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Part 4. Examining Process

Chapter 24. Excise Tax

Section 3. Selection, Assignment and Monitoring of Workload

4.24.3  Selection, Assignment and Monitoring of Workload

4.24.3.1  (08-13-2008)
Selection, Assignment and Monitoring of Workload- Overview

  1. Policy Statement P-4-21 states "The primary objective in selecting returns for examination is to promote the highest degree of voluntary compliance on the part of taxpayers" . This section provides uniform procedures for planning, monitoring, selecting, and assigning excise tax workload for examination. Uniform procedures enable Headquarters analysts to evaluate the program.

4.24.3.1.1  (08-13-2008)
Types of Excise Returns Considered

  1. The provisions of this section apply to:

    1. All excise taxes reported on tax return Forms 720, 2290, 730, and 11C.

    2. Claim Forms 8849 and Forms 4136 used for excise tax credit or refund.

    3. Form 637 registrations.

    4. Form 720-TO/CS information returns.

    5. Form 8876 Excise Tax on Structured Settlement Factoring Transactions.

    6. Form 8278 Computation and Assessment of Miscellaneous Penalties.

4.24.3.2  (08-13-2008)
Organizational Structure of Excise Planning and Special Programs (PSP)

  1. Excise PSP is composed of two separate operating groups:

    1. Excise PSP Workload Identification and Classification (PSPWIC).

    2. Excise Field PSP Operations.

4.24.3.3  (08-13-2008)
PSPWIC Overview

  1. The Excise PSPWIC is responsible for:

    1. Identifying and developing field examination leads.

    2. Classifying field leads.

    3. Selecting workload for field operations based on examination potential.

    4. Coordinating the case building, case control, and delivery of workload to the field.

    5. Monitoring inventory requisitions.

4.24.3.4  (08-13-2008)
Lead Development Overview

  1. Excise tax is a lead-driven program. It relies on its Field Agents, Analysts, Excise Issue Specialists (EIS), Fuel Compliance Officers (FCOs), and Managers to identify leads and other sources of possible noncompliance. Lead development is a critical part of an Excise Agent’s duties.

  2. Examples of classification activities that are routine business operations are as follows:

    1. Development of leads from law enforcement or other government agencies on specific taxpayers. Refer to IRM 4.1.4.2.4 State Referrals.

    2. Development of leads from the media on specific taxpayers.

    3. Development of leads from other sources (taxpayers, informants, other tax entities) on specific taxpayers. Refer to IRM 4.1.4.3.5 Information Reports/Referrals.

    4. Transferred leads between groups.

  3. Analysis of recent excise tax law changes may reveal taxpayers with an excise tax liability that previously did not have a liability or even a filing requirement.

  4. Consideration should be given to economic conditions, geographical location, and taxpayer’s business activities. Where appropriate, approval should be secured for Compliance Initiative Projects (CIP).

  5. Other techniques and information sources available to identify non-filers:

    1. Review Currency & Banking Retrieval System (CBRS) database.

    2. Review data from Federal, State and local sources.

    3. Review list of LMSB cases for potential non-filers. Observe whether taxpayers in the same industry are reporting comparable excise tax liabilities.

    Note:

    New businesses are frequently unaware of excise tax liabilities related to their products.

4.24.3.4.1  (08-13-2008)
Lead Submission Procedures

  1. All field leads that are discovered by Excise Examiners will be transmitted to Excise PSPWIC using Form 5346 Examination Referral Form. The Field Office Manager should sign this form and see that all relevant items are completed.

  2. The completed Form 5346 should be secure e-mailed to the Excise PSPWIC Automation Clerk. EIN/SSN should be provided.

  3. The Excise PSPWIC automation clerk will maintain a tracking system that will identify all open leads for possible follow up.

  4. If the Form 5346 does not contain sufficient information to case-build the lead, the Excise PSPWIC will research the lead in an attempt to locate a valid EIN/SSN. If PSPWIC cannot determine the EIN/SSN then the lead will be rejected and the referral form will be returned via secure e-mail to the Field Office Manager.

  5. Centralized Excise Operations (CEO) staff will case-build, establish on AIMS/ERCS and process the lead per the Excise Classification Check sheet. See IRM 4.24.3.8.

  6. The category of lead will determine how soon CEO Campus will process the lead and return the case to the field office for consideration.

