7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

Handbook 9.12
Administrative and Recordkeeping Matters


Chapter 1
Miscellaneous Administrative Procedures

Contents

[9.12] 1.1  (03-11-1998)
OVERVIEW

  1. This Chapter contains administrative procedures with respect to the following miscellaneous topics:
    • Special Agent Daily Record of Personal Activities
    • Inventory Control Process for Tax Returns
    • Security of Communications
    • Criminal Investigation Recognition Program
    • Honorary Award Plaque
    • Twenty Year Plaque
    • Control of ADP Operations for Criminal Investigation
    • Processing Payments Received by Criminal Investigation
    • Integrated Compliance
    • Coordination Examination Program
    • Manual Deviations

[9.12] 1.2  (10-14-1999)
SPECIAL AGENT DAILY RECORD OF PERSONAL ACTIVITY--DIARIES OR CHRONOLOGICAL WORKSHEET

  1. Criminal Investigation (CI) technical employees, with the exception of CI Headquarters personnel, are required to maintain a daily record of activities. Technical employees in Headquarters may be required to maintain diaries at the discretion of the Director of Investigations or the Assistant Commissioner, CI. The following outlines specific instructions pertaining to employees at the district level:
    1. Special Agents, Tax Fraud Investigative Assistants (TFIA's) and student trainees are required to maintain diaries.
    2. Group Managers and above will maintain diaries or calendars, depending on the discretion of the Chief, CI.
  2. The Chief, CI, and the Director of Investigations are responsible to provide diaries or calendars to technical personnel assigned to CI during each calendar year. For the purpose of uniformity, the diary will be a standardized, permanently bound calendar year type, providing a full page for each workday. Calendar type will be at the discretion of the Chief, CI. It should, however, provide space for daily entries and enough room for daily notes. The Director of Investigations can approve the automation of the diaries or calendars as long as the requirements are met, as set forth below in (3) and (4).
  3. The following actions apply to the diary or calendar:
    1. Keep diaries current and up-to-date.
    2. Entries should be brief but detailed enough to describe the employee's activities with respect to official matters, such as investigative actions, leave, LEAP and overtime hours worked, travel expenses, other official expenditures, etc.
    3. Entries should cover important activities such as initial interview of taxpayers, interviews of return preparers or key witnesses.
    4. They should be safeguarded.
    5. Entries should be of sufficient length to describe the event. This would include sources, dates of origin, and other facts and circumstances involved in obtaining leads and evidence in investigations.
  4. Do not duplicate detailed information in a diary or calendar if chronological worksheets are used.
  5. Diaries and calendars will be inspected annually by supervisory officials to ensure that instructions pertaining to diary or calendar maintenance are being observed. A good practice for Group Managers is to review special agents' diaries when workload reviews are conducted, usually on a quarterly basis.
  6. To facilitate the use of information in such diaries or calendars, employees will be permitted to retain possession of the prior year diary or calendar as well as the current year diary or calendar. In December of each year, diaries and calendars for the prior calendar year will be reclaimed and retained in the CI office to which the employee is assigned. When a technical employee or manager is separated from CI, the current and prior year diaries or calendars will be reclaimed and retained in the custody of the CI office to which the employee was last assigned. When an employee transfers within CI, the current and prior year diaries or calendars will be retained by the employee until they are reclaimed in the established year-end procedure. Diaries or calendars of an employee who has been transferred will be made available to the former office upon request.

[9.12] 1.2.1  (03-11-1998)
Chronological Worksheet

  1. Special agents may be required to maintain a CI chronological worksheet, Form 4365, to record the sources, dates of origin, and other facts and circumstances involved in obtaining leads and evidence in investigations. Completed chronological worksheets relating to investigations should be maintained as a permanent part of the district case file.

[9.12] 1.3  (10-14-1999)
MANDATORY GUIDELINES FOR TAX RETURN INVENTORY CONTROL

  1. A separate record of all tax returns in the custody of Criminal Investigation personnel under the Chief's supervision will be maintained by the Chief, CI.
    NOTE:
    At the option of the Director of Investigations, the Chief, CI, may delegate this responsibility to Group Managers to maintain a listing of all tax returns in the custody of personnel within their groups.
  2. These procedures require appropriate security for tax returns to prevent unauthorized disclosures. CI should not retain tax returns longer than necessary.
  3. The Chief or Group Manager, CI, should designate a clerk to be responsible for the request, receipt, control, and inventory of tax returns.
  4. To request tax returns special agents should submit a completed request Form 4844, approved by the Group Manager, to the clerk who will input the request through the Integrated Data Retrieval System (IDRS).
  5. All returns and transmittals, Form 4251 (Document Chargeout:) or Form 8079 (Data Link Document Request/Chargeout), and Form 3210 (Document Transmittal) should go directly to the clerk. The clerk will control request, receipt, and assignment information on a database, and notify the requesting special agent when returns have been received.
  6. The clerk should exclusively control the database and keep related documents in a locked cabinet. The clerk should use Form 3210 as a controlling document or log book to acknowledge receipt of returns when they are assigned to Special Agents.
  7. Special agents should provide the clerk all tax returns that are no longer needed.
  8. The clerk will recharge the tax returns to files and update the tax returns status on the database.
  9. The clerk will acknowledge receipt of tax returns received from the special agents by using Form 3210.
  10. By November 30th of each year, the clerk should perform database validations to be sure that returns requested have been received or returned to files at the appropriate Service Center, and that both database and related assignment documents match. The clerk should:
    1. Make a listing of all returns assigned to each agent for Group Managers to check against the returns in the Special Agents' possession;
    2. Provide management with copies of the database validation so that management can take necessary actions to correct any discrepancies and measure the effectiveness of the operation.
  11. By November 30th of each year, the Group Manager will sample Forms 4844 to be sure that the clerk inputs only approved requests for tax returns.
  12. As part of their operational review, the Chief or Branch Chief verify the accuracy of the tax return inventory and validate the Group Manager's tax return assignments to the special agent.

