The goal of a parallel investigation is to ensure the IRS effectively balances civil and criminal actions to achieve maximum compliance and stop the promotion of the ATAT promotion.

The existence of a criminal investigation alone does not present a conflict and should not automatically delay or forestall a civil investigation.

During the meeting, each Operating Division should share all non-grand jury information about the ATAT promotion. The discussion should include:

IRM Exhibit 4.32.2-4, Six-Way Conference Discussion Job Aid, may be used during the six way conference. This job aid is not required and is intended to be used as a guide.

The following factors are considered in determining whether or when the IRS should proceed with a parallel investigation:

At the conclusion of the six-way conference, determinations should be made with respect to:

IRM Exhibit 4.32.2-5, Six-Way Conference Documentation Aid, while not required may be used to document the outcome of the meeting.

The six-way conference may result in several different outcomes:

SB/SE examiners are responsible for ensuring returns are controlled on ERCS using the correct project code and ERCS tracking code (if applicable).

A promoter investigation action plan is a tool that can be used by SB/SE group managers. It outlines the activities, actions, and suggested time frames for SB/SE investigations.

SB/SE examiners may conclude during the pre-contact analysis that an investigation should be discontinued before contacting the promoter or that the investigation needs to be transferred to another compliance Area. See IRM 4.32.2.8, Investigation Outcomes, for details on these actions.

In LMSB, Team Managers set up administrative controls, including input on ERCS.

LMSB examiners should review the OTSA referral package which may include investor disclosure statements, OTSA database spreadsheets, attorney legal opinions, promotional materials, IDRS research, internet research, Q&A's of investors and any other material.

For LMSB examiners, the investigation/audit plan for promoter penalty cases must be used by examiners involved in promoter investigations.

Team Coordinators/Team Managers are responsible for completing the audit plan with estimated completion dates at each stage, including an estimated closing date (ECD). The status summary may be used for monitoring the progress of the investigation.

Team Coordinators create activity records and logs to monitor progress for IDRs, summonses, third party contacts, interviews, etc.

The SB/SE LDC can assist SB/SE examiners with investigation development by obtaining promoter materials, conducting field surveys and performing computer research. Generally, field surveys are limited to those investigations where the information is critical to developing the investigation. The Technical Advisor assigned to the promotion coordinates these survey requests.

OTSA is available to assist LMSB examiners with investigation development by providing information from the OTSA disclosure and registration databases and assist in facilitating field surveys. Generally, field surveys are limited to investigations where the information is critical to developing the investigation. See IRM 4.32.2.3.3.1.1, Disclosures of Reportable Transactions/Registrations .

Technical Advisors (TA) responsible for specific promotions can provide additional information not in the SB/SE LDC or OTSA referral package, such as names of other IRS employees investigating the same promotion or similar promotions. TAs can assist examiners with national coordination issues related to the promotion.

Examiners use appointment letter, Letter 1844, Initial Interview Letter, for investigations related to conduct potentially subject to penalties under IRC §6700, IRC §6701, IRC §6694 or IRC §6695. This initial appointment letter specifies the specific time and place of the initial interview.

Examiners should schedule initial appointments for 10 days after Letter 1844 is sent to the promoter. Generally, the appointment time should not be rescheduled to a later date. Examiners should be alert to intentional delay tactics by the promoter.

In some investigations, it may be advisable to combine the opening and closing appointments into one meeting. This approach is generally used when an examiner has reason to believe the promoter will fail to cooperate or appear for the scheduled appointments. In these cases, the opening and closing appointments can be combined in Letter 3828, Opportunity to Present Position - Tax Shelter Promoter.

A Notice 609, Privacy Act Notice, should be enclosed with the initial appointment letter.

Form 4564, Information Document Request (IDR), must be sent with the initial appointment letter. The IDR must be specific and request relevant information related to the promotion.

It is recommended the IDR use "summons ready" language in the event the promoter fails to cooperate and an administrative summons is issued. Area Counsel should assist in preparing the IDR particularly for complex transactions. Consider serving a summons at the initial interview if it is anticipated that the promoter will refuse to cooperate. See IRM 4.32.2.7.5, Summonses.

