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Part 25. Special Topics

Chapter 6. Statute Of Limitations

Section 14. Barred Assessments/ Barred Statute Cases

25.6.14  Barred Assessments/ Barred Statute Cases

25.6.14.1  (10-01-2001)
Barred Assessments Overview

  1. This section provides guidance in:

    • Identifying barred statute cases

    • Preparing barred statute reports

    • Controlling and monitoring barred statute cases

25.6.14.2  (04-03-2006)
What are Barred Assessments

  1. When a legal tax assessment is not made timely within the prescribed period for assessment (Assessment Statute Expiration Date) (ASED), it is considered a "Barred Assessment." Barred Assessments lead to a loss of revenue to the IRS, even though any credits on the "barred" module may be placed in the Excess Collection Fund.

  2. A Barred Statute Report must be prepared if the legal assessment cannot be made before the ASED expires on a tax increase received prior to the ASED passing.

25.6.14.3  (04-03-2006)
Barred Assessment Reports

  1. To process barred statute reports, refer to the following:

    • Form 9355, Barred Statute Report (Used by all functions except W & I Campus Examination )

    • Form 3999/ 3999–T, Statute Expiration Report is used by Campus W & I Examination Functions area (For SB/SE, and LMSB personnel see IRM 25.6.14.8.1 thru 25.6.14.8.3 and IRM 25.6.14.8.4 thru 25.6.14.8.7)

    • Integrated Data Retrieval System (IDRS)

    • Master File (MF)

25.6.14.4  (04-03-2006)
Barred Assessment Procedures for Wage and Investment Campuses

  1. The following subsections provide procedures for preparing and monitoring barred statute cases.

25.6.14.4.1  (04-03-2006)
Barred Statute Report (Form 9355/3999)

  1. The Barred Statute Report, Form 9355 or 3999, will be prepared and assembled by the organizational activity responsible for the loss of the assessment or the function /organization responsible for the lack of appropriate action, that allowed the tax assessment period to expire without a valid tax assessment being made.

  2. The area responsible for the barred assessment will prepare the Form 9355 or 3999, as appropriate, for their function, and forward to Accounts Management (AM) Statute Function.

  3. If a barred assessment is discovered by a W & I campus employee, but it is determined that the responsible employee is assigned to another Business Operating Division (BOD), the Statute function will prepare a memorandum and forward it to the appropriate BOD Headquarter Office for routing to the responsible area. The responsible BOD will prepare the Statute Report. The AM Statute Function will:

    1. Send a memorandum with the case file to appropriate BOD (LMSB, SBSE, TEGE) or appropriate Campus Director within 30 calendar days from date of discovery, including the date of discovery and amount of loss in the memorandum

    2. Close the case on the Statute Control System Log.

    3. Close the IDRS control base to responsible organization assignment number.

  4. The Barred Statute Report serves varied and useful purposes as it:

    1. Is used for monitoring purposes.

    2. Identifies the total number of cases with barred assessments for the year.

    3. Identifies total tax, penalty and interest lost on barred assessments.

    4. Provides documentation as to disposition of credits and unassessed tax, penalty and/or interest for further research and application.

  5. When a barred assessment is identified, and it can be determined that a "STAT, AM–X, or DIAG" transcript did not generate due to a systemic problem, then identify the cause for the barred assessment on Form 9355, item 11 as a "Procedural Deficiency," (Item 10, responsible area, should reflect "N/A" ).

25.6.14.4.2  (04-03-2006)
Managerial Responsibilities For Barred Statute Cases

  1. All W & I Campus Directors must ensure that employees are trained to properly identify potentially barred assessments and actions necessary to protect the statute. Failure to protect an assessment statute can result in disciplinary action against the responsible employee.

  2. See Exhibit 25.6.2–2 (cont.1) - (cont. 3) to help identify statute imminent and/or expired barred statute cases.

25.6.14.4.3  (04-03-2006)
Routing of Barred Cases within AM Campuses

  1. The functional area that identifies a "barred or potential barred assessment" must expeditiously route the return or case to the local Campus AM Statute function for research and final determination.

