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Part 4. Examining Process

Chapter 10. Examination of Returns

Section 8. Report Writing (Cont. 2)

4.10.8  Report Writing (Cont. 2)

4.10.8.16 
Inadequate Records Notices: Overview

4.10.8.16.2  (05-14-1999)
Examination Procedures

  1. The following section addresses examination procedures for handling inadequate records issues.

4.10.8.16.2.1  (05-14-1999)
Time Charges

  1. All time for the development of inadequate records issues by examiners should be charged to the case.

4.10.8.16.2.2  (05-14-1999)
Factual Development

  1. Examiners should avoid criticizing the work of the taxpayer’s employees, accountants, or attorneys in a way that would suggest wrongdoing or negligence. Examiners should focus on explaining how the taxpayer’s books and records are inadequate and what steps need to be taken to bring them into compliance with applicable statutes.

4.10.8.16.2.3  (05-14-1999)
Case File Documentation

  1. Examiners should document:

    1. The nature of the inadequacies of the taxpayer’s records,

    2. Examiner/manager discussions, and

    3. Basis for the conclusion reached.

4.10.8.16.2.4  (05-14-1999)
Group Manager Involvement

  1. If an examiner determines that the taxpayer has not substantially complied with the law and regulations for maintaining adequate books and records or record retention agreements, the examiner should discuss the inadequacies with the group manager to determine if an inadequate records notice should be issued.

4.10.8.16.2.5  (05-14-1999)
Record Retention Agreements

  1. If the case includes a record retention agreement, the computer audit specialist must be contacted.

4.10.8.16.3  (05-14-1999)
Required Forms and Exceptions

  1. Generally, Letter 979, Inadequate Record Notice, requesting a follow-up statement of corrective action from the taxpayer within 6 months, will be used to notify the taxpayer.

  2. If the taxpayer is within the racketeer classification, engaged in illegal activities, or is willfully disregarding the law, the examiner will prepare Form 2807,Agreement to Maintain Adequate Books of Account and Records, and Letter 978,Notice of Inadequate Records, which includes a description of exact records required and penalties for failure to keep records.

4.10.8.16.3.1  (08-11-2006)
Completion of Forms

  1. The designated contact identified on Letter 978/979 should be the individual in PSP responsible for monitoring the taxpayer’s future compliance.

  2. The Form 2807,Agreement to Maintain Adequate Books of Accounts and Records, or Letter 979 narrative must include the following:

    1. The date the taxpayer was orally notified that the records were inadequate or not in compliance with a record retention agreement,

    2. The tax year(s) examined,

    3. A clear and concise statement specifying how the taxpayer’s records were inadequate or not in compliance with a record retention agreement.

    Note:

    Form 2807 should specify the books and records which will be maintained.

4.10.8.16.3.2  (05-14-1999)
Group Manager Approval

  1. Form 2807and Letter 978 (or Letter 979) are approved and signed by the group manager.

4.10.8.16.4  (05-14-1999)
Delivery of Inadequate Records Notices

  1. Inadequate Records Notices should be served personally by examiners or sent by certified mail.

4.10.8.16.4.1  (05-14-1999)
Record of Service

  1. The examiner will complete the record of service on Letter(s) 978/979 at the time of delivery or before it is sent certified mail. The record of service should also be completed on all retained copies.

  2. If sent by certified mail, the return receipt will constitute the record of service and will be attached to the copy of Letter 978/979 retained in the case file.

  3. If Form 2807is mailed, Letter 978 should be held 15 days to give the taxpayer an opportunity to execute Form 2807.

4.10.8.16.4.2  (06-10-2005)
Notices for Joint Returns

  1. Section 3201(d) of RRA 98 requires that whenever practicable, any notice relating to a joint return be sent separately to each individual filing a joint return. Congress believed that sending separate notices would result in mail being forwarded to a spouse who moved.

  2. Separate notices for reports issued by examiners are required to be issued for all first reports (notices of deficiency) provided to the taxpayer and all reports in which the examiner has knowledge that either spouse has a new/separate mailing address or if the correct mailing address for one or both of the spouses cannot be verified. Refer to IRM 4.10.1.6.8, Separate Notice Requirements for Joint Returns, for detailed procedures.

