary and any prior or subsequent year returns. The returns must be assigned within 10 business days of receipt in the group. The returns require expeditious handling at all levels to ensure prompt completion of the examinations. Related returns, including estate and gift tax returns, will be handled in accordance with procedures relating to all taxpayers. The location of the returns of the President and Vice President will be monitored at all times throughout the examination process. The returns should be kept in an orange folder at all times. The returns should not be exposed to viewing by other employees. The returns should be locked in a secure drawer or cabinet when the examiner is away from the work area. The returns should be processed similar to the examination of an employee return per IRM 4.2.6, Examination of Employee Returns, with the exception of the following: The returns of the President and Vice President are mandatory examinations and cannot be surveyed. The returns are subject to mandatory review and must be closed directly to the Employee Audit Reviewer in Baltimore Technical Services. The "Other" box in the "Forward to Technical Services" section of Form 3198 must be checked and the examiner should notate "President (or Vice President) Examination; Forward to Baltimore Technical Services." The examining area will notify Baltimore Technical Services when the return is being forwarded. Baltimore Technical Services will provide Centralized Case Processing (CCP) with advance notice when the return is being closed.
Blind Trust Income Tax Returns Filed by Presidential Appointees
4.2.1.16 (04-23-2014) Blind Trust Income Tax Returns Filed by Presidential Appointees Taxpayers who are presidential appointees are permitted to file their individual income tax returns through a trustee of a blind trust. IRM 4.11.55.1.6, Terms, defines a blind trust as a device used to give management of one's investments to an outside person over whom the beneficiary has no control. Extreme caution should be exercised not to violate a blind trust. All correspondence, inquiries, etc., should be directed to the authorized trustee unless the power of attorney indicates otherwise. No information regarding the source or nature of a blind trust can be disclosed. See IRM 3.28.3.6.1, General Information and Instructions, and Rev. Proc. 2010-11, for additional information.
Reporting Allegations of Tax Violations Involving Senior Treasury Officials
4.2.1.17 (04-23-2014) Reporting Allegations of Tax Violations Involving Senior Treasury Officials Allegations of income tax evasion or allegations concerning the willful failure to file any tax return by a senior Treasury official where prosecution is recommended, where the fraud penalty under IRC 6663 is asserted, or the fraudulent failure to file penalty under IRC 6651(f) is asserted when prosecution is not recommended, will be reported to the Commissioner of Internal Revenue. The Commissioner of Internal Revenue will immediately report the allegations to the Deputy Secretary of Treasury or to the Secretary of Treasury. Note: For a definition of "Treasury Department" or "Senior Treasury Official" see Exhibit 4.2.1-1., Table of Terms.
Compliance Examination Procedures
4.2.1.17.1 (04-23-2014) Compliance Examination Procedures Upon recommending the assertion of the fraud penalty under IRC 6663 or the fraudulent failure to file penalty under IRC 6651(f) (for a "senior Treasury official" ) where prosecution has not been recommended by the CI function, the territory manager will provide the Area Director (or comparable level of management) with a memorandum, for forwarding through channels, to the Commissioner of Internal Revenue. The memorandum will contain the following information: Taxpayer name, residence address, and social security number. Taxpayer position, now held, which qualifies them as a "senior Treasury official." Brief summary of the findings and the tax years involved. Additional civil taxes and penalties.