  2. When it is determined a tax period for assessment has expired, the Statute function will control the case and update IDRS using category "BARD" .

  3. Assign the case a control number.

  4. The Statute function will stamp "No Statute Issue" on any case determined not to be barred and return it to the initiator or process it according to existing instructions.

25.6.14.4.4  (10-01-2007)
Identifying Barred Statute Cases

  1. The following are examples of cases that require a Barred Statute Report:

    1. An original return with amount due of (See LEM 25.6.14.4.4) (or more) of tax, penalty and interest (or combination) and the ASED has passed

    2. An original return posts to the wrong account. A second return (the correct return for this account) posted to MF account as a duplicate. After the ASED, the incorrect return was not reprocessed to the correct tax module timely after the account was backed out.

    3. Original Return posted as an amended return (no transaction code (TC) 150 on the module) and it was not discovered until after the ASED had passed.

    4. Original Return filed timely but failed to pass the validity checks on MF for more than 3 years.

    5. TC 610 posted without TC 150 and the return is located (unprocessed) more than 3 years after the TC 610 received date.

    6. Taxpayer no longer qualifies for Sub-S status and tax not assessed prior to ASED passing.

  2. The following are examples of cases that requires a barred statute report when there are additional assessments of (See LEM 25.6.14.4.4)or more of tax, penalty and interest (or combination) and the ASED has passed:

    1. An amended return posts to MF reporting an increase to the tax liability, but the increase was never assessed.

    2. Additional assessments identified by unapplied/unassessed Advance Payments on proposed Examination or Underreporter deficiencies.

    3. Increases to tax, penalty or interest liability on paper Form 8485, Assessment Adjustment Case Record, (which never posted to MF) on (Non Master File (NMF).

    4. Barred assessments resulting from Unpostable Code (UPC) 150/350/750 or any other UPC including barred Exam and Appeals assessments.

    5. Amended returns which have barred additional assessments with offsetting or excess additional credits (e.g., amended return with (See LEM 25.6.14.4.4) tax increase and (See LEM 25.6.14.4.4) increase in credits).

    6. Correspondence indicating there should be an adjustment to increase tax on a taxpayer's account but was never assessed.

    7. Form 3870 incorrectly requesting an abatement and the tax decrease processed but the error was not discovered until after the ASED.

    8. Amended income tax returns discovered after the 60-day administrative processing extension reflecting an increase to tax.

    9. Amended return showed both an increase to tax and an overpayment and it was treated as a claim. The claim for refund was allowed but the tax was not assessed.

    10. 100% penalty assessment was requested but not completed within the prescribed statute period against all partners.

  3. An erroneous abatement of (See LEM 25.6.14.4.4) which cannot be legally reversed by Examination Operation because the ASED has passed requires the preparation of Form 9355 Barred Statute Report.

  4. The following are EXEMPT from having a barred report prepared:

    1. The case was barred when received by the IRS.

    2. There was insufficient time to secure the original return and there is no way to determine a liability that could be assessed.

25.6.14.4.5  (04-03-2006)
Identifying the Responsible Area

  1. The responsible area is identified as the area that first had the case, when the case was within 90 days of the ASED and either took no action to protect the statute or allowed the statute to expire.

    Note:

    This does not relieve the area that may receive a case within the 90 day period of any responsibility for protecting the statute. All areas must have the best possible statute control system to protect the statute. All functional areas must perform search activities at regular intervals to ensure all statute imminent cases are identified.

  2. The area taking the first processing action or routing action will be responsible for completing the Barred Statute Report. See Exhibit 25.6.14-1-14-1 (cont.1).

  3. A processing action is described as an action directly related to the barred assessment. An action which caused the loss of the assessment, or the absence of an appropriate action which could have precluded the period from expiring.

  4. A routing action is used to identify the area who first routed a case to an area other than the Statute function when the expiration period is less than 90 days.

