Under IRC §6015, a spouse may be relieved of income tax liability in some cases when he/she files a joint return but is not aware that the return is inaccurate as to items generated by the other spouse. In these cases, "Relief from Joint & Several Liability" provisions are applied.

Taxpayers file the claims using Form 8857, Request for Innocent Spouse Relief (And Separation of Liability and Equitable Relief).

Refer to IRM 25.15for detailed procedures. The majority of the claims are worked at the Cincinnati Centralized Innocent Spouse Operation (CCISO).

Cases meeting the criteria listed in IRM 25.15.6.1 are transferred to PSP for distribution to the field.

Each Area PSP will have an Innocent Spouse Coordinator. The coordinator duties are listed in IRM 25.15.6.11.

There is a Service Level Agreement (SLA) between the National Taxpayer Advocate and the Commissioner, SBSE. This agreement outlines the procedures and responsibilities for processing Taxpayer Advocate Service (TAS) casework when the authority to complete case transactions rests outside of the TAS.

The Taxpayer Advocate Service uses the Operation Assistance Request (OAR) process to refer a case to the Small Business/Self-Employed Division when TAS lacks either the statutory or delegated authority to effect the resolution of the taxpayer's problem. The Taxpayer Advocate Service utilizes Form 12412, Taxpayer Advocate Service Assistance Request, to initiate the OAR process.

Each Area PSP will appoint a Taxpayer Advocate Liaison who will be responsible for accepting the OARs from TAS, acknowledging receipt of the case, reviewing the case for appropriate assignment, assigning the case to the appropriate employee within the function, and monitoring the case through its conclusion.

Please see the Taxpayer Advocate Web site at http://tasnew.web.irs.gov/for the current SLA, updated procedures and information.

The Centralized Reconsideration Unit (CRU) works reconsideration cases for individual income tax returns previously worked by the Area office or Campus Examination function.

IRM 4.13provides specific guidance for cases meeting reconsideration criteria.

IRM 4.13also discusses the required criteria the CRU uses if it is necessary to send a case to the Area PSP for distribution to the field examination function. Please refer to this section for guidance and screening of these cases in PSP.

All requests for an audit reconsideration submitted by IRS employees should be mailed to the appropriate Central Reconsideration Unit (CRU) of the IRS campus as prescribed in IRM 4.13.7. The CRU will screen the requests but will no longer assign or work the employee audit reconsideration cases. A centralized section has been established within SB/SE Central Examination Area to assign and control employee audit reconsideration cases.

The CRU employees will follow the guidelines in IRM 4.13.3.2.1 (a thru f) in establishing and preparing the case. All employee audit reconsideration cases will be shipped from the Campus to the address below, which is part of the PSP office within the Central Examination Area. To ensure expeditious handling, use a delivery service that provides tracking capability when sending information to the Campus and the Area office.

Central Examination Area will send the employee audit reconsideration cases to the appropriated Area PSP office for assignment and control. The case should be returned to the group and examiner who originally worked the examination.

Pursuant to IRC §6103(d)a great deal of information is disclosed by the IRS to states and vice versa. The mutual exchange of information is referred to as the Governmental Liaison Data Exchange Program. These exchanges of information aid the administrative and enforcement processes of both agencies, while simultaneously contributing toward improved taxpayer voluntary compliance and reduction of taxpayer burden.

PSP will screen the referrals received from the state. Cases selected for examination will be case built, controlled on AIMS and distributed to the appropriate field group.

The procedures for State Referrals may be centralized at the Campus. Please check the Exam Planning and Delivery web site for current instructions.

Federal/State initiatives based on data covered by the Fed/State agreement signed by the Area Director do not require a Compliance Initiative Project (CIP). The data is part of routine business operations. If the data is something "ad hoc" that is requested from the state or another governmental agency, a CIP is required. However, only Part One approval is necessary in order to secure the data. See IRM 4.17for CIP requirements.

Taxpayers may be identified for consideration through internal analyses, referrals, or reports of noncompliance filed by state housing agencies using Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition, which are processed at the Philadelphia Campus.

Selected Form 8823 and other selected information is forwarded to the Midwest Area PSP where it is associated with the returns and classified. If the return is selected for examination, the complete file, (including a LIHC-specific classification check sheet and case-building information) is sent to the appropriate Area PSP for distribution to the field. Project code 0670 and ERCS tracking code 9812 are used to identify LIHC cases.