[9.12] 1.4  (03-11-1998)
SECURITY OF COMMUNICATIONS

  1. Communications must be protected from unauthorized disclosure.

[9.12] 1.4.1  (10-14-1999)
Use of Double Sealed Mailing Envelopes

  1. Written communications involving matters to which access is limited should be mailed in double sealed envelopes marked, "to be opened by addressee only." This applies to:
    1. Investigative, statistical and management reports;
    2. Collateral requests and replies, and
    3. Memoranda of any kind.
    NOTE:
    When there is doubt as to whether or not double sealed mailing should be used, it should be resolved in favor of using double sealed mailing.

[9.12] 1.4.2  (10-14-1999)
Discussion of Official Business

  1. Official matters should not be discussed in public or within the hearing of the public. When a discussion of findings, theories, and plans relating to an investigation is necessary, the discussion should be limited to the personnel directly concerned. This does not preclude discussions among special agents concerning investigative techniques, sources of information, etc.

[9.12] 1.4.3  (03-11-1998)
Use of Words "Top Secret" , "Secret" , and "Confidential"

  1. The designations "Top Secret,""Secret," and "Confidential" may be used only on documents containing information affecting the national security of the United States as defined in Executive Order 12958, Classified National Security Information.
  2. The following are suggested designations for documents containing information other than that affecting the national security of the United States:
    1. "Limited Official Use" ;
    2. "Unclassified but Sensitive" ;
    3. "Official Use Only" .

[9.12] 1.4.4  (10-14-1999)
Transmitting Documents by Mail

  1. When transmitting documents by regular mail, registered mail, certified mail, or other express service, confirmation of delivery, will be used if any of the following documents are included in the transmittal:
    1. Administrative files, including original tax returns;
    2. Special agents' reports;
    3. Exhibits to special agents' reports; or
    4. Supplemental reports.
  2. Should confirmation of delivery not be received by the office transmitting such files or documents within a reasonable period, not to exceed 30 days, inquiry is to be made through the regular channels of the United States Postal Service in regard to the apparent failure of the registered mail to reach the addressee.
    1. Information concerning the delayed or lost transmittals should be forwarded to the addressee.
    2. Steps should be taken as appropriate or necessary to duplicate the contents of the original transmittal to permit the addressee to proceed with the proposed necessary action.

[9.12] 1.4.5  (03-11-1998)
Facsimile Transmission of Tax Information to and from Taxpayers or Their Authorized Representatives

  1. The legal authority for facsimile transmission of tax information is the same as for responding to an inquiry for tax information by telephone or mailing tax information to third parties.
  2. A special agent should consider the facts and circumstances of each investigation to determine whether to accept facsimile documents in lieu of the originals.
  3. Before sending tax information to a taxpayer or taxpayer representative by facsimile, the special agent should:
    1. Obtain the taxpayer's name, address, and taxpayer identification number;
    2. Determine the specific information sought, such as the type of tax and tax periods;
    3. If the requestor is a representative, determine if he or she has a valid tax information authorization (TIA) on file with the Service;
    4. Request a TIA if there isn't one on file;
    5. Verify whether any TIA that is on file covers the information requested; and
    6. Attach a cover sheet to the information to be sent by facsimile, identifying only the number of pages and the person to whom the information is being sent.
  4. Special agents should use caution in determining the facts and circumstances in each investigation. If any doubt exists as to the validity of the caller's identity or intent, the information should be mailed to the taxpayer's address of record.

[9.12] 1.5  (10-14-1999)
CRIMINAL INVESTIGATION RECOGNITION PROGRAM

  1. Every two years the Criminal Investigation Recognition Program (CIRP) selects an outstanding CI employee in each of eight categories. These employees have been recognized locally through performance awards, but their job performance and interpersonal relationships so far exceed the norm that they also merit national recognition.
  2. During the annual evaluation process, managers should be considering whom, if anyone, they plan to nominate.
  3. Participation in this program is optional. Nominations may be submitted in none, one, or more categories.

