A completed Form 13814, TEFRA Linkage Package Check Sheet verifying all required items are included in the Form 8340 package;

The Form 8340 ( IRM Exhibit 4.29.3-1);

A complete copy of the TEFRA key case return, including all attachments, all Schedules K-1 and all Schedule K-1 attachments;

One additional copy of all Schedules K-1 with all attachments and the MFT of the investor properly annotated on each Schedule K-1 either in the top margin or the investor name and address area. If the year-end of the investor is other than 12/31, the year-end must also be annotated;

An adding machine tape, or spreadsheet, reflecting the reconciliation of the income or loss on the Schedules K-1 to the total income or loss shown on the key case return; or an adding machine tape adding all of the investors income or loss percentages adding up to 100.00% (+ or - due to rounding);

A current AMDISA print to verify that the key case is on AIMS; and

A dated copy of the NBAP that was mailed (certified) to the TMP by the Revenue Agent. The copy of the NBAP must be the " generic" NBAP mailed to the TMP. The generic NBAP is addressed:

• The Tax Matters Partner
• Partnership Name
• Partnership Street Address (or PO Box)
• Partnership City, State, Zip

Although not required, an NBAP may also be mailed (certified) to the TMP by name and title:

• Name of Individual or other entity, TMP
• Partnership Name
• Partnership Street Address (or PO Box)
• Partnership City, State, Zip

The Form 8340 package will be transmitted to the CTF via a Form 3210. The CTF will acknowledge the Form 3210 within three days of receipt. If the individual who would normally acknowledge the Form 3210 is unavailable, the manager will ensure the Form 3210 will be acknowledged by another employee (or himself/herself) within that three -day period. The individual signing the Form 3210 is only acknowledging that a package was received. It does not mean that the package was complete or that everything listed on the Form 3210 was actually received. If the Form 8340 package is returned to the originator for any reason, it too will be sent via a Form 3210 and it must also be acknowledged by the originating area within a three day period.

Verify Schedules K-1 were annotated by field office personnel with the MFT of the taxpayer. Special care must be taken with BMF accounts that the MFT is correct and that the FYM (Fiscal Year Month for fiscal year returns) is correctly entered if the year-end is not a 12/31 year end.

If less than 12 months remain on the key case statute, a memo from the appropriate Division Executive must accompany the original package. It should include why the case was initiated with less than twelve months on the statute.

The key case administrative file should contain separate divisions or folders for:

• A complete copy of the return (including all attachments)
• Schedules K-1 (and all attachments)
• Copies of the NBAP's
• A division for the anticipated receipt of Report 22-3, National Directory, and the action copy of the Form 886-Z(C), Partners' or S Corporation Shareholders' Shares of Income
• Copies of executed agreement forms when received
• In addition to the divisions or folders mentioned, additional divisions or folders may be utilized by the CTF as needed or desired.

The action copy of Form 886-Z(C) will be noted when settlements are received or when partners or shareholders are removed from the unified TEFRA proceeding.

CC TSLODK produces Form 886-Z(C) , which must be compared to the Schedules K-1 for the notice partners to verify that they are listed correctly.

The CTF will send the NBAP to each notice partner using certified mail, within 30 days of receipt of the Form 8340 package from the area. Spouses are not required to be sent a separate NBAP unless the spouse is listed separately as a partner on the Schedule K-1, or otherwise identified as a partner on the partnership return.

Within 10 days after mailing of the NBAP, two copies of the Form 886-Z(C) will be sent to the area PCS Coordinator who will forward them to the area revenue agent. One copy of the Form 886-Z(C) will be placed in the CTF key case administrative file.

The CTF will update the key case 120 day date on the PCS using CC TSCHG, item number 13. The 120 day date is computed by adding 120 days to the date the NBAP was mailed to the last notice partner.

A copy of the investor's Schedule K-1 should be attached to the Form 5546.

The Form 5546 should be annotated with the key case CTF information and forwarded to the investor CTF.

The original of the Form 5546 is filed in the key case administrative file.

These accounts do not establish on AIMS and no Form 5546 is produced.

This condition may be caused by an input error, an incorrect MFT, tax period, or name control. This condition may also be caused by the lack of a TC 150 or the requested module is on retention.

The TC 424 Reject Register is distributed weekly to each CTF.

Status code 99 rejects must be worked promptly by each CTF.

TSUMYP can be used to check if linked investors match Schedules K-1. (See IRM 4.29.2.2.)

