- 5.1.12.21 Refund Offset
- 5.1.12.22 U.S. Tax Court Subpoena
- 5.1.12.23 Backup Withholding — Overview
- 5.1.12.24 Indian Tribal Governments
- 5.1.12.25 Outgoing Mutual Collection Assistance Requests
- 5.1.12.26 Treasury Enforcement Communications System
- Exhibit 5.1.12-1 Suggested Text for Letter to Taxpayer to Apply for Exemption (Reference: IRM 5.1.12.12, Taxpayers Exempt from Taxation for Religious Reasons)
- Exhibit 5.1.12-2 Outgoing MCAR Data Sheet (Reference: IRM 5.1.12.25.4 , Procedures for Preparing an Outgoing MCAR Request )
-
There are four types of refund offset:
-
Individual Master File Automatic Refund Offset
-
Offset into a Business Master File Module
-
Offset out of a BMF Module
-
Offset Across the Individual and Business Master Files
-
-
Each type of offset is discussed below.
-
Follow the applicable procedures for each type of offset.
-
When an IMF taxpayer files a refund return:
-
the Master File automatically recognizes whether the taxpayer owes for another module within the IMF,
-
the refund is offset to pay the amount owed on the other module, and
-
the taxpayer is sent a notice which shows where the refund was applied.
-
-
A refund on an IMF return will be offset withouta TC 130 in certain situations. The following example explains those situations. In all of the following situations, TC 130 input is notrequired for IMF refund offset. The offset will happen automatically.
Example:
Richard and Mary Brown owe a joint IMF liability and then subsequently:
-
Richard and Mary Brown file a joint return.
-
Richard and Mary file a joint return as Mary and Richard Brown (primary and secondary switch positions on the return).
-
Richard Brown files a refund return separately from Mary.
-
Richard Brown files a joint return as the primary taxpayer with a new secondary taxpayer.
-
Mary Brown files a refund return separately from Richard.
-
-
When a balance due return is filed on the BMF and the credits claimed agree with the credits posted, the module will allow offsets into it.
-
When a balance due return is filed on the BMF and the credits claimed do not agree with the credits posted, a notice is sent from the campus to the taxpayer which shows the total amount of credits posted to the module.
Note:
If this notice is sent, offsets are not allowed into the module until the taxpayer has a chance to respond.
-
Once the notice is sent, offsets will be allowed into the module if:
-
the taxpayer does not respond to the notice within 10 cycles, or
-
the taxpayer acknowledges that the amount is owed.
-
-
Handle a BAL DUE like any other payment tracer or adjustment case when the taxpayer says the amount is not owed.
-
Request TC 130 when the BMF Name Control does notmatch the IMF Name Control.
Reminder:
This may occur when the owner of a single member Limited Liability Company (LLC) is liable for employment taxes assessed in the name of the LLC. Request TC 130 only when an individual owner is identified as the liable taxpayer for employment tax periods ending before January 1, 2009. See IRM 5.1.21, Collecting from LLCs, to identify the liable taxpayer.
-
If there is an overpayment on a BMF module and the credits claimed on the return filed agree with the credits posted, the taxpayer can request the overpayment be transferred to another module with a balance due. Any remaining overpayment will be applied to other balance due modules. If there are no other balance due modules, the overpayment will be refunded.
-
If there is an overpayment on a BMF module and the payments claimed on the return filed do not agree with the amounts credited, a notice is sent from the campus to the taxpayer which shows the amount of credits posted to the module. The notice will,
-
list all credits posted (if there is enough room), or
-
show only the total credit (if there is not enough room to list all credits posted), and
-
ask where the overpayment should be applied.
Note:
If this notice is sent, offsets are not allowed out of the module until the taxpayer has a chance to respond.
-
-
Once the notice is sent, offsets will be allowed out of the module if:
-
the taxpayer does not respond to the notice within 10 cycles, or
-
the taxpayer acknowledges there is an amount owed on another module.
-
-
Apply the overpayment as requested by the taxpayer if the taxpayer says where the overpayment should be applied.
-
Refund the overpayment if the taxpayer asks for a refund and there are no BAL DUE modules.
-
Request TC 130 when the BMF Name Control does notmatch the IMF Name Control.
Reminder:
For an LLC, request TC 130 only when an individual owner is identified as the liable taxpayer for liabilities assessed in the name and EIN of the LLC. For excise tax periods beginning on or after January 1, 2008 and for employment tax periods beginning on or after January 1, 2009, the LLC is the liable taxpayer, so TC 130 should not be requested. See IRM 5.1.21, Collecting from LLCs.
-
When an IMF refund return is filed and it includes an Employer Identification Number (EIN) on a Schedule C or F, this EIN is checked for any amounts owed for BMF taxes. If there are BMF taxes owed, the IMF refund will generally be offset to the BMF to pay the BMF taxes.
Note:
It is never " too late" to input TC 130; you can request TC 130 input any time within the applicable period of limitations.
Example:
Several years ago, a taxpayer filed a final Schedule C for his business along with his Form 1040. The business still had a balance due. The IMF refund was not offset for several years. Then the revenue officer (RO) working the BMF BAL DUE realized TC 130 needed to be input on the IMF. The RO requested TC 130 input and the taxpayer's refund was offset the subsequent year and full paid the BMF BAL DUE.
Note:
If the taxpayer's Form 1040 return has multiple Schedules C or F attached, only the EIN from the first one will be input for offset.
-
The widespread adoption of limited liability companies (LLCs) has caused frequent failure of IMF refunds to automatically offset to BMF liabilities, when appropriate.
-
When the owner of an LLC is the liable taxpayer and reports employment taxes in the owner's name, the BMF Name Control (NC) will match the IMF NC. If there are BMF taxes owed, the IMF refund will generally be offset to the BMF to pay the BMF taxes.
-
When the liability of an individual owner of an LLC is reported in the name of the LLC, the BMF NC is different from the IMF NC and the system will not perform the offset. Request TC 130 for those tax periods where an individual owner is identified as the liable taxpayer for liabilities assessed in the name and EIN of the LLC.