[9.12] 1.5.1  (10-14-1999)
CIRP Award Categories

  1. Secretary/Clerical --One employee from job series:
    1. 203
    2. 303
    3. 305
    4. 312
    5. 318
    6. 322
    7. 503
  2. Paraprofessional --One employee, grades 5 through 10, from job series:
    1. 203
    2. 303
    3. 335
    4. 344
    5. 592
    6. 1702
    7. 1801
    8. 1802
  3. Analyst/Specialist/Management Official (Non-1811) --One employee from job series:
    1. 132
    2. 235
    3. 301
    4. 326
    5. 334
    6. 343
    7. 344
    8. 345
    9. 391
    10. 1071
    11. 1084
    12. 1397
    13. 1515
  4. Special Agents --Four field special agents, one from each region.
  5. Analyst (1811) --One special agent who devotes more than 50 percent of his or her time to specialized duties or staff work.
  6. Group Manager
  7. Branch Chief
  8. Division Chief

[9.12] 1.5.2  (03-11-1998)
CIRP Award Criteria

  1. Job Performance:
    1. Nominees exhibit excellent job knowledge, ability, and attitude.
    2. Nominees also display excellence by using personal initiative, innovation, and leadership to promote the efficiency of the Service and improve the quality of service provided to both internal and external customers.
  2. Quality of Relationships:
    1. Nominees demonstrate an outstanding ability to interact with Service employees, other agency employees, and members of the public.
    2. Nominees must be courteous and professional in their communications and exhibit a positive attitude toward the Service and their jobs, including a willingness to assist others and a desire to promote professional standards in their work relationships.

[9.12] 1.5.3  (10-14-1999)
CIRP Nomination and Selection Process

  1. The following subsections cover the process for CIRP Nomination and Selection of individuals for awards in the following categories:
    1. Special Agent Awards
    2. Other Employee Awards
    3. Other Law Enforcement Awards

[9.12] 1.5.3.1  (10-14-1999)
Nomination and Selection of Special Agents

  1. The Group Manager is responsible for submitting a memorandum to the Chief, CI recommending a nomination for Special Agent by the first workday after the beginning of the second fiscal year.
  2. The Group Manager should attach the employee's last two performance appraisals to the nomination write-up, which must be limited to two pages.
  3. Within 20 workdays after the first of the fiscal year, the Chief, CI, with the concurrence of the District Director, will forward one nomination to the Director of Investigations.
  4. Within 40 workdays after the first of the fiscal year, each Director of Investigations, with the concurrence of the Regional Commissioner, will select one special agent to receive the award and forward the selection to the Assistant Commissioner, CI, for inclusion in the Recognition Program.

[9.12] 1.5.3.2  (10-14-1999)
Nomination and Selection of Other Employees

  1. Nominations in each category other than special agent will be made by the employee's first-level manager by memorandum to the office's top level CI manager. The first-level manager will attach a copy of the employee's last two performance appraisals to the nomination write-up, which must be limited to two pages. Managers will make nominations by the first workday of the fiscal year.
  2. Within 20 workdays after the first of the fiscal year, the Chief, CI, with the concurrence of the District Director, will forward no more than one district nominee per category to the Director of Investigations.
  3. Within 40 workdays after the first of the fiscal year, each Director of Investigations, with the concurrence of the Regional Commissioner, will select one nominee per category from district and regional nominations and forward the nominations to the Assistant Commissioner, CI.
  4. The Assistant Commissioner, CI, will select a panel of Senior Executives to review the nominations and select an employee to be recognized in each category. The selection panel will announce the selections by the first workday of the calendar year.

[9.12] 1.5.3.3  (10-14-1999)
Nominations for Other Law Enforcement Awards

  1. The Assistant Commissioner's selection panel will also review the nominations for the Special Agent's Award and select the agent(s) who will be nominated by CI to receive the other law enforcement awards, such as the Association of Former Special Agents Award, The Federal Association Award, and the Treasury Law Enforcement Award.

[9.12] 1.5.4  (03-11-1998)
CIRP Awards Ceremony

  1. The Assistant Commissioner (CI) will host a recognition ceremony in Washington, DC, to present awards to the employees selected in each of the award categories. Travel expenses will be funded by the recipient's office. See text 134 of IRM 1763, Travel Handbook, for procedures for invitational travel for non-employees.

[9.12] 1.6  (10-14-1999)
HONORARY AWARD PLAQUE

  1. CI has established an honorary award plaque that may be presented to individuals who have made a very significant contribution benefiting CI. Examples of those who may qualify for this honorary award are law enforcement or regulatory officials, State Attorneys, Assistant United States Attorneys, and United States Attorneys.
  2. This honorary award can be granted when:
    1. The services, or other personal efforts performed by an individual official or an organization, have substantially exceeded normal standards and expectations and resulted in the successful accomplishment of CI's mission; and
    2. The contribution was made while the individual was an employee of a law enforcement or regulatory agency.
  3. Submit the request in writing, to the Director of Investigations, CI, for approval. This request should be submitted at least 30 days prior to the date needed.
  4. Written request for this honorary award must contain the following information:
    1. Name of the recipient;
    2. Recipient's position or title;
    3. Narrative description of the individual's or organization's contribution and how it contributed to the accomplishment and success of CI's mission;
    4. Projected presentation date;
    5. When and where the award will be presented;
    6. Name and position of the presenter; and
    7. Name and telephone number of a contact person.
  5. After approval by the Director of Investigations, CI, the regional office will forward the honorary award plaque to the requester. The requester will be responsible for having the plaque engraved.
  6. Should a request for this award be disapproved, a local district award may be given subject to the approval of the Chief, CI.

