Internal Revenue Manual
IRM 5.7.1 — FTD Alerts
Part 5. Collecting Process
Chapter 7. Trust Fund ComplianceSection 1. FTD Alerts 5.7.1 FTD Alerts Manual Transmittal June 23, 2026 Purpose (1) This transmits updated IRM 5.7.1, Trust Fund Compliance Handbook, FTD (Federal Tax Deposit) Alerts. Material Changes (1) IRM 5.7.1.1.4(1) Replaced "5081" with "BEARS" request. (2) IRM 5.7.1.1.5(5) Updated to remove all mention of FTD Alert "X" and add details regarding FTD Alert "C" . (3) IRM 5.7.1.1.6(2) Changed all entries noting "15" calendar days to "25" calendar days. (4) IRM 5.7.1.1.6(3) Updated list of acronyms. (5) IRM 5.7.1.2(3) Updated to identify Soft Letter Notice, CP 239. (6) IRM 5.7.1.3 Incorporated Interim Guidance Memorandum SBSE-05-0226-0025, Revised Interim Guidance on Federal Tax Deposit (FTD) Alert Procedures, dated 02-19-2026. Added process for requesting temporary adjustment in FTD Alert volume. (7) IRM 5.7.1.5 Added procedures related to Letter 5857. (8) IRM 5.7.1.5(5) Revised guidance regarding research tools and added further details for CP 239. (9) IRM 5.7.1.6 Incorporated Interim Guidance Memorandum SBSE-05-0524-0032, Federal Tax Deposit (FTD) Alert Procedures, dated 05-07-2024 and Interim Guidance Memorandum SBSE-05-0426-0035, Reissuance Interim Guidance on Federal Tax Deposit (FTD) Alert Procedures, dated 04-01-2026. Procedures updated to adhere to the guidelines regarding field safety, timely contact, and non-contact observational field visits. (10) IRM 5.7.1.6(7) Added Business Tax Account (BTA) as one of options for electronic payments. (11) IRM 5.7.1.6(18) Move Letter 5664 from IRM 5.7.1.5 and change to optional tool for scheduled in-person contacts. (12) IRM 5.7.1.8(8) Updated procedures for out of business (OOB) taxpayers. (13) IRM 5.7.1.9 Added examples for different FTD Alert closure options. (14) IRM 5.7.1.9(6) Added more details clarifying GM actions required for using Erroneously Created closure. (15) IRM 5.7.1.9(8) Specified further closing actions and documentation needed for all FTD Alert closures. (16) IRM 5.7.1.9(9) Added new systemic ICS notification for Alerts open more than 60 days. (17) IRM 5.7.1.10 Added steps to request FTD Alert transfer. (18) Minor editorial changes have been made throughout this IRM. Website addresses, legal references, and IRM references were reviewed and updated as necessary. Effect on Other DocumentsThis material supersedes IRM 5.7.1, dated June 23, 2025 and incorporates Interim Guidance Memorandum SBSE-05-0524-0032, Interim Guidance on Federal Tax Deposit (FTD) Alert Procedures, dated May 7, 2024 and Interim Guidance Memorandum SBSE-05-0426-0035, Reissuance Interim Guidance on Federal Tax Deposit (FTD) Alert Procedures, dated April 1, 2026. This IRM also incorporates Interim Guidance Memorandum SBSE-05-0226-0025, Revised Interim Guidance on Federal Tax Deposit (FTD) Alert Procedures, dated February 19, 2026. AudienceRevenue officers in SB/SE Field Collection Effective Date(06-23-2026)Thomas KramerDirector, Collection PolicySmall Business/Self-Employed
Program Scope and Objectives
5.7.1.1 (06-23-2026) Program Scope and Objectives Purpose: This IRM provides IRS guidance on processes and procedures when working Federal Tax Deposit (FTD) Alerts. Audience: The primary users of this IRM are Revenue Officers in Field Collection. Policy Owner: Director, Collection Policy, SB/SE. Program Owner: Collection Policy, SB/SE, Employment Tax (ET) is the program owner of this IRM. Primary Stakeholders: Field Collection. Program Goals: Federal Tax Deposit (FTD) Alerts are used to determine an employer's compliance with employment tax deposit requirements for the quarter of the Alert issuance, and for subsequent quarters until the taxpayer is brought into full compliance. The FTD Alert process identifies, at an early stage (i.e., before the return is due), taxpayers who have fallen behind in their deposits. Contact Information: Recommendations and suggested changes to this IRM should be emailed to the content product owner. The owner is indicated on the Product Catalog Information page which is found in the Forms and Publications, IRM Numerical Index of the Media and Publications Electronic Publishing website.
Background
5.7.1.1.1 (05-10-2017) Background The FTD Alert Program is the only Collection tool available that identifies anomalies in an employer's pattern of payroll tax deposits. Using this tool to anticipate deposits that are missed allows Field Collection the opportunity to interact with the taxpayer and proactively address potential problems as they develop, but before the amount owed exceeds the taxpayer's ability to pay.
Authority
5.7.1.1.2 (06-23-2026) Authority The authorities for these policies are: Congress mandated that IRS establish a system of making deposits by electronic fund transfer in order to expedite the collection of depository taxes. See IRC 6302(h)(1)(A), Establishment of system. Congress has provided special procedures for the collection of depository taxes held in a special fund in trust for the United States. See IRC 7501(a).