Areas provide bi-monthly status updates to the SB/SE LDC for all promoter investigations assigned to the Area. The territory manager assigned to the ATAT program has responsibility to complete the reports and submit them to the SB/SE LDC. Examiners assigned to these investigations provide the information needed for the reports.

The Team Manager/Team coordinator issues a "soft letter " (IRC §6112 Letter) by certified or registered mail or hand delivery within 30 days of receipt of the approved promoter referral package. The letter requests that the promoter provide:

Notice 609, Privacy Act Notice, must be included with the Soft Letter.

Modifications may be made to the standard Soft Letter as needed, with participation of Area Counsel.

Occasionally, promoter teams may choose to start an IRC §6707/IRC §6708 investigation without first issuing an IRC §6112 letter depending on the specific facts and circumstances of the promoter investigation.

LMSB examiners are required to use a standard IDR for all LMSB tax shelter investigations.

Central Audit File - All LMSB promoter investigation cases should have a "Central Audit File" that includes all documentation pertaining to the investigation including workpapers, analyses, correspondence, copies of summonses, taxpayer’s responses, etc. All examiners working on the investigation should have access to the file. If the investigation is being worked by examiners in multiple locations and it is not feasible for all examiners to have access to the central file, then each examiner should be provided with a complete copy of all of the documents as the investigation progresses. The file should be arranged so that the information needed can be located easily. All examiners are required to have a complete activity record in the file.

LMSB examiners should send a copy of the potentially abusive transaction material obtained during the examination to OTSA. The identity of all material advisors who helped with the tax shelter promotion should be sent to OTSA.

LMSB team managers are required to prepare and submit monthly progress reports on each promoter investigation to the Senior Financial Services Program Analysts for Tax Shelters. A copy of the monthly report format can be found in IRM Exhibit 4.32.2-6, LMSB Monthly Progress Report.

A promoter may not file a qualified amended return after the date any person is first contacted by the IRS concerning an examination of that person under Section §6700 for an activity with respect to which the taxpayer claimed any tax benefit on the return directly or indirectly through the entity, plan, or arrangement Treas. Reg. §1.6664–2(c).

When a promoter contacts an examiner, the examiner should anticipate arguments and questions from the promoter defending the arrangement and questioning the right of the examiner to examine the books and records.

Examiners should have Publication 2193, Should your financial portfolio include Too Good to be True Trusts?, available to answer the promoter’s arguments.

Examiners also should familiarize themselves with The Truth about Frivolous Tax Arguments, and the various toolkits located on the IRS internet website.

Promoters may have an attorney, CPA, enrolled agent, or other person represent them during the investigation. If so, a Form 2848, Power of Attorney, should be secured. The form should indicate the type of tax to be "Civil Penalties." The tax form number should be marked as "Not Applicable (N/A)." The year(s) or period(s) block should be completed showing the current year and any prior year in which the promotion was ongoing.

Refer to IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF), for additional information regarding Power of Attorneys including determining if they are complete.

IRC §7521, Procedures Involving Taxpayer Interviews , allows audio recordings of in-person taxpayer interviews by either the taxpayer or the IRS if the party desiring to record provides advance notice, see IRM 4.10.3.2.6. The IRS generally gives and requests that it be 10-calendar day advance notice of a taxpayer's intention to make an audio recording under the provision, IRM 4.10.3.2.3(2),(5).

If the promoter tapes the interview or uses a court reporter, the examiner should also record the meeting.

Promoters may sometimes not provide the IRS with advance notice of their intention to record a meeting. Since time is of the essence in these investigations and records of interviews can play a pivotal role in the investigation, examiners should arrange to have a tape recorder and a blank unused tape available at all interviews. That way the meeting can continue without delay should the promoter desire to tape record the interview.

Cameras, cell phones capable of taking pictures, and videotaping are never allowable.

Examiners should consider tape recording all interviews with promoters and participants to accurately document the meetings. See IRM 4.16.1.3.2.2, Electronic or Verbatim Recording of Interviews and IRM 4.10.3.2.6, Requests to Tape Record Interviews.

