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Part 4. Examining Process

Chapter 5. TE/GE AIMS Manual

Section 2. TE/GE Examined and Non-Examined Closures

4.5.2  TE/GE Examined and Non-Examined Closures

4.5.2.1  (09-27-2006)
Processing TE/GE AIMS Closings

  1. This IRM section contains Master File (MF) and Non-Master File (NMF) processing, instructions for EP (Form 5330's on BMF), EO/GE examination cases and discrepancy adjustments. TE/GE Examination Closing Function Tax Examiners will be given information on how to:

    1. Determine if they should make an adjustment on MF or NMF.

    2. Make entity and POA changes.

    3. Complete Form 5599, TE/GE Examined Closing Record, Form 5650 EP Examined Closing Record, and Form 5596, TE/GE Non-Examined Closing Record.

4.5.2.1.1  (09-27-2006)
Error Tolerance Level

  1. If, during an edit and review of examination case files, it becomes apparent an error was made in computing the deficiency, overassessment, or penalty and the error favors the taxpayer (less tax due or higher refund due), we should assess the correct deficiency or penalty and schedule the corrected overassessment for a refund.

  2. Research IDRS CC BMFOL (BMF), EMFOL (EPMF), IMFOL (IMF), or the Automated Non-Master File system (ANMF), to verify the accuracy of the tax shown on the return and any previous adjustments as reflected on the examination report.

  3. If, by correcting the error, the taxpayer will owe additional tax or receive a lesser refund, the case may be processed for the deficiency, overassessment or penalty shown on the examination report, if the difference does not exceed $50.00.

  4. Errors of more than $50.00 may be processed when approved by the Manager, Mandatory Review; Manager, Programs and Review; Manager, Outreach, Planning and Review or the Director of EP, EO or GE (FSLG, ITG or TEB) Examinations as established by local procedures. The case file may need to be returned to the Examiner to issue a new report.

    Note:

    The above review must be applied separately to each item involved and not to the net effect when multiple years are involved. The dollar amount of the error in relation to the total corrected deficiency should be considered when determining if the error should be waived. Supporting documentation and applicable forms (i.e., Form 4549 or Form 3198–A) must be completed by the Examiner and included in the case file.

4.5.2.1.2  (09-27-2006)
Electronically Filed Returns

  1. TE/GE personnel should follow normal requisition and closing procedures, even though the taxpayer electronically filed the return (regular prints or Graphic Electronic Prints (GEL) must be closed using an original return blocking series). The hard copy return that the requestor receives is considered the original return.

    1. However, returns will not have Form 8453, U.S. Individual Tax Declaration for Electronic Filing automatically associated unless the requesting function is Appeals, Criminal Investigation or the Taxpayer Photocopy Unit.

    2. The taxpayer's signature will not appear on a hard copy of an electronically filed return, but will appear on the signature document, Form 8453.

      Note:

      If the taxpayer electronically files their return, they can now sign their return electronically by creating their own Personal Identification Number (PIN). This PIN will serve as the taxpayer's signature and can only be used if the return is filed electronically using tax preparation software or through a tax professional. In this case, the taxpayer is no longer required to send an original signature on Form 8453.

    3. Securing the original document may be necessary in criminal investigation, tax court cases and any other time an original signature is critical for processing (see (3) below).

    4. Form W-2, Form W-2G, and Form W-2P information appear on the output page (a W-2 summary page) of the electronic return hard copy. The original W-2’s are filed with Form 8453.

  2. Instructions to secure Form 8453 or Form W-2:

    1. Group manager approval should be secured and documented in the case file. Secure a transcript to ensure the return was electronically filed (see DLN information above).

    2. Use CC ELFRQ-AC2 or follow CC ESTAB procedures. State in the remarks section of the request, "Need Form 8453 Only." Also use the remarks section to request Form 8453-F (1041, Fiduciary), Form 8453-P (Form 1065, Partnership), or Form 8453-E (Form 5500 series returns, Employee Plans).

    3. If the original Form W-2s are needed, use CC ESTAB procedures and enter in the remarks section "Need Form 8453, Original Form W-2s Needed. "

    4. If requested, the Form 8453 must be attached to the print of the return and it will become part of the case file and will receive a renumbered DLN upon closing.

  3. Electronically filed returns that fall into the unallowable program other than Form 5500 series will be worked in the Correspondence Examination Branch in the Campus Center where the return is filed.

  4. Command Code TRDBV (Tax Return Data Base) includes electronically filed original Tax Returns and corrections made to the tax return data in the Error Resolution System (ERS), Generalized Main Frame (GMF) and General Unpostable File (GUF). This command code is a "read only" print.

    Note:

    Command Code TRDBV can display information from electronically filed original individual and business returns, as well as the associated forms and schedules, submitted by the taxpayer for tax years 1998 and later. TRDBV will also display IMF and BMF paper return information, after GMF perfection, beginning with processing year 2003. TRDBV is designed to produce results similar to RTVUE and BRTVU.