Reminder:
Until 1/1/09 the single member owner would still be liable. After that time, if the LLC is identified as the liable taxpayer, the individual is not liable and TC 130 should not be requested. See IRM 5.1.21, Collecting from LLCs.
-
For excise tax periods beginning on or after January 1, 2008 or employment tax periods beginning on or after January 1, 2009, the LLC is the liable taxpayer. TC 130 should not be requested, except before the assessment of a Trust Fund Recovery Penalty, as described below.
-
Screen your assigned BAL DUEs periodically to determine if it is necessary to request input of TC 130.
Note:
When a new inter-Area transfer-in BAL DUE is issued, it will already have TC 130 input by the Campus Compliance Services (CCS).
-
Make the determination to request input of TC 130 subject to the refund offset threshold in LEM 5.1.12.21.2, Refund Offset.
-
Request input of TC 130 if an overpayment can reasonably be expected as a credit to the outstanding liability before the expiration of the statute.
Note:
Do notrequest input of TC 130 if less than six months remain on the collection statue.
-
Request input of TC 130, if applicable, when you:
-
report a BAL DUE(s) currently not collectible, or
-
enter into an installment agreement for longer than six months.
-
-
Be alert to situations where a taxpayer submits a refund return and the refund would normally be offset within the Master File without a TC 130, but because of the timing, the refund may be issued.
Example:
Taxpayer submits a refund and a balance due return at the same time. The refund return may post before the balance due return. To prevent the refund from being issued, input TC 130 so the refund will be held until the balance due return posts.
Example:
Taxpayer files a refund return and the refund has not been issued yet. Then the taxpayer files a balance due return. To prevent the refund from being issued, request input of TC 130.
-
Request input of TC 130 when a refund may be issued before the assessment of a Trust Fund Recovery Penalty. See IRM 5.7.4.7, Notification of Proposed Assessment.
-
Request input of TC 130 when a refund will be issued because a taxpayer with an outstanding liability files a refund return with you.
-
Close a BAL DUE by requesting input of TC 470 CC 93 if the taxpayer files a refund due return with you and:
-
the return appears to be prepared correctly, and
-
the refund will full pay the BAL DUE.
-
-
Follow the appropriate procedures below to request input of TC 130 to offset a refund.
-
Sometimes a taxpayer's Taxpayer Identification Number (TIN) is not established on the Master File.
-
Follow these procedures to request input of TC 130 on a taxpayer whose Taxpayer Identification Number (TIN) is not established on the Master File:
-
Request input of TC 130 and:
-
request input of TC 000 with a mail filing requirement of 3, and
-
include the taxpayer's last known address on the TC 000 request.
-
-
Request input of TC 130 to offset an IMF refund in the situations displayed in the following table. Otherwise, any overpayment will be refunded without TC 130 present on the account.
Example:
John and Carol Blue owe a joint liability. John dies and Carol marries Tom Green. Unless a TC 130 is input on Tom Green's SSN, any overpayment on a Tom and Carol Green return (Carol as secondary taxpayer) will be refunded.
Example:
Diane Yellow owes a single liability. She marries William Red. Unless a TC 130 is input on William Red's SSN, any overpayment on a William and Diane Red return (Diane is the secondary taxpayer) will be refunded.
Example:
Steven and Marcia Orange owe a joint liability. They divorce and Marcia marries James Purple and they file a joint return as Marcia (primary) and James (secondary) Purple. Unless a TC 130 is input on Marcia's SSN, the refund will be issued.
Request TC 130 input when: Procedure a taxpayer owes outstanding joint IMF liabilities and then the taxpayer filed as a secondary taxpayer with someone not liable for the amount due. Request input of TC 130 on the primary individual's Social Security Number (SSN) so any overpayments will be applied to the outstanding joint IMF liabilities. a taxpayer owes outstanding joint IMF liabilities, and the secondary taxpayer filed as a primary taxpayer on a joint return with someone other than the spouse who was liable for the tax. Request input of TC 130 on the primary individual's Social Security Number (SSN) so any overpayments will be applied to the outstanding joint IMF liabilities. a taxpayer owes Non-Master File (NMF) liabilities. Request input of TC 130 on the individual's Social Security Number (SSN) so any overpayments will be applied to the outstanding NMF liabilities. -
Request input of TC 130 to offset an IMF refund in the situations displayed in the following table. Otherwise, any overpayment will be refunded without TC 130 present on the account.
Note:
Even though certain IMF refunds are automatically offset against BMF liabilities as discussed above, there are exceptions.
Example:
Timothy Black is the single member owner of an LLC, and is identified as the liable taxpayer for unpaid employment taxes. Unless a TC 130 is input on Timothy Black's SSN, any overpayment on a Timothy and Bridgette Black income tax return will be refunded.
Request TC 130 input when: Procedure a taxpayer is a partner in a partnership and owes partnership liabilities. Request input of TC 130 on the general partner's SSN so the refund will offset to the outstanding partnership liability when outstanding partnership liabilities exist and the general partner files a personal refund return. a taxpayer is a sole proprietor and owes sole proprietor liabilities. Request input of TC 130 on the sole proprietor's SSN so the refund will offset to the outstanding liability when outstanding sole proprietor liabilities exist and the proprietor files a personal refund return without a Schedule C or F. a taxpayer is the single member owner of an LLC, and the owner is liable for its employment taxes. Request input of TC 130 on the owner's SSN so the refund will offset to the outstanding liability assessed in the name and EIN of the LLC when the owner is identified as the liable taxpayer for employment taxes and files a personal refund return.
-
Request input of TC 130 to offset a BMF refund in the situations displayed in the following table, otherwise, any overpayment will be refunded without TC 130 present on the account.
