Contents

• [9.8] 3.1 Overview

• [9.8] 3.2 Description of the Questionable Refund Detection Team
  • [9.8] 3.2.1 QRDT Responsibilities

• [9.8] 3.3 Methods of Detection
  • [9.8] 3.3.1 Funny Box
  • [9.8] 3.3.2 National Computer Programs
  • [9.8] 3.3.3 ELF Preparer/Transmitter
  • [9.8] 3.3.4 Review of Form 8453, U.S. Individual Income Tax Declaration for Electronic Filing
  • [9.8] 3.3.5 Functional Referrals

• [9.8] 3.4 Referral Process

• [9.8] 3.5 QRP Coordinator Resonsibilities

• [9.8] 3.6 Procedures for Refund Deletions
  • [9.8] 3.6.1 Paper Check
  • [9.8] 3.6.2 Direct Deposit
  • [9.8] 3.6.3 Control Listings

• [9.8] 3.7 Scheme Referrals and Numbering
  • [9.8] 3.7.1 Schemes Identified Outside Service Center Jurisdiction

• [9.8] 3.8 QRP Record Disposition
  • [9.8] 3.8.1 Accepted Referrals
  • [9.8] 3.8.2 Rejected Referrals

• [9.8] 3.9 Reporting Procedures

[9.8] 3.1  (02-26-1999)
Overview

1. This chapter contains administrative procedures for the Criminal Investigation Questionable Refund Program. Topics include:
   • Questionable Refund Detection Team
   • Methods of Detection
   • Referral Process
   • QRP Coordinator Responsibilities
   • QRDT Controls
   • Procedures for Refund Deletions
   • Scheme Referrals and Numbering
   • QRP Record Disposition
   • Reporting Procedures

[9.8] 3.2  (02-26-1999)
Description of the Questionable Refund Detection Team

1. A Questionable Refund Detection Team (QRDT), under the supervision of the Chief, CIB, will operate at each service center.
2. The primary function of the QRDT is to identify and detect questionable refund returns and other non-compliance issues with particular emphasis on preventing the issuance of refund checks and direct deposits to multiple and fraudulent filers.
3. The program's major operations occur in the service centers where teams of personnel conduct a preliminary pre-refund review of questionable returns identified by manual and computerized techniques.
4. Fraudulent returns are referred to the appropriate CI district office or retained in CIB.
5. Returns that have civil issues and do not meet criminal prosecution criteria are referred to other service center functions for civil actions.

[9.8] 3.2.1  (02-26-1999)
QRDT Responsibilities

1. QRDT is responsible for the appropriate referral of additional non-compliance issues including: abusive tax shelter investors; refund discounters; individuals claiming improper deductions or credits; unscrupulous return preparers; and various unprocessable returns.
2. QRDT will initiate pre-refund detection methods prior to the issuance of refunds with minimum impact upon processing timeliness.

[9.8] 3.3  (02-26-1999)
Methods of Detection

1. The following systems provide assistance to QRDT in the methods of detection of Questionable Refund Returns:
   1. Funny Box Referral System
   2. National Computer Programs
   3. Electronic Filing (ELF) Preparer/Transmitter
   4. Form 8453 Review
   5. Other Methods

[9.8] 3.3.1  (02-26-1999)
Funny Box

1. The manual QRP Funny Box Referral System enables service center personnel to identify questionable returns by placing them in a review box for QRDT.
2. These referrals will be evaluated by QRDT within 5 working days, and stamped with a CIB identification stamp assigned to each tax examining assistant.
3. Unprocessed returns identified as fraudulent can be coded with a Computer Condition Code 3 to stop the refunds. Deliver the return to the Numbering Function for pipeline processing and assignment of a Document Locator Number (DLN).

[9.8] 3.3.2  (02-26-1999)
National Computer Programs

1. The National Computer Analysis Program will be used to identify those returns that have been coded in the Document Perfection Branch that meet questionable refund criteria.
2. Listings will be furnished to QRDT on a daily, weekly, and monthly basis.
3. For examples of the computer output to be furnished on Paper and ELF Returns, see:
   1. LEM IX (Located in IRM Handbook 9.14 Chapter 1);
   2. The Computer Program Book (CPB) Questionable Refund Project Number 409;
   3. Computer Operations Handbook (COH); and
   4. Functional Specification Package (FSP) 1.36.00.00.
4. Also refer to the Electronic Fraud Detection System (EFDS) and other automated systems used by the QRP.