If the IRS is not recording the interview, examiners should ask the promoter or participant if they are tape recording the interview, and document the question and the response in the interview notes. Many states have wiretap laws prohibiting the secret recording of conversations without a court order. If the meeting/interview was illegally recorded, the promoter’s denial could be used in later legal proceedings.

Promoters may use a court reporter to record IRS in-person interviews of themselves as taxpayers under investigation. This is allowable if the court reporter is licensed by the state to record official court proceedings and will make a copy of the transcription available to the IRS.Taxpayers and their counsel have no "right" to be present for IRS interviews of any third party witness. See also IRM 25.5.5.1.8.

See IRM 25.5.5.4.4, Rights to Make an Audio Recording of the Proceeding, and IRM Exhibit 4.10.3-1, Pattern Letter P 2156: Recording Interviews.

IRC §7602(c) requires the IRS to provide notice to the promoter before contacting third parties. Letter 3164P (DO), Third Party Notification for IRC 6700/6701 Investigations, is used to provide this statutory notification for promoter investigations.

IRC §7602(c)(3)(C) provides exceptions to the third-party notification requirements. IRC §7602(c)(3)(c) provides for an exception to the third-party notification requirements with respect to any pending criminal investigation. This exception does not apply to any parallel civil investigation contacts with third-parties to a promoter under investigation that CI has authorized.

Examiners should attempt to obtain the information in writing from the promoter before contacting any third parties. However, third party contacts will be required in most promoter investigations.

Tax return information may be disclosed to a third party to the extent necessary for them to answer questions. Sufficient information should be included in the file to document the necessity for the IRC §6103(k)(6) disclosure. Further information on disclosures to third parties may be found in IRM 11.3.21, Investigative Disclosure, and in IRC §6103(k)(6).

Form 12175, Third Party Contact Report Form, should be completed for each third-party contact made during the promoter investigation and forwarded to the Area Third Party Contact Coordinator. Use MFT 55 or BMF 13, as appropriate, and tax period on ERCS for the penalty case when completing part 10 of Form 12175.

Promoter's requests for a third party contact list must be forwarded to the Area Third Party Contact Coordinator. Before forwarding any such request, the employee receiving the request must secure the promoter’s current mailing address.

See IRM 4.10.1.6.12, Third Party Contacts - Background , for more information.

Subpromoters/co-promoters are involved in promoting the same transaction as the promoter. They may also be organizers, managers, or sellers of this transaction. They generally receive fees for their role in the transaction. A promotion may involve several subpromoters/co-promoters, such as an accounting firm, financial services/investment boutique firm, investment banker, or law firm. The entity that generally gives an opinion on the transaction being promoted is a law firm.

Some abusive tax promotions are multi-level marketing promotions. Individuals in multi-level marketing promotions pay fees or commissions to whoever recruited them into the promotion, and receive fees or commissions from whomever they recruit into the promotion. Examiners must be alert to the possibility that subpromoters and co-promoters could have other subpromoters and co-promoters working under them.

Subpromoters/co-promoters may be subject to penalties under IRC §6700, IRC §6701, IRC §6707, or IRC §6708. For IRC §6707 penalties, co-promoters are jointly and severally liable with the promoter.

Examiners should contact the SB/SE LDC, Technical Advisor or LMSB Financial Services Senior Program Analyst to obtain information on related or affiliated promoters. It may be that the subpromoter or co-promoter has been previously, or is currently, the subject of an investigation. If so, contact should be made with the examiner who conducted or is conducting that investigation.

In LMSB, if the co-promoter is not under investigation, contact OTSA to find out if any disclosure statements pertaining to the co-promoter have been filed.

If the subpromoter’s or co-promoter’s activities warrant investigation or should be included with the key promoter investigation, the subpromoter and co-promoter should be referred to the SB/SE LDC or OTSA. See IRM 4.32.2.3, Lead Identification and Investigation Authorization . Investigation of a subpromoter or co-promoter requires SB/SE LDC or LMSB 6700 Committee approval. Third-party contacts with individuals involved in the promotion are permitted if their role in the promotion is not known.

In parallel investigation cases, subpromoters and co-promoters are not contacted without coordinating with CI.

Contacts with subpromoters and co-promoters are considered third-party contacts subject to the notice and record-keeping requirements of IRC §7602(c).