Request TC 130 input when: Procedure a taxpayer owes IMF liabilities and is also active on the BMF. Request input of TC 130 on the individual's Employer Identification Number (EIN) so any overpayments on the BMF will be applied to the IMF liabilities. a taxpayer owes IRAF (Individual Retirement Account File) liabilities and is also active on the BMF. Request input of TC 130 on the individual's employer identification number so any overpayments on the BMF will be applied to the IRAF liabilities. a taxpayer owes Non-Master File(NMF) liabilities and is also active on the BMF. Request input of TC 130 on the employer identification number so any overpayments will be applied to the NMF liabilities. a taxpayer owes BMF liabilities under more than one Employer Identification Number (EIN). Request input of TC 130 on the other EIN(s) so any overpayments will be applied to any outstanding liabilities. a taxpayer owes IMF liabilities and is identified as the liable taxpayer on the BMF as the single member owner of an LLC Request input of TC 130 on the EIN of the LLC where the individual is identified as the liable taxpayer so any overpayments on the BMF will be applied to the IMF liabilities. Reminder:
Overpayments from BMF tax periods where the LLC is identified as the liable taxpayer should not be applied to IMF liabilities.
-
Use Form 3177, Notice of Action for Entry on Master File, for all other requests for input of TC 130.
Exception:
See the following procedure for reporting a BAL DUE account Currently not Collectible (CNC).
-
Use Form 53, Report of Currently Not Collectible Taxes , to request input of TC 130 when you are reporting a BAL DUE account CNC.
Note:
After your group manager (GM) approves the CNC recommendation, ICS will print Form 3177. The form provides space for manual input of additional information.
-
See TIN not on MF above when you need to request input of TC 130 on a taxpayer whose Taxpayer Identification Number (TIN) is not established on the Master File.
-
Include the following on all TC 130 input documents:
-
Form number, tax period, and Taxpayer Identification Number of the cross-referenced liabilities, and
-
Social Security Number and name of each taxpayer responsible for any joint liability.
Note:
Be sure to request input of the TC 130 on the primary number if a joint return is filed.
-
-
Do not request any other type of input on the same document.
-
Send Form 3177requesting input of TC 130 by secure e-mail to Centralized Case Processing (CCP).
-
Request release of the TC 130 freeze when:
-
the liability is paid or abated in full before receipt of CP 44, 188, or NMFL transcript, or
-
the liability is closed by an adjustment (TC 470 CC 90).
-
-
Use Form 3177 with a TC 131 in the "Other" block to release the TC 130 freeze.
-
Request input of TC 131 if a TC 130 was input in anticipation of assessing a Trust Fund Recovery Penalty (TRFP) pursuant to IRM 5.7.4.7, Notification of Proposed Assessment, and IRM 5.1.12.20.2(6) , Offset Bypass Refund Procedures, and:
-
the recommendation to assess the TFRP is rejected,
-
the penalty is not assessed within two weeks after Campus Compliance Services (CCS) contacts the revenue officer about a refund that has been frozen, or
-
the TFRP is assessed, unless it is assessed against a person who files as a secondary taxpayer, and the spouse is not assessed, then overpayments will be refunded if a TC 130 is not present.
-
-
Include an explanation about why you are requesting TC 131 on the Form 3177.
-
Record the date and reason in the case history.
-
Send Form 3177 requesting input of TC 131 by secure e-mail to Centralized Case Processing (CCP).
-
After offset within the Master File, Master File entities containing a TC 130 are frozen from refunding. A notice is generated when a frozen credit is available:
-
Notice CP 44 is generated for IMF cases, and
-
Notice CP 188 is generated for BMF cases.
-
-
Non Master File Liability (NMFL) transcripts are generated when a second credit posts to a module after a CP 44 or a CP 188 is issued and the frozen credit condition is unreversed. A TC 740 causes a transcript to be generated, but a CP 44 or a CP 188 is not issued.
-
Campus Compliance Services (CCS) processes all CP 44 and CP 188 notices and NMFL transcripts.
-
The CP 44 and CP 188 notices and NMFL transcripts:
-
indicate that a refund credit is available for offset against a "130 case" , and
-
serve as a turnaround document informing CCS where to apply the overpayment.
-
-
Use Part 2 of the CP 44/188 or the NMFL transcript to:
-
request transfer of the credit,
-
notify CCS to release the frozen credit, or
-
request input of TC 131.
-
-
Send Parts 2 and 3 of the CP 44/188 and/or the NMFL transcript to Advisory via Form 3210, Document Transmittal .
Note:
You can send these to Advisory on a daily basis, or you can accumulate them and send them on a weekly basis. Advisory will send Parts 2 and 3 of the CP 44/188 and/or NMFL transcripts to CCS via Form 3210, Document Transmittal.
-
At the discretion of the Area Director, Internal Revenue Service employees may be called upon to serve a subpoena issued by the United States Tax Court.
-
The Clerk of the Tax Court will furnish the original of the subpoena to the Office of Chief Counsel. The Office of Chief Counsel will forward the subpoena to the area in which the witness resides.
-
The Area Director will forward Tax Court subpoenas to be served by Collection employees to the Field Territory Manager. The letter or memorandum to the Area Director transmitting the subpoena for service will contain any special instructions that Area Counsel wishes communicated to the official serving the subpoenas, or to the witness.
-
The Field Territory Manager should promptly assign Tax Court subpoenas using Form 2209, Courtesy Investigation.
-
-
See IRM 5.1.8, Courtesy Investigations.
-
Accomplish service by personally showing the witness the original subpoena and delivering a copy of the subpoena to the witness.
-
Mark"Return on Service" on the original subpoena.
-
Acknowledge such return before a Service official authorized to administer oaths.
-
Forward the original through channels for transmittal to the Office of Chief Counsel after you have properly served a copy of the subpoena.
-
Financial Institutions (including banks) and other businesses that pay certain kinds of income must file an information return with the IRS. Generally, these income payments are not subject to withholding; however they may be subject to "backup withholding."
-
The IRS has two separate Backup Withholding (BWH) programs that require payers to withhold at the backup withholding rate from recipients’ (payees’) payment of Form 1099 income. They are:
-
Backup Withholding "B" — Notice Incorrect/Missing TIN process, and
-
Backup Withholding "C" — Notice Underreporter/Nonfiler process.
-
-
The "B" BWH program provides notices to payers (a financial institution, business or person) who file information returns (the Forms 1099 listed below) with incorrect or missing Taxpayer Identification Numbers (TINs) pursuant to Treasury Regulation 31.3406(d)-5(d).
