Complete all requested items

Use a separate block for each issue.

Record all adjustments by year and amount in the "Adjustment " column.

Complete the no-change statement, if applicable.

Use the Form 4700–A, (Form 4700 Supplement) for all tax audits.

Use the Form 4700–B (Form 4700 Business Supplement) for examination of tax returns with a Schedule C or F.

Use the Form 4700–C (Form 4700 Continuation) as the continuation page for Form 4700.

Casualty Loss

Charitable Contributions

Employee Business Expense

Interest Expense

Medical Expense

Miscellaneous Expense

Moving Expense

Rental Income and Expense

Taxpayer’s name,

Tax return form numbers and years examined,

Issue being examined,

Examiner’s name (or initials), and

Date workpaper was prepared.

Indexed page number.

Header

Dollar amount of item on the tax return

Dollar amount of item per the exam

Dollar amount of exam adjustment

Pre-exam analysis

Brief conclusion of examiner’s decision

A workpaper documenting a sample of specific expenditures verified and the conclusions reached. At a minimum, the workpaper should identify the documents inspected (invoices, check numbers) , date, payee, and the amount.

A list of questions or items raised during the examination and the conclusions reached.

Photocopies of relevant documents secured from the taxpayer during the examination.

Documents from internal sources, such as IRP or CFOL.

Pro-forma audit aids. See 9.2.2(3) above.

Correspondence from the taxpayer.

Work performed prior to, during, and subsequent to taxpayer contact.

Research activities.

Date, time, and place of appointments.

Date a tour of the business site or inspection of the taxpayer’s personal residence was completed.

Brief summaries of telephone conversations

Contacts with taxpayers, representatives, and third parties.

Causes for any delays in completing the examination by the IRS (training, details, etc.), the taxpayer, and/or representative. Also include instances demonstrating lack of cooperation by the taxpayer and/or representative.

Group manager involvement, including informal discussions about case development and quality. The dates of formal, in-process case reviews, on-the-job-visitations, and workload reviews, at which the case was discussed should also be noted. These notations should be made by the group manager at the time of involvement.

Collateral requests and referrals, and dates of requests for internal source information such as CFOL.

Actions with respect to the statute of limitations dates.

The date case was closed to group manager.

A fiduciary relationship is established.

A corporate name is changed or a corporation is reorganized.

A bankruptcy or receivership is involved.

Validate a return filed after one of the situations in (1) occurred.

Determine the authority for the execution of waivers and reports.

Determine the authority for the execution of Form 872, Consent to Extend the Time to Assess Tax.

Determine the authority to receive refunds.

To verify a fiduciary relationship for a decedent, obtain Form 56, Notice Concerning Fiduciary Relationship, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, where a refund is due. Form 1310 should also be secured when only one of the taxpayers filing a joint return has died. The above two forms should also be accompanied by a certified copy of the legal document giving the fiduciary authorization to act for the taxpayer. These legal documents include letters testamentary and letters of guardianship.

Where a corporate name is changed or a corporation is reorganized, the examiner should obtain copies of all documents certifying the changes filed with, or received from, the state in which the successor corporation is incorporated.

If a bankruptcy or receiverships is involved, the report for the examination will contain the name of the party legally entitled to any refund which may be due.

Input of entity and return information into the RGS — This provides an on-line error check, comparing tax computed, using the data entered into RGS from the return, with the tax reflected on the Masterfile. The examiner should review IDRS information for changes and any service center adjustments to make sure the entered information is correct.

Copying pro forma computer workpaper files into the taxpayer’s data files for use during the examination — A separate data disk should be used for each taxpayer. If the hard drive is used, a separate directory/folder should be set up for each taxpayer and any information input should be backed up to a disk. (automatic for examination workcenters).

Setting up audit appointments and issuing appointment letters, as well as Information Document Requests — Pro forma appointment letters and document requests, stored on the computer, can be generated. This will reduce the time expended by the examiner.

Pro forma interviews should be customized to fit the taxpayer under examination. Most examination personnel have proforma interviews stored on disk.

MSSP audit technique guides contain proforma interviews and interview questions for specific industries and issues. If this information is not available on disk, the guides can be downloaded from the MSSP bulletin board libraries.

It is not advisable to interview the taxpayer and type the answers into the computer durinq the interview process. Rather, examiners should manually take notes during the interview. A summary of important items discussed can be prepared immediately following the interview on a computerized workpaper.

Identification of disk content

Media information (software format)

Employee’s name

Office

Date created

An index file prepared using word processing. This file should contain the name and description of each file contained on the disk.

Back up files containing the Revenue Agent Report and write up of unagreed issues so that Technical Support, Examination, Appeals or any other function can use the disk to make any necessary corrections.