Examiners should consider tape recording all interviews with subpromoters and co-promoters. See IRM 4.32.2.7.3.1, Tape Recording Interviews .

Interviews with subpromoters and co-promoters should follow the guidelines contained in IRM 4.32.2.7.3, Promoter Interviews, except that third-party interviews are not covered by IRC §7521 and the taxpayer has no "right" to be present for IRS interviews of any third-party witness. Also, examiners need to establish the relationship between the subpromoter/co-promoter and the main promoter. See IRM Exhibit 4.32.2-8, Sample Interview Questions for Sub-Promoters/Co-Promoters, for sub-promoter and co-promoter interview questions.

Income tax returns should be reviewed for potential tax issues; however, an examination is not mandatory.

If an examination is warranted, it should be done concurrently with the promoter investigation. There is no requirement to have the same examiner conduct the income tax examination.

Promoters often utilize their own promotion, and in the absence of known participants, the promoter income tax examination could reveal the underlying operation of the promotion.

The additional time and resources necessary to complete the examination must be balanced against the need to shutdown the promotion as quickly as possible.

Examiners should ensure the promoter has made all required disclosures with their individual return. See IRC §6011 and Treas. Reg. §1.6011-4. If there is noncompliance, appropriate penalties are assessed.

Participants can be a good source of information on the promoter and the promotion, providing insight on operations of the promotion, principals or entities involved and the flow of the money through the promotion. Participant information can be helpful in determining tax harm of the promotion.

In parallel investigation cases, participants are not contacted without coordination with CI. See IRM 4.32.2.6.6, Interviews.

The number of participant contacts and the selection of specific participants for interview are determined on a case-by-case basis.

Examiners should consider securing an affidavit from the participant. See IRM 4.32.2.7.4, Affidavits and Oral Testimony.

Examiners should consider tape recording interviews with participants. See IRM 4.32.2.7.3.1, Tape Recording Interviews.

See IRM Exhibit 4.32.2-9, Sample Interview Questions for Participants, for participant interview questions.

Participant examinations are normally part of promoter investigations. However, examinations of participants are not mandatory if harm to the government can be established by other means. The decision to examine participant cases is made on the strategy established by the operating unit or Strategic Planning Office.

Examiners should secure any available information about prior examinations of participants to use as evidence for the promoter investigation. Contact a Technical Advisor for assistance.

In parallel investigations, participant income tax examinations are not initiated without coordinating with CI. See IRM 4.32.2.6.3, Six-Way Conference, and IRM 4.32.2.6, Parallel Investigations .

In SB/SE, if examinations of participants are necessary to develop an investigation, the Area PSP office can build a maximum of 20 income tax return examination files. Case building cannot be conducted at the group level. See IRM 4.32.2.13, Participant/Investor Cases, for case building procedures of participant cases resulting from participant lists secured during the promoter penalty investigation.

Participants who fail to disclose information required under IRC §6011 regarding a reportable transaction on a return or statement due after October 22, 2004, may be subject to IRC §6707A penalties.

Examiners are required to consider the application of IRC §6662A penalties on all ATAT investigations.

The AJCA of 2004 amended the IRC §7525(b) exception to confidentiality privileges relating to taxpayer communications. This privilege does not apply to any written communication which is in connection with the promotion of the direct or indirect participation of the person in any tax shelter, as defined in IRC §6662(d)(2)(C)(ii).

To control the statute of limitations of related income tax examinations examiners should be alert to the fact that the participants' returns most likely have different limitation periods than the promoter's return. This is because the due dates of the promoter's information return and participants' returns differ. Additionally, AJCA of 2004 made exceptions to the ordinary limitations periods in IRC §6501(c), Limitations on Assessment and Collection, if the taxpayer fails to include on any return or statement for any taxable year any information regarding a listed transaction. AIMS alpha code "WW" is used to identify this exception to the normal statute of limitations. See IRC §6501(c)(10) and Rev. Proc. 2005–26 for further guidance.