[9.12] 1.7  (03-11-1998)
TWENTY-YEAR PLAQUE

  1. CI has established a plaque to recognize the dedication and accomplishments of special agents who have served as GS/GM-1811 criminal investigators in CI for 20 years.
  2. Arrangements for presenting the 20-year plaque to eligible field special agents should be made by the Director of Investigations. The Assistant Commissioner should make arrangements for presenting the plaque to eligible National Office 1811s.
  3. Each district or region should purchase the 20-year plaques through local funding sources.

[9.12] 1.8  (03-11-1998)
ADP OPERATION CONTROLS IN CRIMINAL INVESTIGATIONS

  1. This section provides for the establishment of controls on master file for taxpayer accounts under investigation.

[9.12] 1.8.1  (03-11-1998)
Criminal Investigation Transaction Codes (TCs)

  1. CI uses nine transaction codes: TC 910, 911, 912, 914, 915, 916, 917, 918, and 919. The purpose of these codes is to monitor accounts for the districts and service center.
    NOTE:
    A tax module is a record of tax data for a taxpayer covering one type of tax for one tax period.

[9.12] 1.8.1.1  (10-14-1999)
TC 910

  1. TC 910:
    1. Monitors the entire account but does not generate unpostables.
    2. Is an entity control used to monitor accounts of taxpayers on probation (relating to settlement of civil liabilities and fines), racketeers and strike force subjects.
    3. Prevents the removal of tax filing or payment data from master file to the retention register, providing immediate access to needed information. Data is routinely removed for taxpayers who have no tax liability (zero balance), no controls, and no unsettled conditions.
    4. Retains all posted transactions on the master file and any subsequent account activity.
    5. Will not prevent other functions from posting actions to the account. No unpostable conditions occur when a TC 910 is in place.
    6. Once posted, automatically generates a quarterly listing sent by the Criminal Investigation Branch (CIB) to the districts. The listing provides document locator numbers (DLN) of all returns, payments, etc., currently posted to the master file of all accounts with TC 910 for that district.

[9.12] 1.8.1.2  (03-11-1998)
TC 911

  1. TC 911:
    1. Reverses TC 910.
    2. Allows issuance of a Taxpayer Delinquent Account (TDA) for modules in notice status subject to a seven cycle delay--about 7 weeks.
    3. When the control has been terminated, the Chief, CIB, at the service center will send the original Form 4135 together with any original documents, other than service center forms, that may have been retained in the account folder to the district CI office which requested TC 911.

[9.12] 1.8.1.3  (03-11-1998)
TC 912

  1. TC 912:
    1. Reverses a TC 914.

[9.12] 1.8.1.4  (10-14-1999)
TC 914/916

  1. TC 914/916 provides all of the controls as above for TC 910.
    1. TC 914 is initiated by the district office on an open investigation.
    2. TC 916 is initiated by the service center on a questionable refund investigation and false or fictitious returns.
  2. In addition, TC 914 and 916:
    1. Prevents posting of most original input transactions on tax modules.
    2. Permits posting of input transactions which were reviewed and are acceptable for posting. This allows normal processing operations to proceed.
      NOTE:
      If a balance due return is posted, a first notice to the taxpayer will generate. If a refund return is posted, a refund check to the taxpayer is generated if a TC 914 is present. A TC 916 will not allow a refund check to generate.
    3. Prevents a merger of modules if one or both modules has a TC 914 or TC 916 present.
    4. Prevents computerized Form 5546, Examination Return Charge Out, from issuing and prevents establishment of the AIMS database, unless the push/special handling code i49 is present.
    5. Prevents the issuance of Taxpayer Delinquency Investigations (TDI) or the operation of delinquency check procedures on the Business Master File (BMF) and controls outputs from the Information Returns Program (IRP) and the Individual Master File (IMF) delinquency check.
    6. Ends any further collection activity by generating a TDI recall for all tax modules in TDI notice status.
    7. Ends any further collection action by preventing further TDA notices from generating. If a tax module is in TDA status, the TDA will be placed in an inactive status.
  3. TC 910/914/916/918, when posted, produces a complete Martinsburg Computing Center (MCC) transcript of tax modules titled INTEL-910, INTEL-914, INTEL-916, and INTEL-918.
  4. TC 914/916, when posted, produces an Information Returns Transcript (IRMF) for a certain tax year titled, "Monthly-New CID Case." These transcripts will:
    1. Generate monthly on accounts with new controls until all open Individual Retirement Account File (IRAF) years are obtained.
    2. Provide payee, entity, payer entity, and income information. They will be sorted by service center, district office, agent ID number, and then forwarded to the district by CIB.
  5. A TC 914 or TC 916 control on IMF will automatically place a control for the same taxpayer on the IRAF. Controls may also be placed directly on IRAF accounts. The IRAF is a separate master file for savings plan information for retirement contributions made by employees and self-employed persons.
  6. TC 916 must be used for QRP cases, including the targets of the investigation. There should be no TC 914's on these types of cases.
  7. Request(s) to input TC 916 and TC 918, require the approval of the Chief, CIB, on Form 4135. All others require the approval of the Chief, CI, on Form 4135.