4.10.8.16.4.3  (05-14-1999)
Notices for Corporate Returns

  1. When a notice is addressed to a corporation, it should be delivered to an officer authorized to sign tax returns and preferably to the officer who signed the return under examination.

4.10.8.16.4.4  (06-10-2005)
Notices for Partnerships

  1. In the case of a partnership, the notice will be addressed to all the partners and will show the name in which the partnership is doing business. The original notice will be delivered to the partner who signed the return or, if this is not possible, to a partner who takes an active part in the business. A copy of the notice, including the record of personal service or the mailing receipt, will be sent by registered or certified mail to all the other partners. Receipts from these mailings will be associated with the copy of the notice retained in the case file.

4.10.8.16.4.5  (08-11-2006)
Field Exam

  1. Revenue agents should deliver the Letter 979, or Letter 978 and Form 2807, at the closing conference if possible. Otherwise, send by certified mail.

  2. In cases where Form 2807 is required, the taxpayer will be given the opportunity to execute the agreement, specifying the books and records which will be maintained.

4.10.8.16.4.6  (08-11-2006)
Office Audit

  1. Tax Auditors/Tax Compliance Officers should give the Letter 979, or Letter 978 and Form 2807, to the taxpayer at a subsequent appointment if possible. Otherwise, send by certified mail.

  2. In cases where Form 2807 is required, the taxpayer will be given the opportunity to execute the agreement, specifying the books and records which will be maintained.

4.10.8.16.4.7  (06-10-2005)
Joint Investigations

  1. In joint investigations, the criminal investigator will determine the appropriate time to inform the taxpayer of the inadequacies of the records and issue the notice letter. The criminal investigator is also responsible for delivering the Inadequate Records Notice.

4.10.8.16.5  (05-14-1999)
Taxpayer Agreement

  1. Letter 978/979 serves as notification to taxpayers that their records are inadequate and execution of Form 2807 is not necessary to close the case. Whether or not the taxpayer signed Form 2807 will be noted on Letter 978.

4.10.8.16.6  (05-14-1999)
Taxpayer’s Appeal Rights

  1. If the taxpayer does not execute Form 2807 and the case is unagreed, the taxpayer will be informed of the further opportunity to discuss the matter at an Appeals conference.

  2. An Appeals conference is not given to taxpayers who agree to proposed adjustments but do not execute Form 2807.

4.10.8.16.7  (05-14-1999)
Completing Form 5346

  1. Examiners will prepare a detailed Form 5346, Examination Information Report, following the instructions on the back of the form. The "other" section should state that the package is documentation for an Inadequate Records Notice. The package should include:

    1. Copies of pertinent workpapers,

    2. Copy of the audit report,

    3. Copy of Letter 978/979,

    4. Original Form 2807, if applicable.

  2. A copy of the completed Form 5346 should be included in the workpapers with other documentation of the issue.

  3. The original Form 5346 and documentation should be forwarded to Planning and Special Programs (PSP) for suspense and follow-up action.

4.10.8.16.8  (05-14-1999)
Planning and Special Programs Support (PSP) Responsibilities

  1. PSP is responsible for monitoring the taxpayer’s future compliance with requirements to keep adequate books and records.

4.10.8.16.8.1  (06-10-2005)
Form 5346 Follow-Up

  1. PSP will complete the following actions:

    1. Forward a copy of the Form 5346 and Letter 978/979 to the appropriate campus, requesting nonfiled subsequent year returns.

    2. Suspend the original Form 5346 and documentation. The area will maintain controls to monitor the follow-up actions of all inadequate records notice cases.

    3. The campus will associate the copy of Form 5346 and Letter 978/979 received from the area with the income tax return for the first full taxable year filed after the date the inadequate records notice was delivered to the taxpayer. This return will be sent to the area PSP.

    4. If the return is not filed within one year after the close of the first full taxable year after the delivery date of the notice, the campus will forward a copy of the notice to the area PSP function with the notation "NO RECORD." These notifications will be associated with the suspended case file and appropriate follow-up action taken.