Partner or shareholder linkages without a full AIMS data base which appear with a name control and no statute date must be perfected before they drop off the data base;

Each Schedule K-1 investor that does not appear on Report 22-3 must be re-established;

Investors in status 90 must be checked to ensure that they have not closed prematurely;

Key Case and investor TEFRA indicators must be checked; and

The Report 22-3 must be filed in the key case administrative file.

The CTFs will follow up on key cases that were updated to status 90 to ensure that all partners or shareholders have agreed or that notice of a defaulted FPAA was received from the field.

The administrative files of key cases that have been updated to status 82 must be flagged to show that the case is in docketed status.

The investor CTF will coordinate with the function charged with the return to obtain a copy of the return for the investor's suspense file. (see Note)

The investor CTF will request the return be transferred along with the AIMS controls to the CTF for suspense when the other function completes its action(s) on the return.

When the copy of the return is received, the investor CTF will reconcile the Schedule K-1 to the investor return.

The return and Schedule K-1 must be reconciled.

If the amounts shown on the Schedule K-1 do not equal the amounts shown on the return, an inquiry must be sent to the taxpayer requesting an explanation for the discrepancy.

All taxpayer responses should be screened by technical personnel who will identify actions needed as follows. Other responses will be analyzed by technical personnel on a case by case basis.

If nonTEFRA issues warrant examination, the return will be stamped "Selected" and will be sent via Form 3210, Document Transmittal, to the appropriate area for examination of these issues. The area will acknowledge the Form 3210 within three days of receipt. If the individual who would normally acknowledge the Form 3210 is unavailable, the manager will ensure the Form 3210 will be acknowledged by another employee (or himself/herself) within that three day period.

The investor CTF must keep a copy of the return sent to the area. This copy should be noted "Copy-original sent to area" .

Any return that the area does not choose to examine should be stamped "Surveyed" , updated on AIMS to Status Code 34, EGC 5817, and returned to the CTF via Form 3210. The CTF will acknowledge the Form 3210 within three days of receipt. If the individual who would normally acknowledge the Form 3210 is unavailable, the manager will ensure the Form 3210 will be acknowledged by another employee (or himself/herself) within that three-day period.

All Schedules K-1 must be reconciled to the investor returns.

If no nonTEFRA issues are identified during screening, the return will be updated on AIMS to EGC 5818 and placed in CTF suspense pending completion of the TEFRA key case examination(s).

The CTF screeners will stamp each return " Accepted - for NonTEFRA Issues Only" before placing it in suspense.

Form 8341 is used for loading the investors by CC TSLOD (then TSLODA) establishing and linking these returns.

When returns and/or Form 5546 for tiered investors are received, the procedures outlined in (3) above must be followed.

Where the amounts do not reconcile, appropriate action will be taken to clarify mismatched information through taxpayer contact (see IRM 4.10, Examination of Returns).

This mismatch may be attributable to a variety of situations (i.e., the name on the Schedule K-1 may be a nominee, actual losses may exceed the allowable loss limitation, etc.).

After contact, any pertinent information will be provided to the key case CTF.

Any adjustments to the principal entity may flow to individual taxpayers (i.e., the partners of the tier partnership, the shareholders of the S corporation, and the beneficiaries of the trust, etc.) through the particular entities of which they are members and not directly from the principal entity.

When a tiering situation is found, necessary steps to control the additional returns should be taken.

This includes the preparation and submission of Form(s) 8341 for the additional tier(s).

If the second tier has TEFRA and nonTEFRA issues, the second tier will be resolved as the issues are resolved.

First tier investors are notified and assessed their share of any TEFRA first tier (key case) examination results. Additionally, the second tier investors are separately notified and assessed for their share of any TEFRA first tier examination results.

The second tier investors will be separately notified and assessed for their share of the nonTEFRA examination results.

If the investor return is established on AIMS in another employee group code, contact that function for a copy of the return and note the investor file history sheet.

Send that function a copy of the " FLOW THROUGH NOTIFICATION Charge-Out" ; alert them to make a partial assessment and route the return to the CTF after resolution of their issues.

If the investor return is LMSB CIC corporation, Joint Committee or other corporate specialty, send the Flow Through Notification Charge-Out to the function with the return and do not request a copy of the return. The CTF will not be making any adjustments to the investor return. The area with control of the return will be suspensing that return awaiting the results of any TEFRA examination(s) and will make any necessary adjustments when the examination results of the key case flow-through entity(ies) are known.