25.6.14.4.6  (10-01-2007)
Routing and Controlling Form 9355

  1. This section provides uniform and consistent procedures for all AM Statute functions for controlling, preparing, and routing documents on barred assessments. The AM Statute function must establish and maintain a "Statute Control System" to track barred assessment cases.

  2. When it is determined that a tax period for assessment has expired, the Statute function will control the case and update IDRS using category "BARD" .

  3. Assign the case a control number.

  4. The Statute Function will:

    1. Prepare original and two copies of Form 9355.

    2. Enter the control number in the upper left block of Form 9355 (below the title "Barred Statute Report." )

    3. Complete items 1 through 9.

    4. Enter in item 10 the area (function) responsible for the barred case.

    5. Prepare in chronological order, (attach to Form 9355) the sequence of events that resulted in the barred case.

    6. Prepare a transmittal and route the case file to the area responsible for the barred assessment.

    7. Include the control number on the accompanying transmittal.

    Note:

    The control number will remain the same regardless of who prepares the report. The Statute function will maintain an open control on IDRS until the signed copy of report is returned from the appropriate Director’s office (local management may decide which Director's signature is required on Barred Statute Reports within W & I Campuses).

  5. Local procedures must be established to ensure that statute controls are updated to expeditiously reflect the location of the case each time it is moved to a different area.

  6. The Statute function will follow-up to ensure that Form 9355 is completed and signed by the appropriate Campus Director within 60 calendar days from the date the case is released by the Statute function.

  7. After the appropriate Campus Director has approved and signed Form 9355, the Statute function will close the IDRS control and the control used to track barred cases.

  8. The Responsible area/function will, upon receipt of Form 9355:

    1. Check the appropriate box in item 11.

    2. Give a description of what caused the barred statute case.

    3. Sign and date items 12 and 13.

    4. Complete item 14.

    5. Complete items 15 through 20.

    6. The appropriate Director will complete items 21 and 22.

25.6.14.4.7  (04-03-2006)
Functional Responsibilities for Processing and Clearance of Form 9355 Reports and Potential Statute Cases

  1. The following outlines AM Statute function responsibilities for processing Form 9355 reports and clearing potential statute cases.

25.6.14.4.7.1  (04-03-2006)
Statute Function Responsibility

  1. The Statute Function will:

    1. Review all cases identified as potential statute cases.

    2. Determine if the statute for the tax period is imminent or barred.

    3. Stamp "No Statute Issue" on cases which are determined not to be barred and return to initiator.

    4. If the Statute is barred, record all discovered barred assessments on the Statute Control System.

    5. Develop a written chronological sequence of events that led to the barred statute case (attach to Form 9355).

    6. Prepare and route the "Barred Statute Transmittal" through management, on cases determined to be barred to the responsible area.

    7. Place a copy of the barred statute case in a locked cabinet (keep for 2 years ) after the case is received and signed by the Director. After the two -year suspense period is up, destroy the copy.

  2. The Statute Control System will be updated and the approved Form 9355 will be distributed as follows:

    • Original to the responsible Campus Director.

    • Copy to retain in Statute.

    • Copy to Examination Field Director, Compliance (if statute case originated in Exam).

25.6.14.4.7.2  (04-03-2006)
Responsibilities of W & I Examination and Centralized Case Processing Operations at Campuses

  1. Examination Operation will:

    1. Follow instructions in IRM 25.6.14.1(3) on cases where the Statute function discovered a barred case and a Form 3999 is being requested.

    2. Prepare a chronology of events that lists actions on barred Exam cases discovered by the Statute function. Attach to Form 3999.

    3. Obtain a control log number from the appropriate AM Statute function and Enter the Control Number on Form 3999.

    4. Forward cases through management channels to the Compliance Campus Director for signature..

    5. Forward completed cases to the AM Statute function at the appropriate campus through the appropriate AM Operations Manager.