-
Notices CP2100 and CP2100A advise payers that backup withholding (BWH) could become necessary if a payee (the recipient of a Form 1099) fails to certify his/her TIN.
-
The"B" BWH program includes the following information returns:
-
Form 1099-B,
-
Form 1099-DIV,
-
Form 1099-INT,
-
Form 1099-MISC,
-
Form 1099-OID, and
-
Form 1099-PATR.
-
-
Refer to the Backup Withholding "B" procedures contained in IRM 5.19.3.4.1,TIN-Related "B" BWH Notices (CP 2100 & CP 2100A), when you have a BWH "B" BAL DUE assigned to you.
-
Find more detailed information on the Backup Withholding (BWH) B rules and procedures for payers in Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s).
-
The "C" BWH program provides notices to payees (recipients of the Forms 1099 listed below) who have underreported their interest or dividend income or failed to file a tax return reporting such income when required pursuant to Regulation 31.3406 (c)-1.
-
These notices inform the payee what must be done to prevent backup withholding (BWH).
-
The "C" BWH program includes the following information returns:
-
Form 1099-DIV,
-
Form 1099-INT,
-
Form 1099-OID, and
-
Form 1099-PATR.
-
-
Refer to the Backup Withholding "C" procedures contained in IRM 5.19.3.4.2.2, Procedures for Underreporter/Nonfiler "C" BWH Notices, when you have a case involving BWH "C" assigned to you.
-
Find additional information for payers who need to start BWH " C" in Publication 1335, Underreporter Backup Withholding Questions and Answers.
-
Prepare Form 4442, Inquiry Referral, if:
-
the taxpayer requests to have backup withholding (BWH) discontinued, and
-
all the tax modules for which the taxpayer may be liable for BWH are satisfied.
Refer to IRM 5.19.3.4.2.9, "C" BWH Satisfying Transactions.
-
-
Forward the completed Form 4442 to the Compliance Services Collection Operations (CSCO) operations in KCSC or PSC. See IRM 5.19.3.4.2.11(4),"C" BWH Procedures.
-
Advise the taxpayer that he/she may file Form 911, Request for Taxpayer Advocate Service Assistance , when some or all of the following apply:
-
the taxpayer is experiencing or may experience an economic harm because he/she has limited income which is needed to meet necessary living expenses,
-
backup withholding at the applicable rate will cause significant overwithholding,
-
it appears unlikely that the taxpayer will underreport again, and
-
the IRS office will not grant the relief requested or will not grant the relief in time to avoid the economic harm.
Example:
Senior citizens on a limited, fixed income or other taxpayers dealing with a catastrophic illness (and the related expensive unreimbursed medical expenses) may need to file Form 911 for quick relief.
-
-
IRC § 7871 states that Indian tribal governments shall be treated as states for certain purposes, so a unique relationship exists between Indian tribal governments and the United States government. This relationship requires a heightened level of sensitivity with respect to compliance efforts.
-
The Indian Tribal Governments (ITG) office in the Tax Exempt and Government Entities (TE/GE) Operating Division was established in 2000 to assist Indian tribes with federal tax issues. The ITG office coordinates all aspects of tax administration as it impacts Indian tribes including direct assistance, indirect assistance, compliance checks, and examination of returns. The ITG office:
-
is responsible for ensuring that the Service is in compliance with the various Executive Orders outlining the relationships and protocols required in working with Indian tribes,
-
provides primary front-line service by five field groups which are aligned respective to tribal affiliations wherever possible, and
-
serves as the central point for allService contacts with Federally recognized Indian tribes.
-
-
Refer to the following IRM sections for additional information:
-
IRM 4.86.1,Indian Tribal Governments Administration, and
-
IRM 4.88.1, Examination Issues Pertaining to ITG Cases.
-
-
Indian tribal governmental accounts can be complex and involve an array of legal issues so the Indian Tribal Governments (ITG) personnel (i.e., ITG specialists) are specially trained in the unique areas of tax law and protocol that apply to Indian tribes.
-
The ITG specialist will:
-
act as a liaison and central point of contact between the Indian tribal officials and the revenue officer (RO) assigned to the case and will advise the officials in advance of a visit from the RO.
-
assist the RO with case-related technical issues specific to Indian tribes
-
-
Tribal constitutions or tribal resolutions may designate a specific person to address tax matters. Land ownership legalities are outlined by treaty to ensure that legal rights are not violated. Technical issues specific to Indian tribes are listed below. This list is not all-inclusive.
-
Determining appropriate contacts within a tribe
-
Determining land ownership legalities unique to Indian tribes
-
Filing requirements
-
Conducting full compliance checks
-
Identifying leviable and non-leviable assets
-
Regulations
-
Treaties
-
Court decisions
-
Statutes
-
Tax law
-
Disclosure issues
-
-
Special rules apply to Indian tribes for some tax returns. See IRM 4.88.1.5.3, Filing Requirements.
-
Identify Indian tribal government entities on IDRS by the business operating division (BOD) code TE and the employment code I.
-
Refer to IRM 4.88.1.4, Federal Tax Status Of Indian Tribal Governments, for information on Federal taxation issues involving Indian tribal governments.
-
Contact the local area ITG group manager before making initial contact on Indian tribal government (ITG) accounts. Access the "How to Contact ITG" page on at http://www.irs.gov/govt/tribes/article/0,,id=96133,00.html to determine the appropriate ITG field contact.
Note:
The ITG Manager will assign an ITG specialist to work with you.
-
Contact the ITG specialist when you:
-
need to visit an individual tribal member on tribal land to work an IMF account,
-
have questions about specific filing requirements, or
-
you are contemplating taking anyenforcement action.
-
-
Do not assume that the CFO, Treasurer, or Tribal Administrator is the designated tribal contact.
-
Work closely with an ITG specialist to determine the appropriate contacts within the tribes because the specific person to address tax matters with may be designated in a tribal constitution or through a tribal resolution.