The rehabilitation tax credit is 20% of qualified rehabilitation expenditures with respect to historic property and 10% for non-historic property as authorized in IRC §47. The National Park Service Office of Historic Preservation, as the representative of the Secretary of Interior certifies the work in order for a property to qualify for the historic tax credit. Copies of their correspondence to the property owner during the certification process are provided to the Internal Revenue Service.

The correspondence is sorted in Midwest Area PSP by potential issues as identified by the analyst assigned to the program. The returns are associated with the correspondence and classified. Returns selected for examination are sent to the Area PSP for assignment to the field. Project code 0082 and ERCS tracking code 9633 are used to identify Rehabilitation Credit cases.

IRC §7518authorizes the fishing vessel capital construction fund. This program is co-administered with the Department of Commerce, National Marine Fisheries Services (NMFS) and the Department of Transportation, Maritime Administration.

The section allows a fisher, by agreement, to establish a capital construction fund. The fisher may deposit income from fishing into this account and reduce taxable income by the amount of the contribution. Income can be withdrawn, tax free, to purchase or repair a qualified vessel. A withdrawal for any other purpose is non-qualified and subject to tax at the highest marginal tax rate. The fisher is required to submit an annual report to NMFS.

The NMFS submits reports to the IRS detailing all account activity based on the fishers’ reports. This report is sent to Western Area PSP as the majority of these taxpayers are located in that Area.

The analyst assigned to the program identifies potential issues. Cases meeting specified criteria are case built at the Ogden Campus and classified in Western Area. Returns selected for examination are sent to the Area PSP for assignment to the field. Project code 0120 and ERCS tracking code 9599 are used to identify Fishing Industry-Capital Construction Fund cases.

Offers in Compromise, based solely on doubt as to liability, not rejected by the Campus or from the Area Collection function, may be forwarded to Area Examination for further investigation. Area Examination will make a determination whether the offer merits further consideration.

Please refer to IRM 4.18, Exam Offers-In Compromise for detailed procedures and information.

The OIC coordinator should effectively monitor OIC cases assigned to the field and in process. Monthly status updates should be obtained on offers in process over 6 months.

PSP is responsible for preparing the Form 4778 , Examination Annual Compromise Case Report, per Form 4.18.5, Review, Closing and Reporting Requirements .

A Joint Committee case can arise either from an examination or the campus forwarding to the Area PSP unpaid claims or tentative allowances in excess of the jurisdictional amount. The examiner is responsible in determining whether a case falls under Joint Committee jurisdiction. The examiner can either examine or survey the claim or tentative allowances.

Joint Committee Tentative Carryback Allowances in excess of $2,000,000 to the same taxpayer will be selected and referred to Area examination after the allowance has been made.

Please refer to IRM 4.36, Joint Committee Procedures for detailed procedures and information. The LMSB Joint Committee web site is another excellent resource for up to date information on Joint Committee cases.

The Area PSP may need to enlist the cooperation of LMSB to examine returns related to a Joint Committee case in order to address the Joint Committee issues on an SBSE taxpayer.

The tax returns of all Service employees, regardless of grades or position will undergo the same initial computer screening process, the same classification process, and be subject to the same mass survey procedures applicable to all individual income tax returns.

Employee audits require expeditious handling at all levels to ensure prompt completion of the examinations.

Employee audits are generated by five different methods. This section identifies procedures and reporting requirements for the Area PSP for each of these different sources of employee examinations.

The examination of an employee's tax return can be initiated by one of the following different sources or events:

All requests for an employee examination will be transmitted to the Director, Examination Planning and Delivery (EPD) for assignment to the appropriate PSP.

The Area PSP Territory Manager will determine if an examination of a managers return can be conducted impartially and objectively within the Area, or if the tax return should be transferred to another Area.

The examination of a return of an executive or senior management personnel will be forwarded to the SB/SE Director, EPD for transfer to an Area office outside of the employee's assigned area.

All other employee tax return examinations will be assigned by the Employee Tax Compliance Coordinator to an examination group in a post-of-duty other than where the employee works.