25.6.14.4.7.3  (04-03-2006)
Barred Assessment Account Closing Actions

  1. The AM Campus Statute function will close out Form 9355 as follows:

    1. Move any non-refundable credit(s) on the module to the Excess Collection File (XSF).

    2. Prepare and clear a "DUMMY" return with zero tax using the received date of the barred return. Send the return to Submission Processing for normal processing after all credits have been moved to XSF.

    3. Refile the original document with TC 290–00 using blocking series 300–309. Photo copy entire case for the two-year suspense file.

  2. On original delinquent returns with refundable credits, place non-refundable credits in excess collection. Allow refundable credits to refund before closing the case.

25.6.14.4.8  (04-03-2006)
Statute Expiration Reporting Responsibilities and Procedures for SB/SE Area Office and Campus Organizational Components Involved Directly with or Providing Support for Tax Return Examinations

  1. This subsection contains procedures for the submission of Statute Expiration Reports, Forms 3999 or 3999-T, Barred Statute Report, to the appropriate SB/SE Director of Campus Compliance Services, Examination or Specialty Programs by field and campus operations of SB/SE which are involved, either directly or through support activities (including Specialty Program support activities conducted at campuses), with the examination of tax returns. The procedures contained in IRM 25.6.14.4.8, do not apply to activities (including trust fund recovery penalty investigation activities) conducted by SB/SE Collection nor do these procedures apply to return examination activities conducted by LMSB, TEGE or W &I, as these organizational components have separate statute expiration reporting procedures.

25.6.14.4.8.1  (04-01-2007)
Procedures for the Submission of SB/SE Statute Expiration Reports

  1. Statute expiration reports are required on all tax periods/returns (except for those shown in (2) below) under examination and/or controlled on AIMS upon which the normal three-year period for assessment or the assessment period which has been extended by consent expires while the return is in an AIMS status below 80 or is being examined but is not controlled on AIMS. These procedures in this subsection control when a statute expiration report is required to be submitted by SB/SE managers/employees not withstanding any provision contained in IRM 4.2.1, General Examination Information, or other sections of the IRM.

  2. A statute expiration report is not required, although the period for assessment expired while the return was in an AIMS status of less than 80 or is being examined but not controlled on AIMS, for the following returns:

    1. Any return involving a net overassessment if a claim has been or can be filed or a credit or refund allowed after timely waiver and within six months after the extended assessment period. See IRC Section 6511(c)(2).

    2. Any return for which the assessment can be made because of a statutory exception, including the tolling exceptions, to the normal three-year period for assessment or the assessment period which has been extended by consent.

    3. Any return that is a non-TEFRA, nontaxable, flow-thru entity which is associated with an examined, taxable return.

    4. Any investor return where a Form 3999–T was written for the key case return. A copy of the Form 3999-T should be attached to the investor return.

    5. Any return where the date of approval to establish the return on AIMS or date of automatic establishment on AIMS (systemically generated establishment of returns) and the date the examination commences is after the date the assessment statute expired.

  3. The Form 3999 is used to report expired statutes on all cases other than TEFRA key entities. TEFRA key entities require the preparation of a Form 3999-T.

  4. When an SB/SE employee discovers a potentially expired assessment statute, the employee should consult with his or her manager immediately to determine the assessment statute of limitations has in fact expired and on what date it expired (considering all relevant IRC provisions that impact the calculation of the date by which any tax liabilities must be assessed). Advice of Area Counsel and/or Technical Services staff should be sought by the manager if there are any doubts as to whether or not the assessment statute has expired.

  5. The preliminary report is to be prepared and submitted within 3 business days of the date of discovery of the expired statute (including securing Counsel or Technical Services' advice on whether or not the statute has expired). The preliminary Form 3999/3999-T is prepared by the manager of the person who discovers the potentially expired statute. This requirement is not to be construed or in any manner should it be read to imply that the preparer of the preliminary report is the person responsible for the expired statute.