Roles and Responsibilities
5.7.1.1.3 (06-23-2025) Roles and Responsibilities The Director, Collection Policy, is the executive responsible for ensuring IRM internal control content is complete, accurate, and reviewed at least annually, to promote consistent tax administration. Field Collection group managers and revenue officers are responsible for ensuring compliance with the guidance and procedures described in this IRM. Group mangers have the authority to review and approve FTD Alerts. Revenue officers are responsible for ensuring FTD Alerts case files contain all documentation needed to support the case resolution. Field Collection is responsible for ensuring taxpayers are informed of their rights in accordance with the Taxpayer Bill of Rights (TBOR).
Program Management and Review
5.7.1.1.4 (06-23-2026) Program Management and Review Program Reports: FTD Alert Reports are located on the Control D database. A BEARS request must be completed to obtain access to the Control D database. These reports provide the monthly activity regarding FTD Alert issuances, open FTD Alerts and FTD Alert closures. Program Effectiveness: The annual FTD Alert work plan volume is determined by Field Collection.
Program Controls
5.7.1.1.5 (06-23-2026) Program Controls FTD Alerts (A/B) are sent directly from the Master File to the Integrated Collection System (ICS) for direct assignment to the Field. FTD Alerts (C) are sent directly from the Master File and issued as Soft Letter Notices directly to business taxpayers.
Terms and Acronyms
5.7.1.1.6 (06-23-2026) Terms and Acronyms The tables below provides a list of defined terms and abbreviations used throughout this IRM section. Defined terms are as follows: Defined Terms Word Definition Example of using a word that is open to interpretation Timely - Group Manager Group Managers are to ensure FTD Alerts are assigned to ROs within seven calendar days of receipt Assignment to RO is considered timely when conducted within 7 calendar days. Timely - Revenue Officer The RO is to contact the taxpayer within 25 Calendar days of assignment of the FTD Alert. Initial contact is considered timely when made within 25 calendar days. Inventory Delivery System IDS reflects the anticipated level of difficulty of working on an entity and it is the primary system used to determine case difficulty level which is used to assign work by employee grade level. Work not graded by IDS receive their grade from the Resources and Workload Management System (RWMS) to determine the case difficulty level. FTD Alerts are usually graded as GS-11. Acronyms are as follows: Acronyms Acronym Definition ACS Automated Collection Systems AD Area Director BEARS Business Entitlement Access Request System BMFOLR Business Master File Return Information BMFOLU Business Master File CAWR Response Screen BMFOLK Business Master File Look back Information BMFOLI Business Master File Summary Response BTA Business Tax Account CFINK Centralized Authorization File Inquiry CI Criminal Investigations CIP Compliance Initiative Project EFTPS Electronic Federal Tax Payment System FCM Field Collection Manager FTD Federal Tax Deposits ICS Integrated Collection System IDRS Integrated Data Retrieval System IDS Inventory Delivery System INOLES Information On line Entity Summary IOLA Individual Online Account IPM Integrated Production Model IQA ICS/ENTITY Quality Analyst IRPTRI Information Returns Processing Transcript(s) NFTL Notice of Federal Tax Lien OOB Out of Business PEO Professional Employer Organization POA Power of Attorney PSP Payroll Service Provider RA Reporting Agent RO Revenue Officer RWMS Resources and Workload Management System STAUP Suppressing Balance Due Notices SUMRY Tax Account Summary TAS Taxpayer Advocate Service TBOR Taxpayer Bill Of Rights TC Transaction Code TFRP Trust Fund Recovery Penalty TPP Third Party Payer TXMODA Tax Module(s)
Related Resources
5.7.1.1.7 (06-23-2026) Related Resources IRM 1.4.50, Collection Group Manager, Field Compliance Manager and Area Director Operational Aid IRM 5.1.1.12.1, TPC Advance Notification Procedures IRM 5.1.10, Taxpayer Contacts IRM 25.27.1, Third-Party Contact Program The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord With Taxpayer Rights. For additional information about TBOR see: Taxpayer Bill of Rights and Policy Statement 1-236 in IRM 1.2.1.2.36. IRM 5.2.1, Collection Time Reporting IRM 5.3.1.2.2, Entity Research-Overview IRM 5.17.8.10, Automatic Stay - 11 USC 362 IRM 5.1.24.5, Collection Actions in Cases Involving Third-Party Payers IRM 5.1.11.7.1, Enforcement Determination
Criteria for FTD Alert Issuance
5.7.1.2 (06-23-2026) Criteria for FTD Alert Issuance FTD Alerts are issued on taxpayers who are classified as semiweekly depositors and who have not made FTDs during the current quarter or who have made them in substantially reduced amounts. They may be identified by the presence of TC 971 AC 046 on a tax module. The selection model analyzes past compliance history and current deposit patterns to identify taxpayers who are least likely to self-correct their tax deposit issues. There are three types of Alert selections. They are identified by the following systemically generated codes: Potential Pyramider, identified by an Alert priority code of "A" . The taxpayer had modules in notice status in each of the prior two quarters. Potential Noncompliant, identified by an Alert priority code of "B" . The taxpayer is considered to be likely to owe without intervention based on our identification and selection process. Potentially At Risk, identified by an Alert priority code of "C" . The taxpayer is considered unlikely to owe $5,000 or more in the current quarter. These taxpayers will systemically receive the FTD Alert Soft Letter Notice, CP 239. The notice can be identified by the presence of TC 971 AC 804 on the tax module within the same cycle as the TC 971 AC 046. The FTD Alert priority code for Alert A and Alert B will be present on the ICS FTD Alert Case Summary Screen.