SEP agents may not develop their own cases from leads received from internal or external sources. All leads are forwarded to the Area PSP. The leads will be screened, case built and classified either by PSP or the specialty Campus before distribution to the field groups.

PSP will complete preliminary IDRS research for proper screening of the lead to determine:

These leads and information items will be screened in the Area PSP using the followingSubstantial Noncompliance Factors (SNiF)criteria. These factors will be considered in selecting a lead to be case built and classified:

If the lead does not warrant further investigation, follow the records control schedule of IRM 1.5.23.

Criminal Investigation forwards their Form 6544, Cooperating Agent Requestsdirectly to the responsible Compliance Field Territory Manager for distribution to the SEP group. These requests are not processed through the Area PSP.

Claims related to open examination returns charged to Field Territory Managers are not classified by the Campus Examination Operations. These claims are forwarded to the Area for association with the return. All other claims which meet Category A criteria outlined in the LEM or as defined by instructions provided by the PSP Territory Manager or Classification Department Manager, are classified by Examination prior to processing. If the claim is selected, the original return is secured and forwarded to the appropriate Area PSP Territory Manager using Source Code 30.

The Area PSP Territory Manager should provide Area guidance to the Classification Department Manager at the Campus for use in the classification of claims.

Classification check sheets will be prepared by the Campus for returns selected for Area examination.

If a claim is selected by the Campus and later surveyed by the Area, the Area will process the claim and send Letter 570 to the taxpayer, if Letter 86Cor Letter 96C was sent by the Campus informing the taxpayer of the selection and status of the return.

Tentative Carryback Allowance Cases with related returns (carryback or carryover years) currently open in Area Examination will be forwarded to the area. The Campus will take necessary action to update or control selected returns on AIMS. The tentative allowance cases will be classified by the Campus.

In Tentative Carryback Allowance bankruptcy cases, the refund application, the loss year return and any additional returns necessary will be classified by the Campus. Area Examination may have already taken action on the bankruptcy case. If not and the case is selected for examination:

Each PSP will designate a staff member to coordinate all SB/SE compliance aspects of the Return Preparer Program. Please refer to IRM 4.1.10, Return Preparer Program .

A preparer program action case is a preparer penalty investigation in which clients of a questionable preparer are examined to determine whether preparer penalties and/or an injunction are warranted.

IRM 4.1.10 provides detailed procedures and information to develop preparer program action cases for distribution to the field examination groups.

U.S. taxpayers who give up their citizenship to avoid tax are subject to special tax treatment for a 10 year period after expatriation under IRC §877. The Philadelphia Campus maintains a database of taxpayers who have expatriated. Some of these taxpayers meet the tax avoidance criteria based on their assets and prior U.S. tax liability.

When the taxpayer leaves the U.S. they are considered non-resident aliens. In the year they relinquish their U.S. citizenship, they file a dual status return. A dual status return contains special rules and is a blend of a regular Form 1040and a Form 1040NR. In subsequent years, they file a Form 1040NR.

The Philadelphia Campus screens the expatriate database and the Form 8854, Expatriation Initial Information Statement, submitted by the taxpayer. The expatriate cases that meet the IRC §877 definition of tax motivated abandonment of citizenship are sent to SBSE International for classification. The expatriate returns all fall under the jurisdiction of SBSE International. Cases selected for examination are distributed to Area 15 examiners.

Information reports are generated from the Anti-Money Laundering Program about the financial transactions of businesses and individuals that may have material compliance potential. These information leads are forwarded on Form 5346, Examination Information Report, or Form 3949, Information Report Referral.

All leads are forwarded to the designated Bank Secrecy Act (BSA) PSP. The BSA PSP screens the leads using the SNIF criteria and forwards the SBSE income tax leads to the Brookhaven Campus for classification, case building and distribution to the Area PSPs for distribution to the field groups.

Generally, nonresident alien returns, Form 1040NR , will be examined by SBSE International. Under certain circumstances, some may be referred to the appropriate Area PSP Territory Manager for follow-up action. Returns on which an election under IRC §6013(g) or IRC §6013(h)has been taken, and returns falling under IRC §879, should be examined in the Area office having jurisdiction over the spouse who is a resident or citizen of the United States. Exceptions are as follows:

Form 1040and Form 1040Afiled and examined in domestic Area offices will not be transferred to SBSE International merely because the taxpayer has left the United States. However, if the examination will need to be conducted overseas, the books and records are maintained overseas, or if the issues are sufficiently complex to warrant an international examination, returns may be transferred. Questions should be directed to the PSP Territory Manager, SBSE International.