    5. PSP will classify and assign the returns or examination as warranted.

4.10.8.16.8.2  (06-10-2005)
IDRS

  1. PSP’s Inadequate Records Notice (IRN) coordinator should use command code "ACTON" to input the letter number (Letter 978 or 979), date of the letter, underlying tax period(s) giving rise to the inadequate records determination and whether or not Form 2807 was secured, on the taxpayer’s ENTITY section of IDRS. This information would be viewable via the command code "ENMOD." Placing the information on the entity module would be a benefit in that the particular tax period does not have to be known in order to retrieve the inadequate records historical information which is relevant to the taxpayer.

4.10.8.16.8.3  (05-14-1999)
Taxpayer Response to Letter 979

  1. Letter 979 requires the taxpayer to notify the Service of actions taken to correct their recordkeeping to meet the requirements of the law within six months after the notice was delivered.

    1. Statements from taxpayers regarding improvement of the recordkeeping will be associated with PSP’s case file and considered when determining the need for follow-up action.

    2. In cases where statements from the taxpayer are required, but are not timely received, PSP will call the taxpayer or use Letter 1022 to request submission of the information in accordance with the notice letter.

4.10.8.16.9  (05-14-1999)
Follow-Up Examinations

  1. Follow-up examinations will be conducted when appropriate. These examinations should be started with sufficient time to be completed within established audit cycles.

4.10.8.16.9.1  (05-14-1999)
Case File Documentation

  1. The case file should document consideration of the inadequate recordkeeping issue and state whether the taxpayer has corrected the inadequacies in the recordkeeping practices.

4.10.8.16.9.2  (05-14-1999)
Substantial Compliance By the Taxpayer

  1. If the examiner concludes that the taxpayer is substantially complying with requirements to keep adequate records, the inadequate records notice information should be included in the case file when the examination is closed.

4.10.8.16.9.3  (05-14-1999)
Continued Noncompliance By Taxpayer

  1. If the examiner concludes that the taxpayer is NOT substantially complying with requirements to keep adequate records, then consideration of additional enforcement measures, such as the assertion of penalties, is warranted.

4.10.8.17  (05-14-1999)
Examiner Case Closing Requirements

  1. In addition to preparing all necessary reports to document audit findings and organizing the contents of the case file, examiners have other critical case closing requirements.

4.10.8.17.1  (06-10-2005)
Completion of Form 5344, Examination Closing Record

  1. Completion of Form 5344 is required prior to the closing of a case.

  2. Use of Form 5344 in RGS is required.

  3. Required entries for examiners are outlined in IRM 4.4.12,Examined Closings, Surveyed Claims, and Partial Assessments.

  4. Special Note: Since grading of cases is the responsibility of the group manager (but an entry in this field is required for an agent to forward a case), examiners should enter their own grade unless instructed to enter another grade by their manager. Managers are also required to review this entry on Form 5344 prior to case closing to ensure accuracy.

4.10.8.17.2  (06-10-2005)
Examination Operational Automation Database (EOAD)

  1. EOAD was designed to provide data that would allow the tracking of examination adjustments by issue. This data will be used to enhance the ability to identify specific areas of noncompliance based on examination results and track the effectiveness of the examination classification process.

  2. Capture of EOAD data is mandatory for all examinations of Individual, Corporate, S Corporation, Partnership, and Employment Tax returns.

  3. EOAD data must be entered for all issues examined, both adjusted and non-adjusted items.

  4. Data capture for EOAD should be done just prior to closing the case (after completion of the examination report and automated 5344). See IRM 4.10.16,Examination Operational Automation Database (EOAD) for detailed instructions.

4.10.8.17.3  (08-11-2006)
Case Folder Color

  1. Effective March 1, 2006, Case Processing (CP) established uniform guidelines for file folder color. Examination groups must use the following file folder colors when closing cases to Case Processing:

    • Red – Case with a statute date expiring within 180 days.