-
Coordinate with the ITG specialist as your central point of contact with the tribal officials. The ITG specialist will advise the officials of your planned visit.
-
Keep the ITG specialist involved in material interactions between you, as the representative of the Service, and the tribal government.
-
Maintain contact with the ITG specialist regarding:
-
updated plans of action, and
-
general case developments such as receipt of a new BAL DUE or DEL RET.
-
-
Have the ITG specialist assist you in conducting a full compliance check.
-
Inform the ITG specialist about any new ITG case issuances that arenot properly identified as an Indian tribal government accounts.
-
Do not inadvertently violate Indian tribal legal rights because there are tribal sovereignty and land ownership legalities unique to Indian tribes which are outlined by treaty.
Note:
The Service must comply with Presidential Executive Orders. See IRM 4.86.1. 5, Tribal Sovereignty Overview.
-
Contact the ITG specialist before you take any necessary enforcement action on an ITG account, including the filing of a Notice of Federal Tax Lien, the assessment of the Trust Fund Recovery Penalty, or the service of a summons.
-
Work closely with an ITG specialist to ensure that you secure approval of the ITG Director before serving a summons.
-
Donotserve a summons on a tribal government or a third party for information concerning a tribal government without approval of the ITG Director.
-
Work closely with an ITG specialist when you need to serve a levy or you are contemplating a property seizure.
-
Donotserve a levy or seize property to collect a tribal government BAL DUE without first coordinating with the ITG specialist.
-
This subsection discusses Mutual Collection Assistance Requests (MCARs) in general and outgoing MCARs in specific.
-
The United States has entered into a number of bilateral tax treaties that contain broad provisions for assistance in collection. We currently have five mutual collection income tax treaty partners:
-
Canada,
-
Denmark,
-
France,
-
The Netherlands, and
-
Sweden.
Note:
We also have one estate and gift tax treaty with France that has broad provisions for collection assistance.
-
-
The U.S. tax treaties with Canada, Denmark, France, the Netherlands, and Sweden provide that the treaty partner may request assistance from IRS in collecting taxes owed to the treaty partner by individuals residing in the United States. Such requests from the treaty partner to the United States are referred to as incoming Mutual Collection Assistance Requests.
-
See IRM 5.1.8.7.7, Incoming Mutual Collection Assistance Requests (MCARs).
-
The IRS can request assistance from our treaty partners to collect taxes owed by individuals residing and/or having assets in the treaty country. Such requests are outgoing mutual collection assistance requests. Outgoing mutual collection assistance requests are discussed below.
-
These treaties provide that each country, upon request by the United States, may take whatever actions it would take to collect its own taxes in order to collect on behalf of a treaty partner (when requested to do so).
Exception:
The treaties for France, the Netherlands, and Sweden provide that they will not collect from their own citizens.
The treaties for Denmark and Canada provide that they will not collect from taxpayers who were Danish and Canadian citizens at the time the tax liability arose, regardless of what their citizenship may be now.Note:
Generally, in these cases the Service will not pursue collection if an individual is a citizen of the United States. However, for MCARs from Denmark and Canada, this exception only applies to individuals who were U.S. citizens at the time the tax liability accrued.
-
Both international revenue officers and domestic revenue officers who are trying to reach income or assets located in MCAR treaty partner countries can generate outgoing MCAR requests.
-
All outgoing MCAR requests require coordination with the MCAR Coordinator.
-
The MCAR Coordinator will:
-
review allreferred cases to ensure that they meet the MCAR criteria, and
-
handle the referred cases as displayed in the following table:
If Then the case is accepted the Coordinator will open a CIP (Collection Information Program Case) and document the ICS history. if the case does not meet MCAR criteria the Coordinator will document the ICS history with the reason and return the referral to the originator. -
-
The MCAR Coordinators are listed on the Mutual Collection Assistance Requests (MCAR) webpage. The direct link to the page is: http://sbse.web.irs.gov/collection/Programs/MCAR/Default.htm
-
Do not make any contact with treaty partners. An MCAR Coordinator will handle all contacts with Treaty Partners.
-
Coordinate with an MCAR Coordinator when you:
-
have any questions on the MCAR program, and/or
-
need to make contact with a treaty partner.
-
-
The MCAR Coordinators are listed on the Mutual Collection Assistance Requests (MCAR) webpage. The direct link to the page is: http://sbse.web.irs.gov/collection/Programs/MCAR/Default.htm
-
This subsection discusses outgoing MCAR requests. In general, the outstanding balance, including accruals, must exceed the amount in LEM 5.1.8, Courtesy Investigations, in order to refer an outgoing MCAR case.
-
Refer to LEM 5.1.12.25.3, Outgoing Mutual Collection Assistance Requests (MCAR), to determine the specific criteria for MCAR cases.
-
The type of U.S. taxes that can be collected by these treaty partners on behalf of the U.S. under an MCAR differ depending on the applicable treaty. See the table below.
-
Refer the type of BAL DUE accounts displayed in the table below through the MCAR Coordinator.
Exception:
You may be able to transfer the case to an International collection group rather than to the MCAR Coordinatorif you have verified that the taxpayer resides in a treaty country. See IRM 5.1.8.1.4 , Account Transfers to International.
:
MCAR Referrals to Countries with Treaty Collection Assistance Country Type of Taxes Canada Any type of tax (including IMF & BMF) Exception:
Do not refer Canadian corporations. In a case involving corporate taxpayers, provide evidence that the corporation is not a Canadian corporation.
Denmark Income Tax - IMF only France Income Tax - IMF only, Estate Tax, and/or Gift Tax The Netherlands Income Tax - IMF only Sweden Income Tax - IMF only -
Do not refer DEL RET accounts as treaty provisions prohibit the referral of DEL RETs.
-
Follow these procedures to request assistance from our treaty partners to collect taxes owed by individuals residing and/or having assets in the treaty country.
-
Complete a Data Sheet for each case that you select for referral to a treaty partner. Exhibit 5.1.12-2, Outgoing MCAR Data Sheet , provides a Data Sheet template and instructions. See Exhibit 5.1.12-2..