Tax returns designated as "automatic" must be classified and either selected for examination or accepted as filed on classification. Certain individual, corporate, partnership and fiduciary returns are identified as "automatic" . See the LEM for the criteria used to categorize these returns.

Certain individual returns are identified as Specials based on specific features on the return using Campus Audit Code screening criteria. These returns are sent to the Area PSP Territory Manager for classification and assignment.

The Campus may identify other types of cases that need further consideration and classification by the Area PSP. These are forwarded to the Area PSP Territory Manager. Please refer to IRM 4.19, Campus Examination Operations.

The procedures after receiving Bankruptcy Notice are as follows:

When National Headquarters issues a letter to a taxpayer authorizing a change in accounting method, a copy is sent to the appropriate Area Director for follow-up action. The PSP Territory Manager will prepare Form 5346for subsequent (unfiled) years. Follow-up action is not required in all future years as long as the PSP Territory Manager is reasonably certain that the taxpayer is complying with the terms, conditions and adjustments upon which permission is predicated.

Information reports and referrals are sent to PSP by field examination and other business units. These leads may include information related to returns for tax years not yet required to be filed, also known as intercept files. These may be received on the following forms:

These leads will be screened in PSP using the procedures and Substantial Noncompliance Factors (SNiF)criteria in See IRM 4.1.4.2.11.. The leads will be screened, case built and classified either by PSP or the specialty Campus before distribution to the field groups.

PSP must ensure that the AIMS/ERCS controls have been perfected and the appropriate project code is applied to the case prior to assignment to the field.

Information involving one or more specialty taxes (excise, and estate/ gift tax will be sent to the Cincinnati Campus.

The information reports and referrals sent to PSP also include non-filer leads received from various sources. PSP will screen all non-filer leads to ensure they meet the high income non-filer (HINF) strategy criteria. The HINF strategy is designed to address the filing compliance of taxpayers with known sources of income exceeding $ 100,000. The sources of income may include IRP documents, or alleged information on an information report. Refer to IRM 4.1.3.1.5for an overview of the HINF program.

A non-filer lead with total known income sources exceeding $ 100,000 at least one source of which is non-employee compensation will be sent to the Memphis Campus for case building at the following address:

HINF cases built for examination for an Area office will be classified, AIMS controls secured and the substitute for return (SFR) posted. These cases will be forwarded to the Area PSP for assignment to the examination groups.

If the lead does not meet the above HINF criteria, the leads will be screened using the procedures and Substantial Noncompliance Factors (SNiF)criteria in See IRM 4.1.4.3.5. Information Reports/Referrals-Other Types.

If the lead does not warrant further investigation, follow the records control schedule of IRM 1.5.23.

All non-filer cases referred by Collection will reflect Transaction Code (TC) 595. In instances where a non-filer will not be pursued, all unfiled years/modules must be "satisfied" using a TDI satisfying transaction code and closing code.

The PSP Support Manager or designee should screen all Form 3031referred to Examination within 30 days after receipt.

An INOLE should be obtained to determine the taxpayer's most current address.

) An AMDIS should be secured to determine if there is an open year in status 10 or 12 in a group. If there is, Form 3031 should be sent to that group along with a Form 3210, Document Transmittal.

If there is no open year in status 10 or 12, the PSP Support Manager or designee should requisition the return(s) on ERCS, associate the return(s) with Form 3031 and forward to an examiner for verification of assets transferred and case write-up. Form 3210, Document Transmittal will be used to forward the return(s).

Compliance Initiative Project procedures ensure conformance with Service policies and procedures regarding privacy, security and disclosure. CIPs are characterized by the use of internal or external data to identify, quantify, evaluate and correct areas of noncompliance. They usually involve a study or other analysis of a group of individuals such as those within an occupation, industry, geographic area or specific economic activity or event.

CIP procedures do not apply to routine business operations. Refer to IRM 4.17.1.3 for a list of activities not subject to CIP procedures.