  6. The final report is to be prepared and submitted to the next-level manager no later than 10 business days from discovery of the expired assessment statute. The final report is prepared by the immediate manager of the party responsible for the statute expiration and is to be forwarded through channels to the applicable Director, Campus Compliance Services, Examination or Specialty Programs. If there is no responsible party, because prescribed procedures were followed in controlling and protecting the assessment statute of limitations, then the final statute expiration report is prepared by the manager of the unit to which the return was assigned on AIMS or which was examining the tax period in question when the assessment statute expired, irrespective of whether or not the tax period was controlled on AIMS. See Exhibit 25.6.14–2, for further information on the timetable for submission of statute expiration reports by SB/SE field and campus examination-related activities/organizations, including Specialty Programs and the field and campus organizations which support the examination process.

  7. Copies of all the attachments referenced in the Form 3999 or Form 3999-T or referenced in other attachments to the forms must be included as part of the statute expiration report forwarded to the applicable SB/SE Director, Campus Compliance Services, Examination or Specialty Programs.

  8. The relevant SB/SE executives reporting directly to the Director, Campus Compliance Services or Director, Examination have authority to approve these statute expiration reports for ultimate submission, for information, to the appropriate Director, Campus Compliance Services or Examination. In the case of Specialty Programs, the relevant Program Manager has authority to approve the statute expiration Report for submission to the Director, Speciality Programs.

  9. The relevant executive or Program Manager who approves the statute expiration report is to ensure that other organizational components who in some way contributed to the statute expiration receive copies of the report. The fact that copies of the report were provided to other organizational components and to which organizational components copies of the report were provided is to be included in the block (Blocks 15 or 13) of the respective Form 3999 or Form 3999-T pertaining to "Corrective Action taken or Recommended to Prevent Recurrence of Statute Expiration."

  10. If Block 15 or Block 13, Corrective Action Taken or Recommended to prevent Recurrence of Statute Expiration, of Form 3999 or 3999-T, respectively, includes a recommendation for discipline, then reflect that fact and the recommended disciplinary action even though the final disciplinary action may not be known at the time the final statute expiration report is forwarded to the respective Director, Campus Compliance Services or Examination or Specialty Programs.

  11. Management is to review completed reports to identify trends and causes of expired statutes with an objective of correcting any identified systemic weaknesses in statute control procedures.

25.6.14.4.8.2  (04-03-2006)
Taxpayer Notification of Assessment Statute Expiration and Acceptance of Voluntary Payments on Expired Statute returns When Taxpayer Has Been Contacted for Return Examination

  1. See IRM 4.2.1.5, Taxpayer Notification of Statute Expiration and Acceptance of Voluntary Payments on Barred Statutes, for procedures for notifying taxpayers of assessment statute expiration after taxpayer contact has been made and either a deficiency can or can not be determined.

25.6.14.4.8.3  (10-01-2007)
Closing Cases Involving Expired Statute Returns

  1. Place copy of Form 3999/3999-T, in case file as well as a copy of any notice to the taxpayer concerning assessment statute expiration. The copy of the Form 3999/3999-T, placed in case file should not contain disciplinary-related information. See IRM 4.2.1.5.1, Guidelines for Deficiency Cases, for preparation of Form 3244-A, Payment Posting Voucher, and flagging of the case file via of Form 3198, Special Handling Notice, if a voluntary payment is received after the assessment statute expires. The case file should also be flagged with a Form 3198, with the notation:"Payments/Credits are to be Transferred to Excess Collection File" , whenever payments or credits need to be transferred to Excess Collections File as a result of barred assessment. Centralized Case Processing will prepare the Form 8758, Excess Collection File Addition, for transferring payments to the Excess Collection File.

  2. If payments of tax are made or credits are available prior to assessment statute expiration but the assessment is barred, see IRM 25.6.3.5 and IRM 3.17.220, Excess Collection File, for procedures for transferring the payment amounts/credits to the Excess Collection File. Also, see IRM 25.6.6.4.6.1, Claim for an Amount paid before ASED, and Rev. Rul. 85–67, 1985–1 C.B. 364.