Process for Alert Issuance
5.7.1.3 (06-23-2026) Process for Alert Issuance Master File conducts the FTD Alert analysis in the twelfth cycle week of each calendar quarter. The FTD Alerts generate in the thirteenth week of each calendar quarter, in the months of March, June, September, and December. Field Compliance Managers (FCM) may request a reduction in the FTD Alert volume for their Territory for the upcoming quarter. The requesting FCM must contact their Area Director (AD) to provide the following: The specific number of FTD Alerts each territory can work based on available resources, The reason for the adjustment, and The duration of the adjustment (i.e., one quarter). If an adjustment is needed due to limited resources, the FCM must allow time to obtain proper approval to ensure the requested volume adjustment can be made prior to the FTD Alert issuances for that quarter. The AD will notify the Director of Collection Policy of the requested FTD Alert volume adjustment.
Receipt of FTD Alerts
5.7.1.4 (06-23-2026) Receipt of FTD Alerts Revenue Officer inventories should be at a level that will allow for the immediate assignment of the Alerts; however, under no circumstances should the assignment date exceed seven calendar days from the date the Alert arrives in the group designation hold file. Ensure the case sub code is listed as FTD Alert 105, per IRM 5.2.1.7.1, Field Collection Procedures and IRM 5.2.1.9(2), ICS and Entity Sub Codes (Field Collection Area only). If the sub code is not listed as 105, immediately update ICS. FTD Alert sub codes are automatically changed by ICS when the FTD module closes, see IRM 5.2.1.9(5).
Pre-Contact Research and Analysis
5.7.1.5 (06-23-2026) Pre-Contact Research and Analysis Pre-contact analysis must be conducted on all Alerts prior to making contact on the FTD Alert. Upon receipt of the FTD Alert, the RO must issue Letter 5857, FTD Alert Appointment Letter, to schedule a telephone appointment with the taxpayer or an authorized representative. Note: Letter 5857, FTD Alert Appointment Letter, (previously FTD Alert Telephone Contact Letter) has been revised and can be used to schedule telephone or in-person appointments. Revenue Officers must use Letter 5857 to schedule a telephone appointment for the initial contact. The letter can also be used to schedule follow-up appointments at the business location. Note: When a valid Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, is on file for the taxpayer, mail a copy of Letter 5857 to the representative, and include Letter 937, Transmittal Letter for Power of Attorney. When generating Letter 5857, the RO will complete the table at the bottom of Letter 5857 to include the deposit information that appears on IDRS for the current quarter, the same quarter for the prior year, the deposits on the last quarter filed, and penalties assessed to compare the difference (decrease) in the deposits received. Reminder: Letter 725-B, Notice of Appointment, should not be sent in place of the Letter 5857. Note: The table below provides an example of information needed for Letter 5857: Tax Quarter Tax Due On Return Deposits Made Penalties Assessed Current Quarter N/A $2,000 N/A Same Quarter, Prior Year $75,000 $56,500.24 $1,849.97 Last Quarter Filed $100,000 $60,450.20 $3,954.98 On Letter 5857, use information pulled from IDRS and complete the boxes as follows: Input meeting type by selecting telephone or in-person for initial and subsequent contacts. Enter the specific date and time that the RO plans to call the taxpayer. Add the current quarter FTD Alert module date, e.g. 12-31-2026. Add the same quarter for the prior year date, e.g. 12-31-2025. Add the last quarter filed date, e.g. 09-30-2026 Enter the total amount of deposits made on the current quarter. Enter the total tax listed (TC 150) on the prior year return and the last quarter filed. Enter the total amount of deposits (TC 650) made on the prior year return and the last quarter filed. Enter the total amount of penalties assessed on the prior year return and the last quarter filed. The Letter 5857 table illustration will assist the taxpayer to understand the purpose of the phone call and assist the RO when explaining the specific decrease in deposits made and the costs associated with making late deposits. Research available tools to secure relevant information needed for an effective initial contact and case resolution. The example below provides a list of some required IDRS command codes to review, analyze, and document in case history as appropriate. The list below is not all inclusive and field employees should conduct further research as needed based on case complexity. Example: Some examples of required command codes include: Command Code Description BMFOLR Confirm monthly tax liabilities BMFOLU All wages reported on Form 941, W-2 & W-3. This information can assist with identifying W-3 discrepancies and facts to assist with preparing unfiled returns BMFOLK Confirm type of depositor BMFOLI Verify compliance history and current deposits. Determine if deposits are sufficient and timely BRTVUE Verify prior quarter(s) tax amount due, federal tax deposits, variances in payroll CFINK Determine if the taxpayer has a representative EFTPS Potential levy sources INOLES Address information, filing requirements, cross reference information IRPTRI Income and employee information (W-2) TXMODA All prior assessed penalties including TFRP assessments, FTD Alert indicator transaction codes, and CP notices SUMRY Filing requirements, status codes, balance due and unfiled return modules Analyze the prior quarter deposits, the same quarter prior year tax due on the return and the prior assessed FTD penalties to determine if the deposits that have been made for the current quarter are enough to fully pay the potential tax due. Document findings in the ICS case history. IDRS now identifies the issuance of FTD Alert Soft Letter Notice, CP 239 on the tax module with TC 971 AC 804 with a literal "MISC CP239" . This Soft Letter Notice notifies the taxpayer when deposits are missed or significantly reduced from prior quarters. Check prior modules to determine if the taxpayer previously received this notice and document your findings in the ICS case history. Utilize all research tools available (i.e. IDRS, Accurint, Web Search, ICS Archive History, etc) to secure relevant information, such as, telephone numbers, business location(s), status of state licenses, potential assets, business websites, etc. The unique factors of each case will determine the depth of research needed prior to initial contact and may change as the RO discovers new information during their investigation. During the pre-contact analysis, a revenue officer must determine whether the taxpayer has an authorized representative and plan to make contact with the representative when scheduling the initial telephone interview. If a taxpayer has a valid representative for some open tax periods, but does not include the FTD Alert module, contact may be made with the taxpayer to validate representation prior to beginning the FTD Alert investigation (see IRM 5.1.10.7.2(3) ). The contact may be made by telephone or by issuing a Letter 725-B with Letter 5427, Incomplete Power of Attorney, to schedule a telephone appointment. A taxpayer contact made to secure an updated Form 2848 or Form 8821 is not an investigative contact. The initial FTD Alert interview requirements contained in IRM 5.7.1.6 will not apply to this type of contact. See IRM 5.1.10.7.2(4) for additional information on validating representation. Note: Form 8821 permits the appointee to receive confidential tax information for the purpose of assistance with a tax matter with the IRS. Form 8821 does not authorize a person to represent a taxpayer before the IRS: e.g., the appointee cannot negotiate with the IRS on behalf of the taxpayer or advocate the taxpayer's position to IRS. Follow all safety guidelines as outlined in IRM 5.1.10.2, Pre-Contact. The example below provides a list of questions to address during the initial contact with the taxpayer. Example: Examples of questions to consider: Examples of questions to consider: Is the business current with FTDs? Why did the FTDs decrease? Are there delinquent bal due/del ret modules? Does the taxpayer have the ability to get current with deposits and delinquent returns today or with a short deadline? Is the business seasonal? If yes, what are the taxpayer's productive seasons? Are the officers of the corporation in compliance? Does the taxpayer have a history of non-compliance? Did taxpayer previously receive the CP 239 reminder notice to make timely deposits? Did they react by making timely and sufficient deposits thereafter? Has a Letter 903 been issued to the taxpayer in the past? Is the taxpayer a repeater? If the RO determines during Pre-Contact analysis that the assigned FTD Alert was created in error, see IRM 5.7.1.9, Alert Closing Procedures for additional information. Note: ICS will only display the closing code option "Alert Erroneously Created" on GM and IQA authorized access. ROs will not be able to see this FTD Alert closing code option on their ICS screen, however; ROs should be aware that this option is available to discuss with their GM. If pre-contact research and analysis reveals: CP 239 was issued in a prior quarter(s) indicating that the taxpayer was previously notified of missed deposits, then the RO should document ICS to recognize any patterns of missed, insufficient, or late deposits. The taxpayer is no longer required to deposit employment taxes or file employment tax returns, then verify final return information is posted on IDRS and close the FTD Alert as Not Required to Deposit. If you suspect the business is "out of business" (OOB), and the final return information has not posted to IDRS, then work the FTD Alert to verify status of the business before closing the FTD Alert. The taxpayer is not liable for deposits for the FTD Alert quarter, then verify the deposit frequency during your scheduled initial telephone contact. Next, close the FTD Alert as Not Required to Deposit. Note: Remember to input TC 590 CC 50 for the FTD Alert module only. The taxpayer may be liable for future quarter employment tax. Balance due periods in notice status, then create an ICS module for the balance due periods that are in notice status and input a STAUP via IDRS, as appropriate. Not all FTD Alerts are issued as stand alone FTD Alerts. Note: Initial telephone contact must still be made within 25 calendar days. The taxpayer has other modules in status 22 and assigned to Automated Collection Systems (ACS), then the RO needs to contact the ACS Support Liaison to request case transfer. The ACS contact information can be found on SERP under the Who/Where tab. First, click on ACS Support and Status 22 TAS Liaisons. Use the drop down menu on the left hand side of the screen to select the correct Business Operating Division (BOD). Next, enter the State and input if there is TAS involvement. Lastly, click submit. Unassigned bal due and/or del ret modules and a transfer/assignment request has been submitted, then close the FTD Alert as Bal Due/Del Ret Received and create an ICS only Bal Due module on ICS. Continue to work the entire case according to IRM 5.1, Field Collecting Procedures. The taxpayer is in bankruptcy, then inform Insolvency of the FTD Alert to determine if Insolvency is monitoring the taxpayer's compliance. If Insolvency is monitoring compliance, request input of TC 136, if it has not already been input and close the FTD Alert. A TC 136 prevents future FTD Alerts from generating. It is reversed with a TC 137. If Insolvency is not monitoring the taxpayer's compliance, continue working the FTD Alert. Do not, however, request a collection information statement, demand payment or take any enforced collection action unless Insolvency indicates that the collection action will not violate the automatic stay. Note: Some of the prohibited actions under the automatic stay include: collecting debts incurred before the filing of the bankruptcy petition, as well as taking possession of, or exercising control over, property of the estate and/or attempts to create, perfect, or enforce liens against property of the estate (or against property of the debtor when the lien secures a pre-bankruptcy debt). See IRM 5.17.8.10, Automatic Stay -11 USC 362, regarding actions specifically prohibited. Other actions that must be avoided because of the automatic stay are listed in IRM 5.17.8.10(2); e.g., sending balance due notices on pre-petition taxes