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Part 4. Examining Process

Chapter 71. Employee Plans Examination of Returns

Section 12. Case File Assembly Guidelines

4.71.12  Case File Assembly Guidelines

4.71.12.1  (04-01-2007)
Case File Assembly Overview

  1. The following guidelines and procedures are provided for EP examiners in the assembling of EP examined Forms 5500, 5330, 990-T and Forms 1040/1120 discrepancy adjustments.

  2. Guidelines for the assembling of claims are set forth in IRM 4.71.12.8, hereunder.

  3. These guidelines apply to cases forwarded from the EP group to EP Mandatory Review, Special Review or to the EP Closing Unit.

4.71.12.2  (04-01-2007)
Key Concepts

  1. An examination may involve various related returns. There may be multiple years, multiple plans, related taxpayers, and various types of returns.

    1. To the extent possible, related returns will be assembled and processed together as a group of case files.

    2. Each examined return will be placed in its own individual case file folder.

    3. The related returns within the group of case files will be organized into packages of returns based upon return type, plan number and taxpayer as exemplified in IRM 4.71.12.2(3), below.

  2. The definitions of key terms as they relate to these guidelines are as follows:

    1. Lead Exam File — The originally assigned return is considered the Lead Exam File. The Lead Exam File should be on top and identified by labelling it as such. This file should contain a complete set of workpapers, a case chronology record, and a copy of all correspondence relating to any year in the Case File Package. This file will also contain a closing document (Form 5650 or Form 5599 as applicable) and the subject return. See IRM 4.71.12.3 below for additional instructions.

      Note:

      If the complete set of workpapers encompasses documents giving rise to a Related Exam (i.e., a Form 5500 exam gives rise to a Form 5330 exam) then those workpapers relating to the related file (i.e., Form 5330 file) should be copied and placed in the Primary Related Exam File, as noted in paragraph c) of this section.

    2. Related Exam File — All returns that are examined with the Lead Exam File are Related Exams. These are identified by labelling these folders as Related Exam Files. These cases can be other Forms 5500, or related Forms 5330, 1040, etc. These files will each contain a closing document (Form 5599, TE/GE Examined Closing Record, or Form 5650, EP Examined Closing Record) and the subject return. One file will be labelled as the Primary Related Exam File as described in the following paragraph. See IRM 4.71.12.5 below for additional instructions.

    3. Primary Related Exam File — the oldest year in each related Case File Package will be tagged as the Primary Related Exam File. This file should contain a complete set of workpapers, a case chronology record, and copies of any correspondence related to any year in the Case File Package. See IRM 4.71.12.3 below for additional instructions.

    4. Case File Package — A Case File Package is a group of like returns. For example, all Form 5500 years examined for plan #001 for the XYZ Corporation would be in the same Case File Package. Any Form 5330 returns for the XYZ Corporation related to plan #001 would be in a separate Case File Package.

    5. Top to Bottom — Assemble documents beginning with that listed first on the top and ending with the document listed last on bottom.

  3. Example : An examination of Plans #001 and #002 of the XYZ Corporation for the years ending 200012, 200112, and 200212 disclosed prohibited transactions from Plan #001 and resulted in securing Forms 5330 for 200012 and 200112 for the disqualified person Mr. X. Forms 5330 were also obtained for 200012 and 200112 for the XYZ Corporation relating to Plan #001. The result is one group of returns with four case file packages contained in ten file folders as follows:

    1. Case File Package #1– contains Forms 5500 for Plan 001 for 200012 (labelled as the Lead Exam File) and two Related Exam Files for 200112 and 200212 (each within a separate file folder). The file folder for the year 200012 would contain a complete set of workpapers, the closing document, the subject return and all correspondence related to Plan 001. Each other Related Exam File will contain only the closing document and the subject return.

    2. Case File Package #2 – includes Forms 5500 for Plan 002 for 200012 marked as the Primary Related Exam File and two Related Exam Files for 200112 and 200212, with each return in a separate file folder. The file folder for the year 200012 will contain a complete set of workpapers, the closing document, the subject return and all correspondence related to Plan 002. The other Related Exam Files will each contain the closing document and the subject return.