[9.8] 3.3.3  (02-26-1999)
ELF Preparer/Transmitter

1. Another source of schemes in connection with electronically filed returns is the Preparer/Transmitter community. Contacts in each district or service center to report suspicious return activities have been provided.

[9.8] 3.3.4  (02-26-1999)
Review of Form 8453, U.S. Individual Income Tax Declaration for Electronic Filing

1. The QRDT will:
   1. Request and receive returns, Forms 8453, listings and other information related to questionable refund monitoring.
   2. Ensure that original, unprocessed Forms 8453 are timely processed per the instructions contained in this handbook.
   3. Analyze returns, Forms 8453, listings, EFDS output, for indications of fraud.

[9.8] 3.3.5  (02-26-1999)
Functional Referrals

1. Review referrals from various functions in the service center.

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[9.8] 3.4  (02-26-1999)
Referral Process

1. Refer returns to CI, Adjustments, Examination, Collection, Customer Service Branches and other functions for appropriate actions.
2. Maintain a system to control tax returns and tax information.
3. Implement refund cancellation procedures that provide audit trails on paper checks and direct deposits. (See refund deletion procedures.)
4. Inform processing personnel of new indications of fraud.
5. TECS INTEL: Input all characteristics describing scheme via TECS INTEL. Input only the first return unless the Modus Operandi should change.
6. The 4135 requirements are as follows: Input TC 916/918 using service center input codes on all fraudulent returns, with the approval of Management Only. The approval will be a signed Form 4135, or facsimile, which will accompany the individual case. (This cannot be delegated lower than a first-line manager.)
7. Alert the QRP Coordinator at the center with scheme details. He or she will ensure that the totality of fraud is detected. (See QRP Coordinator Responsibilities.)
8. Contact QRP Coordinator in the district office for guidance when a clear determination cannot be made, whether the fraud is a QRP case or a RPP case.

[9.8] 3.5  (02-26-1999)
QRP Coordinator Resonsibilities

1. The QRP Coordinator serves as the primary contact point on technical questions, problems, and issues pertaining to QRP (Paper and ELF). Responsibilities include:
   1. Understanding how internal and external QRP processes impact CIB, other service center functions, and CI district, regional, and national offices.
   2. Being familiar with QRP FSPs, CPB's, and COHs.
   3. Developing an action plan to ensure all phases of QRP are ready for timely start up each processing year (See LEM IX in IRM Handbook 9.14 Chapter 1 Section 1.3).
   4. Analyzing QRP scores, tolerances, and volumes to provide recommended changes to CIB Chief.
2. Responsibility also includes trouble shooting problems regarding:
   1. QRP computer program problems in order to determine level of problem (local or national). Report national problems to the Office of Refund Fraud (ORF).
   2. Systemic problems.
   3. Error Resolution System (ERS) problems pertaining to QRP.
   4. Code and Edit.
   5. Printing problems pertaining to QRP runs.
   6. Electronic Fraud Detection System (EFDS) loading of data.
   7. IDRS.
   8. Recommend necessary research tools, e.g. Crisscross directories, IDRS Handbook, Lexus/Nexus, etc.
   9. Recommends changes to ELF.
   10. Provide QRP fraud awareness to other service center functions.
   11. Ensure procedures are in place to shut off Electronic Filing Identification Numbers (EFINs.)
   12. Participate in the numbering of all QRP schemes prior to input to final reports.
   13. Participate in review of scheme packages prior to referral to the district offices.
   14. Provide QRP scheme detection advice to tax examiners of pertinent details of all ongoing QRP schemes.
3. The QRP Coordinator also serve as primary district office contact regarding:
   1. Newly detected QRP schemes meeting referral criteria.
   2. Scheme referrals.
   3. Special EFDS queries.
   4. Determining the full scope of returns for QRP investigations.
   5. Tracking progress of QRP schemes in PI status.
   6. Subject Investigations.
4. The QRP is also responsible for the following:
   1. The final review of all QRP reports before sending to Headquarters. Keeping the Chief apprised of any problems.
   2. Coordinating multi-center schemes with the other QRDTs and the National Office.
   3. Being primary contact for transmitters, tax preparers, and financial institutions concerning QRP/ELF/PAPER issues.
   4. Providing statistical/technical QRP and EFDS information to management to assist in determining staffing, equipment, etc.
   5. Participating in meetings, task forces, etc., to present technical information, review problems, and analyze changes that may affect QRP.
   6. Overseeing QRP training,
   7. Providing QRP briefings as requested.
   8. Participating in CI staff meetings.
   9. Alerting the Chief, CIB, all service center QRDTs, and the Office of Refund Fraud regarding significant schemes.
   10. Recommending additional refund selection criteria to Headquarters based on new refund scheme profiles.
   11. Serving as a contact point between the districts and Headquarters (ORF) regarding Master File Routine requests.