other than the "first" or new assessment notice, assuming the assessment is allowable under the Bankruptcy Code. The new FTD Alert module received is on a taxpayer that is currently assigned to an RO and in status 26, including Bal Due/Del RetI/CIP on ICS, the RO should notify their manager. The group manager will contact the FTD Alert Program Analyst to discuss closure of the FTD Alert. Once the FTD Alert Analyst determines the FTD Alert module is actually in status 26, the GM must enter an ICS history explaining the circumstances and the FTD Alert will be closed by the GM as "Alert Erroneously Created" . The GM should copy the email received from the FTD Alert Program Analyst confirming approval for the "Alert Erroneously Created" closure. See IRM 5.7.1.9. The RO will not be required to work the FTD Alert in these specific circumstances. The open Bal Due/Del Ret/CIP case will be used to control the case and worked according to IRM guidance. Note: This closing code option should be used rarely and only when authorized by a specific policy directive, memorandum or Headquarters staff. Headquarters will track the use of closing code Alert Erroneously Created to evaluate the frequency and the rationale for its use. Caution: The ICS systemic closure statement, "This closure is authorized by Headquarters, per IRM 5.7.1.5 and/or IRM 5.7.1.9. " is not the written authorization needed to approve closure of the FTD Alert as "Erroneously Created". The GM must contact the FTD Alert Program Analyst directly and document the approval email into ICS history. If the FTD Alert is a stand alone Alert, meaning there are no associated modules on IDRS, it's possible that the taxpayer has not been provided with advance notice that third party contacts may be made. See IRM 25.27.1, Third-Party Contacts (TPC). Note: Effective August 15, 2019, the Taxpayer First Act of 2019, P.L. 116-25, requires collection employees, absent jeopardy circumstances, to provide the taxpayer with advance notice at least 45 days before a third-party contact. This new general advance notice must inform the taxpayer that the IRS intends to make third-party contacts within a specified time period, not to exceed one year. Such advance notice of third-party contacts may be renewed by the IRS, by notice given 45 days in advance of the new specified period, if the IRS intends to continue to make third-party contacts. Document initial telephone contact on your calendar. Clearly document a plan of action in ICS case history.
Contact Procedures
5.7.1.6 (06-23-2026) Contact Procedures Contact the taxpayer within 25 calendar days of assignment of the FTD Alert. If timely contact is not possible, notify the group manager. The GM will decide if reassignment of the FTD Alert is appropriate. If contact is delayed for more than 25 calendar days, note the reason for the delay in the case history. When the taxpayer has a representative, make initial contact with the POA of record. Procedures outlined in IRM 5.1.10.3(5) and (7) and IRM 5.1.10.7.2, Right to Retain Representation should be followed. If the POA of record is not authorized to discuss the FTD Alert period, you must contact the taxpayer to determine if they intend to update the IRM 5.7.1.5, Form 2848. If the taxpayer does not respond to the Letter 5857 for scheduled appointment, the RO should attempt to contact the taxpayer or authorized representative using telephone number(s) located during pre-contact research. If no telephone number is found, then the RO should conduct a non-contact observational field visit, per IRM 5.1.10.2(2). A non-contact observational field visit can determine potential assets, business location, and status of the business. Note: If the taxpayer has a POA, the RO should make two attempted contacts by telephone within 25 days from the date of FTD Alert assignment. If the RO makes the initial taxpayer contact by telephone, the contact will be considered timely as long as the phone call is made within 25 calendar days from the date of receipt of the FTD Alert. Recording a taxpayer or POA's failure to respond to an appointment letter in ICS is considered a timely contact, per IRM 5.1.10.3.1(1), Timely Initial Contact Actions. All attempted contacts should be documented in the case history. If initial contact is made: Follow the contact procedures in IRM 5.1.10.3.2, Initial Investigative Interview. Review Pub 1, Your Rights as a Taxpayer, with the taxpayer and address any questions. Explain the reason for the contact. Recognize that FTD Alerts generate based on the probability that the taxpayer has fallen behind in deposit payments. If no safety concerns are identified and documented in ICS case history per IRM 5.1.10.2(3), then the RO should schedule a follow-up meeting in the field. Reminder: A subsequent field visit must still be made to the business address to assess the taxpayer's operation and view the assets. Address all outstanding issues and request all needed documents for effective case resolution: Determine and document type of depositor and the taxpayer's compliance with current filing, payment, and deposit requirements. The ICS Full Compliance Check screen must be used to document compliance, see IRM 5.1.10.8(2) for instances when use of the pick list is mandatory. Establish cause of the delinquency and advise the taxpayer how to avoid future delinquencies. Explain the consequences of non-compliance, such as penalties, including the Trust Fund Recovery Penalty. Use the ICS pick list submenu item Cause and Cure under Taxpayer Contact to document this information. Request immediate filing of all delinquent returns Request immediate full/part payment of all delinquent accounts (including accounts in notice status) and explain the various forms of payment such as check, money order, electronic payment (IOLA, DirectPay, BTA), credit card, and electronic federal tax payment system (EFTPS) for future federal tax deposits as well as balance due payments. See IRM 5.1.24.5.2, Initial Contact with a Client of a Third-Party Payer, when third-party payer actions may be the cause of delinquency. Reminder: Payments via check should not be solicited unless all electronic payment methods have been exhausted. However, the taxpayer's request to use a method other than electronic payment must be