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Part 5. Collecting Process

Chapter 6. Collateral Agreements

Section 2. Maintenance

5.6.2  Maintenance

5.6.2.1  (07-15-1998)
Teller’s Initial Confirmation of New Collateral to RACS

  1. Service Center Accounting Branch enters new collateral into the Revenue Accounting and Control System (RACS). RACS produces a monthly Area Office Inventory Summary Report.

  2. Only when the Status of collateral changes during a given month will the teller:

    1. Match retained photocopies of new Forms 2276 with the inventory report.

    2. Destroy the photocopy when the item correctly appears on the report.

    3. Resolve missing and incorrect items with the service center RACS unit.

5.6.2.2  (07-15-1998)
Technical Support and Teller Semi-Annual Verification

  1. Semi-Annual verification of the Revenue Accounting and Control System Area Office Inventory Detail Report (RACS AOI) is required. The reports issued by the Service Center Revenue Accounting Control System (RACS) for March 31 and September 30 will be used for the semi-annual verification.

  2. Technical Support will:

    1. Arrange for a value review and verification of all collateral held by the teller not less often than semi-annually.

    2. Prepare a memorandum of confirmation with responses, either agreeing to the Area Office Inventory Detail Report or reconciling any discrepancy to the Service Center Accounting Branch within 30 days after receiving the listing.

    3. Forward to the teller and manager who will sign off and return to Technical Support for disposition, including returning a copy of the confirmation memorandum and the Inventory Detail Report (collateral account portion) to Technical Support for retention.

5.6.2.2.1  (07-15-1998)
Technical Support Sufficiency Review

  1. Technical Support will examine the case file to determine whether collateral is to be:

    • Retained and amount remains sufficient to protect the government’s interest.

    • Disposed of because of default or resolution of the contested issues. Refer to Section 2.5 for disposal instructions.

5.6.2.2.2  (07-15-1998)
Technical Support and Tellers Physical Verification

  1. The Technical Support representative and the teller representative must physically examine each item of collateral listed on the collateral account portion of the RACS AOI Detail Report to ensure complete agreement. Form 2276 will show in Item 7(d) the value of the collateral or will be noted "Safekeeping" .

  2. List each item, amount and identifying information of collateral on a verification worksheet.

    If the
    envelope
    is. . .    		 Then. . .
    not opened it is not necessary to open it. Notate the envelope with the date and names of the persons conducting the review.
    opened 1. Examine the contents to ensure they agree with Form 2276.
      2. Reseal the envelope and sign and date across the seal.

  3. When a difference between the contents and what is shown on Form 2276 is discovered then:

    1. Determine the reason.

    2. Adjust the Form 2276 when the difference is accounted for.

    3. Reseal the envelope and sign, date across the seal.

    4. Record the reason for the difference on the verification worksheet.

    5. Report the discrepancies to the service center accounting function by copy of an adjusted Form 2276.

5.6.2.3  (07-15-1998)
Technical Support Annual Reconciliation of Collateral Holdings

  1. The annual reconciliation of collateral holdings will coincide with the semi-annual reconciliation of September 30th.

  2. Each Area will provide to the Headquarters Office—Office of Technical Support the Areas reconciliation documents listed below by October 31st:

    • Area Listing—Collateral Property—Exhibit 1

    • Controlled Property Reconciliations Summary Report—Exhibit–2

    • Revenue Accounting and Control System Area Office Inventory Detail Report for Collaterals (RACS AOI).

    • Copies of Forms 2276 that were forwarded to the Service Center Accounting Branch during reconciliation to resolve any discrepancies with the current RACS AOI.

  3. Exhibit 1, Area Listing—Collateral Property will coincide with the columns on Form 2276.

  4. Entering a value for Area Listing—Collateral Property

    If the collateral is. . . Then. . .
      report the value in Columns D and E
      a zero value will be placed in column D and the inventory value reported in column (E) and (F).
    If. . . Then. . .
    a value for safekeeping
    appears on RACS AOI     		An amended Form 2276 is needed to correct discrepancies on RACS AOI.
      Technical Support will:
      1. Prepare an amended Form 2276 and write amended in red.
      2. Reflect the same date as shown on the original Form 2276 except in item 7(d), reflect "Safekeeping" and state the "value" in item 7(e) for information purposes.
      3. Forward parts 2, 3, 4 and 5 to the teller.
      Teller will:
      1. Maintain the amended part 2 to be associated with the existing file copy of part 2.
      2. Indicate on part 7 item 23, "amended Form 2276, value incorrectly stated" .
      3. Forward amended part 3 and the old part 7 to RACS.
      4. Forward parts 4 and 5 back to Technical Support to associate with the original part 4 and 5.
      Note: RACS will assign an alpha (R) at the end of the amended CDR number. The CDR number with the alpha R will be shown on future RACS AOI reports.

  5. Do not include in the Collateral AOI any Form 2276 that was prepared for a seized item that is being held for safekeeping.

    • A Form 2433 should be attached identifying it as a seized item.