    • Yellow – Headquarter approved usage only. Purpose of use will change periodically as interim guidance is issued and posted to the "Interim Guidance Directives"  website at: "http://sbse.web.irs.gov/MS/IGMemos"

    • Orange – IRS Employee audit

    • Lavender – NRP Form 1040

    • Plum – NRP Form 1120S

    • Light Blue – Claims (This includes innocent spouse; injured spouse; and any other type of claim). The type of claim should be notated on Form 3198.

4.10.8.18  (08-11-2006)
Standard Explanations for Report Writing

  1. The Standard Explanations provide specific reasons for the examiner’s adjustment in a particular situation. They will be used in the preparation of most examination reports. See IRM 4.10.10,Examination of Returns, Standard Paragraphs and Explanation of Adjustments , for more information.

4.10.8.18.1  (08-11-2006)
Reports Generation Software (RGS)

  1. RGS is designed to be used by Examination or other users who select, examine, control, process or monitor tax cases. The system enhances the performance of the work process by automating numerous activities such as tax computation, penalty computation, interest computation, case file documentation, time reporting, IDRS interface, workpaper preparation, statute date protection (normal and TEFRA), letter preparation, inventory control, management report preparation, case file retrieval (both open and closed), issue tracking, as well as many other functions.

  2. The benefits realized from use of RGS are:

    • Accurate and consistent tax and interest calculations and recalculation,

    • Computation of statutory adjustments which flow to the report,

    • Timely reports which can be provided to taxpayers immediately or upon managerial approval,

    • Preparation and validation of Form 5344,Case Closing Document,

    • Consistent formatting, identifying, and arranging of workpapers,

    • Passive flow of data to correspondence and forms, and

    • Passive data gathering with associated conversion and roll up programs such as Examination Operational Automation Database (EOAD).

  3. In order to close a case off of RGS, the RGS Group Codes will need to be input and they can be found at: "http://rgs.web.irs.gov/index.htm " .

  4. RGS provides Standard Explanations automatically for statutory adjustments. In addition, RGS provides the nationally approved Standard Explanations and the user has an opportunity to customize standard paragraphs. The number of customized standard explanations should be limited as the National Standard Explanations have been approved by Chief Counsel.

4.10.8.19  (08-11-2006)
Informant's Claim for Reward

  1. IRM 25.2.2,Informant Rewards, and IRM 25.2.1, Receiving Information, provide guidance regarding receiving, evaluating and processing informant claims for rewards. These IRMs should be consulted for correct processing of informant claims.

  2. Third Party Contact rules apply to informant cases.

  3. If an informant initiates a contact with the Service to provide information about a specific taxpayer, there is no requirement to track this contact or to provide the informant’s name to the taxpayer under third party contact rules. However, if an IRS employee subsequently contacts the informant to verify or obtain additional information regarding the specific taxpayer, a third party contact has been made and must be tracked and reported to the taxpayer. See IRM 4.10.1.6.12, Third Party Contacts and IRM 4.11.57,Third Party Contacts.

  4. Frequently, informants may need to be re-contacted for case developmental purpose. It is recommended that examiners consult with their manager prior to re-contacting the informant.

  5. When an examination includes an informant's claim, an AIMS N Freeze should be used to ensure the results are communicated to the Informants' Claims Examiner (ICE).

  6. References for Informant's Claim for Reward:

    • IRC section 7623- Expenses of Detection of Underpayments and Fraud, etc;

    • Treas. Reg. 301.7623-1 - Rewards for Information Relating to Violations of Internal Revenue Laws,

    • IRM 1.2.1.4.13- P-4-36 - Identity of Other Government Agency Informants Must be Protected,

    • IRM 1.2.1.4.26- P-4-86 - Rewards Determined by Value of Information Furnished and Computation and Payment of Rewards (as approved 8-26-1997),

    • IRM 1.2.48.4- Delegation Order No. 16 - Authorization to Approve Confidential Expenditures,

    • IRM 1.2.52.2- Delegation Order No. 25–7 - Rewards for Informant Information,

    • IRM 1.2.52.4- Delegation Order No. 25–12 - Third Party Contact Jeopardy or Reprisal Determination,

    • IRM 25.2.1- Receiving Information,

    • IRM 25.2.2- Informant Rewards,

    • IRM 4.10.1.6.12- Third Party Contacts,

    • IRM 4.11.57- Third Party Contacts,

    • IRM 4.10.1.6.12.4.3- Reprisal Situations,

    • RRA’98 Section 3503 - Disclosure of Criteria for Examination Selection,

    • Publication 733- Rewards for Information Provided by Individuals to the Internal Revenue Service.