honored if the taxpayer insists. If the taxpayer provides documentation or other substantiating information confirming full compliance, verify that the amount deposited is accurate based on prior quarter deposits. The only way to verify complete compliance for the FTD Alert quarter is to keep the FTD Alert open until the Form 941, Employer's QUARTERLY Federal Tax Return, is secured. Note: IRM 5.7.1.8 requires securing the Form 941 return for the FTD Alert quarter before closing the FTD Alert. Review any questions that you prepared during your pre-contact analysis (i.e. Is the taxpayer seasonal? If yes, what are the business' productive seasons?). Take any necessary actions to resolve the FTD Alert and add further questions based on new information secured during your interview with the taxpayer and/or representative: If the amount of the deposits are less than prior quarters, ask additional questions regarding possible reduced payroll or wages. If the taxpayer is no longer required to deposit (e.g., out of business, no employees), ensure that there are no other outstanding modules. Secure final return, if out of business. Using Form 4844, Request for Terminal Action, promptly request input of TC 591 CC 50 and close the FTD Alert. Note: If the taxpayer advises that they had no employees for the alert quarter, determine if taxpayer intends to have employees again in the future. If the taxpayer confirms that they will take on employees again, then the RO should secure a signed "zero return" for the alert quarter. If the taxpayer is in compliance, but due to sporadic or seasonal payrolls the Alert programming analysis is unable to predict deposit compliance, request input of TC 136. During the contact, briefly review Federal Tax Deposit requirements with the taxpayer. Provide Notice 931, Deposit Requirements for Employment Taxes, and/or other documents outlining the deposit rules to help explain the requirements. This may help ensure the taxpayer maintains future compliance. Set clear deadlines as needed for required actions and documents. Advise the taxpayer of potential consequences if established deadlines are not met. During the initial telephone contact, the RO can schedule a face-to-face meeting with the taxpayer in the field to complete the FTD Alert interview and to secure the FTD Alert quarter return, any outstanding payments, delinquent returns, view business assets, and/or other documentation to aid in case resolution. A subsequent Letter 5857 is not required to schedule follow-up visits in the field, but the letter can be used for this purpose. In preparation for scheduled follow-ups in the field, the RO can prepare Letter 5664, FTD Alert Field Contact Letter, to provide the taxpayer a copy. If a business taxpayer (i.e. sole proprietor, partner or a corporate officer) who has authority to bind the partnership or the corporation is not present for the scheduled field visit, the RO may leave a copy of the letter, in a sealed envelope that is addressed to the taxpayer, at the business location. The completed table will help the taxpayer understand the purpose of the visit and guide the RO when explaining the specific decrease in deposits made along with the cost associated with making late federal tax deposits. Note: The table below provides an example of information needed for Letter 5664: Tax Quarter Tax Return Deposits Made Penalties Assessed Prior Quarter 09/30/2026 56,500.24 5,650.00 Current Quarter 12/31/2026 15,225.24 N/A Note: The letter can also be used as an official document for the taxpayer to provide to their preparer, accountant, or agent to assist in resolving the outstanding deposit discrepancies.
Taxpayer Not in Compliance
5.7.1.7 (06-23-2026) Taxpayer Not in Compliance FTD Alerts on delinquent taxpayers provide an early opportunity to assist and educate taxpayers before their liability pyramids and the growing debt becomes more difficult to resolve. Review Federal Tax Deposit requirements with the taxpayer. Provide the taxpayer with a copy of Notice 931, Deposit Requirements for Employment Taxes, Pub 3151-A, The ABCs of FTDs or other documents outlining the deposit rules to help explain the requirements. The RO can also direct taxpayer or representative to IRS.gov for electronic and accessible versions of any forms and publications such as, Pub 15, Circular E, Employer's Tax Guide. If the taxpayer claims to be in compliance because they use a third-party payer (payroll service provider, reporting agent, professional employer organization), secure information about the third-party arrangement and verify compliance. Explain that the employer is ultimately responsible for withholding, reporting, and paying federal employment taxes (see IRM 5.1.24.5, Collection Actions in Cases Involving Third-Party Payers). Revenue Officer questions or concerns about third-party payer issues should be directed to the appropriate Area PSP/PEO Coordinator. A list of coordinators can be found at Collection PSP/PEO Coordinators by Area. Discuss the costs for failing to make timely deposits. Explain the FTD penalty to the taxpayer. Show the taxpayer the penalties incurred in the prior quarters. Ensure that the taxpayer understands the consequences of continued noncompliance. Discuss the Notice of Federal Tax Lien (NFTL), levy and seizure provisions. When applicable, discuss the provisions for the Trust Fund Recovery Penalty (TFRP). Regularly monitor and document the taxpayer's compliance with deposits for the FTD Alert quarter and subsequent quarters until the account is resolved. Use the FTD Verification, ICS submenu pick list to document tax deposits received. The RO should document if the taxpayer continues to miss required due dates and fails to make sufficient deposits. If the taxpayer cannot satisfy past due deposits while meeting current deposits, encourage the taxpayer to make current deposits first while working to resolve past due deposits. After contacting the taxpayer, document the case history to show that FTD requirements and the penalty assessment were discussed with the taxpayer. Also, document that the taxpayer was informed of the consequences of non-compliance. If the taxpayer is unable to make the required deposits or become compliant, after initial contact, see IRM 5.7.1.8, Working FTD Alerts.