  7. Third party issues must be considered, and if present, appropriate procedures must be followed. See IRM 4.11.57.

  8. Compliance Initiative Program (CIP) procedures, if applicable, must be followed. See IRM 4.24.3.14.

4.24.3.5  (08-13-2008)
Types of Leads

  1. Filer leads - leads submitted where there is an excise tax return or claim filed covering the tax period in question.

  2. Non-Filer leads -leads submitted where there is no excise tax return filed covering the tax period in question. See IRM 4.24.6.17 for details regarding SFR procedures.

  3. 637 leads - leads identified during 637 initial visitations or compliance reviews.

  4. Time sensitive leads - leads such as jeopardy assessments or wagering leads involving coordination with law enforcement agencies.

  5. Leads from the Specialist Referral System (SRS).

  6. Leads from the Excise Files Information Retrieval System (ExFIRS).

4.24.3.5.1  (08-13-2008)
Identification and Selection of Filer Leads

  1. The Area Compliance Tracking System (ACTS) is used to track the performance of Excise return filers (Form 720 and Form 8849 only) and report on anomalous filing behavior. It is also used to monitor patterns of filer behavior in the field and will identify exceptional filing patterns. ACTS provides a summary of what others in the state, territory, and nation are doing so there is a reference point for evaluating filing behavior. ACTS also provides a consistent, quantitative, objective measure of filing patterns and comparison among filers. ACTS will:

    1. Identify stop filers,

    2. Identify new filers,

    3. Identify tax returns where liabilities vary over time, and

    4. Identify zero filers.

  2. PSPWIC may utilize ACTS to select filer workload as warranted.

    • In selecting cases using ACTS, attention is to be made concerning the irregular filing patterns of certain excise abstracts such as foreign insurance (ABS 030) and floor stocks taxes on ODC’s (ABS 098).

4.24.3.5.1.1  (08-13-2008)
CEO Claim Classification Procedures

  1. CEO staff will identify, classify, and select Form 8849 claims for field examination. CEO claims classification team identifies claims per criteria found in IRM 21.7.8.3.2. This includes IRC 4081(e) and 4091(d) claims, Form 720 line 4 adjustments, and Form 8849 claims.

  2. Excise PSPWIC will coordinate claim selection for field examination with CEO claims classification team to ensure all mandatory claims are considered. Significant fuel claims should be sent to the Fuel Territory. The remaining claims should be forwarded to general excise groups for compliance action. See IRM 4.24.3.9.1 for more information regarding claims.

  3. All unpaid claims meeting mandatory select criteria are selected by CEO Revenue Agents and forwarded to Excise Field groups.

  4. CEO Revenue Agents may also select discretionary claims for the Excise Field groups. Interest bearing fuel claims (Form 8849 schedules 2,3, and 8) selected for field review will be paid before shipment to the Excise Field groups.

  5. CEO Revenue Agents should use Tracking Code 7734 for mandatory claim selects and Tracking Code 7735 for non mandatory claim selects.

  6. CEO claims classification team also reviews all COBRA requests and makes field referrals as warranted.

4.24.3.5.2  (08-13-2008)
Non-Filer Leads Processing

  1. When developing individual non-filer leads from law enforcement, government agencies, and/or other sources such as taxpayers, informants and other tax entities, the Excise Field group will:

    1. Submit individual non-filer leads to Excise PSPWIC on Form 5346.

    2. Complete line 1 positions 1 through 26 and line 2 positions 1 through 28 of Form 5346.

    3. Ensure that the Other Information section clearly indicates the reason for the referral.

    4. Indicate approval of the Form 5346 by signature of the Group Manager.

    5. Ensure that all instructions for Form 5346 are complied with. Form 5346 can be found at http://publish.no.irs.gov/FORMS/INTERNAL/PDF/42467I02.PDF.

  2. Excise PSPWIC will complete initial research and prepare the Excise Classification Check sheet. See IRM 4.24.3.8.

  3. CEO staff will complete case building research, establish the case on AIMS using:

    1. For filed returns-Source Code 20 (Regular Classification).

    2. For non-filed returns-Source Code 24 ( Non-Filer).

  4. The completed case including the classification sheet and results of the research are to be mailed to the appropriate field office via Form 3210.

  5. Generally all non-filer leads have a five-week turn-around time from the time the lead is received in PSPWIC to the time the case is controlled and released to the Excise Field Group.