-
Provide enough details on the Data Sheet so that the treaty partner will have adequate information to collect the tax on our behalf. Provide:
-
details about the taxpayer,
-
details about the tax assessment, and
-
explanations about each of the liabilities you refer to the treaty partner.
-
-
Do not provide the taxpayer's Taxpayer Identification Number (TIN) on the Data Sheet.
Note:
Instead of including the taxpayer's TIN on the Data Sheet, you will include it in a secure e-mail message to the MCAR Coordinator. See IRM 5.1.12.25.5, Procedures for Forwarding an Outgoing MCAR Request.
-
Obtain MFTRA-U from IDRS to verify the taxpayer's citizenship, and document the Data Sheet.
-
Attach the appropriate documentation to the Data Sheet based on the type of assessment as displayed in the following table.
Type of Assessment Attachment(s) TC 290 Adjustments IRPTR-O or SUPOL for each tax period. Note:
Attempt to secure the Revenue Agent Report (RAR) if IRPTR-O or SUPOL are not available.
TC 300 Exam Assessments Revenue Agent Report (RAR) for each tax period (i.e., each TC 300 assessment), if available. TC 290 or TC 300 SFR Assessments TXMOD (TC 150 followed by 0.00 and the Letters SFR at the end of the line) -
Proceed with an MCAR referral even if you are in doubt about whether or not it will be accepted (because of the exception above regarding the taxpayer's citizenship).
-
Access the SB/SE MCAR webpage at http://sbse.web.irs.gov/collection/Programs/MCAR/Default.htm and locate a blank data sheet by clicking on the MCAR Data Sheet link.
-
Forward the Data Sheet (and attachments) as shown below
-
See additional post-referral procedures below.
-
Prepare a secure e-mail message to your manager to forward the Data Sheet (and attachments).
-
Name the pertinent country in the "Subject" line of the message.
-
Include the taxpayer's Taxpayer Identification Number (TIN) in the body of the secure e-mail message.
Note:
The MCAR Coordinator needs the taxpayer's TIN, however the treaty partner doesnotneed the taxpayer's TIN.
-
Request your GM to signify his/her approval of the outgoing MCAR request by forwarding the message to the MCAR Coordinator at "*SBSE C MCAR" using secure e-mail.
-
Request your GM to include you on the "Cc" line of the message.
-
-
Send the message (and attachments) to your group manager (GM) using secure e-mail.
-
Ensure that you receive a copy of the forwarded message.
Note:
Follow up with your GM, if needed.
-
Keep the domestic BAL DUE account open after you refer the outgoing MCAR case to the MCAR Coordinator until you have exhausted alldomestic avenues for collection.
-
Close the case appropriately once you have exhausted the domestic collection potential, i.e., as currently not collectible, continuous levy, etc.
-
Keep the MCAR Coordinator informed of any changes to the account (i.e., funds collected, 53, etc.).
-
The Treasury Enforcement Communications System (TECS) is a database maintained by the Department of Homeland Security, and it is used extensively by the law enforcement community. It contains information about individuals and businesses suspected of, or involved in, violations of federal law. TECS can provide useful information about taxpayers so employees can attempt taxpayer contact or locate asset information.
-
Revenue officers can request that delinquent balance due taxpayers be entered into TECS, and the Service will then receive information when those taxpayers travel into the United States for business, employment, or personal reasons. Employees must help maintain the TECS database by requesting that appropriate taxpayers be entered into TECS or be deleted from TECS.
Note:
It is important for each employee to understand the benefits the Service derives from TECS because such understanding should ensure that each employee will do his/her part in maintaining TECS.
-
The taxpayers in TECS are primarily International taxpayers because the cases usually concern persons who reside abroad. However, domestic taxpayers may also be entered into TECS. Taxpayers placed on TECS are often not subject to ordinary administrative and judicial collection procedures because they frequently reside outside the jurisdiction of the US Courts. Information derived from placing a taxpayer on TECS can facilitate contact with these taxpayers or provide asset information which, in turn, may facilitate collection of their delinquent liabilities.
-
This IRM provides TECS procedures for SB/SE Collection Field function (CFf) employees. It does not discuss using TECS historical travel information. See IRM 5.1.18, Locating Taxpayers and their Assets, for that information. This IRM discusses the role of the TECS Coordinator, notifications to the Service from Immigration and Customs Enforcement (ICE), providing information about taxpayers to be placed on TECS, and the criteria for entering a taxpayer on or removing a taxpayer from TECS. It also provides routine procedures to request entry or removal and expedited TECS entry procedures.
Note:
IRM 9.10.2, Treasury Enforcement and Communication System and International Fugitive Notices also discusses TECS, however, the intended audience is CI. IRM 9.10.2.7 prescribes the use of Form 5523, TECS Query Request, to request information from TECS, however, SB/SE CFf employees should not use Form 5523.
-
Consider the following example to increase your awareness and understanding about TECS.
Example:
A CFf RO has a balance due taxpayer in his/her inventory and he determines the taxpayer resides in Norway. The RO transfers the case to International.
The International RO determines the taxpayer is "Unable to Contact" and closes the case from open inventory. The RO requests that the taxpayer be placed on TECS.
One year later, the taxpayer travels to the US and initially arrives at an airport in New York. Upon the taxpayer's arrival, Immigration and Customs Enforcement (ICE) informs the TECS Coordinator where the taxpayer is ultimately traveling to, how long the taxpayer plans to stay, and on which flight(s) the taxpayer will be departing. The taxpayer will be staying in Denver for one week.
The ROs who had previously worked the case had not been aware of any connection the taxpayer had to Denver.
The TECS Coordinator notifies the group manager (GM) in International who is responsible for cases in Norway (the country in which the taxpayer resides).
The International GM issues an OI to the Collection group working the location in Denver where the taxpayer is staying.
The GM in Denver assigns the case to an RO, and the RO meets with the taxpayer and secures a financial statement. When this happens, the IRS learns about the taxpayer's assets for the first time as other research methods and attempted contacts were unsuccessful. The RO provides the information to International and closes the OI.