[9.12] 1.8.1.5  (03-11-1998)
TC 915

  1. TC 915:
    1. Releases a credit for refund or offset in the cycle of posting if a TC 916/918 is on the module/entity.
      NOTE:
      If a TC 916/918 is present on another module with a balance due, the refund will not offset to that module. The credit will refund to the taxpayer.
    2. Is effective for the one cycle in which it posts.

[9.12] 1.8.1.6  (03-11-1998)
TC 917

  1. TC 917 reverses the TC 916 on the tax module.

[9.12] 1.8.1.7  (10-14-1999)
TC 918

  1. TC 918:
    1. Is used to control Questionable Refund investigations, fugitives or fictitious entities on IMF and BMF.
    2. Posts to the entity and establishes a CI control on the entire account.
    3. Input must be approved by Chief, CIB, on BMF accounts.
    4. Provides all of the controls described above for the TC 914/916, and removes the mail filing requirements. This eliminates a tax package from being sent to the taxpayer until the TC 918 is reversed.
    5. Prevents refunds, credit elects, and offsets to BMF or IRAF and suppresses activity on all modules.
    6. Causes an entity transcript entitled INTEL-918 each time one of the following entity changes occur:
    1. Primary SSN change.
    2. Address change.
    3. Location or zip code change.
    4. Addition, change, or deletion of spouse's SSN.
    5. Name change.

[9.12] 1.8.1.8  (03-11-1998)
TC 919

  1. TC 919:
    1. Posts to the entity module and reverses the TC 918.
    2. Reestablishes the mail filing requirements.

[9.12] 1.8.2  (10-14-1999)
Issuance of Form 4135 and Form 4331

  1. The Chief, CI, or designee will notify the service center Director through the Chief, CIB, of any active criminal investigation in which controls should be established by use of Form 4135, Criminal Investigation Control Notice. The desired level of control should be indicated in the squares provided at the top of the form. Form 4135 should also be used to remove controls when they are no longer needed.
  2. When control of an account is requested, instruct the service center to suppress the assertion of the delinquency penalty if there is a possibility that a fraud penalty will be applied. If at a later date, CI completes or withdraws from the investigation, advise both the service center and Examination as to what action has been taken or should be taken with regard to the delinquency penalty. Use Form 4135 to indicate whether the file has been forwarded to Examination to assess the delinquency penalty or not to assess the delinquency penalty. Retain a copy of Form 4135 in the file sent to the Chief, Examination Division.
  3. Social Security Number (SSN) on IMF accounts and Employer Identification Numbers (EIN) on BMF accounts are essential to establish Master File account control. When both numbers are known or obtainable, control over both BMF and IMF accounts for the same taxpayer may be initiated. Control cannot be established if the numbers are not furnished and the service center cannot locate the taxpayer's SSN or EIN.
  4. When initiating or reversing TC 910/914 controls, CI will send the original signed Form 4135 and one copy to CIB. CIB will:
    1. Input the controls.
    2. Notate the cycle of posting on Form 4135.
    3. Return Form 4135 copy to the district with two copies of the automatically generated MCC transcript for TC 914/910.
    4. Return Form 4135 copy to the district for TC 912/911.
    5. Keep a copy of the Form 4135 and MCC transcript, if applicable, in the CIB case file.
  5. Criminal Investigation Branch at the service center will forward copies of all documents rendered unpostable, along with two copies of Form 4331, to the Chief, CI, initiating control unless special instructions are indicated on Form 4135 or subsequently submitted on Form 4331, Document Transmittal-Criminal Investigation Control. The Chief, CI, will return one copy of the Form 4331 indicating the course of action to be taken by the service center. If the original document is needed, district CI will check the applicable box on Form 4331 and return it to the sending service center. The original document will be transmitted by the service center using two copies of Form 4331. One copy of the form will be returned acknowledging receipt.
  6. It is essential to service center operations that CI personnel advise the service center within 20 workdays whether or not to:
    1. Post the forwarded document to the Master File;
    2. Assess any return(s) involved;
    3. Send a Form Letter 316(C).
    NOTE:
    Service center procedures require a follow-up contact with the district CI after 20 workdays have elapsed and a reply has not been received. This should be done by sending a "Second Notice" copy of Form 4331 to the district.
  7. Each district will receive from the Service Center a quarterly inventory listing, for each district, of all modules which CI has placed under TC 914, TC 916, TC 918 or TC 910 control. The listing is in alphabetical sequence and in agent ID sequence and used by CI to verify the accuracy of the modules under control. After the review of the this report, the district should complete a Form 4135 for each control that requires correction, deletion, or addition and forward it to the appropriate service center.
  8. During the period that a module is controlled through the use of TC 914 or TC 916, Collection and Examination computer programs designed to automatically initiate Examination or Collection action are suppressed. Arrangements should be made, usually with the cooperating revenue agent or revenue officer, to jointly review the transcripts and inventory listings received by CI in order to identify any non-filing or required returns on the part of the taxpayer. It is particularly important that this be done in investigations where control is being maintained after completion of the active joint investigation, such as prosecution recommendations being reviewed by District Counsel, Department of Justice, or awaiting trial in the U.S. Attorney's office. If it is found that the taxpayer has not met the filing requirements as established on the Master File, the Chief, CI, or designee will determine whether any action should be taken to obtain delinquent returns from the taxpayer before the criminal features of the investigation have been resolved. The Chief, CI, may wish to request the views of District Counsel to aid in making this determination. Promptly inform Collection of the taxpayer's failure to file all required returns and recommend the action, if any, to be taken pending disposition of the criminal features of the investigation.
  9. Under certain conditions, such as jeopardy or termination assessment procedures, Examination may request that CI initiate TC 914 or TC 916 control procedures regarding a particular taxpayer. Such requests may be made by preparing the top portion of Form 4135, original and one copy, for the signature of the Chief, CI, or designee and subsequent transmittal to the Chief, CIB. Termination of this control through the Chief, CI, or designee will be the responsibility of the requesting Chief.