    • Areas must maintain their own control of the seized asset provided to the teller.

  6. Exhibit 2—The Controlled Property Reconciliation Summary Report is a Collective sheet from Exhibit 1 for a summary of cases opened & closed.

       
    Collateral Property Column A—should reflect the Beginning balance for collateral securities from exhibit 1–Column D—the Asset Value reported to RACS.
    Safekeeping Summarize using the Same process. The total safekeeping value will be taken from Exhibit 1–Column F—Safekeeping values

5.6.2.4  (07-15-1998)
Transfer to Another Area

  1. If the balance due is to be transferred to another area, the collateral must also be transferred.

5.6.2.4.1  (07-15-1998)
Revenue Officer Procedures

  1. The revenue officer initiating the transfer will:

    1. Prepare a memorandum in triplicate to Technical Support explaining the transfer.

    2. Leave part 5 of Form 2276 attached to balance due.

    3. Attach copy of memorandum to balance due.

    4. Forward original and copy to Technical Support.

5.6.2.4.2  (07-15-1998)
Technical Support Procedures

  1. Upon receipt of the memorandum Technical Support will:

    1. Complete item 23 on all parts of Form 2276 and notate in the "Other block" Balance due and Collateral transferred to— "Area."

    2. Retain a copy of the memorandum in the case file pending the teller’s confirmation of the transfer.

    3. Forward the memorandum and all parts of Form 2276 to the teller.

    4. Notate index system of action taken and follow-up date.

  2. Entering a value for Area Listing—Collateral Property

5.6.2.4.3  (07-15-1998)
Teller Procedures

  1. Upon receipt from Technical Support the teller will:

    1. Send the collateral, a copy of the revenue officer’s memorandum and Form 3210 addressed to the remittance processing function in the receiving area by registered mail.

    2. Notate in Item 14 of Parts 4 and 7 the date and area office to which collateral was transferred.

    3. Return Part 4 of Form 2276 to Technical Support.

    4. Attach a copy of the revenue officer’s memorandum to Part 6 of Form 2276 and associate Part 6 with Part 2 in the closed file.

    5. Send Part 7 of Form 2276 to Service Center Accounting Branch.

5.6.2.4.4  (07-15-1998)
Receiving Area Procedures

  1. Upon receipt the receiving area will:

    1. Secure a serial number from Technical Support.

    2. Prepare a new Form 2276 for control purposes.

    3. Send part 3 of Form 2276 to the service center.

    4. Retain Part 2.

    5. Send Part 5 to the revenue officer.

    6. Send Parts 4, 6 and 7 to Technical Support.

    7. Monitor the Area Office Inventory listing to ensure that the service center includes the item in the inventory.

5.6.2.5  (07-15-1998)
Disposition of Collaterals (Overview)

  1. This section covers procedures for disposition of the collateral upon satisfaction of the liability or default.

5.6.2.6  (07-15-1998)
Technical Support Action for Account Satisfied

  1. IDRS issues a transcript (IMF and BMF) 4 cycles before expiration of the stay to Technical Support when the module balance changes and a collateral stay is in effect.

    If advised by Counsel the. . . Then. . .
    liability has not been sustained in
    litigation     		release the collateral.
    account will be abated do not wait for the abatement to post before returning the collateral.

  2. When the conditions for releasing the collateral security have been complied with or account shows a zero balance Technical Support will:

    1. Input TC 525

      Note:

      %Note: %If an abatement is to be made monitor the account and input TC 525 when the account has been adjusted.

    2. Complete items 15–18 on Form 2276, Parts 4, 6, and 7.

    3. Note Index system and follow-up date.

    4. Secure the collateral from the teller.

5.6.2.6.1  (07-15-1998)
Surety Bond

  1. Technical Support will:

    1. Prepare Pattern Letter P–299 in quadruplicate (see Exhibit 2–3) to Notify the surety company that it is relieved of liability under the bond.

    2. Associate copy of letter with case file and mail:
      —original with the surety bond to the surety company.
      —copy to the taxpayer.

    3. Check appropriate blocks for item 23 of Parts 4, 6 and 7 of Form 2276.

    4. Return parts 6 and 7 to the teller.

5.6.2.6.2  (07-15-1998)
Mortgages

  1. Technical Support will:

    1. Mail original and copy of release of the mortgage to the taxpayer with the mortgage and advice to record the release.

    2. Check appropriate blocks for item 23 of Parts 4, 6 and 7 of Form 2276.

    3. Return parts 6 and 7 to the teller.

5.6.2.6.3  (07-15-1998)
Other Collateral

  1. Technical Support will:

    1. Return the collateral to the taxpayer, securing a receipt in items 20–22 on Form 2276, Parts 4, 6, and 7.

    2. Return parts 6 and 7 of Form 2276 to the teller.

5.6.2.6.4  (07-15-1998)
Teller Release of Collateral

  1. Upon receipt of Parts 4, 6, and 7 from Technical Support:

    1. Enter name in Item 19 as the person releasing the collateral.

    2. Return, in person, or by mail (registered, if the collateral is a negotiable item), Parts 4, 6, 7 of Forms 2276 and the collateral to the Technical Support representative.