Working FTD Alerts
5.7.1.8 (06-23-2026) Working FTD Alerts If the taxpayer is unable to make required deposits or become compliant, at initial contact, secure a Collection Information Statement and follow the procedures listed in IRM 5.1.10.3.2, Initial Investigative Interview. Secure the Form 941 return for the FTD Alert quarter. Use the appropriate closing code with TC 599 for the return secured, see IRM 5.1.11.6. If full payment of tax, including penalties and interest, is not received with the return, determine if it is in the best interest of the government to prompt assess the return. Explain the TFRP provisions, provide Notice 784, Could you be Personally Liable for Certain Unpaid Federal Taxes?, and make TFRP determination. Ensure ICS histories are clearly documented. See IRM 5.1.10.8, Case Histories. Ensure timely follow-ups are met. See IRM 5.1.10.9, Timely Follow-ups. If the FTD Alert is assigned with no related Bal Dues and the RO is unable to locate the taxpayer, then all available internal and external locator sources should be exhausted in an effort to locate the taxpayer. If the RO determines that the taxpayer is OOB, then the FTD Alert can be closed as Not Required to Deposit. Make sure all business return filing requirements are closed: Make a field call to business address to determine status and if there are remaining assets. Make field call to courthouse/county recorder for property search or civil suit settlement. Research internet for state licenses, Accurint/LexisNexis, news articles, business website, or other indications of business status. If there are deposits made on the FTD Alert module, then the RO must make an effort to secure the FTD Alert module Form 941 return before closing the FTD Alert. Secure final returns for the last quarter, if not already filed. If business closed prior to the FTD Alert module and the "final" box was not checked, complete Form 4844 to close the filing requirements using TC 591 CC 50. The RO should clearly document the ICS history notating all efforts taken to secure the FTD Alert return and if any responses were received from the taxpayer or representative Consider all possible resolutions for the unfiled FTD Alert return on a case-by-case basis, including 6020(b). If the RO determines, after contact, the business is in bankruptcy litigation, see IRM 5.7.1.9, Alert Closing Procedures. If the RO determines that enforcement action should not be pursued for the unfiled Form 941 return for the FTD Alert module, close the FTD Alert as "Bal Due/Due Ret Received," open an ICS only Del Ret and follow the procedures in IRM 5.1.11.7.1, Enforcement Determination, to close the Del Ret.
Alert Closing Procedures
5.7.1.9 (06-23-2026) Alert Closing Procedures Close the FTD Alert when the taxpayer is brought into full compliance. Full compliance includes, filing of all tax returns on or before the required due date; making appropriate tax deposits in the proper amount, by the appropriate due date; and paying any tax due with the return at the time the return is filed. This option should be used when the taxpayer is not in full compliance at the time of the initial contact. In this case, the RO secures full payment and delinquent returns to resolve the FTD Alert. If the taxpayer is not in full compliance, unable to fully pay the outstanding Bal Dues, and/or provide the returns for the open Del Rets, then ensure that all outstanding modules have been assigned or requested via STAUP. Once the STAUP request has been submitted, document the case history that the STAUP request was input, close the FTD Alert as "Bal Due/Del Ret Received" and create a ICS Only Bal Due or Del Ret on ICS to control the case and continue your full investigation. If a Bal Due or Del Ret is received for the FTD Alert module, prior to RO requesting assignment, the FTD Alert will systemically close and the Bal Due/Del Ret module will be assigned to the RO. The only way to open an ICS Only Bal Due or Del Ret on the FTD Alert module is to close the FTD Alert first. The following ICS options are available to close an FTD Alert: TP is in Compliance: The taxpayer is required to make deposits and is current with payment and filing requirements at the time of initial contact on the Alert. Example: RO Nelson mails Letter 5857 to schedule the initial FTD Alert interview. During the scheduled interview, the taxpayer provides documentation confirming that all deposits were previously paid and the current quarter return has been filed prior to the scheduled telephone contact. There are no outstanding issues that must be addressed by the RO. At the conclusion of the contact, RO Nelson will document ICS history and close out the FTD Alert as "TP is in Compliance" . Not Required to Deposit: The taxpayer was not required to deposit for the specific FTD Alert quarter. Example: During the initial interview, RO Nelson confirms with the taxpayer that there were no employees for this quarter. The taxpayer advises that they will have employees in the future. The RO secures a "zero return" for the Alert quarter, and documents ICS history. Closes out the FTD Alert as "Not Required to Deposit" . TP is Sporadic/Seasonal: The taxpayer is either a sporadic or seasonal employer with a fluctuating payroll. The Alert programming analysis is unable to predict the taxpayer's deposit compliance. In this situation, the revenue officer should manually request input of TC 136 to suppress future Alerts when closing the FTD Alert. Example: During the initial interview, the taxpayer advises RO Nelson that they work seasonally. They have a pool cleaning business that has no customers or employees during the winter months. The taxpayer has no payroll for the Alert quarter and is in full compliance. RO Nelson inputs full documentation regarding the interview and next steps. After securing a "zero return" for the Alert quarter, the RO manually requests input of the TC 136 and closes the FTD Alert as "TP is Sporadic/Seasonal" . Brought into Compliance: The revenue officer brought the taxpayer into compliance on all required deposits and secured the return for the FTD Alert quarter. The taxpayer is now fully current on the FTD Alert and current quarter at the time the FTD Alert is ready for closure, and there are no additional balances owed, including penalties and interest. Example: RO Nelson scheduled clear deadlines to secure signed copies of delinquent returns, the current quarter deposits, and the FTD Alert return. The taxpayer provides the requested information prior to the RO's deadlines and has no other outstanding issues. RO Nelson has taken the necessary steps to bring the taxpayer into full compliance. The RO documents ICS history and closes the FTD Alert as "Brought into Full Compliance" Bal Due/Del Ret Received: If initial contact is attempted within the required 25 calendar days, and another delinquent module is listed on IDRS for the same taxpayer, the RO should use appropriate procedures to request assignment of the existing IDRS module. When the STAUP request has been submitted, close the FTD Alert, create an ICS only Bal Due module on ICS and continue working the Bal Due according to current procedures in IRM 5.1. Note: Example: RO Nelson completed the pre-contact analysis and identified several delinquent return and balance due modules. The RO requested assignment of the non-FTD Alert modules and scheduled the FTD Alert interview with the taxpayer's authorized representative. After meeting with the representative, RO Nelson closes the FTD Alert as "Bal Due/Del Ret Received" and creates ICS only Bal Due and Del Ret modules to continue working the delinquent return and balance due case. If the RO secures a balance due return in the field, then the RO should first attempt to secure full payment, including penalties and interest. If a balance due return is secured without full payment, determine if it is in the best interest of the government to prompt assess the return. The RO should close the FTD Alert using closing option, Bal Due/Del Ret Received, create a pre-assessed or prompt assess Bal Due on ICS and continue to pursue collection. The pre-assessed/prompt assessed ICS Only Bal Due will be used to control the case in inventory until the module is assigned to the RO. Alert Erroneously Created: The table below list examples of when a revenue officer or GM may determine during initial analysis that the FTD Alert should be closed, due to extenuating circumstances. Example: Examples of FTD Alerts, extenuating circumstances: Extenuating Circumstances Description Alert Erroneously Created FTD Alert created as a systemic error (See IRM 5.7.1.5 if RO or GM identifies a systemic error while conducting pre-contact analysis, the GM will contact the HQ Program Analyst for approval. Also, HQ can request the IQA to close a large volume of Alerts created erroneously). Newly input TC 914/916 CI requests no initial or further contact with the TP. FEMA designations FTD Alert located in a designated disaster area for which the relief period recently opened. Bankruptcy FTD Alert Created on an account that recently changed to status 72. Case assigned to Advisory FTD Alert created on a case already assigned to Advisory involving a subordination or discharge. If the FTD Alert circumstances fits one of the options listed above, the RO must discuss the reason for closure without a Field Call with their GM. The RO will include a detailed ICS history providing the specific reason for using this closing code option in their ICS closing summary. The GM will contact the FTD Alert Program Analyst to discuss closure of the FTD Alert. Once the FTD Alert Analyst determines that the closing code is appropriate based on presented facts, the FTD Alert Program Analyst will email concurrence to the GM. The GM must enter an ICS history explaining the circumstances and the FTD Alert will be closed by the GM as Alert Erroneously Created. The GM should copy the email received from the FTD Alert Program Analyst confirming approval for the Alert Erroneously Created closure into the ICS case history. Caution: The ICS systemic closure statement, "This closure is authorized by Headquarters, IRM 5.7.1.5 per IRM 5.7.1.5(5)(m) and/or IRM 5.7.1.9 IRM 5.7.1.9(6)(h)." is not the written authorization needed to approve closure of the FTD Alert as "Erroneously Created" . Note: This closing code option should rarely be used and only when authorized by a specific policy directive or memorandum. Headquarters will track the use of closing code, "Alert Erroneously Created" to evaluate its frequency and the rationale for its use. If a new FTD Alert is issued while an FTD Alert from a prior quarter is still open in inventory, the old Alert will be systemically close and be replaced with the new Alert. A closing narrative, including, the reason that a specific closing code was used, must be documented in the ICS History when closing the FTD Alert. Note: A closing narrative is still needed even when "Bal Due/Del Ret Received" closing option is used, because the narrative will support the Alert closure. At closing of the FTD Alert, the RO must use the full compliance check to confirm if all filing and paying obligations have been addressed. The RO must document all efforts taken to secure any delinquent returns and outstanding tax due. A new systemic follow-up notification has been created in ICS to notify the user when there has been an FTD Alert assigned to the user's inventory for more than 60 days. This follow-up notification will repeat at the 75- and 90-day marks if it still is not resolved. Note: The literal notification will display, "There is an assigned FTD Alert that has been open for more than 60 days, please resolve using the appropriate closing code" .
Transfer of FTD Alerts
5.7.1.10 (06-23-2026) Transfer of FTD Alerts If the taxpayer is in another area, the FTD Alert can be transferred without a prior Courtesy Investigation. FTD Alert Transfer requests occur in rare instances. Due to the time-sensitive nature of FTD Alert contacts, call and advise the receiving office of the transfer. Transfer FTD Alerts only if the business itself, not merely one or more officers or partners, is located in the transferee area. To complete the FTD Alert transfer, you must have the receiving RO's assignment number. Use ICS to transfer the FTD Alert: Go to Collection Activities and select "Transfer" . Select option "E" :Transfer Non-Bal Due/Del Ret Inventory Check the "Acknowledge Alerts " box. In the" Summary of Inventories" screen, select the FTD Alert(s) being transferred. Select the Area or input the Receiving RO's assignment number. Select Save. Input mailing address for Form 3210. Select Save. Note: Case file records are now being digitized and will be forwarded electronically. Select Transfer. Alert GM of pending approval due to time-sensitivity. There are special circumstances where the FTD Alert can be closed without a field call after the assigned RO has verified that the taxpayer is in full compliance. Example: The RO has attempted to transfer the FTD Alert to a different Area, but has received a response that there are no available resources in the transferee Area to timely work the FTD Alert. The RO must verify full payment, deposit, and filing compliance, and document the ICS History using the Full Compliance Check and FTD Verification pick list. The full filing compliance includes return for the Alert quarter. The RO must secure GM concurrence regarding the special circumstances and document ICS history as appropriate.
Source: official text