[9.8] 3.6  (02-26-1999)
Procedures for Refund Deletions

1. QRDT is responsible for paper check and direct deposit deletions.

[9.8] 3.6.1  (02-26-1999)
Paper Check

1. The QRDT review of questionable paper returns selected from the computer should be completed each cycle, within established time frames.
2. The cycle cutoff for paper refunds occurs weekly. (Times vary among service centers.)
3. QRDT will determine the refunds which need to be intercepted and will then input command code NOREF on IDRS. This NOREF command code will automatically establish a control base on IDRS for those tax modules as required.

[9.8] 3.6.2  (02-26-1999)
Direct Deposit

1. The QRDT review of ELF returns and paper returns should be completed each cycle, within established time frames necessary to stop refunds.
2. To stop a Direct Deposit refund or a paper check, Command Codes NOREF and CRMNL can be used.
3. Both command codes can be used to stop Direct Deposit refunds until the Friday cutoff time (EODO).
4. The major difference between CRMNL and NOREF is that when a NOREF is input, an IDRS control base is automatically opened for paper refund checks. Also, when using NOREF you must manually input a TC 916/918 on the module, if needed.
5. If you stop a refund with the Command Code CRMNL, a TC 916 is automatically posted to the Master File account.
6. The Command Code CRMNL should only be used when you know the return is fraudulent.

[9.8] 3.6.3  (02-26-1999)
Control Listings

1. Maintain a control listing of all refund cancellations which detail each module's name, Social Security Number (SSN), Document Locater Number (DLN), and evaluation status.
2. To release a refund where there is no evidence of fraud and the TC 841 has posted, input TC 290 with a zero amount.
3. Update the control listing of the status of the refund.
4. Follow procedures on scheme referrals and refer to the appropriate district office.
5. The QRP scheme should be input in the Agent Identification Field at the time of the original control input.
6. This can be updated later if a scheme is merged or deleted.

[9.8] 3.7  (02-26-1999)
Scheme Referrals and Numbering

1. The questionable refund scheme referral to CID will be entered on the Criminal Investigation Management Information System (CIMIS) on the day of mail-out as a Primary Investigation.
2. Form 4930 will be prepared at the service center. The original 4930 will accompany the referral to the district. A copy will be kept in the scheme file at the service center.
3. Each district will have a QRP pool to assign the QRP referral. See National Office guidelines for required fields.
4. Most fraudulent returns must be posted to the Masterfile. Contact Office of Refund Fraud, QRP personnel in situations where it does not appear prudent to post false returns to Masterfile.
5. For schemes identified within the service center, the QRDT will:
   1. Intercept refunds involved in the scheme. (Paper & ELF.)
   2. Input TC 916/918, depending on the type of false return. If you cannot make a determination, see your manager.
   3. Contact the district office QRP Coordinator and give all specifics of the scheme. Fax a copy, if requested.
   4. Complete all research required.
   5. Input the characteristics of the first false return into TECS INTEL. If the characteristics change, input additional records for each change in scheme characteristics.
   6. Forward the scheme package to the district office QRP Coordinator for evaluation, through the District Office Chief, CI.

   NOTE:

   For more specific instructions, refer to current desk procedures.