[9.12] 1.8.3  (10-14-1999)
Special Instructions

  1. Special instructions may be given on Form 4135 or 4331 by CI concerning the handling of routine documents received from taxpayers or generated as a result of processing. Special instructions may also be provided to control only returns relating to certain tax years or tax periods, to permit Form 1040 Estimated Tax Returns and payments to be posted, to send only photocopies rather than original returns received for periods subsequent to the period under investigation, or to post current year Federal Tax Deposit (FTD) payments.
  2. The Chief, CI, or designee may request on Form 4135 or 4331 that a return not be posted to the Master File and that manual accounts and controls be initiated. This pertains to cases where CI requests that no assessment be made and that any funds received be placed in special deposit. Precautions should be taken to prevent possible loss of revenue through expiration of a civil statute on such manually controlled returns.
  3. When the service center receives communications from a taxpayer or taxpayer representative, the district CI office initiating control will be requested to furnish guidelines to the service center on preparing a reply to the communication.

[9.12] 1.8.4  (10-14-1999)
Amended Returns, Delinquent Returns, and Advance Payments

  1. The following applies to amended returns, delinquent returns, and advance payments received at the service center and at the CI district office.

[9.12] 1.8.4.1  (03-11-1998)
Service Center

  1. In the event amended returns, delinquent returns, or payments without accompanying returns are received in the service center relative to an account subject to TC 914 or TC 916 control, the Chief, CI, or designee will be notified on Form 4331, Document Transmittal Criminal Investigation Control. The Chief, CI, will promptly return a copy of the Form 4331 to the service center advising how the return and payment is to be processed by the service center.

[9.12] 1.8.4.2  (03-11-1998)
Criminal Investigation

  1. When amended or delinquent returns relative to a case under investigation are submitted directly to district CI, they must be annotated with the IRS "received" date stamp as soon as possible after receipt. The stamp should be placed as close to the center of the return as possible without covering any taxpayer entry. If "received" date stamps are not available, the agent who receives the return should, instead, handwrite the following on the face of the tax return in the upper margin on the left side: "Received" , the date received, the agent's signature, and title. The original of each return and accompanying payment, if any, will be forwarded to the service center by the morning after receipt via Form 4331 containing instructions as to how the return and payment is to be processed. If the original return is needed by the district after service center processing, a request for the return should be made on the accompanying Form 4331.