  6. Submit a separate Form 5346 for each abstract involved in the multiple non-filer lead. If necessary, attach a list of all names, addresses and TIN’s.

4.24.3.5.3  (08-13-2008)
Leads from 637 Validations and Reviews

  1. Leads identified during 637 initial validations or compliance reviews will be classified as "related leads" (directly related to the 637 case being worked for example) and "unrelated leads " (a business competitor for example) by the examining agent.

  2. For all related 637 leads, the examiner must secure the manager’s approval to open an examination and then establish AIMS controls.

  3. For all unrelated leads, the examiner will forward the lead to Excise PSPWIC following the procedures for non-filer leads. See IRM 4.24.3.5.2.

4.24.3.5.4  (08-13-2008)
Time-Sensitive Leads

  1. "Time-Sensitive" leads, such as jeopardy assessments or wagering cases involving coordination with law enforcement agencies, have a 24 hour processing turn-around time in which the following actions must take place:

    1. The Group that discovered the lead will secure e-mail a properly completed Form 5346 to Excise PSPWIC.

    2. The e-mail must be clearly marked "TIME-SENSITIVE " .

    3. The Excise PSPWIC Unit will complete a classification sheet, conduct initial research, and transmit (via secure e-mail) the classification sheet and results of initial research to the responsible Field Manager.

  2. To complete the processing of "Time-Sensitive" leads, the following steps are to be taken timely, but are not held to the 24 hour turn-around requirement:

    1. The Field Office will establish ERCS controls and start working the case.

    2. Excise PSPWIC will provide the group with the results of any related additional research.

4.24.3.5.5  (08-13-2008)
Leads from the Specialist Referral System (SRS)

  1. SRS is used to provide excise referrals on each Coordinated Industry Case (CIC). The SRS has been modified so that an entry in the excise screen is mandatory for the Case Coordinator. See IRM 4.24.5.3.

4.24.3.5.6  (08-13-2008)
Leads from the Excise Files Information Retrieval System (ExFIRS)

  1. ExFIRS is a set of production applications/activities which provide improved management and support process for the administration of the IRS Excise Tax program as a whole.

  2. ExFIRS is a program that incorporates the use of distinct, fielded applications, each with distinct user groups and databases to identify workload for examiners.

  3. PSPWIC will utilize ExFIRS to select, and classify workload for the Fuel Territory and all other Excise field groups.

4.24.3.5.6.1  (08-13-2008)
Leads from the Excise Summary Terminal Activity Reporting System (ExSTARS)

  1. One of the ExFIRS components, ExSTARS, is a system implemented to gather and analyze taxable fuel information to be used for determining if proper excise tax liabilities are being reported to federal and state governments.

  2. Form 720 Terminal Operator (720-TO) Report is an information return used by terminal operators to report their monthly receipts and disbursements of all liquid products to and from all approved terminals. Schedule B of Form 720-TO is used to report entity specific removals of liquid product from each terminal. Periodic reports are generated from information filed on Form 720-TO.

  3. Form 720 Carrier Summary (720-CS) Report is an information return used by bulk transport carriers who receive liquid product from an approved terminal or deliver liquid product to an approved terminal to report their monthly receipts and deliveries. Periodic reports are also generated from information filed on Form 720-CS.

  4. See IRM 21.7.8.4.1.20 Form 720-TO, Terminal Operator Report, Form 720-CS, Carrier Summary Report for more information.

  5. The periodic report information is compared with Form 720 Quarterly Federal Excise Tax Return information to identify differences between gallons reported by Form 720-TO/CS filers and gallons reported by Form 720 filers.

  6. These differences are analyzed to classify workload for the Fuel Territory and other Excise field groups.

4.24.3.6  (08-13-2008)
Classification Planning and Selection Criteria

  1. Classification is the process of determining whether a lead/return should be selected for examination, what issues should be examined, and how the examination should be conducted. Refer to IRM 4.1.5 Classification and Case Building.

  2. Classifying and selecting excise tax returns for examination are the joint responsibility of the Excise PSP, Excise Policy Analysts, Excise Issues Specialists, Territory Managers, Group Managers, Centralized Excise Operations staff, and Excise Tax Agents.

  3. For information relating to fuel classification and selection procedures see IRM 4.24.4.4.

  4. Workload should be monitored to avoid a large number of surveyed cases.

  5. Non-filer workload can be estimated based on historical data. Historical data is available on AIMS Inventory Validation Lists by source code.