The SB/SE CIP Coordinator will be located in the Area PSP office. See IRM 4.17.2.2for a detailed list of coordinator duties.

The IRS Tax Attache' or Exchange of Information (EOI) program analyst will forward foreign initiated requests to the appropriate office for action. Under the Memorandum of Understanding (MOU) between LMSB and Small Business Self-Employed Division (SBSE), the IRS Tax Attache' or the EOI program analyst will forward the case to the SBSE Compliance Area Directors. These requests are generally referred to the Area PSP for assignment and control to a Revenue Agent (RA).

Please refer to IRM 4.60.1.2.5for specific procedures for these requests.

It is imperative that the request is assigned to an examiner on a priority basis. A response to the IRS Tax Attache' or EOI program analyst is required within 60 days.

The PSP Territory Manager should select for examination all returns with Form 5346, Examination Information Report, attached, indicating that the taxpayer did not maintain adequate records of business expenses, unless they lack significant examination potential.

An Inadequate Records Notice (IRN) coordinator should be established in each Area to monitor the follow-up investigations.

Please see IRM 4.10.8.15.8for PSP responsibilities to monitor and follow up on Inadequate Records Notice Cases.

Returns that are surveyed must have a Form 1900 , Income Tax Survey After assignment, completed and attached to the return.

The PSP Territory Manager will receive selected claims through the Informants' Claim Examiner (ICE) at the Campus. The Campus is responsible for establishing on AIMS the returns related to the claim for reward.

Project Code 0153 has been assigned to the Informants' Claims for Reward program. The Area PSP will ensure that PC 0153 and the Informant Claims Indicator has been established on these cases by the Campus. Please see the AIMS IRM 4.4.1for setting the Informant Claims indicator.

The PSP Territory Manager may accept or survey these claims if the available information indicates that an examination is not warranted. If the claim is accepted or surveyed, the PSP Territory Manager must inform the ICE expeditiously.

The PSP Territory Manager will promptly assign any claims deemed worthy of examination to the appropriate group. These cases require seven point protection and should be assigned in double sealed pink security envelopes.

The identity of persons who furnish information regarding possible tax violations must be protected. All employees must handle such information in strict confidence. Special handling must be given to avoid disclosure to other than those employees having a "need to know. "

Refer to IRM 25.2, Information and Informants' Rewards for detailed procedures.

The Information Returns Master File (IRMF) will match information returns and Currency Transaction Reports (CTR) with any current tax year return ordered from the DIF Programs Correspondence and Self-Employment Tax (SET) inventory files, or delivered as an Automatic/Special for the current year and two prior years.

This data will be printed on an IRMF transcript and summarized on a summary sheet. The transcript and summary will be associated with the related return prior to classification.

If the Information Returns Program (IRP) produces an underreporter transcript for a return located in an Area, the transcript will be forwarded to the appropriate Area and:

MACS is an automated compliance tool that provides the capability to profile a population, identify market segments, and identify issues during screening. MACS contains Return Transaction File data and certain Master File information for three years for all taxpayers who filed within an Area or campus area (IMF, 1120, 1120S 1065 and 1041 only). MACS has stringent operating restrictions to ensure the securing of the data and that taxpayer privacy is not compromised.

MACS may be used for information on specific taxpayers even if only a partial name or address is known. This includes a return facsimile in either a one year or three year comparative format and a Cash-T analysis. This information may be used for case building or return selection decisions. A MACS facsimile may be used in lieu of the original tax return.

MACS may be used to identify potential noncompliance within a market segment, and to select a sample of returns to test the level of noncompliance.

No taxpayer compliance contact, including examination action, taxpayer education, etc., should be made on specific taxpayers identified using MACS prior to the approval of a Compliance Initiative Project (CIP). Refer to IRM 4.17for detailed CIP procedures.

Returns selected for compliance contact using MACS based on any criteria other than activity code, POD, NAICS code, DIF, and UIDIF score equal to or greater than the local computed DIF cutoff score, must have an approved CIP before contact is made.

Refer to IRM 4.3Midwest Automated Compliance System (MACS) Handbook for an in-depth explanation and procedures.