A directory of the disk should be obtained using command code DIR at the C or A prompt. The directory should be printed and attached to the sleeve used to store the disk.

If the examiner uses a computer with a hard drive, it should be used to prepare taxpayer data files. The data files should always be backed up at the end of the day to a floppy disk. Word processing, spreadsheet, database files, and reports are generated much quicker using the hard drive. When a case is closed, the taxpayer files can be removed from the hard drive and stored on a disk.

File directories or folders should be used on the hard drive for each taxpayer. This separates the taxpayer data and provides security and privacy for each taxpayer. It is an effective organization tool and makes it easier to back up information separately to a floppy disk. Current IRS workcenters/reporting writing programs separate taxpayer data by directory/folder. Reports and workpaper files are stored on a directory/folder for each individual taxpayer.

Examiners should be familiar with DOS commands, Enable word processing, spreadsheet, and database commands and/or MicroSoft Word, Excel, and Access features (based on training provided and resources available)

The availability of workcenter/report writing programs allows examiners to fully automate the examination from the pre-audit stage, through the preparation of reports. Special applications are available for developing issues and generating workpapers. An examiner should become familiar with the software and workcenters available, to facilitate informed decisions, regarding the effective use of automation tools.

Form 895, Notice of Statute Expiration, (CASE MUST BE PLACED IN A RED FOLDER. THE FORM 895 IS TO BE STAPLED TO THE RED FOLDER, ON TOP OF ALL OTHER DOCUMENTS)

Document 6441, This Document Requires Protection. This document is a special cover sheet for cases requiring protection.

Form 3185, Transfer of Return

Document 6077, Deficiency/Overassessment Case $50,000 or More. This document is affixed to a case folder to flag a $50,000 or more agreed case, which requires expeditious processing.

Document 6078, Deficiency/Overassessment Case $10,000–$49,000

Form 3198, Special Handling Notice

Form 4760, Processing Record — Agreed Unpaid Deficiency Cases Requiring Prompt Assessment or Overassessment

Two-way memo to classification

Form 6809, Civil Fraud Penalty Report

Form 885–F, Self Employment Tax Adjustment (or RGS equivalent)

Form 885–E, Schedule for FICA Tax Adjustment of Wages Not Reported to Employee (or RGS equivalent)

Form 885–T, Adjustment of Social Security Tax on Tip Income Not Reported to Employee (or RGS equivalent)

Form 6657, Related Returns Examination Report (Key Case File—Non-TEFRA)

Form 6558, Special Investor Action

Form 5752, Flow Through Entity Distribution Schedule

Form 5346, Examination Information Report

Form 3699, Return of Documents to Taxpayer

Form 2363, Master File Entity Change (Change of Name/Address Sheet)

Computer diskettes enclosed in protective jacket (s)

Form 9984, Examining Officer’s Activity Record

Confidential Information — place in "To be Opened by Addressee Only" or pink envelope and Document 6441, This Document Requires Protection, is to be used as a cover sheet to alert others to the sensitive nature of the information.

Collectibility Information (ARDI Forms) — Form 9440, Taxpayer Levy Source and Contact Information and Form 9677, Taxpayer Asset Information

Form 872–T, Notice of Termination of Special Consent to Extend Time to Assess (initiated by the Service.

Taxpayer’s Protest, correspondence and copy of 30-Day Letter

Waivers and Acceptance Forms, such as Forms 870 (P/S/L) , Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment; Form 875, Acceptance of Examiners Findings by a Partnership, Fiduciary or Small Business Corporation; Revenue Agent Reports (RAR)/ Examination Reports including Forms 4549, 4549–B, 4605, 886–1, 886–S, 886–X, 886–Z, 2504, 4667, 4668 and 1902–B; Form 2297, Waiver of Statutory Notification of Claim Disallowance, and Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit.

Unagreed Report (top to bottom order) — Form 4665, Report Transmittal, (all unagreed cases) ; Form 3213, Engineer Memorandum Report; Form 3963. International Examiner’s Report; Examination Report (i.e. Forms 4549, 4605 & 1902); Supporting Computations (i.e. penalty and SE tax computations) , and Forms 8865, X, Z & A & exhibits

Tax Return(s) — The oldest tax period should be on the top and progress down to the most current year.

Workpapers — Forms 4318 or 4700 should always be the first page of the workpapers. The following items should also be included: copy of Form 433–D, Installment Agreement; Form 9984, Examining Officer Activity Record, and all other forms and documents, which provide a trail of where the case has been and what actions have been taken.

Prior Examining Officer’s Reports and workpapers

Miscellaneous Documents, e.g. Special Agents’ Reports, Collateral Reports