[9.12] 1.8.4.3  (10-14-1999)
Processing

  1. CIB will process amended returns, delinquent returns, and advance payments submitted to CIB from the CI district office for accounts under CI control based on instructions on the Form 4331.
  2. CIB will input the appropriate computer condition codes required to suppress the assessment of all applicable civil penalties as requested on Forms 4135 or 4331. It is essential, therefore, that the instructions given by CI are precise and complete. Such instructions will depend upon the type of return or payment involved, as follows:
    1. When a payment is received without an accompanying return, CI will request that Form Letter 316(C) be sent to the taxpayer by certified mail, return receipt requested. The signed receipt will be forwarded to district CI for association with the administrative file.
    2. When an amended return is received for a module under TC 914 or TC 916 control, it should be assessed unless such action would impair the criminal investigation. The Chief, CIB, or designee will send a request to the Chief, CI, on Form 4331, Document Transmittal Criminal Investigation Control, asking him/her to send a letter to the taxpayer advising that this is not a final determination of tax liability and does not constitute settlement of the account.
    3. Where an amended return is received for a module under TC 914 or TC 916 control, and if civil assessment would impair the criminal investigation, the return is not to be assessed. The Chief, CIB, or designee will send a request to the Chief, CI, on Form 4331, asking him/her to send a letter to the taxpayer advising that, although the Service has received the return, it is not being assessed at this time. The remittance will be held until the return is assessed, or if the taxpayer so instructs, the money will be returned. The Chief will also notify the Chief, Collection Division, who will consider the civil aspects of this action.
    4. Treasury Decision 7498, dated July 1, 1977, provides that where a taxpayer shows on an amended return additional taxes and the taxpayer does not pay that amount, the unpaid taxes will not be treated as a deficiency. The Service may assess the amount of unpaid taxes shown on an amended return without sending the taxpayer a notice of deficiency.
    5. When a delinquent return is filed, the Service's computerized Master File system computes the tax liability, interest, and any applicable civil penalties and automatically generates a first notice of such assessments to the taxpayer for any balance due. A remittance is normally applied to the tax liability, penalty, and interest, in that order. When returns are posted to the Master File, the generation of the first notice cannot be suppressed or stopped even on accounts under TC 914, TC 916, or TC 918 control. However, the assessment of civil penalties on the first notice can be suppressed by CI using specific instructions on Form 4135 or on Form 4331. The tax or interest due on delinquent returns will not be suppressed on the Master File. In those special instances when CI elects to manually assess a delinquent return, the special instructions contained in 1.6.3. will apply.
    6. The civil penalties computer-generated on the Service's Master File system are Failure to Pay Penalty, Estimated Penalty, and the Delinquency Penalty. CI instructions on Form 4135 or Form 4331 to suppress civil penalties should read: "Suppress All Applicable Civil Penalties."
    7. The Chief, CIB, will insure that appropriate computer condition codes required to suppress the assessment of all applicable civil penalties requested on Form 4135 or on Form 4331 are entered onto the delinquent return before further service center pipeline processing occurs.
    8. When a delinquent return which reflects only taxes or taxes plus interest due is received, CI will request that the taxes and interest be assessed and the accompanying payment be applied against the assessment.
    9. In the event that the delinquent return includes a delinquency penalty in addition to the taxes and interest, CI will request that taxes, interest, and the delinquency penalty be assessed if the special agent agrees that the delinquency penalty should be asserted in the particular case. If the special agent has not determined which penalty will apply, or if he or she feels the fraud penalty will apply, CI will request that only the taxes and interest shown on the return be assessed and the accompanying payment be applied against this assessment. CI will further request that Form Letter 316(C) be sent to the taxpayer relative to the amount by which his or her payment exceeds the assessed taxes and interest.

[9.12] 1.8.5  (03-11-1998)
Control of District Collection Action

  1. TC 914 or TC 916 controls will terminate all collection action and delinquency investigations in process and prevent the computerized initiation of such activity relative to the module under control. However, controls will also be initiated with the Collection activity for the following reasons:
    1. To provide immediate control of activities by the district Collection activity during the time required by the service center to receive, initiate, and forward to the district notification of CI control.
    2. To provide immediate contact between the special agent and any revenue officers who may have had contact with the taxpayer or taxpayer representative.
    3. To alert the Collection activity that the subject is under investigation by CI. This is essential to prevent Collection contact with the taxpayer resulting from such manually-initiated activities as compliance surveys; receipt by Collection of returns, payments, or other communications from the taxpayer; and receipt of manually prepared TDI assignments from the service center.
    4. To provide control over non-Master File taxes such as gift, estate, wagering, and highway use taxes.
  2. The Chief, CI, or designee will notify the Collection function of all investigations in which TC 914 controls are being initiated. This may be accomplished by preparing extra copies of Form 4135 and forwarding them to the Collection Special Procedures function. CI will periodically reconcile its inventory of controlled modules with the records of the Collection activity. When control is being terminated, a copy of Form 4135 requesting TC 912 to terminate controls at the service center will be forwarded to the Collection activity, indicating that district Collection action may be resumed.
  3. In some instances, it may be desirable to control district collection action in investigations not under TC 914 or TC 916 control. For example, in some failure to file cases, a taxpayer's SSN or EIN may not be known until the later stages of the investigation. While one of these numbers must be known to establish TC 914 or TC 916, control of district collection action may be initiated based on the taxpayer's name and address.