    3. Case File Package #3 –includes Forms 5330 for Mr. X for 200012 labelled as the Primary Related Exam File and the Related Exam File for 200112, with each return in a separate file folder. The Primary Related File folder for the year 200012 will contain a complete set of workpapers, the closing document, the subject return and all correspondence related to Forms 5330 for Mr. X. The Related Exam File will contain the closing document and the subject return.

    4. Case File Package #4 – includes Forms 5330 for the XYZ Corporation for 200012 marked as Primary Related Exam File and the Related Exam File for 200112, with each return in a separate file folder. The file folder for the year 200012 will contain a complete set of workpapers, the closing document, the subject return and all correspondence related to Forms 5330 for XYZ Corporation. The file for 200112 will contain only the closing document and the subject return.

4.71.12.3  (04-01-2007)
Assembly Guidelines for All Files

  1. Outside-front — The following items, if applicable, should be stapled to the outside front of all files from top to bottom:

    1. Form 10329, Transmittal Sheet — Related Cases (if applicable).

    2. Form 895, Notice of Statute Expiration , if applicable.

    3. Form 3198–A, TE/GE Special Handling Notice. See information in the paragraph immediately following for specific instructions on completion of Form 3198-A.

      Note:

      Form 3198-A must be attached to each case file.

  2. The following items must be completed on Form 3198-A:

    1. Check the box for EP.

    2. Complete the information related to the agent assigned the case in the "Required Entries" section - Person to Contact, Employee ID#, Phone #, POD, and Group.

    3. Complete the information related to the case file in the " Required Entries" section - EIN/SSN, MFT, Plan # (if applicable), Year and Taxpayer's Name. Also mark any box that applies to the case.

    4. In the "Required Entries" section under " Earliest Statute Date Is:" enter the statute date of the case to which the Form 3198-A is attached.

    5. The rest of the form is used to alert IRS personnel involved in processing the case of specific actions that should be taken and of special case features. Select items that apply and input any necessary information.

  3. Examples of other items to be completed for proper processing of the case are as follows:

    1. If the case involves a discrepancy adjustment, indicate accordingly in the "Special Features" section.

    2. Indicate if the case is subject to Mandatory Review and the reason for such processing.

    3. Indicate if this is an Unagreed Case.

    4. For Form 1040 discrepancy adjustments in which interest is required to be suspended under IRC 6404(g), provide instructions in the " Other Instructions" section in accordance with paragraph 7 of IRM 4.71.4.5.1.

      Note:

      The highlighting of such information is crucial to assuring that the ESS properly follow processing instructions to the case file to implement the actions needed.

  4. Inside-left — The following items, if applicable, should be securely attached to the inside-left of the Lead Exam File or the Primary Related Return File (for the package to which it relates), from top to bottom:

    1. Computer disks containing required information. These disks should be labeled and placed in separate envelopes. For example, an "Unagreed" case would include a disk with a Revenue Agent Report (RAR) , a 30-Day Letter, and any attachments that are part of the RAR.

    2. Print-out of the completed CECA checksheet for Form 5500 examinations for every disposal code other than disposal code 02 – No Change.

    3. File copy of Form 5457, Response to Reviewer’s Memorandum — EP/EO(to be placed here when the case is being closed from Mandatory Review or Special Review to the EP Closing Unit).

    4. File copy of Form 5456, Reviewer’s Memorandum — EP/EO (to be placed here when the case is being closed from Mandatory Review or Special Review to the EP Closing Unit).

    5. Other checksheets for special projects flagged for proper disposition.

  5. Inside-right — The following should be placed from top to bottom on the inside-right of the file:

    1. If the case is being sent from the group to EP Mandatory Review (or Special Review) or from EP Mandatory Review (or Special Review) to the group due to issuance of a Reviewer’s Memorandum, the Forms 5457 Response to Reviewer’s Memorandum — EP/EO and 5456 Reviewer’s Memorandum — EP/EO should be placed on the right hand side of the case file, loose and on top of all other items.

    2. For "Agreed Tax Change" (Disposal Code 03) cases, as applicable, completed (signed and dated by the taxpayer) Forms 4549–E (Income Tax Discrepancy Adjustments), 2504 (Agreement to Assessment and Collection of Additional Tax and Acceptance of Over-assessment), or 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Over-assessment).

      Note:

      If additional excise tax or penalties are being assessed to an already filed return, attach calculations.