Documents related to foreign accounts or entities can often be obtained by use of a summons, and summonses may be issued to persons or entities in the United States who have control over books and records located abroad. If the promoter is acting as agent for an entity or if there is a factual basis for concluding the promoter controls or possesses foreign-based records (e.g. the promoter is the grantor of a foreign trust or is using a credit card issued by a foreign bank), a court can compel the promoter to produce the summoned books, papers, records, or other data (United States v. Wheaton, 791 F. Supp. 103 (D. NJ 1992) (applying Powell analysis)). Other examples of "control" of records abroad include interlocking boards of directors, corporate officers holding positions with each corporation, or direct or indirect ownership. Any such proposed summons shall be submitted to the appropriate Field Counsel office for pre-issuance review, which will consult with Branch 3 of the Office of the Assistant Chief Counsel (CBS) within the Procedure and Administration Division of Chief Counsel's Office. As an alternative to the issuance of a summons for foreign information, the Service may determine that it is appropriate to obtain foreign information by utilizing treaties, conventions, and agreements, including tax treaties and tax information exchange agreements (TIEAs. Requests to foreign governments under tax treaties and TIEAs are made through the Office of Director, International (LMSB), which is the U.S. Competent Authority for treaties and TIEAs. CBS and field counsel shall coordinate enforcement matters concerning tax treaties and TIEAs with Branch 7 of the Office of Associate Chief Counsel (International). (See CCDM 35.4.5.)

The summoned party may allege that compliance with the summons will violate the law of the country where the books and records are located. In that case, the court will balance the competing interests of the two countries.

A collective entity, such as a corporation or partnership, possesses no Fifth Amendment privilege; therefore, it cannot use that privilege as a defense to production of summoned books, papers, or other data. This applies regardless of the corporation's size, and regardless of whether the summons is addressed to the corporation or to an individual in his representative capacity as a custodian of the collective entity's records. See Braswell v. United States, 487 U.S. 99 (1988). Further, an agent of a collective entity (including an offshore entity), such as the custodian of corporate records, may not resist a summons for such records on the ground that the act of production will incriminate him in violation of the Fifth Amendment privilege against self-incrimination. See Braswell v. United States, 487 U.S. 99; see also United States v. Teeple, 286 F.3d 1047 (8th Cir. 2002) (holding individual taxpayer could not rely upon his Fifth Amendment privilege to refuse to produce his business records responsive to a Service summons because it found that his act of producing the documents was insufficiently testimonial for purposes of the privilege). Because the agent is acting as the collective entity's representative and not in his individual capacity, the act of production is deemed to be that of the entity, and the Government may make no evedentiary use of the "individual act " of production against the individual. See Braswell , 487 U.S. at 99.

A summons generally may only be issued to persons or entities (such as banks) that have a presence within the United States, including United States possessions. .If a foreign trust chooses a foreign branch of a U.S. bank to be its trustee, a summons may be issued to the U.S. bank to produce its branch records. A proposed summons of this type will be subjected to pre-review by Counsel.

Area Counsel should be used for assistance in preparing summonses to offshore entities.

See CCDM 34.6.3.7, Issuance of Summons for Books and Records Abroad, describing Area Counsel coordination with CBS for obtaining information from sources outside the United States.

A Formal Document Request (FDR) is another method of gathering information from abroad. An FDR is any request issued during an investigation or examination and made after the normal request procedures have failed to produce the requested documents. IRC §982(c)(1). IRC §982, Admissibility of Documentation Maintained in Foreign Countries, provides consequences if a taxpayer fails to substantially comply with any FDR for documents.

IRC §982(c)(1) provides a powerful incentive for a promoter to produce foreign-based documentation. Under specific conditions, see IRC §982(a), the appropriate court is to prohibit the introduction of any foreign-based documentation covered by the FDR in a civil proceeding in which the tax treatment of the examined item is an issue. IRC §982 does, however, provide a reasonable cause exception to subsection (a), IRC §982(b), and allows for a proceeding to quash, IRC §982(c)(2).

Examiners should consult with managers and Area Counsel for the preparation of a FDR and consider issuing a summons concurrently with it. See IRM 4.61.2, Information Reporting and Record Keeping, and CCDM 35.4.5.2.1, Formal Document Requests.

