- 4.22.2.1 Introduction
- 4.22.2.2 Case Building Tools
- 4.22.2.3 Beyond Case Building
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The NRP approach maximizes use of data available to the IRS and, to the extent possible, minimizes intrusiveness and taxpayer burden.
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Case building is the process of adding information to the case file, both from IRS and non-IRS sources, prior to classification. Use of this information during the classification process will identify potential issues or eliminate potential issues prior to contacting the taxpayer.
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Examiners should supplement the case building material included in the file as necessary at the Area Offices.
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For the Individual study, case building will be conducted at the Cincinnati Campus.
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NRP training Module B (Case Building Tools and Classification Overview) provides more detailed information on items contained in this IRM.
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The following subsections describe the case building items that will be included in the Individual NRP case files as an investigative tool that facilitates improved analysis and enhanced decision making by NRP classifiers and examiners.
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The NRP 1040 Case Building Inventory Sheet is stapled to the inside left of the case folder. It contains a list of all case building information included in the case file. The Case Building Inventory Sheet provides a quick overview of the case building tools provided in the case file.
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Form 5546 is attached to the top of the original return or return facsimile. It verifies that the return has been established on AIMS. It provides some audit history, CAF information, and a myriad of codes (AIMS, BOD, etc.) giving information about and the status of the taxpayer’s account.
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Form 5546 provides the classifier and the examiner an audit history. It lets the classifier and examiner know the results of the last two returns the Service either classified or examined. Care should be taken in using this information to draw conclusions. The classifier and examiner need to look at the overall, current picture of the taxpayer based on the case building and other known data.
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The original NRP Individual key case tax return will be included in the case file. An imaged copy of the NRP key case return will be in the RGS Case File Documents.
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MACS is a security-certified, menu driven database that contains a combination of all transcribed lines from returns and selected entity information for IMF and part of the BMF. MACS does not include all the line items of the return. It is limited to what is transcribed for RTVUE. MACS generates three years of tax return data in a side-by-side tax return format so returns are easy to compare, thus enabling the examiner to readily see changes from year to year. Additionally, the transcript includes several helpful and informative special calculated fields.
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Variances and trends (e.g., in income, deductions, other information) can be detected through correlation with other case building data. MACS data could indicate unusually low Schedule C or F gross profit year after year or consistent business losses with low net profit and no other apparent sources of income to support expenditures. The three year comparative analysis would reflect any other significant changes from year to year.
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CBRS reports large individual financial transactions and cash transactions in excess of $10,000. Cash transactions include deposits, withdrawals, check cashing, wire transfers, sales and redemption of money orders, travelers’ checks or stored value, casino activity, payments for certain services, and information on foreign bank accounts. In addition, CBRS contains reports of cash and/or other monetary instruments in excess of $10,000 used as payment for certain goods.
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For NRP, the following extracts will be secured for all NRP sample select entities by primary and secondary SSN and by any Schedule C or F EIN:
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Form 4789, Currency Transaction Report (CTR), for cash transactions in excess of $10,000 filed by financial institutions and non-bank financial institutions; e.g., by the entity that has received cash from an individual or given cash to an individual in excess of $10,000.
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Form 8300, Report of Cash Payments over $10,000, filed by businesses when cash and/or monetary instruments of $10,000 or more are received for goods or services.
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Form 8362, Currency Transaction Report by Casinos (CTRC), or Nevada Form 8852 (CTRC-N), filed by casinos for cash transactions (cash in or cash out) in excess of $10,000.
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Form 4790, Report of International Transportation of Currency or Monetary Instruments (CMIR), filed by anyone carrying cash or monetary instruments in excess of $10,000 into or out of the country.
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ChoicePoint information is provided on the primary and secondary SSN and is a general combination report with data from multiple sources. ChoicePoint is used in NRP case building versus Accurint because it can be generated and printed in a batch mode and Accurint is only available on a one-by-one lookup basis.
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Various consumer reporting agencies are scanned and the information is utilized to search public records. The ChoicePoint print included in the file will show that the information search was performed even if no data was found. A single report of search results (including both the primary and secondary SSN’s, if applicable) is generated and may include:
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Taxpayer name.
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Possible AKAs for the taxpayer.
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Addresses associated with the taxpayer. This section includes current and prior addresses and possible phone numbers.
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Real property ownership and deed transfers.
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Vehicles registered at the taxpayer’s addresses. Vehicles (including possible leased vehicles) appear regardless of the name on the vehicle registration.
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Watercraft ownership including state registrations and boating accidents.
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Aircraft registrations.
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Professional licenses.
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Business affiliations.
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IDRS provides filing and payment history by using specific command codes. The following are IDRS command codes used for NRP.
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INOLE - Displays filing requirements such as current name and address.
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DDBKD - Displays the person who may be entitled to claim the child indicated on the return, who actually claimed the child, the number of returns on which the child was claimed, and if the child filed a return and claimed their own exemption.
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DDBOL - Displays the possible erroneous claim of a person receiving public assistance.
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RTVUE - Displays return items from Form 1040 (as filed, and as changed during processing).
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IRPTR - Displays IRP (income) information: K-1s, 1099, etc.
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IMFOLI - Displays filing history, module balances (if any).
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IMFOLT - Displays a list of posted transactions to a specific period.
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PMFOL - Displays Payer Master File information such as whether the entity filed W-2s and/or 1099s.
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NRP training Module B (Case Building Tools and Classification Overview) contains a more detailed description, benefits and how to leverage each of the aforementioned IDRS command codes.
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Upon completion of the case building process, NRP selected returns will be analyzed (classified) by highly skilled, well-trained classifiers who will determine if the return should be considered accurate as filed or if more data collection is necessary to make a determination about the accuracy of the return. If more data collection is necessary, the classifier will make a determination about the best way to obtain the data. If in the judgment of the classifier (taking into full consideration the sufficiency of the data and the complexity of the return under consideration) a decision can be made to accept the return as filed, no further examination techniques will be necessary. If the return cannot be accepted as filed, it will be identified for examination through either correspondence or face to face techniques.