4.5.2.1.3  (06-01-2003)
Power of Attorney/Tax Information Authorization

  1. A taxpayer may designate a representative to handle their tax matters. To provide data on Power of Attorney (POA) or Tax Information Authorization (TIA) in a complete and timely manner, the Centralized Authorization File (CAF) system was established. See IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF).

    Note:

    Powers of Attorney received on Civil Penalty cases, MFT 13 or 55 cannot be established on the CAF system.

  2. Powers of Attorney may be submitted on Form 2848, Power of Attorney and Declaration of Representative. Form 8821, Tax Information Authorization can also be submitted. The form requires the taxpayer to specify the type of tax matter and the period of time for which the power of attorney is effective. These forms are not mandatory and the use of technical language is not necessary.

  3. CAF Unit processing of the Power Of Attorney or Tax Information Authorization forms have been consolidated into two campuses, Memphis or Ogden Campus Centers. POA or TIA forms received at the group level should be forwarded to Memphis or Ogden, based on the state mapping shown below.

    Exception:

    International third party forms will still be processed by the Philadelphia Campus.

    Campus Address Phone Numbers State Mapping
    Memphis Campus
    5333 Getwell Road
    Stop 8324
    Memphis, TN 37501     		FTS:
    901-546-4176
    FAX:
    901-546-4115     		AL, AR, CT, DE, FL, GA, IL, IN, KY, LA, ME, MD, MA, MI, MS, NH, NJ, NY, NC, OH, PA, RI, SC, TN, VT, VA, WV
    Ogden Campus
    P.O. Box 9941
    Stop 6737
    Ogden, UT 84409     		FTS:
    801-620-4254
    FAX:
    801-620-4249     		AK, AZ, CA, CO, DC, HI, ID, IA, KS, MN, MO, MT, NB, NV, NM, ND, OK, OR, SD, TX, UT, WA, WI, WY
    Philadelphia Campus
    International Department
    11601 Roosevelt Blvd.
    Philadelphia, PA 19255     		FTS:
    215-516-5882
    FAX:
    215-516-1017     		International Third Party Forms Only

  4. The Examiner must annotate on the POA/TIA their initials, employee group code, telephone number and primary business code.

  5. POA/TIA’s received for determination case files should be forwarded to the Technical Screening Unit for input into EDS.

  6. If the original is sent to the service center, the copy must be annotated "Original Sent to ___ Campus Center" and the date in the case file attached to page 1 of the return. If there is no indication the POA/TIA was processed, check IDRS CC CFINK to determine whether an individual is authorized to receive information or act on the taxpayer’s behalf.

  7. Form 2848 and Form 8821 should contain the following information:

    Note:

    Original documents, photocopies or documents submitted by facsimile transmission (FAX) are acceptable for processing.

    1. The name, Taxpayer Identification Number (TIN) and the address of the taxpayer

    2. The name and address of the designated representative (POA) or the appointee (TIA)

    3. The type of tax (individual, corporate, etc.) and the tax form number

    4. The tax year(s) or period(s)

    5. Plan or report numbers for Form 5500's, Form 5330's, Form 8038 series returns and Form 8328

    6. The taxpayer’s signature and date of the signature

    7. Declaration of good standing signed and dated by the representative(s). This does not apply to Form 8821.

    IF THEN
    Form 2848 is a joint return and they have the same representative Both spouses must sign.
    Form 2848 is a joint return and they have different representatives Both spouses do not have to sign (See CFR 601.504(b)(ii) for limitations.)
    Form 8821 is a joint return Only one spouse’s signature is required. Both spouses are not required to sign this form.

  8. POA/TIAs filed for specific issues must not be detached from the related document and sent to the CAF function, unless the document authorizes recognition for a return besides the specific issue. In this case, send a copy of the POA/TIA to the CAF function to input in the return portion of the CAF system. Examples of the specific issues include, but are not limited to, the following:

    1. Form 843, Claim for Refund and Request for Abatement

    2. Form 966, Corporate Dissolution or Liquidation (Form 964 is Obsolete)

    3. Form W-4, Employee’s Withholding Allowance Certificate

    4. Form 4361, Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners

    5. Form 1128, Application to Adopt, Change or Retain a Tax Year

    6. Form SS-4, Application for Employer Identification Number

    7. "General Power of Attorney" or "Durable Power of Attorney" - These powers of attorney do not contain sufficient information to process on CAF and must be retained in the case file or left attached to the related return. If, however, a general or durable power of attorney is submitted attached to a completed Form 2848 (a transmittal power of attorney), send both forms to the CAF function for processing.

  9. Power of Attorney or Form 3198–A, TEGE Special Handling Notice marked "Power of Attorney" may be in a case file when it is received in the Closing Function for closing.

    IF THEN
    There is an indication the POA has been processed (copy of POA noted "POA sent to service center" ) Take no action on the POA and process the case.
    There is no indication the POA was processed Check IDRS via CC CFINK.
    A POA is present on CAF Annotate the copy and process the case.
    A POA is not present on CAF Make a photocopy of the POA and suspense the case for two weeks to allow time for the POA indicator to be input by the service center before the case is closed.
    A POA is reviewed and is rejected because of missing or incorrect data Associate the POA with the case and reject it to the examining officer.