After the OI is closed, the International RO does further research once he/she is aware of the Denver nexus. He/she discovers the taxpayer has real property held in the name of a trust and files a nominee lien.
-
The Department of Homeland Security requests that IRS employees not discuss the Treasury Enforcement Communications System (TECS) with taxpayers.
Caution:
When you are talking with a taxpayer to inform him/her that you may place him/her on TECS, do not discuss the existence of TECS with him/her. Instead, follow the language in letter 4106 and proceed as follows. -
Advise the taxpayer that you may notify the Department of Homeland Security about the unpaid tax liabilities (which are public record from a previously filed lien), and that subsequently:
-
a Customs and Border Protection Officer may interview him/her when he/she enters the country,
-
the IRS may be advised of the taxpayer's arrival, and
-
the IRS may be provided with information that will enable the IRS to contact the taxpayer.
-
-
Access the TECS webpage at: http://sbse.web.irs.gov/Collection/Programs/TECS/Default.htm . You can also access the webpage by going to the SB/SE Collection webpage and clicking on Treasury Enforcement Communications System (TECS).
-
The TECS Coordinator is a Collection Automation Coordinator (CAC) on the Headquarters staff. The TECS Coordinator:
-
will coordinate the investigation of TECS cases,
-
is responsible for informing SB/SE Collection group managers upon receipt of notifications of imminent taxpayer arrival into the US from Immigration and Customs Enforcement (ICE). ICE notifications are discussed below.
Note:
Once the TECS Coordinator notifies a group manager of a taxpayer coming into the country, the GM may need to send an Other Investigation (Ol) using Form 2209, Courtesy Investigation, so the ICE notification can be addressed in a timely manner. See IRM 5.1.8, Courtesy Investigations for procedures on assigning and working these Courtesy Investigations.
-
will review allcases referred from revenue officers requesting that a taxpayer be entered on TECS to ensure that they meet the TECS criteria, and
-
will handle the referred cases as displayed in the following table:
If Then the case is accepted the TECS Coordinator will: -
forward the taxpayer information to Treasury for input into TECS, and
-
document the ICS history.
if the case does not meet TECS criteria the TECS Coordinator will: -
document the ICS history with the reason, and
-
return the referral to the originator.
-
-
Contact the TECS coordinator via e-mail at "*SBSE International TECS Coordinator" .
-
Immigration and Customs Enforcement (ICE) will notify the TECS Coordinator when ICE becomes aware that a balance due taxpayer on TECS is arriving in the US.
-
ICE will provide the TECS Coordinator with some or all of the following information:
-
the taxpayer's address while in the United States,
-
nature of visit,
-
transportation of any currency over $10,000.00, and
-
any other available travel and/or asset information.
-
-
Be alert for case situations where you can provide information to TECS to facilitate the collection of delinquent liabilities from taxpayers.
Reminder:
The reason it is important to enter a taxpayer on TECS is it allows ICE to notify the IRS in the future (via the TECS coordinator) about when and where a taxpayer will be traveling as discussed above.
-
Follow the procedures below to request that a taxpayer be entered on or removed from TECS.
-
Taxpayers will be entered on TECS only when the case meets all of the following conditions:
-
The taxpayer is living outside the United States and the United States commonwealths and territories or is about to depart to reside in a foreign country.
Note:
Puerto Rico, American Samoa, Guam, the U.S. Virgin Islands, and the Northern Mariana Islands are commonwealths or territories of the United States.
Exception:
Enter a balance due taxpayer on TECS if, despite an official IRS domestic address of record, you believe the taxpayer resides in a foreign countryor travels outside the United States and the United States commonwealths and territories on a frequent basis and we have not been able to contact the taxpayer.
-
The taxpayer has not voluntarily resolved his/her case by full payment or other voluntary action, including an installment agreement (IA).
-
A Notice of Federal Tax Lien (NFTL) has been filed for all balance due modules.
-
The total unpaid balance of assessment exceeds the amount specified in LEM 5.1.12.26.3.1, Entering a Taxpayer on TECS.
Exception:
TECS input can also be requested for a lesser amount when your group manager concurs there are significant compliance issues and approves your request.
-
The taxpayer is not in bankruptcy.
-
The IRS has notaccepted an Offer in Compromise (OIC) to settle the taxpayer's liabilities.
-
The taxpayer's case is in Status 26or the taxpayer's case is being reported currently not collectible (CNC) with closing code 06, 03 or 12.
-
-
Do not request placement of taxpayers onto TECS if there are only DEL RETs.
Note:
TECS is only for taxpayers with BAL DUEs and a Notice of Federal Tax Lien (NFTL) musthave been filed for all liabilities.
-
Coordinate allrequests for entering a taxpayer on TECS with the TECS Coordinator.
-
Ensure a Notice of Federal Tax Lien (NFTL) has been properly filed for all liabilities.
-
Use Form 6668, TECS Entry Request, to request that a taxpayer be entered on TECS.
-
Complete Form 6668 in its entirety.
-
Save Form 6668 as a PDF file.
-
Attach the PDF file to an e-mail message to your group manager (GM) to request his/her approval of Form 6668.
-
Use secure e-mail to encrypt the message since it contains taxpayer data.
-
Send the secure message to your GM to obtain his/her approval of Form 6668.
Note:
Your GM will indicate his/her approval by digitally signing the PDF file of Form 6668. Additionally your GM will provide you with a courtesy copy when he/she sends the approved Form 6668 to the TECS Coordinator as provided below (i.e., your GM will include you on the "Cc" line of the message).
-
Prepare Letter 4106 after your manager approves Form 6668.
Caution:
When you are talking with a taxpayer to inform him/her that you will place him/her on TECS or that you have already placed him/her on TECS, do not discuss the existence of TECS with him/her.
Instead, follow the language in Letter 4106and onlyadvise the taxpayer that you have notified the Department of Homeland Security about the unpaid tax liabilities (which are public record from a previously filed lien) and, subsequently, a Customs and Border Protection Officer may interview him/her when he/she enters the country.
See IRM 5.1.12.26.1,Do Not Discuss TECS with Taxpayers. -
Mail Letter 4106 to the taxpayer.