    3. Note in item 14, Part 2, of Form 2276, to whom collateral was released and the date released.

    4. File Part 2 of Form 2276 in the closed file.

5.6.2.7  (07-15-1998)
Technical Support Actions for Agreement in Default

  1. IDRS issues a Notice of Disposition to Technical Support and a balance due four cycles after the stay expires.

  2. For all collaterals, except surety bond (see section 2.3.1), send Pattern Letter P–301 (Exhibit 2–5) default letter to the taxpayer with a 10 day deadline.

    If in response
    to the letter. . .    		 Then. . .
    Payment
    received     		follow procedures in 2.6 for Accounts Satisfied.

    If in response
    to the letter. . .    		 Then. . .
    Payment not
    received     		a. Complete items 15–18 on Form 2276, Parts 4, 6, and 7.
      b. Secure the collateral from the teller.
      c. Request input of TC 525.
      d. Apply the collateral to the liability in accordance with the terms of the agreement.
      e. Seek assistance from area counsel as needed.
      f. Complete item 23 and 24 of form after disposition and notate items 23 "Taxpayer failed to comply with the conditions of the agreement—Collateral deposited for application to taxpayer’s account."
      g. Return parts 6 and 7 of Form 2276 to the teller.

5.6.2.7.1  (07-15-1998)
Surety Bond

  1. Send Pattern Letter P–300 (Exhibit 2–4) to the surety, with a copy to the taxpayer.

    If. . . Then. . .
    the surety full pays the account process per section 2.6.
    otherwise seek assistance from area counsel to enforce against the bond.

  2. After disposition, complete items 23 and 24 of Form 2276 and return parts 6 and 7 to the teller.

5.6.2.8  (07-15-1998)
Teller Closing Actions

  1. Upon receipt of parts 6 and 7 from Technical Support the teller will:

    1. Hold Part 6 with Part 2 of Form 2276 pending verification of the next monthly Area Office Inventory Summary Report.

    2. Send Part 7 to the Service Center in the Accounting Control Package.

    3. File Part 6 and Part 2 in the closed files when the Area Inventory listing no longer includes the item.

    4. Resolve any discrepancies with the service center accounting branch.

Exhibit 5.6.2-1  (07-15-1998)
Area Listing—Collateral Property

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Exhibit 5.6.2-2  (07-15-1998)
Controlled Property Reconciliation Summary Report

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Exhibit 5.6.2-3  (07-15-1998)
Pattern Letter P–299

     
  [AREA DIRECTOR LETTERHEAD]
     
    Name and Address of Principal:
     
    Name of IRS Contact:
     
    Contact Telephone Number:
     
[Name and address of surety]
     
[Salutation]
     
  Our records show the principal named above has complied with the conditions under which a surety bond in the amount of $[amount] was executed by you, as surety, and by the principal under Internal Revenue Code section [number]. You are therefore released from liability under this bond.
     
  We are sending the principal a copy of this letter.
     
  If you have any questions, please contact the Internal Revenue Service representative whose name and telephone number are shown above.
     
    Sincerely yours,
     
     
    Area Director
     
cc: [Name of Taxpayer]

Exhibit 5.6.2-4  (07-15-1998)
Pattern Letter P–300

     
  [AREA DIRECTOR LETTERHEAD]
     
    Name and Address of Principal:
     
    Name of IRS Contact:
     
    Contact Telephone Number:
     
[Name and address of surety]
     
[Salutation]
     
  Our records show the principal named above has not paid the tax liability for which the surety bond in the amount of $[amount] was executed by you, as surety, and by the principal under Internal Revenue Code section [number]. The liability should have been paid in full not later than [date]. Consequently, we must ask you to make payment as provided by the terms of the bond agreement.
     
  We will appreciate your early response. If you have any questions, please contact the Internal Revenue Service representative whose name and telephone number are shown above.
     
  Thank you for your cooperation.
     
    Sincerely yours,
     
     
    Area Director
     
cc: [Name of Taxpayer]

Exhibit 5.6.2-5  (07-15-1998)
Pattern Letter P–301

     
  [AREA DIRECTOR LETTERHEAD]
     
    Taxpayer Identifying Number:
     
    Name of IRS Contact:
     
    Contact Telephone Number:
     
[Name and address of taxpayer]
     
[Space for Salutation]
     
  Our records show you have not complied with the conditions of the agreement you executed for payment of Federal taxes. The following items were pledged as security.
     
  Description:
     
     
     
     
     
  We must now ask you to pay the amount due within 10 days from the date of this letter. Otherwise, the above items will be disposed of under the terms of the agreement.
     
  If you have any questions, please contact the Internal Revenue Service representative whose name and telephone number are shown above.
     
    Sincerely yours,
     
    [Space for signature]
     
    Area Director

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