  6. Examiners may need Group Support Staff to conduct additional research to determine EIN, address etc.

    1. Examiners will use Form 6882 IDRS/Master File Information Request to request this action.

    2. Examiners who conduct their own research shall use Form 11277 Taxpayer Data Access Form to record IDRS actions.

4.24.3.7  (08-13-2008)
Informants Claim for Reward

  1. The Excise PSPWIC will be responsible for the assignment of informants claim cases and ensure that Project Code 153 is assigned to them. Refer to IRM 25.2.1 Information and Informants’ Rewards for detailed procedures.

4.24.3.8  (08-13-2008)
Overview of Case Building

  1. Case building is the process of assembling available taxpayer specific research to identify possible compliance issues. Please see the Exam Planning and Delivery web site for the most current information on Case Building, http://sbse.web.irs.gov/EPD/PSP/CaseBuilding.htm.

  2. Case building tools help determine whether a return should be selected for examination, what issues should be examined, and how the examination should be conducted.

  3. Case building data provides taxpayer specific research to identify possible compliance issues (IDRS, CBRS).

  4. Case building data can corroborate items on the return so they don't have to be raised with the taxpayer.

  5. Excise PSPWIC will forward all selected leads to CEO for case building and will specify the case building information to be included in a case file on the Excise Classification Check Sheet. For a copy of this check sheet see http://sbse.web.irs.gov/EX/Library/default.htm.

    Note:

    If a lead is considered "time sensitive" See IRM 4.24.3.5.4.

  6. Leads from ExFIRS data may require supplemental case building.

4.24.3.8.1  (08-13-2008)
Integrated Data Retrieval System (IDRS)

  1. IDRS is an internal database accessed by various command codes, each of which provides specific information. Please see the Exam Planning and Delivery web site for more updated information on IDRS at http://sbse.web.irs.gov/EPD/MIS/IDRS/IDRS.htm .

  2. IDRS can provide:

    1. Current name/address and filing status.

    2. Income sources and amounts.

    3. Examination activity.

    4. Filing requirements.

    5. Bankruptcy indicators.

    6. Filing status and number of dependents.

    7. Prior names/addresses.

    8. Filing and payment transactions.

    9. Cross reference to other taxpayer identification numbers (TINS).

  3. The IDRS information should be compared against the return information to determine if there are discrepancies.

4.24.3.8.2  (08-13-2008)
Currency and Banking Retrieval System (CBRS) U.S. Customs Excise Tax Documents

  1. CBRS (Currency and Banking Retrieval Systems) is an on-line database containing reports of cash transactions in excess of $10,000, providing information from the following forms:

    1. Form 104 Currency Transaction Report (CTR) is for cash transactions in excess of $10,000, filed by financial institutions and non-bank financial institutions.

    2. Form 8300 Report of Cash Payments over $10,000 filed by businesses when cash and/or monetary instruments of $10,000 or more are received for goods or services.

    3. Form 103 Currency Transaction Report by Casinos (CTRC) or Nevada Form 8852 (CTRC-N) or Form 103-N Currency Transaction Report by Casinos - Nevada are filed by casinos for cash transactions (cash in or cash out) in excess of $10,000.

    4. Form FBAR, Report of Foreign Bank and Financial Accounts, is filed by an individual, if the aggregate value of foreign accounts exceeds $10,000.

  2. CBRS has a section which allows access to U.S. Customs Excise Tax Documents. These documents are a facsimile of Customs Form 7501 Entry Summary.

    1. The Form 7501 contains imported products data that match potentially taxable Harmonized Tariff Schedule (HTS) Numbers provided to Customs by the IRS. These HTS codes match certain excise taxable commodities cited in Chapters 31, 32 and 38 of the Internal Revenue Code.

    2. Information can be searched for records of the Importer and Consignee using SSN, EIN, Customs IDN, Name and Zip Code. Searches can also be done by Tariff Number, Date and Entry Number.

    3. The CBRS also includes an Excise Summary query that creates summary reports in conjunction with access to the facsimile of Customs Form 7501 Entry Summary. Information is searched by DO, Year or Quarter, and by Consignee IDN number or HTS number.

    4. An analysis of Form 7501 data can generate leads for potential excise tax due on imported products that are generally subject to excise tax.