-
Retain copies of the Letter 4106 and the approved Form 6668 in the case file.
Note:
Your GM will send the digitally approved PDF file of Form 6668 in an e-mail message to the TECS Coordinator to request that the taxpayer be entered on TECS. Your GM will use secure e-mail to encrypt the message since it contains taxpayer data.
Note:
Your GM will send the secure e-mail message (with the attachment) to the TECS coordinator at "*SBSE International TECS Coordinator" to request that the taxpayer entered on TECS.
Note:
The TECS Coordinator will send the taxpayer information to CI; the actual input of the taxpayer data into TECS will be done by CI.
-
Notify your group manager (GM) to request expedited TECS entry when a taxpayer's arrival in the United States is imminent and the taxpayer isnotalready on TECS.
Note:
A GM, Tax Attache, or Deputy Tax Attache may request expedited TECS entry by making a telephone call to the TECS Coordinator, as long as all the conditions listed above for entering a taxpayer on TECS are met.
-
Remove a taxpayer from TECS promptly, only when the case meets one or more of the following conditions:
-
The tax liability is satisfied.
-
The taxpayer enters into IRS approved arrangements to satisfy the tax liability, including an installment agreement (IA).
-
The taxpayer is deceased and his/her death is verified.
-
The taxpayer's Offer in Compromise (OIC) has been accepted.
Caution:
Do not delete a taxpayer from TECS if an Offer in Compromise is still under investigation; only an accepted OIC qualifies the taxpayer for removal from TECS.
-
The taxpayer is in bankruptcy.
-
Any other situation renders the continuation of the TECS entry unnecessary.
-
-
Coordinate allrequests for removal from TECS with the TECS Coordinator.
-
Contact the TECS Coordinator immediately by e-mail at " *SBSE International TECS Coordinator" if a taxpayer already on TECS should be removed for any of the above case conditions.
-
Entitle any e-mail message to the TECS Coordinator concerning this topic as "Request To Delete Taxpayer from TECS."
-
Include the following information in the memorandum:
-
taxpayer name,
-
taxpayer identification number
-
taxpayer date of birth, and
-
the reason deletion is being requested.
-
-
Send the e-mail message to the TECS Coordinator using secure e-mail to encrypt the message since it contains taxpayer data.
-
Retain a copy of the e-mail in the case file.
Note:
The TECS Coordinator will send the taxpayer information to CI; the actual removal of the taxpayer data from TECS will be done by CI.
Use Area Office letterhead paper to prepare a letter to notify the taxpayer to apply for exemption.
The suggested content for this letter is displayed in the following table.
| Letter Content |
|---|
| Name and address of taxpayer) |
| [Insert appropriate salutation] |
| Federal tax law exempts members of certain religious sects or divisions from paying self-employment tax if they file an application on Form 4029, Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits. |
| We understand you may be eligible for exemption, but we have no record of receiving a Form 4029 from you. If you want to apply for exemption from self-employment tax, please complete the enclosed Form 4029 and return it, with the copy of this letter, by the date shown below. An addressed envelope is enclosed for your convenience. |
| If we do not receive your application by the date shown, we will have to collect the self-employment tax. |
| If you have any questions, please contact me at the telephone number shown above. |
| Thank you for your cooperation. |
| Sincerely yours, |
| [Space for signature] |
| Revenue Officer |
| Enclosures: Form 4029 Copy of this letter Envelope |
| Last day for filing Form 4029: |
-
Use the information in the following table as a template for preparing a Data Sheet for Outgoing Collection Assistance Requests.
MCAR Data Sheet
Outgoing Mutual Collection Assistance Request(1) Treaty Partner: (2) Date: (3) Taxpayer Identification Number:
Do not include the taxpayer's Taxpayer Identification Number (TIN) on this Data Sheet.
Instead, as directed in paragraph (4) of IRM 5.1.12.25.4,Procedures for Preparing an Outgoing MCAR Request, include the TIN in the body of the secure e-mail message.(4) Name of Taxpayer: (5) Taxpayer’s Address: (6) Telephone/Fax Numbers: (7) Provide either of the following:
Date and Place of Birth (individuals):
Place of Incorporation (corporations):(8) Has the taxpayer been identified as potentially dangerous? (9) Specify any known income or assets the taxpayer may have in the treaty partner country. (10) What is the basis for the liability? Be specific, e.g., tax on return, SFR, unreported income, disallowed items, etc. (11) Notice of Federal Tax Lien Filing:
When:
Where:(12) Delinquent Account Information:
Type of Unpaid Balance Accruals
Statute of Tax Period of Assessments
To:
Total Due:
Limitations Date:
Total:(13) Is there any other information that the treaty partner should know? (14) Originating Office: (15) Name of Originator: (16) Originator's Telephone Number: (17) Originator's Signature: (18) Group Manager's Signature: (19) MCAR Coordinator's Signature: This information is being provided pursuant to the Income Tax Treaty in force between our two countries. The use and disclosure of this information must be governed by the provisions contained in the Income Tax Treaty. -
Follow the instructions in the following table for handling Data Sheets.
| Data Sheet Instructions |
|---|
| (1) The treaty partners and the types of tax covered are as follows: - Canada: All Taxes - Denmark: Income Tax - France: Income, Estate, & Gift Taxes - The Netherlands: Income Tax - Sweden: Income Tax |
| (5) Include an address where the treaty partner can reach the taxpayer, including sending notices, even if the address is in the United States. |
| (7) Obtain the date of birth from INOLE-S or obtain the date of birth form MFTRA-U which also provides the place of birth. |
| (10) Include enough information so that we can explain the assessment
to the taxpayer if they raise questions when they are contacted by the treaty
partner. Identify: - the income items used for an SFR, or - the items disallowed, etc., from an Exam Report. Note:Include information on the corporation, other officers, etc. |
| (11) File a NFTL before making a referral if appropriate, and include a copy with the referral. |
(12) Calculate accruals to 180 days from the date of preparation of
the form in item 2,
Note:Calculate the accruals as of the date of preparation of the form - only for Canadian referrals. |