  3. If payments of tax are made after the assessment statute expires, then the payment amounts/credits should also be transferred to Excess Collection File, but a credit or refund can be obtained by the taxpayer provided that a claim is filed within 2 years from the date of payment. See IRM 25.6.6.4.6.2, Claim for an Amount Paid After the ASED, and Rev. Rul. 74–580, 1974-2 C.B. 400.

  4. Use AIMS Disposal Code 12 with an entry of $1 in item 35 of the Form 5344, Examination Closing Record, if the AIMS closing is an examined return closing (return examination started and either a tax deficiency can be determined or determination made that no tax changes are warranted or adjustments to tax can not be determined). For surveyed returns, use the applicable disposal code specified in IRM 4.4.21, Non-Examined Closings/Deleting AIMS Records, and defined in more detail in Exhibit 4.4.1-16, Disposal Codes, for the type of survey being made to close the AIMS base to AIMS status 90 after the assessment statute expires.

25.6.14.4.9  (04-03-2006)
Statute Expiration Reporting Responsibilities and Procedures for LMSB Field Operations and LMSB Campus Employees

  1. This subsection contains procedures for the submission of a Statute Expiration Report (Form 3999 or Form 3999-T) to the appropriate LMSB Director of Field Operations, Director Field Specialists, or Director, Strategy, Research, and Program Planning by field and campus operations of LMSB which are involved, either directly or through support activities, with the processing, classification, or examination of LMSB tax returns. The procedures contained in IRM 25.6.14.4.8.4, do not apply to activities conducted by SB/SE, TEGE, or W & I, with respect to LMSB tax returns, as these organizational components have separate statute expiration reporting procedures.

25.6.14.4.9.1  (10-01-2007)
Procedures for the Submission of LMSB Statute Expiration Reports

  1. Statute expiration reports are required on all tax periods/returns (except for those shown in (2) below) under examination and/or controlled on AIMS for which the normal three-year period for assessment or the assessment period which has been extended by consent expires while the return is in an AIMS status below 80 or is being examined but not controlled on AIMS. In addition, a statute expiration report is required for LMSB cases when the statutory period for overassessments has expired and the period for timely filing of a refund suit has also expired. The procedures in this subsection control when a statute expiration report is required to be submitted by LMSB managers/employees not withstanding any provisions contained in IRM 4.2.1, General Examination Information, or other sections of the IRM.

  2. A statute expiration report is not required, although the normal period for assessment expired while the return was in an AIMS status of less than 80 or is being examined but not controlled on AIMS, for the following returns:

    1. Any return involving a net overassessment if a claim has been or can be filed or a credit or refund allowed after timely waiver and within six months after the extended assessment period. See IRC section 6511(c)(2).

    2. Any return for which the assessment can be made because of a statutory exception, including the tolling exceptions, to the normal three-year period for assessment or the assessment period which has been extended by consent.

    3. Any return that is a non-TEFRA, nontaxable, flow-thru entity which is associated with an examined, taxable return.

    4. Any investor return where a Form 3999-T was written for the key case return. A copy of the Form 3999-T should be attached to the investor return.

    5. Any return where the date of approval to establish the return on AIMS or date of automatic establishment on AIMS (systemically generated establishment of returns) and the date the examination commences is after the date the assessment statute expired.

    6. Any return surveyed timely before the assessment statute date.

    7. Any "no change" examination when a no change decision is documented in advance of the statute expiration.

  3. Form 3999 is used to report expired statutes on all cases other than TEFRA key entities. TEFRA key entities require the preparation of a Form 3999-T.