Reporting Misconduct of IRS Employees or Officials
4.2.1.18 (09-10-2025) Reporting Misconduct of IRS Employees or Officials All information received concerning misconduct of IRS employees or officials must be reported to TIGTA via the local TIGTA office or by a report to the TIGTA hotline using one of the following methods: Online— the preferred contact method for non-emergency reports is through the online web form process found at: Report a Crime or IRS Employee Misconduct Telephone—1-800-366-4484 Mail— Treasury Inspector General for Tax Administration (TIGTA) Hotline Team P.O. Box 23291 Washington, DC 20026-3291
Income Tax Bonds Under IRC 332(b) and IRC 905(c)
4.2.1.19 (04-23-2014) Income Tax Bonds Under IRC 332(b) and IRC 905(c) A bond for the purpose of securing payment of internal revenue taxes is collateral security offered by the taxpayer, representative or a third party, which satisfies the provisions of IRC 7101 and 26 CFR 301.7101–1. If an IRC 332(b) liquidation is not completed within a single year, the recipient corporation must sign a waiver of the statute of limitations on assessment and may be required to file a bond. The recipient corporation must waive the statute of limitations on assessment for each year that falls wholly or partly in the liquidation period. Form 952, Consent to Fix Period of Limitation on Assessment of Income Taxes, is used to extend the period of assessment of all income taxes of the receiving corporation on the complete liquidation of a subsidiary under IRC 332. See 26 CFR 1.332-4. Under a three year corporate liquidation plan, the recipient corporation may be required to file a bond in case nonrecognition treatment is later lost. See 26 CFR 1.332-4(a)(3). Under IRC 905(c) and 26 CFR 1.905-2(c), in the case of a credit sought for a tax accrued but not paid, the district director, as a condition precedent to the allowance of a credit, may require a bond from the taxpayer, in addition to Form 1116 or 1118. If such a bond under IRC 905(c) is required, Form 1117, Income Tax Surety Bond, shall be used by an individual or by a corporation. It shall be in such sum as the Commissioner may prescribe and shall be conditioned for the payment by the taxpayer of any amount of tax found due upon any redetermination of the tax made necessary by such credit proving incorrect, with such further conditions as the district director may require. This bond shall be executed by the taxpayer, or the agent or representative of the taxpayer, as principal, and by sureties satisfactory to and approved by the Commissioner. No period of limitations is established under either IRC 905(c) or IRC 6501(a) for the furnishing of a bond requested pursuant to IRC 905(c) for a foreign tax credit based on an accrual of a foreign tax. Such bond may be required from a taxpayer at any time and the foreign tax credit may be disallowed without regard to any period of limitations if a taxpayer refuses to furnish the bond. See Rev. Rul. 73-573. If IRC 332(b) or IRC 905(c) issues are present, examiners should contact their Area Counsel for help in determining whether to secure a bond and what the terms should be. Any bonds secured must be held by Collection Advisory. See IRM 5.6.1, Collateral Agreements and Security Type Collateral, and IRM 5.6.2, Maintenance, for additional information.
Property Blocked by Foreign Funds Control or Vested by Office of Foreign Assets Control
4.2.1.20 (04-23-2014) Property Blocked by Foreign Funds Control or Vested by Office of Foreign Assets Control The Office of Foreign Assets Control (OFAC) of the Department of Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States. OFAC acts under Presidential national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under U.S. jurisdiction. On September 24, 2001, the President of the United States issued an executive order that immediately froze U.S. financial assets of and prohibited U.S. transactions with 27 different entities. These entities include terrorist organizations, individual terrorist leaders, a corporation that serves as a front for terrorism, and several nonprofit organizations. Treasury Directive (TD) 15-43 (May 3, 2007, reaffirmed September 8, 2011) delegates to the Commissioner of Internal Revenue the authority of the OFAC to investigate and review for compliance with economic sanctions programs persons that the IRS has the authority to examine for compliance with the Bank Secrecy Act provisions in Title 31 (31 U.S.C. 5311 et seq.). The authority to investigate and review includes, but is not limited to, the authority to compel the production of documents and information and otherwise to examine a person's compliance with OFAC-administered economic sanctions. IRM 1.2.2.5.36, Delegation Order 4-47 (New), Compliance Reviews of Economic Sanctions Program, addresses the Commissioner of Internal Revenue's authorization under TD 15-43 with respect to conducting reviews for compliance with economic sanctions programs. Information regarding blocked property of aliens and foreign corporations may be obtained from records located in OFAC. When such information is requested by area offices, a request detailing the desired information must be forwarded to the SB/SE Area Director. Requests should contain clear instructions on what is requested and why. OFAC collects the information for bank regulatory purposes and needs to know who will be the end user of the information and how the information will be used; e.g., by a revenue agent to conduct an examination. Make the request in a letter sent to the address listed on the contacts page of the Office of Foreign Assets Control website and include the subject line "Records Request from Federal Agency" .
Office of Foreign Assets Control (OFAC) Information
4.2.1.20.1 (04-23-2014) Office of Foreign Assets Control (OFAC) Information Information obtained from the records of OFAC with respect to blocked accounts must be considered to be of a confidential nature and the source thereof must not be disclosed to taxpayers or their representatives, nor will such information be used in any legal proceeding without written authorization from headquarters. OFAC will pay all taxes legally assessed against a former owner whose property has been vested by that office if the tax is attributable to taxable income accruing prior to the date of vesting. This is conditional upon a proper determination of the taxes, where there is no non-vested property from which the taxes may be realized, and there are vested funds available for payment of the taxes.