Any returns referenced in a request for prompt assessment or prompt examination that are selected for examination by the Campus Classification Section will be controlled on AIMS by the Campus to the appropriate Area office. The Campus will use Letter 621C, or another appropriate letter, to notify the requester that the request has been transferred to the Area for consideration.

Upon receipt of requests for prompt assessments, Examination will proceed at the earliest possible date to close the returns which have not already been administratively closed. If an Area is not in possession of the original returns for the taxable years needed in a prompt assessment request and such returns have not been administratively closed, the examination should proceed using the taxpayer's retained copies. The original returns should subsequently be requisitioned.

If the statutory period for assessment as prescribed in IRC §6501(d)is about to expire and the taxable years covered in the request cannot be closed prior to the expiration date, the taxpayer will be given an opportunity to file a consent. In no case should the taxpayer be requested to withdraw the request for prompt assessment.

When a request is received by an Area involving a case that is pending before Appeals, a copy of the request will be sent to the Appeals office having physical possession of the returns.

The PSP Territory Manager will then assign the return(s) to the appropriate function, Office or Field

The Area PSP is responsible for screening Prompt Determination Requests received on Bankruptcy cases. Please refer to IRM 4.27.5.3 for detailed procedures to control the cases on AIMS and respond to the trustee or debtor-in-possession.

Per Rev. Proc. 81-17, 1981-20and IRB 48, the Service must notify the trustee or debtor-in-possession if the return has been selected for audit within 60 days.

Employment tax has established a Centralized Workload Selection and Delivery System at the Cincinnati Campus.

Employment tax leads or workload received by PSP will be forwarded to Cincinnati using a Form 3210to the following address:

Please refer to IRM 4.23.3for classification, selection and assignment of employment tax cases.

All IRC §338 Elections, Certain Stock Purchases Treated as Asset Acquisitions , completed packages should be forwarded to the PSP Territory Manager by the Section 338 Technical Reviewer.

For all elections on Form 8023, the PSP Territory Manager in the Area where the purchasing corporation is located will be responsible for securing all relevant returns and coordinating examinations of the returns by using collateral requests or support requests on CEP cases. Relevant returns include:

The PSP Territory Manager will ensure that these returns are classified in the Area as a group (purchaser, seller and target), and where possible, by agents with IRC §338technical expertise.

Generally, the examination of any income, estate, or gift tax return is the responsibility of the Area in which the taxpayer resides or conducts its business or maintains its principal office. The examination will generally be assigned to an examiner at the post-of-duty nearest to the taxpayer's residence for a non-business return or place of business for a business return.

Transfer of returns for examination from Area to Area and between posts-of-duty in the same Area will be governed by Regulation 26 CFR 301.7605 (published in the Internal Revenue Bulletin in 1990). By observing the regulatory guidelines on time and place of examination, the convenience of the taxpayer will be balanced with the requirements of sound and efficient tax administration.

In addition to the general guidelines noted below, examiners must be familiar with all details of the regulation.

A taxpayer may request a transfer of an examination if they no longer reside or conduct business at the site shown on the original return. The taxpayer's request to transfer the place of examination must be written and must take into account the following factors:

The regulation provides further guidelines on time and place of examination with respect to incapacitated taxpayers, Service initiated transfers, location of representative's office, seasonal fluctuations in the business of the taxpayer or representative, and requests for transfer to offices with insufficient resources.

When an income, estate, or gift tax return is transferred from one Area to another for examination, the following procedures should be followed:

The overall impact on compliance should be considered when determining if a return should be transferred for examination or should be surveyed.

Examiners should strictly adhere to the "case-by-case " standard contained in the regulation for determining if a transfer is appropriate. No additional criteria should be developed by examiners or Areas.

If an examiner is assigned a case that was transferred from another Area and it becomes clear that the books and records and other source documents needed to complete the examination are not available in that Area, this case should be referred to the group manager for resolution. Group managers (or PSP Personnel) will contact PSP staff from the transferring Area to determine which Area will complete the examination. If agreement cannot be reached at the PSP level, the case will be referred to the Field Territory Manager level for resolution. Under no circumstances should the case be returned to the transferring Area without prior telephone contact and agreement. Taxpayers and/or representatives should be consulted as necessary during this process and should be advised expeditiously where the examination will be completed.