4.10.8.19.1  (08-11-2006)
Informant Confidentiality

  1. Informants’ communications are confidential. The existence of an informant’s communication should not be revealed to the taxpayer.

  2. All informant claims, reports, and information shall be transmitted from office to office in double sealed confidential envelopes marked "To Be Opened By Addressee Only" and kept in locked file cabinets.

  3. The name of the informant is not to be used in the examiner’s report, IFRAC, workpapers, or T-Letter. Every effort should be made to exclude from the workpapers any reference to the fact that the case involves an informant.

  4. Remove all information relating to the informant or the informant’s information from the case file before the case file is taken out of the office to conduct the examination.

  5. The taxpayer may inquire about why his/her return was selected was selected for examination. Publication 1, Your Rights as a Taxpayer, has been revised and includes a statement describing the criteria and general procedures for selecting taxpayers for examination. The Service is not required to disclose the basis for the selection of a particular taxpayer for examination. Generally, it is the practice of the Service to respond if the source of the examination is random, DIF generated (without explaining the scoring process), or if generated from a public source (e.g., public media report). However, if the source of the examination is an informant, the Service is not obligated to, nor would it be appropriate to, disclose an informant exists. The examiner and his manager should consult with Disclosure when requested to provide a response to return selection for informant cases.

4.10.8.19.2  (08-11-2006)
Surveyed Cases with Form 211 Claims.

  1. If an assigned return contains a Form 211 and/or Form 3949, determine if the return should be accepted as filed. The return may be surveyed. Normal survey procedures using Form 1900 should be followed.

  2. Form 11369 must be completed on all cases that contain a Form 211 Claim. This includes cases closed by survey. See IRM 25.2.2.4 paragraph 1 and IRM 25.2.2.19 paragraph 4(a).

  3. Seal all information regarding the informant's claim and all forms referred to above in a confidential envelope. Delete all references to the Form 211 Claim from the case file.

  4. Note on Form 3198"Informant Claim for Reward, route to _______________ Campus, Attn: Informants' Claims Examiner (ICE)."

4.10.8.19.3  (08-11-2006)
Form 211 Claims Report Writing

  1. At the conclusion of the examination the examiner should prepare two files:

    1. A complete case file for regular processing through the appropriate Case Processing function, and

    2. A partial file to be forwarded to the Campus /compliance center for processing of the claim for reward by the Informant Claims Examiner (ICE).

  2. The reward claim file should contain the following documentation:

    1. Form 11369;

    2. Copies of all examined returns, substitutes for return prepared during the examination, and/or secured returns prepared by the taxpayer;

    3. Copy of the examination report;

    4. Special agent’s evaluation report (if applicable) attached to Form 3949;

    5. Copies of Activity Records;

    6. Copies of Form 4318;

    7. Any other information which may assist the Informant Claim Examiner in processing a reward claim.

  3. The memorandum on the reward claim, along with the entire case file, must be approved by the group manager.

  4. All of the above items will be included in a confidential envelope marked "ICE COPY" and included in the case file when closing the case.

  5. Annotate Form 3198with the following instructions: "Informant's Claim Case." The designated Area reviewer (currently a PSP function) will review Form 11369for the reward determination and sign Form 11369in addition to the PSP Manager. Then the reward claim file will be sent to the Campus Informants' Claims Examiner who will release the "N" freeze. All Informants claim cases have an "N" freeze on the case and cannot be closed out of the Area until the "N" freeze has been removed.

4.10.8.20  (08-11-2006)
Deceased Taxpayers

  1. This section provides procedures for deceased taxpayers. Deceased taxpayer procedures should be followed when a taxpayer has died, whether the death occurred before or after the filing of the return.