  4. When a LMSB employee discovers a potentially expired assessment statute, the employee should consult with his/her manager immediately to determine whether the assessment statute of limitations has in fact expired and on what date it expired (considering all relevant IRC provisions that impact the calculation of the date by which any tax liabilities must be assessed). Advice of Field Counsel and/or Technical Service staff should be sought by the manager if there are any doubts as to whether or not the assessment statute expired. There may be instances where not all of the proposed tax is barred from assessment. Only the barred assessment (or overassessment) amount should be reported on Form-3999/3999-T

  5. The preliminary report is to be prepared and submitted within 10 business days of the date of discovery of the expired statute (including securing Counsel or Technical Services' advice on whether or not the statute has expired). The preliminary Form 3999/3999-T is prepared by the person who discovered the expired statute. This requirement is not to imply that the preparer of the preliminary report is the person responsible for the expired statute. The preliminary report for barred statutes in field operations should be submitted through the respective Director of Field Operations and forwarded to the respective Industry Director for transmittal to LMSB headquarters. For campus operations the preliminary report should be submitted through the Director, Strategy, Research, and Program Planning, to LMSB Headquarters.

  6. The final report is prepared by the party responsible for the statute expiration and will be forwarded through channels to the applicable Industry Director, Director Field Specialists, or Director, Strategy, Research and Program Planning no later than 60 calendar days from preparation of the preliminary report. The respective Director will forward the document to the Director, PQA with a report of proposed disciplinary action. Proposed disciplinary actions should not be addressed on Form 3999/3999-T but rather in a separate memorandum. If there is no responsible party because prescribed procedures were followed in controlling and protecting the assessment statute of limitations, the final statute expiration report is prepared by the manager of the unit to which the return was assigned on AIMS or which was examining the tax period in question when the assessment statute expired, irrespective of whether or not the tax period was controlled on AIMS. The list below contains further information on the timetable (all days are business days) for submission of statute expiration reports by LMSB field and campus organizations which support the LMSB examination process.

    1. Initial report is submitted by preparer 10 business days from discovery (10 days)

    2. Initial report is reviewed and approved by First Level of Management (5 days)

    3. Initial report is reviewed and approved by Territory Manager (5 days)

    4. Initial report is reviewed and final approval by DFO (5 days)

    5. Report is forwarded to Industry Director (2 days)

    6. Industry Director forwards to National Office PQA (5 days)

    7. Director, PQA Forwards to LMSB Commissioner (2 days)

      Note:

      The total number of business days thus far is 34 days.

    8. Final report is submitted by preparer (10 days from date preliminary report approved by DFO)

    9. Final report is reviewed and signed by First Level management (10 days)

    10. Final report is reviewed and signed by Territory Manager (20 days)

    11. Final report is approved by DFO (20 days)

    12. Report is transmitted to Industry Director (5 days)

    13. Final Report and recommended disciplinary action is forwarded to Director, PQA (10 days)

    14. Director, PQA Analysis, Forward to LMSB Commissioner (10 days)

      Note:

      Total number business days to process the Final Form 3999/3999-T Report is 85 days.

  7. Management will review completed reports to identify trends and causes of expired statutes with an objective of correcting any identified systemic weaknesses in statute control procedures.

25.6.14.4.9.2  (04-03-2006)
Taxpayer Notification of Assessment Statute Expiration and Acceptance of Voluntary Payments on Expired Statute Returns When Taxpayer Has Been Contacted for Return Examination

  1. See IRM 4.2.1.5 for procedures for notifying taxpayers of assessment statute expiration after taxpayer contact has been made and either a deficiency can or can not be determined.

25.6.14.4.9.3  (04-03-2006)
Closing Cases Involving Expired Statute Returns

  1. Place a copy of Form 3999/3999–T in the case file as well as a copy of any notice to the taxpayer concerning a statute expiration. The copy of Form 3999/3999–T placed in the case file should not contain disciplinary-related information. See IRM 4.2.1.5.1 for preparation of Form 3244–A, Payment Posting Voucher, and flagging of the case file via Form 3198, Special Handling Notice, if a voluntary payment is received after the assessment statute expires. The case file should also be flagged with a Form 3198 with the notation: "Payments/credits are to be Transferred to Excess Collections File" , whenever payments or credits need to be transferred to the Excess Collections File as a result of a barred assessment, or barred overassessment. Centralized Case Processing will prepare the Form 8758, Excess Collection File Addition, for transferring payments to the Excess Collections File.