4.24.3.9  (08-13-2008)
Control of Excise Returns

  1. All filed case built workload selected by Excise PSPWIC on will be sent to CEO AIMS/ERCS. These cases will be established on Master File using Examination Returns Control System (ERCS). These cases usually take up to one cycle (approximately one week) before they are available to be updated to the field Employee Group Codes (EGC).

  2. CEO AIMS/ERCS team will establish all Non-Filer cases using the proper MFT and Push Code 036, which will be notated on the Classification Check sheet. Generally all non-filer leads have a five-week turn-around time from the time the lead is received in PSPWIC to the time the case is controlled and released to the Excise Field Group. Income Tax Non-Filer Project Codes should not be used for Excise Non-Filer cases.

  3. Once controls are fully established, the CEO AIMS/ERCS team will either ship case to field office or hold at the Campus pending an approved inventory request.

  4. Non filer inventory and Form 5346 lead selects are shipped to the field groups in status 10 once fully established. Generally, all other inventory is established in status 08 and held pending a group inventory request. It is the responsibility of Excise PSPWIC to determine the appropriate status code for non-filer and lead cases.

4.24.3.9.1  (08-13-2008)
Master File Control of Non Paid Selected Fuel Claims

  1. Once a claim is selected for field examination, CEO will establish the claim on AIMS as follows:

    1. Determine if TC 150 has posted to Master File (tax return has posted to master file). If so establish the claim using MFT 40 and Source Code 31. No push code is required.

    2. If there is no TC 150 posted to Master File (tax return has not posted to master file), establish the claim using MFT 40, Push code 036 and Source Code 30.

    3. The activity code will be the applicable abstract code.

    4. The statute date of AA will be used for all unpaid claims.

    5. The normal statute date will be used on paid claims.

    6. Claim cases will be established on ERCS in status code 08.

    7. Claim cases will be updated to status code 10 and shipped via Form 3210 to field groups.

    8. Source code and status code are determined by PSPWIC and reported on the Classification Check Sheet.

4.24.3.9.2  (08-13-2008)
Excise Tax Grading Guidelines

  1. The grade of the excise case should be the same as the grade of the primary income tax return. See IRM Exhibit 1.4.40-7 for details.

  2. If there is no information to make a grade determination based on IRM Exhibit 1.4.40-7 , a case will be considered grade 11.

  3. The Excise Tax Manager will determine the correct grade level based on information received during the examination.

4.24.3.10  (08-13-2008)
Consideration of Collectibility

  1. Excise PSPWIC must ensure that classification check sheets are documented to reflect an overriding compliance justification for conducting an examination on a taxpayer with low collection potential.

  2. Collectibility Indicators appear on the AMDISA print. Definitions and locations of each indicator are as follows:

    • BANKRUPTCY — Taxpayer is currently in bankruptcy or bankruptcy discharge prior period.

    • CURNOTCOLL — Prior period was closed as Currently Not Collectible.

    • COLLSTCD26 — Open Collection status (i.e. assigned to Revenue Officer, Automated Collection, or is in Collection queue).

    • OIC— Offer-in-Compromise Pending.

  3. Case built files that contain Collectibility Indicators that are selected for examination by the classifier must be reviewed by the PSPWIC Manager. If the manager agrees that the case should be selected for examination, Form 3198 will be completed with a notation on the case file "Examiner Alert -- Collectibility Indicator (B, N, C, or O)" .

  4. Other indicators are:

    1. Large open balances,

    2. Previously written-off accounts; and

    3. Bankruptcy under the chapter for liquidation.

  5. See LEM 5.3 for information on survey of returns and limitation of scope where collectibility is an issue. See IRM 4.24.6.12.1 for further information.

  6. Consideration should also be given to:

    1. The need to develop information about compliance in an industry. Cases should not be surveyed based solely on collectibility when a limited examination has potential for developing leads to other non-compliant taxpayers.

    2. Application of the Trust Fund Recovery Penalty under IRC 6672.

    3. Possible assessments under IRC 4103 or 6715.

  7. If an account does not fit within the multifunctional guidelines, or is not suitable for the installment agreement for any reason, assistance will be sought from the Collection function or the taxpayer will be referred to Collection.

  8. Local procedures should be developed to accommodate functions seeking assistance from the Collection function or referring taxpayers to Collection.