4.5.2.2  (09-27-2006)
Processing EP/AIMS Closings

  1. This subsection contains EP Plans Master File (EPMF) and Non-Master File (NMF) processing instructions for EP examination cases (Forms 5500 and Forms 5330 NMF). TE/GE Examination Closing Function Tax Examiners should be given information on how to:

    1. Determine If they should make an adjustment on MF or NMF.

    2. Make entity and POA changes.

    3. Complete Form 5650, EP Examined Closing Record and Form 5596, TE/GE Non-Examined Closing Record.

4.5.2.2.1  (09-27-2006)
Processing EP Examined Closing Record, Form 5650

  1. Form 5650 is used for closing examined EP returns, 5500 and 5330 NMF (DCs 01 through 15) and Claims Allowed in Full (DC 34) off of the AIMS database at the completion of an examination. Form 5650 is used to update the Employee Plans Master File (EPMF) with closing information from an EPMF account. Form 5500 Series Returns are closed using Form 5650. Form 5330's that have posted to the BMF beginning 1/1/2001 are now established and closed on AIMS as a BMF accounts using form 5599, TEGE Examined Closing Document. See IRM 4.5.2.3. on TE/GE AIMS Closing for procedures. . Manual assessments are still required for for claims filed on Forms 5330 returns posted on NMF prior to 1/1/2001.. Form 990T-2 returns will also be closed using Form 5599.

  2. Form 5650 is not used to close EP Flow-Through Discrepancy Adjustments. Use Form 5599, TE/GE Examined Closing Record. See IRM 4.5.2.2.3. below for handling EP Flow-Through Discrepancy Adjustments.

  3. The local use of forms, special handling procedures and the data contained in the "Responsibility for Completion" area on Form 5650, should suggest who, in the area office, will be responsible for completing each item on the form. Local procedures may permit Examiners and Reviewers to pencil in other items.

  4. Entries in Item A, positions P7-18, P20-22, P24-29, P31-34 and Items C, 02, 13, 20, 21, 28, 30-33, 40, 42, 49-50, 416, 600-612, I, L and M are made at the Group/Review level.

  5. Entries in positions P36, P38-40 and Items 13,14,16, 20, 21, 36, 602, 603, 604, 605, D-G, K, L, and M are completed and/or perfected by the Closing Function. Information needed to complete these items must be provided by Examiners and Reviewers.

  6. Closing Function Tax Examiners must review all entries on Form 5650 for legibility, validity and range, and presence of required entries. Appropriate correction action including returning incomplete forms to the originator or AIMS Coordinator should be taken.

  7. Closing Function Tax Examiners must edit entries on the Form 5650 as required to prepare the form for terminal input. Technical assistance from Planning and Review Staff must be provided when requested.

  8. All entries must be made legible using a Number 2 pencil, if Form 5650 is completed by hand.

  9. Positions P7-18, P20-22, P24-29, P31-34 and Item C should normally be completed by attaching an AIMS label. In the absence of a label, these Items must be completed manually, in block print.

4.5.2.2.2  (09-27-2006)
Form 5650, EP Examined Closing Record

  1. Form 5650, with all examination items completed, and case file are forwarded to the closing function where it is completed, reviewed, and processed to close it off AIMS NMF and EPMF.

  2. Returns closed with an agreed examined disposal code remain on AIMS for ninety days after being closed at the terminal or until assessment verification has been completed (whichever is longer). They are included in closing reports at the end of the month in which they are closed at the terminal.

  3. Returns closed with an unagreed examined DC 11, Unagreed - Petition to Tax Court, remain on AIMS for ninety days after being closed at the terminal for Appeals or until assessment verification has been completed (whichever is longer). They are included in closing reports at the end of the month in which they were closed at the terminal for TE/GE.

  4. An examined return may be re-established once it has aged off of AIMS. In some instances, however, there may be a need to re-establish a closed return before the end of the normal ninety days aging-off period. If this is the case, refer to IRM 4.5.1.3.9.1.2.1 for instructions on re-establishing closed returns.

  5. All information that is placed on Form 5650 is used for statistical purposes. Any type of assessment or abatement must be manually done before the case file is closed off at the terminal. Once the case file is closed at the terminal, it will be forwarded to Ogden Campus Center for refiling.

4.5.2.2.3  (06-01-2003)
Processing Discrepancy Adjustments and Form 5330 on the BMF

  1. Form 5599 is used to close discrepancy adjustments, Form 5330 BMF and 401(a) examinations by Employee Plans. This is necessary as Form 5599 allows adjustments to tax and penalties to be assessed and/or abated through the Integrated Data Retrieval System (IDRS) for posting to the Business Master File (BMF). A Flowthru Indicator of "1" has been input on the establishment of the discrepancy adjustment. Any Source Code can be used to identify a discrepancy adjustment as CC AMDIS will display discrepancy adjustment.