  2. If payments of tax are made or credits are available prior to assessment statute expiration but the assessment is barred, see IRM 25.6.3.5 and IRM 3.17.220 for procedures for transferring the payment amounts/credits to the Excess Collections File. Also, see IRM 25.6.6.4.6.1, Claim for an Amount Paid before ASED, and Rev. Rul. 85-67, 1985–1 C. B. 364.

  3. If payments of tax are made after the assessment statute expires, then the payment amounts/credits should also be transferred to Excess Collections File but a credit or refund can be obtained by the taxpayer provided that a claim for refund is filed within 2 years from the date of payment. See IRM 25.6.6.4.6.2, Claim for an Amount Paid After the ASED, and Rev. Rul. 74–580, 1974-2 C.B. 400.

  4. Use AIMS Disposal Code 12 with an entry of $1 in item 35 of the Form 5344 if the AIMS closing is an examined return closing (return examination started and either a tax deficiency can be determined or a determination was made that no tax changes are warranted or adjustments to tax can not be determined). For surveyed returns, use the applicable disposal code in IRM 4.4.21, and defined in more detail in IRM Exhibit 4.4.1-16, for the type of survey being made to close the AIMS base to AIMS status 90 after the assessment statute expires.

Exhibit 25.6.14-1  (10-01-2007)
Form 9355 Barred Statute Report

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Exhibit 25.6.14-2  (10-01-2007)
SB/SE Statute Expiration Reporting Timetable (for examination-related activities)

TIMETABLE FOR SUBMISSION OF STATUTE EXPIRATION REPORTS BY SB/SE FIELD AND CAMPUS EXAMINATION-RELATED ACTIVITIES/ORGANIZATIONS (including Specialty Programs and supporting activities located in the field or at the campuses)
(all days are business days)

Preliminary Form 3999/3999-T  
Preliminary report submitted by manager of unit which discovered assessment statute expiration including securing advice, if needed, from Counsel or Technical Services staff, 3 days is days from date of discovery 3 days
Preliminary report reviewed by field Territory Manager (or counterpart Campus manager) and submitted to the applicable next-level manager 3 days
Preliminary report logged in by Examination Area Director or Director, Campus Compliance Operations or Director, Technical Services (Examination) or Director, Case Processing or relevant Specialty Programs Manager for control and necessary follow-up to ensure that the final report is prepared and submitted timely 2 days

Final Form 3999/3999-T  
Final report submitted by manager of party responsible for statute expiration or, if procedures for controlling and protecting statutes were followed, then final report is submitted by manager of the unit to which return was assigned on AIMS or which was examining the tax period (even if not controlled on AIMS) when the assessment statute expired, 13 days is days from date of discovery 13 days
Final report reviewed, approved and submitted by field Territory Manager (or counterpart Campus manager) to the applicable next-level manager (including preparation of any disciplinary action recommendation) 10 days
Final report reviewed, approved and forwarded for information by Examination Area Director or Director, Campus Compliance Operations or Director, Technical Services (Examination) or Director, Case Processing or relevant Specialty Programs Manager as appropriate, to applicable Director, Campus Compliance Services or Examination or Specialty Programs 7 days
Total maximum business days from discovery of assessment statute expiration until final statute expiration report submitted to applicable Director 30 days

Note:

Pen and ink changes may be made to appropriate blocks of the online Form 3999 or 3999-T, in order to ensure that the forms conform to our current organizational structure and position titles. For preparation of the final statute expiration report, Block 1, To:, of the forms should indicate the applicable Director (Campus Compliance Services, Examination or Specialty Programs), as appropriate. Block 2, From:, of the forms should indicate the title of the applicable Director or Specialty Program Manager who approved and is submitting the final statute expiration report.


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