    3. Form 1900 if the return is being surveyed.

    4. For "Unagreed" cases closed from the group to EP Mandatory Review, see IRM 4.71.12.6, below.

    5. Form 4442, Inquiry Referral on top of the closing document.

      Note:

      This is the Form to be used to make entity changes for correcting information on Forms 5500 returns. Instructions for the completion of Form 4442 can be found in the "EP AIMS Newsletter " , volume 4, September 2004.

    6. Closing document and return clipped together in one package. For all cases (both "Agreed," and" Unagreed" ) see IRM 4.71.12.3.1, below.

    7. All workpapers should be rubber-banded or clipped together and placed in the order as noted in IRM 4.71.12.4, below.

4.71.12.3.1  (04-01-2007)
The Closing Document and Return Package for Both " Agreed" and "Unagreed" Exams.

  1. The closing document and return package should be organized and clipped together, as follows:

    1. Form 5650 EP Examined Closing Recordor Form 5599 TE/GE Examined Closing Record.

      Note:

      Form 5599 is used to close Forms 5330 established on master file, Forms 1040/1120 discrepancy adjustments and 990–T.

    2. Current AMDISA print stapled to the left side of the Form 5650 or Form 5599. This print should be generated when the case is closed from the group. The purpose of the print is to show that the case has been updated to status 53 when the case is being closed to ESS or status 52 when the case is being closed to Mandatory Review or Special Review.

    3. Applicable return with the following documents (as applicable) clipped together, as described below:

      Form No. Form Name Treatment/Arrangement
      2848 Power of Attorney and Declaration of Representative Stapled face down to the back of the first page of each return to which it applies.
      872 or 872-H Consent to Extend the Time to Assess Tax Stapled face down to the back of the last page of the return with the most current on the top.

      Note:

      Form 56 may apply, see below.
      56 Notice Concerning Fiduciary Relationship Stapled to the back of the Form 872 or 872-H to which it applies.
      3198–A TE/GE Special Handling Notice If the applicable return is a delinquent return that was forwarded to the Service Center for processing (inclusive of penalty assessment instructions) include a file copy.
      3244–A Payment Posting Voucher – Examination Attach the file copy of the Form that was processed with a tax or penalty payment by stapling to the left side of the first page of the return.
      none EP Classification Sheet Stapled face down to the back of the return.
      5546 Examination Return Charge-Out Sheet Attach (including labels) to the very back of the return – on top of the EP Classification Sheet

    4. Audit CAP Closing Agreement (fully authorized with original signatures).

4.71.12.4  (04-01-2007)
Workpaper Organization

  1. All workpapers should be rubber-banded or clipped together and placed in the order as noted below, from top to bottom. Workpapers must be indexed to the Form 5772. Nothing should be marked to purge. EP examiners themselves should purge any documents that are duplicates, immaterial, and/or unsubstantive to the examination issues. All correspondence and information prepared for and transmitted to the taxpayer must be saved.

    1. File copy of the closing letter(s) with the notation, " Copy - Letter Sent to Taxpayer" .

    2. File copy of the Revenue Agent Report.

    3. Form 4632 & 4632A, if the case involves a referral received from an Examination Functional Unit.

    4. Form 5772, EP/EO Workpaper Summary.

    5. Form 5773, Workpaper Continuation Sheet.

      Note:

      Form 5773 is optional only if all examination findings are documented within the workpapers.

    6. Form 5464, Case Chronology Record.

    7. Workpapers and exhibits indexed to Form 5772.

    8. File copy of Form 6212–B, Examination Referral Checksheet B, indexed to Form 5772 as workpaper S–1 (the file copy of referrals sent to the US Department of Labor (DOL) including any attachments).

      Note:

      The original Form 6212–B should have been previously routed to DOL through EP Classification in Baltimore, MD by the EP examiner in accordance with IRM 4.71.6. The case must remain open until the earlier of twenty days from the date mailed to Classification, or the date feedback is received.

    9. If applicable, a file copy of Form 6533, Examination Referral Checksheet (for PBGC), indexed on Form 5772 as workpaper S–2 . If a referral was required, the original Form 6533 should have been previously routed to PBGC with a courtesy copy to EP Classification in El Monte, CA in accordance with IRM 4.71.6.