Investigation and Disposition
4.2.1.20.2 (04-23-2014) Investigation and Disposition Investigation of returns must be made under the general procedure prescribed for investigation of income tax returns. If the owner has property vested by OFAC, any deficiency in tax liability arising from income realized prior to vesting or from income earned on non-vested property must be asserted under the general prescribed procedures. Preliminary (30-day) letters or statutory notices of deficiency in cases where communication cannot be had with the owner or representative, should be addressed in care of the party or agency having custody of the property. Under war conditions, such address may be treated as the taxpayer's last known address. If all the property of the owner has been vested, the preliminary (30-day) letter, as well as the statutory notice of deficiency, should be addressed to the owner, in care of Justice Dept., Civil Division, Office of Foreign Assets Control. Visit the Office of Foreign Assets Control website for additional information on the OFAC. If the owner of the property or the party having custody of the property (in situations in which the property has not been vested by OFAC) does not agree to any proposed deficiencies, the parties will have the right to a protest. Any reasonable request for an extension to the 30-day letter should be given favorable consideration, provided the interests of the government are adequately protected. If Appeals consideration is not requested, the case file must be forwarded to the LB&I, Withholding, Exchange and International Individual Compliance (WEIIC) PSP program manager. The file must include the audit report and a statement of reasons why an agreement was not reached. In cases where agreements were concluded in vested cases, the file must be noted to assess in the name of the OFAC, for the former owner. Likewise, agreed assessments in non-vested cases must be made in the name of the owner in care of the person, party, or agency having custody of the property.
Payor Failure to Withhold Tax at Source
4.2.1.20.3 (04-23-2014) Payor Failure to Withhold Tax at Source In cases of blocked or vested property, where it is determined the payor failed to withhold tax at the source on income, the amount required by statute to be withheld will be asserted against the payor agent. In cases where it is determined that income arising, but not paid, prior to blocking or vesting was turned over to OFAC without withholding, the liability of the payor agent for withholding must be promptly reported to the LB&I, Withholding, Exchange and International Individual Compliance PSP program manager for adjustment.
Witness Security Program
4.2.1.21 (09-23-2022) Witness Security Program Federal agencies have always recognized a duty to protect informants and witnesses from threats or possible danger resulting from their assistance to the government by furnishing information or by testifying on behalf of the government in the prosecution of individuals. See IRM 9.5.11.11, Protection and Maintenance of Informants and Witnesses. The IRS has the authority to temporarily protect an informant or witness until a determination is made by the DOJ that the person qualifies for protection under its Witness Security Program. The IRS has the authority to approve all confidential expenditures for other protective arrangements undertaken by the IRS for an informant or witness who does not qualify for or is refused protection under the DOJ's Witness Security Program, in an investigation which is not under jurisdiction of the U.S. Attorney's Office. Examination personnel who become aware of or have indications that the taxpayer assigned may be a person in the Witness Security Program must immediately suspend the examination. No subsequent attempts by examination employees will be made to contact a protected witness. The examiner must prepare a memorandum addressed to the territory manager detailing the following facts and circumstances: Any examination action taken to date. Facts indicating that the taxpayer is enrolled in the Witness Security Program. Relevant facts involved in the tax matter, e.g., ear under examination, information needed, etc. After the group manager and territory manager (TM) review and approve the memorandum, the TM must email the memorandum to the SB/SE Witness Security Coordinator (WSC) at the following email address *SBSE Witness Security Coordinator. The SB/SE WSC works in Small Business/Self-Employed, Deputy Commissioner, Collection / Operation Support, Office of Fraud Enforcement. The WSC is the liaison between the IRS and the United States Marshall Service. Upon receipt by an IRS employee of information alleging a threat or possible danger to a past or present government informant or witness or family member, as a result of furnishing information or otherwise cooperating with the government, the employee must email the information immediately to the WSC at *SBSE Witness Security Coordinator.