Technical Services will transfer cases to PSP for assignment to the field for field resolution of specific issues.

These may include the following types of cases:

Sometimes it is necessary to request information from another IRS office or request the examination of another taxpayer in another IRS office in order to properly develop the issues being examined. A collateral request is used for this purpose. This is not intended to replace the Specialist Referral System, where participation of a specialist, such as an International Examiner, Engineer or Employee Plans specialist, is being requested.

A collateral request is made when an exchange of information between business operating divisions or area offices of the same operating division is essential to resolve issues of material tax consequence. A collateral request is not limited to a request for information, but also includes a request for examination of returns that cross area offices or operating divisions.

A collateral request for exchange of information is used only when the information cannot be obtained from the taxpayer, the taxpayer's representative or third parties.

Before making a collateral request, IDRS research must be conducted to determine if the taxpayer located within the jurisdiction of the other office is currently under examination (status 12 through 18). If the taxpayer is under examination, the examiner located in the other jurisdiction will be contacted directly to exchange information pertinent to the issues.

Form 6229, Collateral Examination will be used to make a request for a collateral examination between Operating Divisions or Area offices, or a request for collateral information. All collateral requests must receive priority treatment.

Coordination and routing of requests for collateral examination will be coordinated through PSP:

A specific Memorandum of Understanding between SBSE and LMSB is located at: http://lmsb.irs.gov/hq/srp/MOUSBSELMSB.asp which covers scenarios and procedures specific to High Income Taxpayer Strategy (HITS) cases.

A Letter of Understanding between SBSE and LMSB is located at: http://lmsb.irs.gov/hq/srp/downloads/FTCC/MOUDecisionMakingRegFlowThruEntWk.pdf which covers Decision Making Regarding Flow Through Entity Workload Across Operating Divisions. Special procedures apply for releasing jurisdiction in these operating divisions

Form 13649, Multi-Case Inventory Referral, will be used to transfer multi-case inventory between Campus Examination, Field Examination, Specialty Tax, Wage & Investment or any other Operating Division. For example, this form must be used to transfer multiple cases related to special projects, return preparer projects, CI Refund Schemes, etc., between business units.

The revised Form 13649 allows multi-functional transfers of Examination inventory and provides details of the potential workload up front to the receiving business unit. The business unit receiving the request must make a decision to either accept or reject the referred workload within 30 days. This ensures timely delivery of the inventory to the appropriate business function.

The completed form should be sent electronically to the contact listed on the form and coordinated with the respective Exam Return Selection (ERS) Analyst from SB/SE Examination Planning & Delivery.

A case may be referred to Examination from Appeals (where Appeals jurisdiction is not released) where the taxpayer challenges; a) underlying liability as to existence or amount or b) spousal defenses. (Refer to Section 3401 of RRA 98.)

These cases should be given priority and assigned for examination within 30 days of receipt. These cases must be worked in the Area and cannot be referred to any centralized Audit Reconsideration or Innocent Spouse units in the campus.

The receipt and processing of all frivolous documents has been consolidated Servicewide at the Ogden Compliance Center (OCC).

The criteria for considering a tax return frivolous is found in IRC 6702and also listed in IRM 4.10.12.

Documents deemed frivolous should be referred to OCC as listed in IRM 4.10.12.

Criminal Investigations (CI) may request information on a taxpayer prior to starting their initial investigative activity. These inquiries generally include an IDRS search to determine whether there is a pending or previous examination or investigation relating to a specific taxpayer.

PSP will perform the necessary research and respond to CI regarding their inquiry.

Administrative Adjustment Requests (AAR) may be sent to the Area PSP for consideration.

Please refer to IRM 4.31.4for Campus criteria for sending AARs to the Area PSP and PSP responsibilities on receipt of the AAR.

Returns identified as training returns may be selected as a normal part of classification and are assigned Project Code 0204. If the returns are not used for training, the project code should be removed. All related, subsequent year, and/or prior year returns secured in connection with the training return will also have Project Code 0204 assigned, regardless of when the related examination is started.

MACS may be used to secure training returns with specific issues, based on the training needs.

Refer to the Exam Planning and Delivery web site at http://sbse.web.irs.gov/EPD/ERS/training.htm for current procedures based on the number and timing of new hires.