An authorization directive is a document, signed by a U.S. person, that, without admitting the existence of documents, authorizes and directs a foreign specified person (bank, trustee, or other entity or individual) who has control over documents of the U.S. person, to turn them over to the IRS. An authorization directive can only be used to obtain documents located outside the United States. The authorization directive says that to the extent the U.S. person has foreign records under the specified person's control the foreign specified person is to release those records to the IRS. An authorization directive may be made voluntarily or compelled by court order in a summons enforcement proceeding (the request to sign the authorization directive is made by summons served on the U.S. person).

The IRS may be able to compel a promoter to sign an authorization directive for releasing foreign bank or trustee records otherwise protected by bank secrecy laws. Consult Area Counsel for assistance with preparing this document.

See CCDM 34.6.3.7, Issuance of Summons for Books and Records Abroad, for guidance.

IRS records (tax returns or other official documents) must be certified if they are to be used as evidence in court. See IRM 11.3.6, Seals and Certifications, for obtaining certified copies of official IRS records. When a record for which certification is requested is located in another office, it is generally preferable to transfer the certification request to the office that has the record, than to transfer the record to be certified elsewhere.

Form 2866, Certificate of Official Record, is the cover sheet used for official certifications of documents or records. Attach copies of the certified documents or records to this form.

Form 4340, Certificate of Assessments, Payments, Other Specified Matters, is attached to Form 2866 when certifying transcript information.

Form 3050, Certification of Lack of Record, can be used in lieu of Form 2866 when certifying a lack of records (for example, no record of a filed return).

Examiners and Area Counsel generally prepare and issue a closing conference appointment letter, Letter 3829, Closing Conference Letter for Tax Shelter Promoter Investigations. This letter should be modified to incorporate the specific IRC sections applicable to the investigation. Area Counsel must approve all revisions to the letter. It is recommended that Area Counsel attend the closing conference.

Examiners should explain the possible outcomes of the investigation without implying that a final decision has been made. The purpose of the meeting is to clarify the facts and evidence, obtain additional or any new information, and determine any defense or rebuttal positions.

If a decision has not been made to make an injunction referral or if an injunction referral is anticipated, the examiner should delay discussing any penalty assessment. A follow-up meeting with the promoter may be necessary to discuss penalty assessments.

If the modified commencement letter (Letter 3828, Opportunity to Present Position - Tax Shelter Promoter) was used, no closing conference is offered. See IRM 4.32.2.7.2.1, Commencement of SB/SE Investigations .

Any proposed penalties must be approved in writing by the examiner's immediate supervisor before discussing with the promoter. See IRM 4.32.2.11.5, Approval of Penalties.

A closing conference is generally scheduled after the examiner and Counsel determines that the evidence establishes penalties should be asserted or that a suit to enjoin the promoter should be brought. In making the decision, consider whether:

For LMSB examiners, Form 5701, Notice of Proposed Adjustment , should be prepared for the penalty asserted for each transaction. Any proposed penalties must be approved by the promoter team's DFO and subsequently the DFO, Financial Services, Manhattan, before discussing with the promoter. See IRM 4.32.2.11.5, Approval of Penalties.

Promoters are given the opportunity to present facts or legal arguments as to why a penalty is not appropriate, including "reasonable cause" arguments. The promoter’s position should be obtained in writing, and if the promoter wishes, the promoter can write an informal protest.

For LMSB, if the investigation is agree, a Form 906, Closing Agreement, is prepared by the Promoter Team. Area Counsel and the LMSB, DFO with jurisdiction over the investigation and LMSB DFO:F, Manhattan, must be involved in the preparation of this agreement. The agreement finalizes the examination issues permanently. The agreement should also address future compliance of the promoter.

For potentially unagreed IRC §6707 and IRC §6708 investigations, examiners may consider Appeals Fast Track Mediation if it is applicable to the investigation and the promoter consents to its use.

Examiners and attorneys must agree on the appropriate action. Any disagreements must be referred to the respective managers for resolution.

Examiners, with assistance from Area Counsel, prepare a recommendation memorandum to the examiner's DFO. The approval of the DFO is mandatory for the assertion or non-assertion of promoter penalties. After the DFO's approval is obtained, the investigation is sent to the LMSB Financial Services DFO, Manhattan, under cover of a memorandum for final approval. The memorandum should include:

If injunctive action is warranted, penalties are generally applicable. See IRM 4.32.2.8.1.2, Injunctions - No Penalty Assessment, for additional discussion on injunctions without a corresponding penalty assessment.