Taxpayer Advocate Program
4.2.1.22 (05-29-2019) Taxpayer Advocate Program The Taxpayer Advocate Service (TAS) helps taxpayers resolve problems with the IRS and recommends changes to prevent problems through two types of advocacy—case-related and systemic. See IRM 13.10.1.3(3), Philosophy of Advocacy. TAS has identified criteria that qualify taxpayers for TAS assistance. TAS Criteria 1-9 reflect situations requiring acceptance of taxpayer cases to be worked by TAS. TAS refers to Criteria 1-4 as "Economic Burden" cases, Criteria 5-7 as "Systemic Burden" cases, Criteria 8 as "Best Interest of the Taxpayer" cases, and Criteria 9 as "Public Policy" cases. See IRM 13.1.7.3, TAS Case Criteria. All inquiries meeting TAS criteria should be documented on Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), and forwarded to TAS by the most expeditious method available. Note: If the taxpayer specifically requests TAS assistance, the case should be referred to the Local Taxpayer Advocate (LTA). Problems that meet TAS criteria must not be sent to TAS if they can be immediately resolved by the function. All IRS employees should handle potential TAS cases with the taxpayer's best interest in mind. For other taxpayer problem resolutions, see IRM 4.10.1.4.6, Problem Solving. If TAS accepts a Form 911 that is related to a taxpayer under examination, it will be forwarded to Examination for review by the responsible group. The group manager must refer to the Service Level Agreement between the National Taxpayer Advocate and the Commissioner of their respective division for procedural guidance. Examiners should charge time expended on TAS activities to miscellaneous examination Activity Code 671, Taxpayer Advocate, per IRM 4.9, Examination Technical Time Reporting System. Time charged to this code should only include actual time spent on TAS activities. Examination time should be charged to the case in the usual manner. The statute of limitations on assessment may be extended by IRC 7811(d) and should be confirmed in writing with TAS.
Extensions of the Replacement Period of Involuntarily Converted Property
4.2.1.23 (05-29-2019) Extensions of the Replacement Period of Involuntarily Converted Property The provisions of IRC 1033, Involuntary Conversions, allow for the deferral of gains realized on the disposition of compulsorily or involuntarily converted property when a taxpayer purchases similar property within the specified replacement period. When the taxpayer is unable to replace the property within the normal replacement period, they can request an extension of the replacement period by writing to the Area Director. Extension requests are submitted via mail or eFax and worked by Technical Services. See IRM 4.8.8.6, Involuntary Converted Property, for additional information. Note: Technical Services employees are delegated authority to grant or reject the request (see IRM 1.2.65.4.14, SB/SE 1-23-33, Authority to Grant Extensions of Time to Replace Involuntary Converted Property Under Section 1033 of the Internal Revenue Code).
Identification of Bad Payer Information
4.2.1.24 (05-29-2019) Identification of Bad Payer Information During the preliminary review of IRP data, examiners may determine that information provided by the payer is incorrect. Bad payer data is defined as any situation where the payer made an error on the information return of a type that could occur on other information returns. When errors have occurred on ten or more of these documents filed by one payer or transmitter, bad payer data exists. Examples of bad payer data include but are not limited to: Duplicate filing of Forms W-2 or 1099; Corrected Forms W-2 or 1099 not identified as a corrected, thus appearing to duplicate the original filing; Misplaced decimals; Additional digits added to amounts; Nontaxable income reported as taxable; and Income reported on the wrong form. When examiners determine that bad payer data exists, they must briefly explain the identified error on a copy of the IRP and email it to the AUR HQ Payer Agent Coordinator, by selecting the coordinator from the AUR Coordinator Site - "Ogden" .
Awards Received by Informants
4.2.1.25 (05-29-2019) Awards Received by Informants Informant awards for confidential services are often received from the Bureau of Customs, Federal Bureau of Investigation, Central Intelligence Agency, Secret Service, local Police Departments, Whistleblower program, and other similar sources. It is imperative that the source of income not be revealed in the examiner's report and that the identity of the informant be protected. See IRM 25.2.1.5.4, Protection of Whistleblower Information, for additional guidance on confidentiality. If during the examination, unidentified income reported on the return or unreported income is discovered, the taxpayer may explain that the income was received for services of a confidential nature. If verification of the source of income is necessary, then verification should be secured through inquiry of the official in charge of making the payment. If the official is in the same locality as the examiner, then the official will be interviewed personally without any written communication or other report. If a personal interview is not possible, the examiner must prepare for the personal signature of the Area Director, a letter to the official marked "Confidential - To be opened by addressee only" requesting verification of the payment for confidential services. If the taxpayer states that the unidentified or unreported income was received for services of a confidential nature, the case must be processed in the usual manner without disclosing the source of the payment. In the case file, the description of the income must state "miscellaneous income -source verified." Correspondence used to verify the source of income must not remain in the case file but must be maintained in special file, confidential in nature, under the personal control of the Area Director.
Forms of Advice Provided to Taxpayers
4.2.1.26 (09-10-2025) Forms of Advice Provided to Taxpayers Taxpayers may request advice from IRS employees. Non-technical advice is generally provided to the taxpayers in the form of informal advice or information letters. See IRM 4.2.1.26.1, Informal Advice, and IRM 4.2.1.26.2, Information Letters, for additional guidance. Technical advice is generally provided to taxpayers in the form of a letter ruling or determination letter. See Rev. Proc. 2024-1, its predecessors, and its successors for additional information. See IRM 4.2.1.26.3, Letter Rulings, and IRM 4.2.1.26.4, Determination Letters, for additional guidance. Caution: Employees not directly involved in the examination must not discuss examination issues with taxpayers, unless the discussion is coordinated with examiners who are directly involved.