  2. Form 5599 should be used for the following tax returns:

    1. Form 990T

    2. Form 1040, Form 1040A, Form 1040EZ

    3. Form 1041

    4. Form 1065

    5. Form 1120 (Including Form 1120F, Form 1120L, Form 1120PC, and Form 1120S)

    6. Form 940

    7. Form 941

    8. Form 1042

    9. Form 945

    10. Form 11C

    11. Form 730

    12. Form 4720

    13. Form 5227

    14. Form 8038, Form 8038G, Form 8038GC, Form 8038T and Form 8328

    15. Form CT-1, Form CT-2

    16. Form 5330 (effective - 01/01/2002)

    17. Form 720

    18. Form 942

  3. For Completion, Edit and Review of Form 5599, TE/GE Examined Closing Record, See IRM 4.5.2.2.4.

4.5.2.2.4  (06-01-2003)
Completion, Edit and Review of Form 5650, EP Examined Closing Record

  1. Reflected below are explanations for the completion of each item on Form 5650. The items are listed in the order they appear on the Form.

4.5.2.2.4.1  (06-01-2003)
CC TSCLS (Item A)

  1. Item A, CC TSCLS, is to be entered by the Examiner.

  2. Place a check in the box if the Form 5650 is for a full closure of a TEFRA related return. CC TSCLS must be entered at the terminal before a final closure of a Partnership Control System (PCS) linked case. CC TSCLS releases a freeze on AIMS to allow input of CC AMCLSP. Partnership Information Control File (PICF) Codes 5 and 6 denote cases linked through PCS and prevent the premature closing of the investor return unless all necessary flow-through adjustments from the key-case(s) to the investor have been resolved. Refer to IRM 4.29, Partnership Control System and IRM 4.31, Flow-Through Entity for procedures on TEFRA-PCS.

  3. CC TSCLS should not be input if only a partial assessment is being made, the case is being transferred to the Ogden Campus Center PCS Function; or is being closed to Appeals. CC TSCLS will automatically check all of the investor’s linkage to see if they have been closed. If all linkages are closed then CC TSCLS will set the PN-SUM-CLOSED-IND on the partner record and the PICF-CD to a closed status on the PCS and the AIMS data bases. When the " REQUEST COMPLETED" message is transmitted to the screen, the Terminal Operator can proceed to enter the CC AMCLSP.

  4. If all linkages were not properly closed upon input of the CC TSCLS, the error message "CANNOT CLOSE, PCS CONTROL" will be displayed on the screen. The Terminal Operator must input CC TSUMY, secure a print, attach it to the Form 5650 and route the case file back to the originator.

4.5.2.2.4.2  (09-27-2006)
CC AMCLS_ (P1-6)

  1. Item CC AMCLS_ is completed by the Closing Function.

  2. The Closing Function must enter the definer to indicate the type of closure necessary, e.g., AMCLSA (Appeals), AMCLSP (EP Examination), or AMCLSU (Unpostable).

4.5.2.2.4.3  (06-01-2003)
TIN (P7-18)

  1. Positions 7-18, TIN, is to be completed by the Examiner.

  2. The Taxpayer Identification Number (TIN), i.e., EIN or SSN, will be included on the audit label or must be entered in the left-most position.

  3. Enter EIN for all 5500 Series Returns beginning in the left-most position followed by File Source "P" . Form 5330 NMF returns closed with an EIN, should have a File Source "N" entered after the EIN. When closing Form 5330 NMF returns with an SSN, should have a File Source "N" entered after the SSN.

  4. When closing Form 990T, use Form 5599, TE/GE Examined Closing Record. When the 990T is picked up by EP for a 401(a) Trust, you must use the EIN of the Trust, not the employer’s EIN.

    1. EIN format is NN-NNNNNNN followed by the applicable File Source

    2. SSN format is NNN-NN-NNNN followed by File Source "N"

4.5.2.2.4.4  (06-01-2003)
Plan Number (P20-22)

  1. The Plan Number is to be entered by the Examiner.

  2. Enter the Master File Tax (MFT) Code of 76 when closing NMF Forms 5330. Enter the Plan Number when a 5500 Series Return (MFT 74) is being closed with Form 5650.

4.5.2.2.4.5  (09-27-2006)
Tax Period (P24-29)

  1. The Tax Period is to be entered by the Examiner.

  2. Enter the Tax Period/Plan Period in "YYYYMM" format. For example, if a calendar year 1999 return, enter 200312. If the tax period is a fiscal year, (i.e., September 30,2003) enter 200309. The tax period on Form 5650 should match that of the return on EPMF. To verify if the tax period is correct, utilize IDRS CC EMFOLT.

4.5.2.2.4.6  (09-27-2006)
Name Control/Check Digit (P31-34)

  1. The Name Control/Check Digit is to be entered by the Examiner.

  2. A Check Digit is two-alpha characters printed on the examination label following the tax period on the first line. If there is no check digit, or name control on the first print line of the examination label, underline the name control on line two (generally the first four characters). The name control or check digit is also enter by the Examiner when using the work center.