Research for a better DLN and order the return from files using CC ESTAB;

Research IDRS using CC TXMOD with a definer "A" to identify an open case control in an area other than Examination (IMFOL or BMFOL may be utilized to find a "route" for a TXMOD);

Research the MFT for TC 922; if present, contact the Underreporter Function for a copy of the return and coordination of any proposed assessments; and

If after performing follow-up steps, the investor CTF is still unable to secure the original return, contact the taxpayer for a copy. Do not contact the taxpayer if there is a "Z" Freeze or a TC 914 on the taxpayer account. If there is a "Z" Freeze or TC 914 on the taxpayer account, give the file to the TEFRA Coordinator for immediate, appropriate action.

Secure a TSUMYI print to verify that the return is linked to a TEFRA key case. If no linkage is shown, check to see if the return is needed for a carryback or carryover issue. If the return is not needed, reject the transfer by updating AIMS to the prior employee group code and status code and return the case to the area or to the function, which initiated the transfer.

Order a TXMOD, IMFOL or BMFOL to determine that necessary partial adjustments were assessed.

If partial agreements were secured and have not been assessed, return the investor file to the originating office for assessment provided adequate time (more than six months) remains on the statute. Update AIMS to the prior originating office employee group code and status code. Retain a copy of the return in the TEFRA suspense file.

If adequate time does not remain on the statute, the CTF must make the partial assessment. Provide feedback to the originating office.

Upon verification of the assessment, identify the TEFRA linkages and reconcile the return to the Schedules K-1. Identify any potential carryback and carryover issues. Update AIMS to employee group code 5818 and status code 34. File the investor file in the investor suspense files.

If an investor suspense file was already created, combine the contents of this file with the return package and refile in the investor suspense inventory.

An advance payment of deficiency and interest;

An attempted removal from the TEFRA proceedings;

An adjustment related to a TEFRA partnership or S corporation;

A Form 1045, Application for Tentative Refund, based on a carryback from or to a suspensed year;

Protective claims (this administrative provision does not apply for TEFRA cases), see IRM 4.31.4 of this IRM (under Administrative Adjustment Requests); and

NonTEFRA issues resulting in a claim for a refund or an additional balance due.

Screen the document(s) to see if the amended return or claim relates to a TEFRA return;

Secure the investor file from the suspense files and associate the document (timely) with a TSUMYI print and an IMFOLT print;

Forward all Form 1040X and claims to a technical employee for screening, and update AIMS to EGC 5808 (local option);

Perform technical screening to determine whether:

• The necessary assessments have been made, and if an assessment is required, ensure that it is made
• The claim is allowable
• A formal claim disallowance is required (this provision does not apply to TEFRA returns)
• The taxpayer needs to be advised that the claim filed is related to a TEFRA examination
• The amended return or claim (including protective claims for nonTEFRA cases) is worthy of examination and requires forwarding to the field for examination

All BMF returns ( Form 1041 , Form 1065, Form 1120, U.S. Corporation Income Tax Return, and Form 1120S) should be screened by revenue agents for nonTEFRA and potential carryback or carryover issues;

Generally, all tiers with more than 50 partners should be reviewed by revenue agents to determine if linkage is warranted. The decision to link, or not link should be notated in the case file. There may be instances where it will be necessary to contact the field regarding the potential key case adjustments. Due to the amount of time it takes to secure returns, the campus should always err on the side of linkage if there is any question in whether or not to link.

Tier returns not linked will be considered a no-load tier.

If the potential adjustments are material, Form 8341 will be prepared to establish PCS linkage using CC TSLOD to link the partners, shareholders, or beneficiaries to the tier;

The Schedules K-1 (and any Schedule K-1 attachments) from the tier should be copied for establishment of the investor files; under NO circumstances should the original Schedules K-1 be used to establish the investor files;

Special care should be taken when a tier is an investor in two or more key cases (this is called a multi-linked tier), or is a key case in its own right;

When a Form 886-S, Partners' Shares of Income, Deductions, and Credits, a Form 886-W, Beneficiary's Shares of Income, Deductions, Credits, Etc., or a Form 886-X, Shareholders' Share of Income, Deductions, and Credits is used to reflect the distributive share of income (loss), the report writer must note whether the individual partner, shareholder, or beneficiary should be closed as a full closure, or as a partial closure and then suspensed;

When the tier investor returns are received, they should be screened for nonTEFRA issues, discrepancies in Schedule K-1 reporting and/or carryback or carryforward issues; and

Tiers linked with their investors must have reports written even if the adjustments to the investor returns at this level are not material.