    10. SCP Form (formerly APRSC Form) reflecting approval by the Self-Correction Program (SCP) coordinator and/or manager, if required by your Area’s CAP requirements indexed as workpaper T-1 or T-2.

    11. Audit CAP checksheet reflecting approval by the CAP Coordinator and/or Manager, if required by your Area's CAP requirements indexed as workpaper T-1 or T-2.

    12. If applicable, Form 6212–A, Examination Referral Checksheet, (the file copy of referrals received from DOL including any attachments) indexed to Form 5772 as workpaper T-3.

      Note:

      Form 6212–A is a form sent from DOL to make referrals to IRS.

    13. If applicable, Form 5666, TE/GE Referral Information Report (file copies of Forms 5666 both sent and received including any attachments) indexed on Form 5772 as workpaper T–3–1.

      Note:

      The original Form 5666 (with supporting documentation) should have been sent directly to EP Classification in El Monte, CA by the EP examiner in accordance with IRM 4.71.6.

    14. Copy of Form 5346, Examination Information Report, including attachments supporting the referral, if applicable. This should be indexed on Form 5772 as workpaper T–3–2.

      Note:

      The original Form 5346 (with supporting documentation) should have been previously routed to the Examination Functional Unit (LMSB or SB/SE) through EP Classification in El Monte, CA by the EP examiner in accordance with IRM 4.71.6.

    15. Correspondence between the Service and the taxpayer assembled in chronological order with the most recent letter on top (initial contact letter at the bottom).

    16. Copies of delinquent return processing documents (Form 3210, Form 4571, etc.) if applicable.

    17. Copy of Form 5597 if the return was established in the group.

    18. Prints of IDRS research.

    19. Miscellaneous items.

4.71.12.5  (04-01-2007)
Special Assembly Guidelines for Related Exam Files

  1. Outside-front — The following items, if applicable, should be stapled from top to bottom to the outside-front of each Related Exam File to which it pertains:

    1. Form 10329, Transmittal Sheet — Related Cases (if applicable).

    2. Form 895, Notice of Statute Expiration. All entries on the Form 895 should be completed and updated prior to closure of the case from the group.

    3. Form 3198–A, TE/GE Special Handling Notice, should be completed and include relevant information.

  2. Inside-right — The following should be placed from top to bottom on the inside-right of the file:

    1. For "Agreed Tax Change" (Disposal Code 03) cases, as applicable, completed (signed and dated by the taxpayer) Forms 4549–E (Income Tax Discrepancy Adjustments), 2504 (Agreement to Assessment and Collection of Additional Tax and Acceptance of Over-assessment), or 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Over-assessment).

      Note:

      If additional excise tax or penalties are being assessed to an already filed return, attach calculations.

    2. For the guidance in assembling the closing document and subject return package refer to IRM 4.71.12.3.1, above.

4.71.12.6  (04-01-2007)
"Unagreed" Case Package

  1. Clip together in one package:

    1. The 30-Day Letter (unsigned and undated).

    2. Revenue Agent Report (RAR).

    3. Form 4549–E if assessing additional income tax.

    4. Form 870 if additional excise tax is being assessed.

    5. Form 5438 if excise tax is being assessed.

    6. Excise tax calculations if excise tax is being assessed.

    7. Penalty calculations if penalties are being assessed.

    8. Copy of Form 5597, if applicable.

    9. A substitute for return package. See IRM 4.71.5.9.2.

  2. See IRM 4.71.12.3.1 and 4.71.12.4, above for the remainder of the package.

4.71.12.7  (04-01-2007)
Additional Assembly Guidelines for All EP Exam Files

  1. Place in a red folder all files that contain a return for which the statute of limitations will expire within 210 days.

  2. If case files within a Case File Package are closed separately, a complete set of workpapers should be included in each file closed separately. See IRM 4.71.12.4, above.

4.71.12.8  (04-01-2007)
Special Case File Assembly Instructions for Claims

  1. A separate case file should be maintained for each year and return type for which a claim is being filed.

  2. See IRM 4.71.8 for procedures on EP claims.

  3. Outside-front — The following items, if applicable, should be stapled to the outside-front of the Lead Exam File and Primary Related Exam Files, from top to bottom:

    1. Form 10329, Transmittal Sheet - Related Cases (on the Lead Exam File only),

    2. Form 895, Notice of Statute Expiration. All entries on the Form 895 should be completed and updated prior to closure of the case from the group.