  2. References for Deceased Taxpayers:

    • IRM 4.4.3.6 - Refunds to Other Taxpayers,

    • IRM 4.10.9.3.2 - Special Situations Requiring Documentary Evidence,

    • Publication 3920,Tax Relief for Victims of Terrorist Attacks.

  3. If a fiduciary relationship exists, the case file must include letters testamentary and Form 56, Notice Concerning Fiduciary Relationship , which are to be attached to the return.

  4. Some payments associated with the death of an individual may be tax exempt. For example:

    • September 11th Victim Compensation Fund of 2001;

    • Qualified Disaster Relief of Payments;

    • Disability Payments (tax years ending after September 10, 2001) - Payments incurred as a direct result of a terrorist attack directed against the U.S. or its allies, whether outside or inside the U.S.;

    • Payments to Survivors of Public Safety Officers - Including police and law enforcement officers, firefighters, rescue squad ambulance crew and ambulance crews; etc.

4.10.8.20.1  (08-11-2006)
Names and Addresses

  1. In the case of a decedent, if a fiduciary relationship exists, reports and correspondence should include the name of the current administrator or other proper representative. The correspondence and reports will also be mailed to the fiduciary's address. Once legal evidence of death is obtained, correspondence and examination reports should be addressed as indicated below.

  2. For Joint Returns:

    1. If one spouse has died and a fiduciary relationship can be determined:
      Estate of Simon Fir (Deceased)
      H. Bank, Executor and
      Mary Fir, Surviving Spouse

    2. If one spouse has died and a fiduciary relationship cannot be determined:
      Estate of Simon Fir (Deceased)
      Mary Fir, Surviving Spouse

  3. For Single/Separate Returns:

    1. If a fiduciary relationship can be determined:
      Estate of John Doe (Deceased)
      H. Bank, Executor

    2. If a fiduciary relationship cannot be determined:
      John Doe (Deceased)

4.10.8.20.2  (08-11-2006)
Signatures

  1. Joint Return Agreements - Must be signed by the surviving spouse and executor or administrator of the deceased taxpayer’s estate. If no executor has been appointed, the surviving spouse signs for self and for the decedent (e.g., "John Doe, Deceased, by Mary Doe, Surviving Spouse." ) If both taxpayers are deceased, the executor for each estate must sign the agreement.

  2. If the surviving spouse does not receive all of the decedent’s assets or sufficient assets to cover the tax liability, he/she cannot sign as the surviving spouse and correspondence should be sent to the decedent’s last known address and to the surviving spouse at his/her current address.

  3. If the surviving spouse received all of the decedent’s assets and the estate is closed, Form 2045, Transferee Agreement, and Form 870,Waiver of Restrictions on Assessment and Collection of Deficiency In Tax and Acceptance of Overassessment, with special language, will need to be solicited. See IRM 4.11.52, Transferee Liability.

4.10.8.20.3  (08-11-2006)
Consents

  1. Refer to IRM 25.6.22.6.14, Decedents, when preparing a consent for a decedent.

  2. If a decedent dies intestate and no executor or administrator is appointed, no one may sign a consent for the decedent or the estate extending the period of assessment for income tax. Similarly, a consent cannot be executed after the executor or administrator has been discharged. See Rev. Rul. 83–41, 1983–1 C.B. 349,clarified and amplified by Rev. Rul. 84–165, 1984–2 C.B. 305.

    Note:

    An heir liable under IRC section 6901 as a transferee may sign a consent for his or her own liability.

  3. A surviving spouse generally has no authority to sign a consent on behalf of the deceased spouse. Estates are generally considered successors in interest to the decedent under state law and as the decedent's successor in interest, the executor or administrator of the estate is the proper party to execute a consent.