Informal Advice
4.2.1.26.1 (09-10-2025) Informal Advice Informal advice is generally provided to taxpayers orally. Oral advice provided to taxpayers must clearly reflect the position of the IRS. Oral advice is advisory only and does not bind the IRS. Example: An examiner may discuss substantive tax issues with a taxpayer under audit, but this discussion does not bind the IRS. Note: The IRS must not respond to letters seeking to confirm the substance of oral discussions. Further, a non-response from the IRS is not an indication of the IRS' position on the matter.
Information Letters
4.2.1.26.2 (09-10-2025) Information Letters An information letter: May be issued if a taxpayer's inquiry indicates a need for general information or if the taxpayer's request does not meet the requirements of the first revenue procedure issued each year (e.g., Rev. Proc. 2024-1) and the IRS concludes that general information will help the taxpayer. Is advisory only and does not bind the IRS. Is not a substitute for a letter ruling.
Letter Rulings
4.2.1.26.3 (09-10-2025) Letter Rulings Letter ruling guidance is found in the first revenue procedure issued each year (e.g., Rev. Proc. 2024-1). A letter ruling is a type of formal advice provided to taxpayers. A letter ruling may take the form of a closing agreement, another type of formal advice provided to taxpayers. A taxpayer may request a closing agreement with a letter ruling or in lieu of a letter ruling, with respect to a transaction that would be eligible for a letter ruling.
Determination Letters
4.2.1.26.4 (09-10-2025) Determination Letters Determination letter guidance is found in the first revenue procedure issued each year (e.g., Rev. Proc. 2024-1). A determination letter is a type of written advice provided to taxpayers. Employees who handle the determination letter requests (i.e., Technical Service employees) must ensure a careful distinction is made between requests for determination letters and general information requests. If it appears to be a request for general information, treat it as such and do not apply these provisions. A general information response should clearly state it is providing general information only.
Providing Advice to Taxpayers
4.2.1.27 (09-10-2025) Providing Advice to Taxpayers Employees who provide advice to taxpayers must: Ensure they have a clear understanding of the facts involved in the transaction under discussion and the applicable principles of law are identified and explained so the taxpayer understands the facts and law as discussed. Ensure the necessary research is performed to ascertain the applicable law before replying to the request. Ensure to clarify areas of doubt and request additional information if the facts are not clear. Employees providing advice to taxpayers on the filing of claims for refund and answering questions on the appeal rights of taxpayers should explain the IRS' position and recite the law and regulations regarding the filing of a timely claim or an individual's appeal rights. No attempt should be made to dissuade the taxpayer from making a claim. This will avoid subsequent assertions that, if the IRS had not refused to accept the claim, the taxpayer's interest would have been protected and other similar assertions.
Forms of Advice Provided to Examiners
4.2.1.28 (09-10-2025) Forms of Advice Provided to Examiners Examiners may request advice to assist in performing their job duties. Generally, examiners are entitled to advice or guidance for any technical or procedural matter related to the tax liability of any taxpayer. Informal advice is generally requested when a quick response is needed, and the subject matter is relatively routine and simple concepts. Caution: Informal advice must not be sought as a substitute for formal advice, where such advice is appropriate. Formal advice, including technical advice, is generally requested when the subject matter is an interpretation and proper application of tax law.
Area Counsel Advice
4.2.1.28.1 (09-10-2025) Area Counsel Advice Area Counsel provides advice to examiners through consultation or by memorandum. Note: SB/SE examiners generally request written advice through Technical Services but may make a request directly to Area Counsel. See IRM 4.8.8.12.1.2, Advice from Area Counsel, for further guidance. Examples of types of assistance examiners may request from Area Counsel include: Meaning, enforceability, and effect of legal terms in a contract. Application of State laws to the elements of a contract. Information regarding applicable State statutes, which relate to corporate existence and the status of transferee assets. Review of a case to ascertain favorable points, factual weaknesses, and/or adverse circumstances to the government's case to determine whether the IRS' position on the issue would be fairly presented in court. Evaluation of primary or secondary evidence in a case, which would be useful in litigation. Documentation of evidence. Review of proposed statutory notices of deficiency under the provisions of IRM 4.8.8.7.1.3.4, Review by Counsel. Advice related to the issuance and enforcement of summons per IRM 25.5.10.4.3, Examination.