[9.8] 3.7.1  (02-26-1999)
Schemes Identified Outside Service Center Jurisdiction

1. If a refund scheme involves addresses in more than one district or region and the location of the perpetrator(s) is unknown, contact Headquarters for a determination of which District CI will have authority to control investigation activities.
2. If a false return is filed at a service center which does not service that address on the return, QRDT will:
   1. Intercept the false refund.
   2. Assign a QRP scheme number.
   3. Contact the controlling service center and fax a copy of the false return and all other information available.
   4. Request a cross-reference scheme number from the controlling service center. The controlling service center will input CI controls on each return identified. Recharge the false returns and Forms 8453, if applicable, to the controlling service center.
   5. Complete all research based on current desk procedures.
   6. Forward the scheme package to the controlling service center QRP Coordinator. Forward one copy of the first return to Headquarters and input characteristics of the scheme into TECS-INTEL and QRPT in FY98.

[9.8] 3.8  (02-26-1999)
QRP Record Disposition

1. When a QRP referral is sent to the CI district office, the district will accept the referral or reject it with a closing memo.
2. The memo must provide directions on controls, credits, etc.

[9.8] 3.8.1  (02-26-1999)
Accepted Referrals

1. QRDT will document the scheme chronological worksheet and Headquarters QRP status report with the CI case number, name, and date assigned.
2. QRDT will assist the case agent to further develop the scheme upon request.
3. Ensure that all UNPROCESSED, original Forms 8453 secured by the CI district office are timely processed as follows:
   1. These instructions are to be used on ELF returns that were accepted and posted to the Masterfile.
   2. The CI district office will photocopy each Form 8453 and forward a copy to the QRDT at the controlling center.
   3. If the controlling center is not an ELF site, ensure that the copy of the Form 8453 is sent to and processed by the filing center.
4. QRDT will walk copies of the 8453 through pipeline processing.
5. After completion of processing, Form 8453 will be charged out to the special agent. The charge outs will be sent to files.
6. The photocopies will then have a Document Locator Number (DLN). The photocopies will be sent to the special agent working the case. The agent will associate the photocopy to the front of the 8453 with the DLN to the original Form 8453. Any Forms 8453 that are not part of the CI case will be sent to files.
7. After the CI investigation has been completed, the district office QRP Coordinator will provide the service center QRDT with a closing memorandum requesting appropriate disposition of original false return(s) involved in the case. (See IRM Handbook 9.14, LEM IX, Chapter 1 Section 1.3 and 1.4)

[9.8] 3.8.2  (02-26-1999)
Rejected Referrals

1. Returns determined to be valid should be handled as follows:
   1. Release refund immediately in order to avoid TPI and PRP cases.
   2. Reverse existing TC916/918 controls.
   3. Close IDRS control data base.
   4. Update the QRP reporting data base.
   5. Send original returns and Forms 8453 to Files.
2. False returns determined to have no criminal potential should be handled as follows:
   1. Maintain TC916/918 controls on applicable modules/entities. The time frames to maintain controls will be determined on a case by case basis.
   2. Update QRP case records and reports.
   3. Use the standardized Headquarters Office procedures in adjusting QRP Master File accounts.

[9.8] 3.9  (02-26-1999)
Reporting Procedures

1. Schemes that are significant in size (volume of returns and/or refund amounts) or have unique characteristics, should be reported to the Chief, CIB. The Chief, CIB will notify ORF.
2. A cumulative summary report listing all refund schemes will be prepared monthly from January through December. The report will be mailed by the tenth working day of the following month to the Office of Refund Fraud in Washington, DC.
3. A QRP cumulative summary report listing all multi-center schemes will be sent on a monthly basis. The report will be sent by the tenth day of the following month from January through December to the Office of Refund Fraud in Washington, DC.
4. A QRDT Cumulative Volume Analysis report will be prepared monthly from January through December and sent to the Office of Refund Fraud in Washington, DC.
5. The Office of Refund Fraud will analyze the characteristics of questionable returns nationwide, and compare the refund scheme information with information in the Taxpayer Usage Study. To assist in this analysis, QRDT will send a copy of the first false return detected in each scheme with the monthly reports.

   NOTE:

   All of the above reports will be sent with a cover memorandum from the Chief, CIB.

   NOTE:

   Refer to the Criminal Investigation Branch Desk Procedures for detailed procedures and examples of the Questionable Refund Program.