  3. If a check digit was used to establish the account, the check digit must be used to close the account. Enter the check digit in the last two positions of the name control section on Form 5650.

4.5.2.2.4.7  (06-01-2003)
Name (Item C)

  1. The Name is to be entered by the Examiner.

  2. Enter the name as it appears on the tax return and/or EPMF.

  3. The total number of characters in a taxpayer’s name cannot exceed thirty-five. If it does, edit the name to reduce the length.

4.5.2.2.4.8  (09-27-2006)
Batch Position Indicator (NMF) (P36)

  1. The Batch Position Indicator is to be entered by the Closing Function.

  2. Only NMF accounts require a batch position indicator. This item is used to indicate whether the record being processed is the first, last, continuation, addition to a block, or a single closing of a block.

  3. It must be one of the following: "F," " C," "L," "R," or " S."

    "F" First closing in a block. Once this record is processed the CC will change the "F" to a "C."
    "C" Continuation within a block. This may be used if the processing of a block was interrupted and was not previously closed.
    "L" Last closing within the block. If this is not entered with the last closing, it is not possible to begin a new block.
    "R" Reopens a previously closed block. After this record is processed the CC will change the "R" to a "C."
    "S" Single closing (one case in the block.) This indicator will open the block, process the account and close the block.

4.5.2.2.4.9  (09-27-2006)
Block Number (P38-40)

  1. The Block Number is to be entered by the Closing Function.

  2. This item must always be entered with the first closing and must be three characters in length. The first character must always be numeric and the remaining characters may either be numeric or "X." See Exhibit 4.5.2-1. See Exhibit 4.5.2-1., MF Sorting and Blocking Series for Document Code 47 Adjustments. The Terminal Operator assigns a Blocking Series for NMF accounts.

  3. Valid blocking series by Command Code:

    1. AMCLSA (Appeals) - NNN, 70X, 75X, 76X, 77X, 78X, or 79X.

    2. AMCLSP (EP) - 9XX, 0XX , OR 2XX with MFT 74 on a Form 5500 from the RICS system;.

    3. NMF Form 5530 or any other NMF from being closed must be assigned a blocking series by the Terminal Operator.

4.5.2.2.4.10  (09-27-2006)
Penalty Reason Code (Item 02)

  1. Penalty Reason Code is to be entered by the Examiner.

  2. The Penalty Reason Code is a required input item for abatements of penalties, TC 161, 171, 181, 201, 241, 281, 311, 321, and 351. Refer to Document 6209, ADP and IDRS Information Handbook, Chapter 8, for Transaction Code definitions.

  3. The Examiner is responsible for entering the applicable Penalty Reason Code. The case file should be returned to the originator if a penalty is being abated and the reason code is not entered.

    Note:

    Tax Adjustments are completed using Form 1331 (Notice of Adjustment) and statistics picked up in items 602–604 on Form 5650.

4.5.2.2.4.11  (06-01-2003)
Disposal Code (Item 13)

  1. Disposal Code is to be entered by the Examiner.

  2. A disposal code must be entered for all examined returns. Valid disposal codes used on Form 5650 for examined cases are 01 through 15 and 34. Refer to Document 6476, Employee Plans Systems Codes, for disposal code definitions.

4.5.2.2.4.12  (09-27-2006)
Statute Extended to Date (Item 14)

  1. The Statute Extended to Date is to be entered by the Closing Function.

  2. If a valid Form 872, Consent to Extend the Time to Assess Tax is in the file, the Statute Extended to Date must be entered in item 14 on Form 5650. Form 5595 TE/GE Update, must also be completed and submitted to the terminal area before the Form 5650 is forwarded for closure off of AIMS. The extended date must always be in "MMDDYYYY " format.

4.5.2.2.4.13  (09-27-2006)
Appeals Code (Item 16)

  1. Appeals Code is to be entered by the Closing Function.

  2. If the case is going to an Appeals Office, enter the applicable three-digit Appeals Office Code. See Exhibit 4.5.2-6. and Document 6209 for Appeals Office codes.

4.5.2.2.4.14  (09-27-2006)
Claim Rejection Date (Item 20)

  1. Claim Rejection Date is entered by the Examiner.

  2. If a Claim (Source Code 30) is being disallowed and is agreed, the Disposal Code (Item 13) must be 01, and the claim rejection date must be entered in Item 20 in "MMDDYYYY" format. .