4.24.3.11  (08-13-2008)
Ordering of Inventory

  1. The levels of inventory for each field office are available through ERCS management reports. These reports will assist management in planning/selecting workload.

  2. If workload is needed and the ERCS reports indicate sufficient inventory at the Campus is available for a particular field office, managers will submit an inventory order requests to his or her Territory Manager for approval. The Territory Manager will utilize the Work Order Request Tracking System (WORTS) to place orders with PSPWIC. WORTS will enable the Territory Manager to monitor their field group inventory requests as they are being filled. PSPWIC will input any and all updates to an order request.

  3. The Excise PSPWIC and Campus AIMS/ERCS Manager will work with the Field Manager to ensure adequate geographic coverage when filling the inventory request.

  4. If an inventory request cannot be filled due to the lack of inventory, the Excise PSPWIC Manager will contact the Excise Territory Manager to discuss methods to obtain ways of getting the order filled.

  5. An inventory requisition that has not been filled is considered "open/back ordered" . The Excise PSPWIC will monitor WORTS and prepare a monthly open/back ordered inventory report to the Territory and Headquarters Management.

  6. Excise PSPWIC will semi-annually evaluate aging inventory and make appropriate disposition in coordination with CEO, and PSP Territory Management.

  7. Group managers should be aware of the time frames for inventory being shipped after submitting their requests and make every effort to timely order inventory. CEO case building and AIMS/ERCS team each have 5 business days to complete case building and input AIMS controls. Inventory must update from status code 06 to status code 08 to status code 10 prior to shipment. Each status update takes approximately 5 business days.

4.24.3.12  (08-13-2008)
Shipment of Inventory

  1. The Territory Manager and Excise PSPWIC Manager will be notified by the Campus AIMS/ERCS Manager when inventory is shipped to the field office and whether the total order was filled.

  2. When a Work Order Request is approved, the Campus will update the ERCS status code from 08 to 10 (Assigned) and ship the case via Form 3210 to the appropriate Field Office Manager.

  3. Upon receipt of the Form 3210, the Field Office Manager or designee will acknowledge and return the Form 3210 to CEO.

4.24.3.13  (08-13-2008)
Project Development

  1. All project requests must be forwarded to the Excise PSPWIC Manager for project development using Form 5346.

  2. The established Compliance Initiative Project (CIP) procedures listed below will be followed if applicable.

  3. Project requests may be submitted by Territory, Field Group, Issue Specialist, or PSP.

  4. The Territory or Issue Specialist may request that Excise PSPWIC match certain databases to identify areas of non-compliance.

  5. Excise PSPWIC conducts the necessary research and classifies any potential leads. CEO will case-build and establish AIMS/ERCS controls for any potential leads.

  6. The Territory Manager or Issue Specialist will be notified that the research has been conducted and potential leads have been built.

  7. Project and or Tracking Codes will be used for projects as warranted.

4.24.3.13.1  (08-13-2008)
Use of Project and Tracking Codes

  1. The use of Excise Exam Project and Tracking Codes is the responsibility of Excise Policy and PSP Field Operations. For a listing of approved excise project and tracking codes see http://sbse.web.irs.gov/EX/Library/default.htm .

  2. For all cases with Project and or Tracking codes, it is important to input the project /tracking codes when ordering controls on all related exam pick ups.

4.24.3.13.2  (08-13-2008)
Project Development - Fed/State Agreements

  1. The IRS Fed/State Program partners with state government agencies to enhance voluntary compliance with tax laws. This includes facilitating the exchange of taxpayer data, leveraging resources, and providing assistance to taxpayers to improve compliance and communications.

  2. The IRS also assists state agencies by identifying and reporting information on emerging tax administration issues. This is accomplished through the IRS entering into agreements to share information with the state agencies.

  3. The Governmental Liaison and Disclosure Program (GLD) is responsible for the coordination of activities between the IRS and state and local governments as well as other federal agencies.

  4. Refer to IRM 11.3.32 Disclosure to States for Tax Administration Purposes for more information.

4.24.3.14  (08-13-2008)
Compliance Initiative Projects (CIP)

  1. IRM 4.17 contains procedures for the development, approval and management of Compliance Initiative Projects (CIPs).

  2. CIPs are any activities involving contact with specific taxpayers within a group, using either internal or external data to identify potential areas of noncompliance within the group, for the purpose of correcting the noncompliance.