Procedures for Examiners to Request Area Counsel Advice
4.2.1.28.1.1 (09-10-2025) Procedures for Examiners to Request Area Counsel Advice Prior to seeking legal advice, the examiner must: Sufficiently research the issue in question. Discuss the issue with their manager who must ensure the facts are fully developed and documented. Discuss the issue with Area Counsel (either through Technical Services or directly with Area Counsel). To request legal advice, the examiner must prepare a formal memorandum fully detailing the facts and circumstances of the issue. Additionally, the examiner must include pertinent documents as attachments to the memorandum and provide contact information in the event Area Counsel needs additional information. All examiners must route the memorandum to Area Counsel of the appropriate operating division (e.g., SB/SE, LB&I, etc.) through their group manager.
Procedures for Examiners to Request Chief Counsel Advice
4.2.1.28.2 (09-10-2025) Procedures for Examiners to Request Chief Counsel Advice Chief Counsel Advice (CCA) includes case specific advice provided to examiners by the Associate Chief Counsel. Note: CCA does not represent a final determination of the IRS' position, even in the case for which it was requested. Examiners must contact the Appeals/Counsel liaison to determine if a request for CCA is appropriate. The Appeals/Counsel liaison will review the request for CCA to determine if the request warrants CCA. If Chief Counsel Advice is needed, Area Counsel sends the request to the appropriate Associate Chief Counsel office. The request should have factual information, and adequate research performed. Area Counsel will review the request to ensure the issue warrants Chief Counsel involvement. See CCDM 33.1.3.1.1, Definition of Chief Counsel Advice, for additional guidance.
Technical Advice Memoranda
4.2.1.29 (09-10-2025) Technical Advice Memoranda The second revenue procedure (e.g., Rev. Proc. 2024-2) issued each year explains how a Technical Advice Memorandum (TAM) is requested. This revenue procedure may be modified or amplified during the year. A TAM is intended to establish the proper interpretation and application of the Internal Revenue laws to the facts of a specific case. A TAM is a final determination of the IRS' position for a specific case. The examiner must follow the TAM when preparing the report and closing the case. Examiners may request a TAM when the application of the law to the facts involved is unclear. The question must be on the interpretation and proper application of any legal authority, to a specific set of facts that concerns the treatment of an item in a tax period under examination or in Appeals. The Area Director determines whether to request technical advice on any issue being considered. Once an issue is identified, all requests for technical advice should be made as early as possible. The Area Director's decision to request technical advice should not be affected when the issue is raised late. Responses to technical advice frequently result in publication of revenue rulings and revenue procedures which promote uniformity in the treatment of tax issues. The taxpayer may request technical advice on the grounds that a lack of uniformity exists regarding an issue, or that the issue is so unusual or complex that it warrants consideration by Headquarters. (See IRM 1.2.1.5.25, Policy Statement 4-82, Taxpayer may request referral of issue under jurisdiction of District Director to National Office.) Each request for a TAM is forwarded through the Area Technical Coordinator in Technical Services (Examination). The Technical Coordinator's role is limited to processing the requests for technical advice, except for rare circumstances. (See IRM 4.8.8.12.1.4, Requests for Technical Advice Memorandum.)
Methods of Reporting Examiner-Identified Issues
4.2.1.30 (09-10-2025) Methods of Reporting Examiner-Identified Issues Examiners are often in the best position to identify tax abuses, emerging issues, inequities, and administrative problems in the interpretation and application of tax laws and regulations. The initial steps toward correction or elimination of these matters frequently originates with them. If the examiner identifies an issue meeting the criteria for more than one method of reporting, the examiner should discuss the issue with their group manager. If the group manager concurs, the examiner should report the issue as follows: If the issue is an emerging issue, see IRM 4.32.2.4.3.3, Emerging Issues. If the issue is a potentially abusive transaction, but not an emerging issue, report the issue to the respective BOD. See IRM 4.2.1.30.1, Potentially Abusive Transactions. If the issue is an inequity or administrative problem in the interpretation and application of tax laws and regulations, but not an emerging issue or potentially abusive transaction, report the issue to Headquarters through the Technical Coordination Reports Program. See IRM 4.2.1.30.2, Technical Coordination Reports Program.
Potentially Abusive Transactions
4.2.1.30.1 (09-10-2025) Potentially Abusive Transactions Examiners who identify abusive transactions must refer their findings based on their respective BOD as follows: TE/GE—Compliance Planning & Classification, Issue Identification SB/SE—Office of Promoter Investigations, Policy and Technical Support LB&I—Office of Tax Shelter Analysis Note: Promoters of potentially abusive transactions and abusive return preparers should be reported to the Lead Development Center. See IRM 4.32.2.4.2, SB/SE Office of Promoter Investigations Lead Development Center ( LDC). See IRM 4.32.1, Process Guide for Combating Abusive Tax Avoidance Transactions, for additional guidance.