  3. Item 20 is only applicable for Form 5330 NMF accounts.

4.5.2.2.4.15  (06-01-2003)
Amount Claimed (Item 21)

  1. Amount Claimed is to be entered by the Examiner.

  2. This item must have an entry if the Source Code is 30. Enter whole dollars only.

4.5.2.2.4.16  (09-27-2006)
Examiner's Time (Item 28)

  1. Examiner's Time is entered by the Examiner.

  2. This item must contain an entry. The entry must be in whole hours only.

  3. Effective 1/1/2004, Examiner's Time can be reported in 15 minute intervals. Valid entries for Item 28 are:

    • .0 = .00 minutes

    • .3 = .15 minutes

    • .5 = .30 minutes

    • .7 = .45 minutes

4.5.2.2.4.17  (06-01-2003)
Technique Code (Item 30)

  1. The Technique Code is to be entered by the Examiner.

  2. This item must have an entry if Item 13 (Disposal Code) is 01 through 15. The valid codes are:

    1. 1 = Office Interview Examination

    2. 2 = Office Correspondence Examination

    3. 4 = Field Examination

4.5.2.2.4.18  (06-01-2003)
Examiner's Grade (Item 31)

  1. Examiner's Grade is to be entered by the Examiner.

  2. This item must have an entry if Item 13 (Disposal Code) is 01 through 15. Valid range is 05 through 14.

4.5.2.2.4.19  (06-01-2003)
Case Grade (Item 32)

  1. The Case Grade is to be entered by the Group Manager.

  2. Must be 09 or 11-13.

4.5.2.2.4.20  (06-01-2003)
Examiner's Name (Item 33)

  1. The Examiner's Name is to be entered by the Examiner.

  2. Enter last name, space and first initial. This item is a required entry for all examined returns.

4.5.2.2.4.21  (06-01-2003)
Hash Total (Item 36)

  1. The Hash Total is to be entered by the Closing Function.

  2. A Hash Total entry must be made for all closures using Form 5650. "Hash Total" is a term applied to the sum of several unrelated items entered on Form 5650. The computer will compare the Hash Total to the total of individual items as entered by the Terminal Operator. This should ensure the accuracy of the individual item as entered by the Terminal Operator. Minus figures will be treated as minus.

  3. Items to be included in the Hash Total are:

    P20-22 Plan Number
    P24-29 Tax Period
    Item 21 Amount Claimed
    Item 28 Examiner's Time
    Item 605 Adjustments to SB/SE, W&I, LMSB or Adjust. to Income/Deductions
    Item 606 Total Deductions Claimed
    Item L Only if MFT 76 is entered in P20-22

4.5.2.2.4.22  (09-27-2006)
Project Code (Item 40)

  1. The Project Code is to be entered by the Examiner.

  2. Enter the current fiscal year's —four-digit Project Code that indicates which special project code the case was worked under. Refer to Document 6476, Employee Plans Systems Codes for valid project codes. Ensuring that the current fiscal year's Project Code is entered will eliminate Campus Center and Detroit Computing Center rejects.

4.5.2.2.4.23  (06-01-2003)
ARDI Code (Item 42)

  1. The ARDI Code is to be entered by the Examiner.

  2. In order to track agreed deficiencies for ARDI (Accounts Receivable Dollar Inventory) as a result of an examination, this item must be completed if the DC is 03, 06, 09 or 15. Otherwise, leave this item blank. Valid ARDI codes are as follows:

    1 Fully Paid
    2 Not Paid
    3 Partially Paid
    4 Installment Agreement with Payment
    5 Installment Agreement without Payment
    7 Appeals - Returned
    0, 6, 8 and 9 ARDI Codes reserved for future use.

4.5.2.2.4.24  (06-01-2003)
Secondary Business Code (Item 49)

  1. The Secondary Business Code (SBC) is reserved for future use by TE/GE. Must be blank or if entered contain five zero's (i.e., 00000).

4.5.2.2.4.25  (06-01-2003)
Employee Group Code (Item 50)

  1. The Employee Group Code (EGC) is to be entered by the Examiner.

  2. A four-digit code that is the group code number establishing the account on AIMS. An EGC is a required entry on all Examined full closures with the exception of DC 34 - Surveyed Claims. Valid range is 7600-7699.

4.5.2.2.4.26  (06-01-2003)
FAX Agreement Indicator (Item 416)

  1. Fax Agreement Indicator is to be entered by the Examiner.

  2. A one-digit code on AIMS. Enter a "1" if the taxpayer faxed the agreement to the Examiner, otherwise leave this item blank. If entered, DCs must be 03 or 15.

4.5.2.2.4.27  (09-27-2006)
Operator Employee No./Date (Item D)

  1. The Operator Employee No./Date is entered by the Closing Function.

  2. This item is entered by the Terminal Operator after the Form 5650 is input on the terminal. The entry should include the Terminal Operator’s employee number, sequence number and the date of input.

4.5.2.2.4.28  (09-27-2006)
Rej. (Item E)

  1. This item is completed by the Closing Function Terminal Operator only if Form 5650 is rejected.

  2. The Terminal Operator will enter the date in the reject (Rej.) block when an entry on Form 5650 does not meet a validity check at the terminal. The Terminal Operator must attach a print of the CC AMCLSP to the Form 5650 and indicate the item that failed to meet the validity check and the reason it failed. This procedure will alert the Tax Examiner of what item failed to meet the validity check. Local procedures may require returning the case to the originator or AIMS Coordinator.