  3. CIP procedures apply to gathering taxpayer specific external data, whether or not taxpayer contacts are made.

  4. CIP procedures apply to excise and are mandatory.

  5. See IRM 4.17.1.3 for activities not subject to CIP procedures.

  6. Excise CIP requests are the responsibility of the Excise PSPWIC CIP coordinator. See IRM 4.17.4.3.5 and Form 4.17.4.4.4 for approval and concurrence procedures.

  7. For additional information refer to

    1. IRM 4.17.1 Compliance Initiative Projects, Overview of Compliance Initiative Projects.

    2. IRM 4.17.2 Compliance Initiative Projects, Responsibilities.

    3. IRM 4.17.3 Compliance Initiative Projects, Requirements.

    4. IRM 4.17.4 Compliance Initiative Projects, Procedures.

4.24.3.15  (08-13-2008)
Midwest Automated Compliance System - MACS

  1. 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.

  2. 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.

  3. 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.

  4. 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 4.17 for detailed CIP procedures.

  5. Refer to IRM 4.3 Midwest Automated Compliance System (MACS) Handbook, for additional information.

4.24.3.16  (08-13-2008)
Return Preparer Program Cases

  1. Excise PSPWIC will coordinate all excise compliance aspects of the Return Preparer Program. Please refer to IRM 4.1.10 Return Preparer Program which provides detailed procedures and information to develop preparer program action cases.

  2. 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. See IRM 4.24.9.6 for additional information relating to excise tax preparer penalty investigations.

  3. These types of cases generally are a result of suspicious Form 4136 Fuel Tax Credit and Form 8849 claim examinations.

4.24.3.17  (08-13-2008)
Collateral Referrals and Examination Transfers between Operating Divisions

  1. Under certain circumstances, it may be necessary to request a transfer a case between Operating Divisions.

  2. A Collateral Examination request is no longer limited to a request for information and may include a request to transfer an examination to another business unit.

  3. Form 6229 will be used to request a transfer for a collateral. See IRM 4.2.2.1.

4.24.3.18  (08-13-2008)
PSPWIC Program Monitoring Overview

  1. Excise PSPWIC will provide monthly classification reports to Headquarters Management and should monitor the following:

    1. Delivery of leads/returns for classification.

    2. Classification selection rates.

    3. Survey rates before and after assignment and survey of excessive inventory.

    4. Volume and timing of return orders.

4.24.3.19  (08-13-2008)
Overview of Excise PSP Field Operations

  1. The Excise Field PSP is responsible for planning and monitoring of the Excise Examination Program. Excise Field PSP will assist the Chief Excise Program in conducting operational reviews at the Territory and Field group level.

4.24.3.19.1  (08-13-2008)
Annual Excise Tax Plan

  1. The Excise PSP Field is responsible for the development, implementation, and monitoring of the annual National Excise Tax Examination Plan.

  2. Listed below are factors that must be considered when developing the plan.

    1. Staffing levels.

    2. The type of excise tax work streams.

    3. Geographical coverage.

  3. Refer to IRM 4.1.1 Planning and Monitoring for more information.

4.24.3.19.2  (08-13-2008)
Excise PSP Field Monitoring Overview

  1. The Excise Field PSP is responsible for monitoring the accomplishment of excise examination goals and providing timely reports to Headquarters and Territory Management. PSP also will monitor programs and projects not reflected in the standard reports. Refer to IRM 4.1.1.6 Monitoring for details

  2. At a minimum, the Excise Field PSP should monitor the following for cycle time:

    1. Average cycle time for open and closed cases.

    2. Average days in process for open and closed cases.

  3. At a minimum, the Excise Field PSP should monitor monthly the following for inventory:

    1. The number of new started returns by status code.

    2. Unstarted returns by status code.

    3. AIMS open case database by status code.

  4. At a minimum, the Excise Field PSP should monitor the following for business results:

    1. Dollars per hour by activity code and project code.

    2. Dollars per return by activity code and project code.

    3. Return accomplishments.

    4. Time applied.

    5. Large assessment cases.

  5. This data should be used for allocation of resources, workload selection, and for assessment of program effectiveness.

  6. Excise Field PSP will assist PSPWIC in development of the annual return delivery plan.

  7. PSP must follow the operating guidelines found in IRM 1.5 Managing Statistics in a Balanced Measurement System.


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