The one-year date for multiple level tiers should be input on PCS in a timely manner even though the flow-through tier reports may not be prepared until a later date.

Determine the one-year assessment statute date and input it on the PCS (or to the longest period allowed on the PCS). Generally, the one-year assessment statute date is one year from the date on which the taxpayer filed for bankruptcy, although the actual limitation on assessment may be longer. Consult Area Counsel if the IRC 6229(f) period may expire prior to assessment.

Remove the partner TEFRA indicator on PCS (see note below). Two changes (box 11 on Form 8339) are needed to properly remove the TEFRA indicator and identify the taxpayer's bankruptcy filing. Input TSCHG Item No 22-B and 29-B in box 11. (To input both of these changes may require it be done in two steps.) If the investor has more than one linkage to a key case, these TSCHG items are required for all key case linkages.

Input the literal "Bankrupt" in the investor's user special message field.

Forward a Form 3210 to the key case CTF clearly marked with the one-year assessment statute date and the notation "Bankruptcy - TEFRA investor" .

If the investor CTF has the AIMS data base, update AIMS to the area office status, PBC, SBC and EGC code and forward the investor file via Form 3210 to the CWSD function of the field office shown on AIMS (see note below). The area office will acknowledge the Form 3210 within three days of receipt. If the individual who would normally acknowledge the Form 3210 is unavailable, the manager will ensure the Form 3210 will be acknowledged by another employee (or himself/herself) within that three day period.

When an AM424 reject shows that a CI freeze code TC 914 is on an investor's module, AIMS and PCS controls cannot be established. The key case CTF will establish the investor account on non-Master File. The CTF will coordinate with CI to reverse the freeze. When the freeze is removed, Master File linkage will be established.

If the CI freeze code TC 914 cannot be reversed, agreement must be reached with CI on issuance of TEFRA notices and procedures for assessments.

If CI determines that an investor account is subject to their jurisdiction, the investor will be removed from TEFRA suspense.

The investor must receive notice in accordance with Treas. Reg. section 301.6231(c)-5. Delegation Order 4-19 allows SB/SE Area Directors of Compliance; LMSB Industry Directors; Appeals Director, Technical Services; and Appeals Directors, Field Operations to issue such notices.;

The investor TEFRA linkage indicator will be removed using CC TSCHG. If the investor has more than one key case linkage, using TSCHG to remove the linkages is not possible. The key case CTF(s) must use CC TSDEL to remove the linkages.

Notification that the partnership items have converted to nonpartnership items and that no more notices should be issued to the taxpayer will be sent to the key case CTF, if different from the investor CTF, via Form 3210. The key case CTF office will acknowledge the Form 3210 within three days of receipt. If the individual who would normally acknowledge the Form 3210 is unavailable, the manager will ensure the Form 3210 will be acknowledged by another employee (or himself/herself) within that three day period.

Ensure that the Form 906 applies to a TEFRA issue;

Ensure that the Form 906 is valid and properly countersigned; and

Determine if nonTEFRA issues are open under old Form 872, Consent to Extend the Time to Assess Tax, or Form 872-A, Special Consent to Extend the Time to Assess Tax.

The 60-day procedures must be followed whether the key case is agreed, unagreed, or no changed if at least one investor did not execute a Form 870-PT or Form 870-LT. ( Form 870-P or Form 870-L for tax years ending before August 6, 1997.)

The TS will prepare a 60-day letter for the TMP and for the TMP's power of attorney (POA), if applicable, but only if the partner requests that the power cover TEFRA proceedings in a statement furnished to the Service.

After updating the key case to status code 22, the package will be forwarded to the key case CTF using Form 3210.

The CTF will review package for completeness and acknowledge the Form 3210 within 3 days of receipt.