    Caution:

    Before rejecting any Form 5650, the Terminal Operator ensures that all items were input correctly.

4.5.2.2.4.29  (09-27-2006)
Document Locator Number (Item F)

  1. The Document Locator Number is to be entered by the Closing Function Tax Examiner.

  2. The appropriate blocking series must be determined by the Tax Examiner and annotated on Form 5650 for an EPMF account. For NMF accounts, the Tax Examiner must notate on a 3 x 5 paper the notation "NMF Blocking needed" . The 3 x 5 paper is to be stapled to the front of Form 5650.

  3. The renumbered DLN must be entered for NMF closing. A log, consisting of DLN, EIN, Plan and Tax Period, must be maintained by the Terminal Operator to keep track of the DLN’s assigned to each account.

  4. When an EPMF case has been closed, only a portion of the DLN is assigned by the terminal. The remainder of the DLN (last digit of the block number, two digit serial number, and list year) is not determined and assigned until the end of the day computer processing. The refile DLN is not entered on MF closing documents.

4.5.2.2.4.30  (09-27-2006)
Cor. (Item G)

  1. Correction is to be entered by the Closing Function Tax Examiner.

  2. The date the correction is made will be placed in the corrected (Cor.) block by the Tax Examiner or person making the correction to the item rejected. Form 5650 should then be returned to the terminal area for re-input. Refer to IRM 4.5.1, TE/GE AIMS Processing for additional information on terminal rejects.

4.5.2.2.4.31  (06-01-2003)
Examiner's Series (Item 600)

  1. Examiner's Series is to be entered by the Examiner.

  2. Enter the Examiner’s GS Series:

    512 Revenue Agent
    987 Tax Law Specialist
    526 Tax Auditor

4.5.2.2.4.32  (09-27-2006)
EP Taxes (Item 602)

  1. EP Taxes is to be entered by the Examiner.

  2. When an examination results in the assessment of additional tax (excise on prohibited transactions, minimum funding, etc.), the applicable amounts must be reflected in Item 602. Item 602 should also include the tax reflected on original Form 5500 delinquent returns sent to the Campus Center for processing, unless additional tax or penalties were assessed during examination. The Closing Function Tax Examiners must calculate interest on any additional tax assessed. If the DC is 03, an entry of at least one dollar ($1.) must be entered in Item 602. Item 602 should be entered through the terminal and may be positive or negative. An ARDI Code must be entered in Item 42 on Form 5650.

4.5.2.2.4.33  (09-27-2006)
Penalty, Section and Interest (Item 603)

  1. The Penalty and Section is to be entered by the Examiner. The Interest is entered by the Closing Function Tax Examiner.

  2. This item must reflect the interest to be assessed on Item 602 amounts. In addition, the type and amount of penalties assessed during examination should be reflected in item 603. Item 603 should also reflect penalties on original delinquent returns sent to the Campus Center, unless additional tax or penalties were assessed during the examination. This entry is necessary for processing the adjustment using NMF procedures. Item 603 should not be entered through the terminal. The penalty amount and IRC section must be entered by the Examiner. The Closing Function Tax Examiners must compute and enter the interest amount.

4.5.2.2.4.34  (09-27-2006)
EP Penalties and Interest (Item 604)

  1. Total penalties and/or interest from Item 603 must be entered by the Closing Function Tax Examiners.

  2. Item 604 must be entered through the terminal and may contain a positive or negative amount.

4.5.2.2.4.35  (06-01-2003)
Adjustments to SB/SE, W&I, LMSB or Adjust to Income/Deductions (Item 605)

  1. Adjustments to SB/SE, W&I, LMSB or Adjust To Income/Deductions is to be entered by the Examiner.

  2. Enter the amount of proposed adjustment referred to SB/SE, W&I or LMSB.

    Note:

    If Form 1120 is open and a discrepancy adjustment cannot be made (e.g. large case exam or a referral from DOL, SB/SE, W&I, LMSB or an independent informant where Form 1120 is currently under exam) and the EP exam results in a referred adjustment to SB/SE, W&I or LMSB, the proposed adjustment should be entered here. If the proposed adjustment is to reduce the deduction taken on the 1120, enter amount as a positive. If the deduction should be increased, enter it as a negative amount.

4.5.2.2.4.36  (06-01-2003)
Total Deductions Claimed (Item 606)

  1. Total Deductions Claimed is to be entered by the Examiner.

  2. Enter the total deductions claimed (whole dollars only) as reflected on the taxable return (i.e., the deductions claimed on Form 1120, etc.). No commas or decimal points are to be used.

  3. The valid range is 1-999999999. If a deduction is not claimed, a minimum entry of one dollar ($1.) must be reflected in Item 606.

4.5.2.2.4.37  (06-01-2003)
Total Trusts Assets (Item 607)

  1. Total Trust Assets is to be entered by the Examiner.

  2. Enter the total gross assets of the trust pertaining to only the plan referenced in P20-22 or Item L. An entry must be made. The asset amount may be variable up to 12 digits (include whole dollars only). No commas or decimal points are to be used.