Technical Coordination Reports Program
4.2.1.30.2 (09-10-2025) Technical Coordination Reports Program The Technical Coordination Report Program is used to communicate issues not considered abusive transactions and/or emerging issues to Headquarters (HQ). Technical Services administers the program and is responsible for establishing and maintaining an avenue of communication with HQ. See IRM 4.2.1.31, Technical Coordination Reports, for additional guidance.
Technical Coordination Reports
4.2.1.31 (09-10-2025) Technical Coordination Reports Technical Coordination Reports (TCR) do not need to be case related. They may result from news items, publications, or other matters encountered in day-to-day operations. The use of both case related and non-case related TCRs allows HQ to utilize the knowledge and experience of examiners in improving nationwide operating programs. TCRs may include one or more of the following subject areas: Problems or practices that indicate inequities or difficulties in applying the administrative provisions of the Internal Revenue Code and that may be corrected by reexamination of rules for interpretation and application of tax law Suggestions for policy statements or interpretative materials on broad subjects if the guidance would assist in eliminating controversy or in promoting national uniformity Suggestions for improvements in tax laws, regulations, tax forms and/or instructions for tax forms TCRs are categorized based on their subject matter, as TCRs that: Merit the commissioner's attention, or Do not merit the commissioner's attention.
Preparation of Technical Coordination Reports
4.2.1.31.1 (09-10-2025) Preparation of Technical Coordination Reports TCRs are prepared in memorandum form. If the report contains matters that require the commissioner's attention, COMMISSIONER'S ATTENTION must be clearly marked at the top of the memo. Reports are addressed to the appropriate office in HQ. Examiners forward the original report and copies to Technical Services for review. Technical Services coordinators are encouraged to add their comments or additional recommendations, even if they concur with the examiner. Technical Services coordinators must provide comments or an appropriate explanation if they do not concur with the recommendation. The package is then processed to HQ. If the Technical Services coordinator concludes that a TCR marked COMMISSIONER'S ATTENTION does not require the commissioner's attention, it must be amended and forwarded to the appropriate office in HQ.
Technical Coordination Reports That Merit the Commissioner's Attention
4.2.1.31.2 (09-10-2025) Technical Coordination Reports That Merit the Commissioner's Attention Examiners must assume the Commissioner wants to review matters: Affecting a large number of taxpayers Involving a large amount of revenue (or potential revenue) Relating to a key policy of the president, the Secretary of the Treasury, or the Congress Causing (or potentially causing) a significant amount of adverse publicity or public controversy Creating significant problems in the audit of returns, appeals, or litigation While the primary focus is on substantive problems, administrative problems can be submitted under this category if they are of a significant nature. Problems which might be alleviated by amendment of regulations rather than legislative enactment may also be included.
Technical Coordination Reports That Do Not Merit the Commissioner's Attention
4.2.1.31.3 (09-10-2025) Technical Coordination Reports That Do Not Merit the Commissioner's Attention Some matters involving inequities, and administrative problems must be reported to HQ, but do not necessarily require the commissioner's attention. Inequities: These matters include situations where the application of a particular provision of the law to a particular set of facts and circumstances, results in a substantial disadvantage to other taxpayers. Administrative Problems: These matters include situations where an administrative requirement of the law seems to impose an unnecessary burden on the IRS.