  4. If necessary, a statutory notice of deficiency should be issued.

4.10.8.20.4  (08-11-2006)
Refunds

  1. When a refund is to be issued to someone other than the taxpayer in whose name the tax was paid, documentary evidence must be provided to permit refunds to be made. This includes (but is not limited to) deceased taxpayers, trustees, estates, guardians, minors, dissolved corporations, reorganizations, and bankruptcy cases. See IRM 4.4.3.6,Refunds to Other Taxpayers, and its subsequent sections for guidance in determining what evidence is necessary.

  2. In addition, Form 1310, Statement of Person Claiming Refund Due to a Deceased Taxpayer, should be secured if an overassessment is recommended on a joint return and one of the taxpayers has died since the return was filed.

4.10.8.20.5  (08-11-2006)
Relief for Victims of Terrorist Attacks and with Respect to Astronauts

  1. Section 692(d) provides relief for federal income tax liabilities of decedents who died as a result of certain terrorist attacks. Section 692(d) applies to victims of:

    • Oklahoma City Attack - For 1994 and later up to and including the year of death.

    • September 11th Attack - For 2000 and later.

    • Anthrax Attacks - For 2000 and later.

    • Any astronaut whose death occurs in the line of duty after 12/31/02.

    See IRM 21.7.4.4.1.13, Business Tax Returns and Non-Master File Accounts - Income Taxes/Information Returns, for additional information.

4.10.8.20.5.1  (08-11-2006)
Minimum Amount of Relief for Victims

  1. The minimum amount of relief is $10,000 per IRC section 692(d)(2). The 2003 Act did not modify minimum benefit.

  2. If the total tax forgiven for all eligible years is less than the minimum the difference is treated as a tax paid for the decedent’s last tax year and will be refunded the same as if the amount had actually been paid.

  3. IRC section 692(d)(3) stipulates what income is not subject to the terrorist relief provisions. For example, deferred compensation that would have been payable if the death had occurred because of an event other than the attacks.

  4. For more information see Rev. Proc. 2004–26, 2004–19 I.R.B. 890.

4.10.8.20.5.2  (08-11-2006)
Necessary Documents

  1. Proof of Death - Death certificate or Form 1300, Report of Casualty, issued by the Department of Defense.

  2. Form 1310 unless either of the following applies:

    1. Surviving spouse is filing an original or amended return with the decedent, or

    2. The personal representative filing an original Form 1040or Form 1040NRfor the decedent and a court certificate showing the appointment is attached to the return.

4.10.8.20.6  (08-11-2006)
Form 3198 for Deceased Taxpayers

  1. Note on Form 3198 that the case involves a decedent and any name or address change.

Exhibit 4.10.8-1  (08-11-2006)
Sample Flow-through Entry Report - S Corporation

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Exhibit 4.10.8-2  (06-10-2005)
Sample Flow-through Entity - TEFRA Partnership

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Exhibit 4.10.8-3  (06-10-2005)
Sample Form 4605–A — Change in Accounting Method

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Exhibit 4.10.8-4  (06-10-2005)
Sample Form 2297 — Waiver of Statutory Notification of Claim Disallowance

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Exhibit 4.10.8-5  (06-10-2005)
Sample Form 4549–A — Personal Holding Company

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Exhibit 4.10.8-6  (06-10-2005)
Sample Form 870 — Personal Holding Company

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Exhibit 4.10.8-7  (06-10-2005)
Sample Form 2198 — Determination of Liability for Personal Holding Company Tax Section 547(c)(3) of the Internal Revenue Code

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Exhibit 4.10.8-8  (06-10-2005)
Sample Form 4549A — Personal Holding Company - Page 1

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Exhibit 4.10.8-9  (06-10-2005)
Sample Form 3189 — Deficiency Dividend Deduction Case Transmittal

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Exhibit 4.10.8-10  (06-10-2005)
Sample Form 4549A - Full Allowance of Tentative NOLD

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Exhibit 4.10.8-11  (06-10-2005)
Sample Form 4549A - Partial Allowance of Tentative NOLD

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Exhibit 4.10.8-12  (06-10-2005)
Sample Form 4549A - Full Disallowance of Tentative NOLD

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Exhibit 4.10.8-13  (08-11-2006)
Restricted Interest Decision Chart (Non-Joint Committee Cases Only)

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