    3. Form 3198–A, TE/GE Special Handling Notice.

  4. Inside-left — The following items, if applicable, should be stapled or clipped to the inside-left of the Lead Exam and the Primary Related Exam Files, from top to bottom:

    1. Computer disks containing required information. These disks should be labeled and placed in separate envelopes. These disks for "Unagreed" cases would consist of the RAR, 30 Day Letter Package and any attachments that are part of the RAR.

    2. For "Unagreed" cases, a disk containing the RAR, 30 Day Letter Package and any attachments that are part of the RAR.

    3. Copy of Form 5666, TE/GE Referral Information Report, including attachments supporting the referral.

      Note:

      The original Form 5666 (with supporting documentation) should have been sent directly to EP Classification by the EP examiner in accordance with IRM 4.71.6.

    4. File copy of Form 5457,Response to Reviewer’s Memorandum — EP/EO(when the case is being closed from Mandatory Review to the EP Closing Unit).

    5. File copy of Form 5456, Reviewer’s Memorandum — EP/EO (when the case is being closed from Mandatory Review to the EP Closing Unit).

  5. Inside-right — The following items, if applicable, should be placed on the inside-right of the file in the order shown from top to bottom. If there are multiple years involving the same taxpayer for the same type of return, all applicable items will be placed in the file for the oldest year. Copies of items listed in c) to f) and h) and i), below, should be included in files for later years.

    1. If the case is being sent to or from EP Mandatory Review or Special Review as a result of a Reviewer’s Memorandum, the Form 5456, Reviewer’s Memorandum — EP/EO, and Form 5457, Response to Reviewer’s Memorandum — EP/EO, should be placed on the right hand side of the case file, loose and on top of all others items:

    2. Form 1900, Income Tax Survey After Assignment.

    3. For an "Agreed" claims disallowance, a signed Form 2297, Waiver of Statutory Notification of Claim Disallowance.

    4. For an "Agreed" claims disallowance, a signed Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit.

    5. For "Agreed Tax Change" (Disposal Code 03) cases should contain signed Forms 4549–E (Income Tax Discrepancy Adjustments), 2504 (Income Tax Discrepancy Adjustments), or 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Over-assessment).

      Note:

      If additional excise tax or penalties are being assessed, attached calculations.

    6. For "Unagreed" cases closed from the group to EP Mandatory Review, clip together in one package: Letter 3602–A, 30-Day Letter - EP Claim Denied, Form 2297, Waiver of Statutory Notification of Claim Disallowance , Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, and Revenue Agent Report (RAR)

    7. Amended return, Form 843 (Claim for Refund and Request for Abatement), or any informal claims.

    8. For the guidance in assembling the closing document and subject return package refer to IRM 4.71.12.3.1, above. All workpapers should be rubber-banded or clipped together and placed in the order described in IRM 4.71.12.4, above.

4.71.12.8.1  (04-01-2007)
Workpapers Organization for Claims Files

  1. All workpapers should be rubber-banded or clipped together and placed in the order below from top to bottom. Workpapers must be indexed to the Form 5772. Nothing should be marked to purge. EP examiners themselves should purge any documents that are duplicates, immaterial and/or not substantive to the examination issues. All correspondence and information prepared for and transmitted to the taxpayermust be saved.

    1. File copy of the closing letter indicating, "Copy - Letter Sent to Taxpayer" .

    2. File copy of the Revenue Agent Report.

    3. Form 5772, EP/EO Workpaper Summary.

    4. Form 5773, Workpaper Continuation Sheet.

      Note:

      Form 5773 is optional only if all examination findings are documented within the workpapers.

    5. Form 5464, Case Chronology Record.

    6. Workpapers and exhibits indexed to Form 5772.

    7. Form 5666, TE/GE Referral Information Report (file copies of Forms 5666 both sent and received including any attachments).

    8. Correspondence between the Service and the taxpayer assembled in chronological order with the most recent letter on top (initial contact letter at the bottom).

    9. Prints for all IDRS research.

    10. Miscellaneous items.


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