An original undated 60-day ( Letter 1827(DO)) letter addressed to the TMP for the partnership and signed on behalf of the appropriate designated field official;

A Form 870-PT (a Form 870-LT with Letter 1829(DO) may be appropriate in certain circumstances) addressed to the TMP including a schedule of adjustments which shows all adjustments to each adjusted item;

A complete copy of the revenue agent's report including the Form 4605-A, Examination Changes-Partnerships, Fiduciaries, S Corporations and Interest Charge Domestic International Sales Corporations, an explanation of all adjustments, and the appropriate distribution schedule;

If applicable, a copy for the POA of the 60-day letter addressed to the TMP, with the cover letter ( Letter 937);

Three additional copies of the completed 60-day letter addressed to the TMP (One copy to accompany mail out, one to keep in the case file, and the last to send back to the originator to show proof of mail out);

A field office return address envelope addressed to the TMP;

A field office return address envelope or labels addressed to the POA, if applicable;

A Letter 886-Z(C) with correct distributive shares completed for each adjusted item;

A return address envelope or labels with the TS return address;

A supplemental report for penalties, if applicable, including statutory notice language (not used for tax years ending after August 5, 1997); if penalties are not applicable, it should be noted in the package;

A Form 3210 annotated as a 60-day letter package ( IRM Exhibit 4.31.2-6) which clearly reflects the key case name, tax years(s), EIN, statute date, RAR, Letter 886-Z(C), number of TMP letters, POA letter, affected items report, and penalties; and

A completed check sheet verifying all required items are included in the 60-day letter package. ( IRM Exhibit 4.31.2-7)

Unlinked notice investors must be re-linked using CC TSLODA, and the investor's Schedule K-1 name and address must be input using CC TSCHG. Research for the most current address available.

If a correct TIN was not identified, an NMF database must be established using CC AMNON before input of TSLODA.

All investors who had their partnership items converted to nonpartnership items must have the "TEFRA" indicator removed.

DO NOT use a one-year assessment date to prevent notices from being generated, because entering a one-year date will distort PCS reports.

Investor letters will be folded and enclosed in envelopes bearing the return address of the CTF, including a return envelope for the investor.

The 60-day certification listing will be initialed and dated and all letters, including the TMP (and POA, if applicable), will be mailed simultaneously.

A dated copy of the 60-day letter issued to the TMP (and the POA) and a copy of the certification will be forwarded to the TS with a Form 3210.

Whatever enclosures are sent to the TMP must also be sent to the POA, if applicable.

A Form 3210 annotated as a settlement offer package which clearly reflects the key case name, tax year, EIN, and statute date;

A Form 5402, Appeals Transmittal and Case Memorandum;

A letter to the TMP, (generally not applicable);

A Form 870-PT(AD) or Form 870-LT(AD), ( Form 870-P(AD) or Form 870-L(AD) for tax years ending before August 6th, 1997 or Form 870-S(AD) for S-corporation tax years beginning before January 1, 1997) including a schedule of adjustments which identifies the items adjusted and the amount of each adjustment;

If available, include a copy of the docket sheet;

A copy of the Appeals Case Memo (ACM) (formerly, supporting statement) for the partnership marked "Information Only - Do Not Mail to Taxpayer." ;

A Form 886-Z(C) with corrected distributive shares for each adjusted item as reflected in the settlement offer (Appeals does not use Form 886-Z(C) for a no change settlement.);

A completed Form 4605-A (Appeals does not use Form 4605-A for a no change settlement);

Penalty information. For tax years after August 5, 1997, penalties are included on Form 4605-A. Penalty information includes the following:

• An instruction to mail penalty notices to non-notice partners, if necessary;
• If the TMP has signed an agreement to bind non-notice partners, a special insert is sent to non-notice partners explaining that they should sign for penalties if they wish to accept the offer;
• Special instructions, if any, for the mailing of penalties; and
• If penalties are not applicable, it should be noted in the package.

A Form 5402;

Appeals case memos (formerly supporting statements), if not included on the Form 5402;

A missing Form 886-Z(C) (Appeals does not use Form 886-Z(C) for a no change.);

A missing Form 4605-A (Appeals does not use Form 4605-A for a no change.); and/or

An omitted schedule of adjustments.

If it is determined that additional letters are needed, they will be generated by the PCS or manually prepared.

A copy of the schedule of adjustments received from Appeals will be attached to each investor letter.

Investor letters will be folded and enclosed in envelopes bearing the return address of the CTF, including a return envelope for the investor unless Appeals specifically instructs otherwise and includes a return envelope for the investors.

One copy of the No Adjustment Letter ( Letter 2621) the Revenue Agent sent to the TMP, as required;

A Form 4605-A showing that no adjustment has been made; and

Form 886-Z(C) clearly labeled "No Adjustment" on the top of the form.

One copy of the No Adjustment Letter, Letter 2621;

Form 4605-A; and

Form 886-Z(C) clearly labeled "No Adjustment" on the top of the form.