[9.12] 1.8.6  (03-11-1998)
Enforced Collection Activity in Criminal Investigation Controlled Modules

  1. If it is jointly concluded that enforced collection action should be taken against a taxpayer who has a TC 914 or TC 916 controlled module, the Chief, CI, or designee will prepare Form 4135, Criminal Investigation Control Notice, in quadruplicate, indicating:
    1. Service center involved.
    2. Address of initiating district CI office.
    3. Taxpayer identification information.
    4. Special instructions on the reverse of the Form 4135 that the Chief, Accounting Branch be requested to furnish the district Collection function an updated manual TDA. (Show tax years involved, type of tax, and other pertinent data.)
    5. Signature of Chief or designee and date of request.
  2. One copy of the completed Form 4135 will be sent to the district Collection function for their files and one copy maintained in the district CI. The original and one copy will be sent to the appropriate service center.

[9.12] 1.9  (03-11-1998)
PROCESSING PAYMENTS RECEIVED IN DISTRICT OFFICES (including Posts of Duty)

  1. This section establishes standardized and uniform procedures for processing payments received in district office, CI, to insure the timely deposit of revenue receipt remittances.

[9.12] 1.9.1  (10-14-1999)
Requirements and Procedures for Employees who Secure Payments

  1. These procedures apply to all CI employees.
  2. All CI employees who receive remittances must transmit them, via Form 3210, Document Transmittal, as soon as possible to ensure receipt within 24 hours in the district remittance processing function.
  3. If remittance is $100,000 or more, measures should be taken to ensure immediate delivery to the remittance processing function to minimize the interest loss to the government. In this instance, the employee should notify his or her manager. The immediate manager will determine what measures should be taken to ensure delivery of the remittance to the remittance processing function by the most expeditious means by the day after receipt. Such measures will include, but are not limited to, the following:
    1. Express Mail: To ensure next day delivery either by use of previously arranged express mail service or hand delivery to the post office for this service.
    2. Private Delivery Service: (1) Within 300 miles; Examples: United Parcel Service, Purolator, etc.; or (2) over 300 miles; Examples: Emory, Airborne, etc.
    3. Hand carry remittance to remittance processor by car or in extreme cases by plane.
  4. Contact with Facilities Management's Administrative Mail Coordinator should be made to determine which of the above is most cost effective.
  5. The cost of transportation of the remittance should be commensurate with the interest to be gained by expeditious deposit.
  6. Call the remittance processing function to alert them on the receipt of a large remittance.

[9.12] 1.9.2  (03-11-1998)
Responsibilities of Managers of Employees Who Secure Payments

  1. Managers are responsible for ensuring timely remittance processing by employees under their supervision.
  2. When Form 5919, Teller's Error Advice, indicating late remittance processing is received, it is the manager's responsibility to initiate corrective or disciplinary action as appropriate.

[9.12] 1.10  (03-11-1998)
INTEGRATED COMPLIANCE

  1. Integrated compliance General Investigations may be initiated by the Commissioner, Deputy Commissioner, Chief Compliance Officer or Assistant Commissioner, CI, in order to reinforce voluntary compliance through coordinated criminal and civil actions, and effective public information activities; then measuring the effectiveness of these efforts.

[9.12] 1.10.1  (10-14-1999)
Responsibilities

  1. The Assistant Commissioner, CI, is responsible for the overall coordination of CI activities and ensuring sufficient nationwide coverage in integrated compliance projects.
  2. The Director of Investigations is responsible for the coordination of General Investigations with other regional officials and for ensuring sufficient geographic coverage within his or her region.
  3. The Chief, CI, is responsible for determining whether there are suitable investigations for General Investigations inclusion within his or her district.

[9.12] 1.10.2  (03-11-1998)
Reports

  1. Reporting requirements will be issued in the documents which authorize integrated compliance activities.

[9.12] 1.11  (10-14-1999)
COORDINATED EXAMINATION PROGRAM

  1. A Coordinated Examination Program (CEP) case warrants application of coordinated case management procedures, especially those susceptible to interdistrict coordination, team audit techniques, and case manager participation on a taxpayer and related entities, if necessary.
  2. The Chief, CI, may designate a special agent as the CI Large Case Coordinator in districts where substantial large case activity warrants the appointment of a coordinator. The Large Case Coordinator will also work closely with the District Fraud Coordinator in the development of fraud detection and other CEP related training provided to Examination Division personnel.

[9.12] 1.11.1  (10-14-1999)
Assistance to the Examination Division in the Development of In-depth Probes

  1. The affected CI district will be furnished a copy of the annual program listing of National Coordinated Examination Program cases to be started in the ensuing fiscal year. This will provide time for CI to compile information which may be useful in examination planning.
  2. During the initial planning phase of each National CEP case, Examination will contact CI to determine what information and assistance is available to identify areas for examination and/or investigation probes. To the extent CI has suggestions, they will participate with Examination in the development of the in-depth probes.
  3. CI personnel will be made available, as requested, to advise and assist Examination in training their personnel in interviewing procedures and techniques. Materials for this general training can be those from Special Agent Basic Training, available through CI National Training Academy or developed locally.

[9.12] 1.12  (03-11-1998)
MANUAL DEVIATIONS

  1. Reserved

Internal Revenue Manual  

Hndbk. 9.12 Chap. 1 Miscellaneous Administrative Procedures

  (03-11-1998)

05/02/2001 14:29:44 EST