Table of Terms
Exhibit 4.2.1-1 Table of Terms The following table provides definitions of terms that are used throughout this IRM section: Term Definition Appeals The administrative function within the IRS that has the authority to settle tax controversies and has the primary responsibility to resolve these disputes without litigation. For purposes of this IRM is defined as the IRS Independent Office of Appeals Associate Office For purposes of this IRM is defined as: Office of Associate Chief Counsel (Corporate), Office of Associate Chief Counsel (Financial Institutions and Products), Office of Associate Chief Counsel (Income Tax and Accounting), Office of Associate Chief Counsel (International), Office of Associate Chief Counsel (Passthroughs and Special Industries), Office of Associate Chief Counsel (Procedure and Administration), or Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes), as appropriate. Closing Agreement A final agreement between the IRS and a taxpayer on a specific issue or liability. It is entered into under authority in IRC 7121, Closing Agreements, and it is final unless fraud, malfeasance, or misrepresentation of a material fact can be shown. Determination Letter A written determination issued by a Director that applies the principles and precedents previously announced by the IRS to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in a statute, a tax treaty, the regulations, a conclusion in a revenue ruling, or an opinion or court decision that represents the position of the IRS. Director For purposes of this IRM is defined per operating division and refers to an individual serving in an executive level position. Examples in this IRM are: Area Director, SB/SE for SB/SE; Practice Area Director or the Director, Field Operations for LB&I; Director, Return Integrity & Compliance Services for Taxpayer Services; and Any official to whom the authority normally exercised by a Director has properly been delegated. Emerging Issues An issue that may involve a new or novel set of facts relating to the improper application of the tax law. It may also be a new technical issue or a new interpretation of existing tax law. Emerging issues do not necessarily need to be abusive or fraudulent to be considered an emerging issue. Information Letter A statement issued by an Associate Chief Counsel office or Director that calls attention to a well-established interpretation or principle of tax law (including a tax treaty) without applying it to a specific set of facts. Letter Ruling A written determination issued to a taxpayer by an Associate office in response to the taxpayer's written inquiry, filed prior to the filing of returns or reports that are required by the tax laws, about its status for tax purposes or the tax effects of its acts or trans-acts. A letter ruling interprets the tax laws and applies them to the taxpayer's specific set of facts. A letter ruing is issued when appropriate in the interest of sound tax administration. Potentially Abusive Transaction A specific tax transaction/promotion that reduces tax liability by taking a tax position that is not supported by tax law or manipulates the law in a way that is not consistent with the intent of the law. Abusive tax avoidance transactions/promotions may be applicable to either a large number of taxpayers or a limited number of taxpayers. These strategies may be organized and marketed and, if so, are often referred to as an abusive tax shelter. or The organization or sale of any plan or arrangement promoting false or fraudulent tax statements or gross valuation misstatements, aiding or assisting in the preparation or presentation of a return or other document to obtain tax benefits not allowed by law, and actions to impede the proper administration of the Internal Revenue Code (IRC). Senior Treasury Official For purposes of this IRM is defined as: All individuals within the Treasury Department serving in Executive Levels I through V. All individuals within the Treasury Department serving in the Senior Executive Service or positions classified above grade general schedule (GS)-15 (or comparable pay band). All individuals within the IRS in grade GS-15 (or comparable pay band) serving in positions centralized in the IRS Executive Resources Board. All individuals within the Treasury Department (other than IRS) in grade GS-15 (or comparable pay band), which the Deputy Secretary may designate. Technical Advice Advice or guidance in the form of a memorandum furnished by Headquarters in response to any technical or procedural question that develops during any proceeding on the interpretation and proper application of tax law, tax treaties, regulations, revenue ruling, notices, or other precedents published by the national office to a specific set of facts. Such proceedings include: The examination of a taxpayer's return; The consideration of a taxpayer's claim for refund or credit; Any matter under examination pertaining to tax-exempt bonds or mortgage credit certificates; and Any other matter involving a specific taxpayer under the jurisdiction of the territory manager. Technical Advice Memorandum Advice furnished by an Associate office that responds to a formal request for assistance on a technical or procedural question that develops during a proceeding before the Internal Revenue Service. Technical Coordination Report Memorandum to report tax abuses, inequalities or administrative problems in interpretation and application of tax laws and regulations to headquarters. Treasury Department For purposes of this IRM, this is defined as the Office of the Secretary and all agencies, bureaus, and other organizational elements within the Department of the Treasury.
List of Acronyms
Exhibit 4.2.1-2 List of Acronyms The following table provides acronyms that are used throughout this IRM section: Acronym Definition AARS Appeals Account Resolution Specialists ADP Automated Data Processing ATE Appeals Technical Employee AUR Automated Underreporter BMF Business Master File BOD Business Operating Division CAU Caution Upon Contact CI Criminal Investigation DOJ Department of Justice EA Examination Assistance E&G Estate and Gift HQ Headquarters IDRS Integrated Data Retrieval System IMF Individual Master File IRP Information Reporting Program IRS Internal Revenue Service LB&I Large Business & International LTA Local Taxpayer Advocate OEP Office of Employee Protection PDT Potentially Dangerous Taxpayer PSP Planning and Special Programs SAC Special Agent in Charge SAMC Situation Awareness Management Center SB/SE Small Business / Self-Employed TAM Technical Advice Memorandum TAS Taxpayer Advocate Service TC Transaction Code TCR Technical Coordination Report TIGTA Treasury Inspector General for Tax Administration WPV Workplace Violence WSC Witness Security Coordinator
Source: official text