If an injunction referral has been made to DOJ, examiners and Area Counsel should discuss the timing of the penalty assessment with DOJ prior to assessment. DOJ generally recommends penalties not be assessed until after the courts have granted a preliminary injunction, in order to avoid disputes that may in some instances impede the injunction litigation.

In parallel investigations, CI may request suspending penalty assessments until the conclusion of the criminal investigation. See IRM 4.32.2.6, Parallel Investigations, for additional information on coordination of penalty assessment in parallel investigations.

After an injunction is ordered by the Court, examiners prepare a penalty report per the instructions in IRM 20.1.6, Preparer/Promoter Penalties.

Promoter investigations are closed by the field compliance group using penalty case processing procedures described in IRM 4.32.2.11.10.2, Case Closing Procedures.

Examiners include a copy of the injunction order with the penalty report and forward to the PSP ATAT Coordinator. The Coordinator forwards a copy of the penalty report and the injunction order to the SB/SE LDC or through the Industry Director to the LMSB 6700 Committee as applicable.

In some limited instances, examiners may determine assessing penalties may not be in the best interest of the government. The following factors should be considered when deciding whether to assert penalties:

The SB/SE LDC, OTSA or IMT TA (if applicable) is consulted before an investigation with an injunction referral but no penalties recommended is closed from the group.

Examiners use Form 4665, Report Transmittal, to document the basis for not asserting penalties. A copy of the injunctive order and Form 4665 is forwarded through the SB/SE PSP ATAT Coordinator to the SB/SE LDC or through the Industry Director to the LMSB 6700 Committee as applicable.

Investigations are closed by the field compliance group using penalty case processing procedures described in IRM 4.32.2.11.10.2, Case Closing Procedures.

If an examiner, in consultation with Area Counsel, decides to not seek injunctive relief, penalties may still be assessed. Injunctive action generally will not be sought if a promoter’s activity is not ongoing or is unlikely to recur. See IRM 4.32.2.8.1, Injunctions, for a discussion of factors to consider in determining the potential for future recurrence of the conduct.

Examiners must use good judgment when pursuing only penalties. Promoters may provide self-serving testimony maintaining they have voluntarily ceased the unlawful activity when, in fact, they continue to advocate ATATs. Experience has demonstrated many promoters merely modify the existing promotion to avoid detection by the IRS or become engaged in a new but equally abusive type of promotion.

DOJ may decline to pursue injunctive action against a promoter or the court may deny the government’s motion for injunctive relief due to a lack of ongoing activity or inability to demonstrate a reasonable likelihood of reoccurrence. In such cases, penalties may still be applicable if the investigation reveals conduct or activity subject to penalties under the various promoter or preparer penalty statutes.

Examiners prepare penalty reports per the instructions in IRM 20.1.6, Preparer/Promoter Penalties, and close the investigation as described in IRM 4.32.2.11.10.2, Case Closing Procedures.

Examiners should make information referrals to the OPR when appropriate, if not already done earlier in the investigation or update information previously forwarded.

In parallel investigations, CI may request suspending penalty assessments until the conclusion of the criminal investigation. See IRM 4.32.2.6, Parallel Investigations, for additional information on coordination of penalty assessment in parallel investigations.

Examiners should complete the investigation to the point where penalties can be easily assessed once the criminal investigation is completed. The investigation is suspended until completion of the criminal investigation. Investigations to be suspensed are updated to status code 16 and held at the group or Team level.

For SB/SE investigations, a draft penalty report, Form 4665, a copy of the Examiner Injunction Referral (if applicable), and CI six-way conference minutes should be forwarded to the Area PSP Coordinator. The Area PSP Coordinator forwards the information to the SB/SE LDC on a Form 3210.

The group or Team monitors CI’s criminal investigations for when CI releases the investigation for penalty assertion. Upon release of the investigation, examiners follow normal closing procedures. See IRM 20.1.6, Preparer/Promoter Penalties, and IRM 4.32.2.8.2.2, Penalty Assessment - Parallel Investigation,