Approved - Oct. 2, 2008

System Overview

The Withholding Compliance Program (WHC) uses Form W-2 information to identify taxpayers with potential under-withholding problems that result in tax compliance problems. The Withholding Compliance System (WHCS) is a database application designed to provide a means to monitor and control information related to the WHC case inventory. Depending on their user access level, WHCS users may add, update, query, close, and maintain case information such as case actions, decisions made, and letters issued to taxpayers and/or employers.

System of Records Numbers

• Treasury/IRS 42.021 Compliance Programs and Projects Files
• Treasury/IRS 24.030 CADE Individual Master File
• Treasury/IRS 24.046 CADE Business Master File

Data in the System

1. Describe the information (data elements and fields) available in the system in the following categories:

A. Taxpayer
B. Employee
C. Audit Trail Information (including employee log-in info)
D. Other (Describe)

A. Taxpayer Data:

• Taxpayer Identification Number (TIN)
• Spouse’s TIN
• TIN validity indicator
• Taxpayer’s name
• Taxpayer’s address
• Taxpayer’ phone number
• Aggregate wages reported on Form(s) W-2
• Aggregate withholding reported on Form(s) W-2
• Total wages reported on Form 1040 (including spouse’s wages if joint return was filed)
• Total withholding reported on Form 1040 (including spouse’s wages if joint return was filed)
• Total tax liability minus total payments from Form 1040
• Payments
• Refund
• Tax due
• Total income shown on Form 1040
• Federal Employee indicator
• IRS Employee indicator
• Combat Zone indicator
• Killed in Terrorist Action indicator
• Filing extension indicator
• Bankruptcy indicator
• Criminal investigation indicator
• Offer in Compromise indicator
• Installment agreement indicator
• Frivolous filer indicator
• Source code
• Reason code
• Outcome 3/Referral code
• Referral disposition code
• W2 count
• Date of death
• Spanish Indicator

Employee

• Standard Employee Identification number (SEID)

Audit Trail Information

• AUDIT TRAIL NUMBER
• AUDIT TRAIL TIN
• AUDIT TRAIL EIN
• AUDIT TRAIL TAX YEAR
• AUDIT TRAIL DATE
• AUDIT TRAIL TIME
• AUDIT TRAIL ACTION
• AUDIT TRAIL REMARKS
• AUDIT TRAIL SOURCE
• AUDIT TRAIL USER ID
• AUDIT TRAIL SEID

Other

• Employer Data
• EIN
• Name and address
• Case actions
• Lock-in rate, defined as the marital status and number of allowances at which the IRS directs the employer to withhold income tax from the taxpayer’s wages.
• Letter type and date
• Closed date
• Disposition code

2. Describe/identify which data elements are obtained from files, databases, individuals, or any other sources.

A. IRS
B. Taxpayer
C. Employee
D. Other Federal Agencies (List agency)
E. State and Local Agencies (List agency)
F. Other third party sources (Describe)
G. Other

The WHCS database is populated via download from the Individual Master File (IMF) and the Payer Master File (PMF).

A. IRS - Not applicable
B. Taxpayer - IMF
C. Employee - Online 5081
D. Other Federal agencies - No information is obtained from other federal agencies.
E. State and local agencies - No information is obtained from state and local agencies.
F. Other third party sources - No information is obtained from other third-party sources.
G. Other - Employer address data may be obtained from the Payer Master File (PMF).

3. Is each data item required for the business purpose of the system? Explain.
Yes. The data elements related to allow us to apply business rules to withholding compliance cases

4. How will each data item be verified for accuracy, timeliness, and completeness?

• Records from IMF are trusted and accepted as-is.
• The application subjects manually input data to validity checks.

5. Is there another source for the data? Explain how that source is or is not used.
No

6. Generally, how will data be retrieved by the user?
Users can retrieve WHC case data through the use of the taxpayer’s SSN.

7. Is the data retrievable by a personal identifier such as name, SSN, or other unique identifier?
Data is retrievable by SSN.

Access to the Data

8. Who will have access to the data in the system (Users, Managers, System Administrators, Developers, Others)?

WHCS has identified the following users:

• Clerical support, tax examiners and their managers working the WHC program in Compliance Services Campus Operations (CSCO) at the Andover campus
• W&I Compliance Withholding Compliance program headquarters analysts
• Detroit Computing Center (DCC) developers, programmers
• WHCS System administrator(s)
• Database administrator(s)

9. How is access to the data by a user determined and by whom?
Employees gain access to WHCS through submission of an OL-5081. Management determines which employees are selected to work these cases.

10. Do other IRS systems provide, receive, or share data in the system? If YES, list the system(s) and describe which data is shared. If NO, continue to Question 12.
Yes. WHCS receives data from the IMF and the PMF

11. Have the IRS systems described in Item 10 received an approved Security Certification and Privacy Impact Assessment?
Yes. Authority to Operate (ATO) issued to the IMF and the PMF on June 21, 2007 and June 14, 2007, respectively.

12. Will other agencies provide, receive, or share data in any form with this system.
Yes. Information may be shared as allowed by law, treaty, or policy, i.e., GAO, TIGTA, information sharing agreements with other governmental entities.

Administrative Controls of Data

13. What are the procedures for eliminating the data at the end of the retention period?
Data will be retained for three (3) years after lock-in is released or ten (10) years after lock-in date, whichever is earlier, as set forth in Exhibit 1.15.29-1, Item 85 (5) of IRM 1.15.29, Records Management - Records Control Schedule for Service Center Operations. At the end of the retention period, data will be archived and purged from the system.

14. Will this system use technology in a new way? If "YES" describe. If "NO" go to Question 15.
No. WHCS is not using technologies in ways that the IRS has not previously employed.

15. Will this system be used to identify or locate individuals or groups? If so, describe the business purpose for this capability.
Yes, the information is used to identify individuals or businesses who are not in compliance with withholding regulations. WHCS contains the TIN’s of both the taxpayers and their employers. Using the TIN, records are identified and updated on WHCS.

Additionally, the system will enable us to identify employers who do not comply with the instructions in the lock-in letter, a notice instructing the employer to withhold income tax from the taxpayer’s wages at the rate specified by the IRS.

WHCS, through its audit trail, identifies and monitors the actions of users accessing the system to ensure conformance with applicable security guidelines.

16. Will this system provide the capability to monitor individuals or groups? If yes, describe the business purpose for this capability and the controls established to prevent unauthorized monitoring.
No

17. Can use of the system allow IRS to treat taxpayers, employees, or others, differently? Explain.
No. All taxpayers meeting criteria established by the business are selected and housed in WHCS. This ensures equitable treatment for all taxpayers.

18. Does the system ensure "due process" by allowing affected parties to respond to any negative determination, prior to final action?
No. Lock-in determinations are not subject to “due process”. Treasury Regulation § 31.3402(f)(2)–1T(g)(2)(iv) provide that the earliest that the notice of lock-in may be effective is 45 days from the date of the letter in order to give the taxpayer an opportunity to dispute our determination.

19. If the system is Web-based, does it use persistent cookies or other tracking devices to identify Web visitors?
Not applicable.

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