4.5.2.2.4.38  (06-01-2003)
Number of Participants Affected (Item 608)

  1. Number of Participants Affected is to be entered by the Examiner.

  2. Enter the number of participants directly affected by the results of the exam

    Example:

    If some participants were not vested properly and as a result of this examination their vesting schedule was adjusted, the number of participants that received an increase/decrease would be considered "affected participants" .

  3. The valid range is 0-99999999.

4.5.2.2.4.39  (06-01-2003)
Type of Plan (Item 609)

  1. Type of Plan is entered by the Examiner.

  2. Enter the Type of Plan. Valid entries are

    • "1" for Defined Benefit Plans

    • "2" for Defined Contribution Plans

4.5.2.2.4.40  (06-01-2003)
EP Issue Code (Item 610)

  1. EP Issue Code is to be entered by the Examiner.

  2. Enter the two-digit EP Issue Code. An Issue Code must be selected that relates to the disposal code. The Issue Code must be entered beginning in the first two positions of Item 610 of Form 5650. Only one Issue Code must be entered if the case is closed with DC 01 or 02. Up to three Issue Codes may be entered, only if each subsequent Issue Code relates to a disposal code other than DC 01 or 02. Any remaining spaces must be filled in with zeros.

  3. The Issue Code must be carefully selected because it is used with the disposal code to validate the accuracy of Condition Codes in selecting returns with examination potential, and to report the accomplishments of the examination program. Refer to Document 6476 for valid EP Issue Codes.

4.5.2.2.4.41  (06-01-2003)
EP NAICS Code (Item 612)

  1. EP NAICS Code is to be entered by the Examiner.

  2. Enter the EP NAICS Code, must be six-digit numeric character. Refer to Document 6476 for valid EP NAICS Codes.

4.5.2.2.4.42  (06-01-2003)
Remarks

  1. The Remarks area is completed by the Examiner to annotate special instructions for the Closing Function Tax Examiner and Campus Center to process the return.

    Example:

    If taxes and penalties are not to be assessed, the Remarks area of Form 5650 should include the statement "DO NOT ASSESS."

  2. Additionally, this information must be included on Form 3198–A, TEGE Special Handling Notice, attached to the front of the case file. If tax and/or penalties are to be assessed, the supporting documentation and applicable forms must be completed and included in the case file.

4.5.2.2.4.43  (06-01-2003)
Reviewer (Item I)

  1. The Reviewer’s signature and date the report was approved must be entered, if the return was reviewed.

4.5.2.2.4.44  (06-01-2003)
Tax Examiner (Item K)

  1. The Tax Examiner closing the case that codes, edits, verifies, assembles and sends the case for input through the computer will complete Item K. Item K will include the first initial, last name, and may include the unit employee number. The date that the case was completed and sent for input must also be completed.

4.5.2.2.4.45  (06-01-2003)
Plan Number (Item L)

  1. Plan Number is to be entered by the Examiner.

  2. Enter the three-digit Plan Number of the Form 5330 NMF return being closed with this Form 5650.

4.5.2.2.4.46  (06-01-2003)
Form Number (Item M)

  1. Form Number is to be entered by the Examiner.

  2. Enter the Form Number of the return being closed with this Form 5650.

4.5.2.3  (09-27-2006)
Processing TE/GE Examined Closing Record, Form 5599

  1. Form 5599, TE/GE Examined Closing Record, is used for closing examined:

    1. EP examined BMF Form 5330 returns, Disposal Codes (DC) 01-11, 13 and Surveyed Claims, DC 34. Form 5599 is also used by EP to close examined Form 990T returns and discrepancy adjustments.

      Note:

      Disposal Codes 08 and 09 are used to close Form 5500 only.

    2. EO examined returns, Disposal Codes (DC) 01-19, 50, Surveyed Claims, DC 34 and discrepancy adjustments.

    3. GE examined returns, Disposal Codes (DC) 01-19, 50, 51 and Surveyed Claims, DC 34.

  2. The local use of forms and special handling procedures and the data contained on the reverse side of the Form 5599 should suggest who will be responsible for completing each item on Form 5599.

  3. When Form 5599 is received in the Closing Functions, some items will have been completed. This section contains information for the completion of Form 5599, for legibility, validity of range, and presence of required entries. If necessary, appropriate corrective action, including returning incomplete forms to the originator or AIMS Coordinator should be taken.

  4. The Enforcement Revenue Information System (ERIS), was incorporated into AIMS effective January 1, 1991. ERIS collects data from existing data sources on a regular basis to track enforcement actions from opening through collection.

4.5.2.3.1  (06-01-2003)
Completion, Edit and Review of Form 5599, TE/GE Examined Closing

  1. Reflected below are explanations on the completion of each item listed on Form 5599. The items are listed in the order they appear on the form. Items that should not be completed for a specific form (i.e., BMF Form 5330's, Form 8038 Series Returns, etc.) are indicated as such.


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