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Part 25. Special Topics

Chapter 15. Relief from Joint and Several Liability

Section 10. Review of All Cases with Relief from Joint and Several Liability Issue

25.15.10  Review of All Cases with Relief from Joint and Several Liability Issue

25.15.10.1  (05-01-2005)
Overview

  1. The section will address the review of Innocent Spouse Cases worked in the Area Offices. Cases worked in the Cincinnati Centralized Innocent Spouse Operations (CCISO) will be reviewed using IRM 21.10 .

25.15.10.2  (09-01-2006)
Cases Subject to Special Processing Review

  1. All requests for Relief from Joint and Several Liability worked by a Revenue Agent or Tax Compliance Officer are to be forwarded to Technical Services (TS) for a streamlined review after a determination is made. All pre-assessment cases should be ready to close and include an RAR. Update to Status 21 when forwarding to TS.

  2. TS will perform a streamline processing procedure which includes issuing all 30/90 day letters for post assessment cases and ensuring the correct processing instructions are included on the Revenue Agent Report (RAR), Form 3198, Special Handling Notice, or Form 12317, Special Notice for all pre-assessment cases. This process does not include a review of technical issues. A guide has been developed for these streamline procedures. See Exhibit 25.15.10-1.

25.15.10.3  (03-21-2008)
Responsibilities of Area Technical Support (TS)

  1. Upon receipt of claim in TS the Innocent Spouse Tracking System (ISTS) should be updated to Stage 08 (TOREVU).

  2. The claim should be assigned to a reviewer for streamline processing procedures, See Exhibit 25.15.10-1.

    Note:

    The reviewer should not review the determination on the innocent spouse relief request to determine if the technical provisions were correctly applied.

  3. TS should not return a case unless there is an obvious error and, relief should have been granted.

  4. TS should continue to prepare and mail letters to the requesting spouse (RS) and non-requesting spouse (NRS) on all post—assessment claims. TS should suspend the case if necessary (30/90 day). See Delegation Orders 4.33, 4.55, and 4.57 for additional information.

    Note:

    When you are working a case with a short statute and the taxpayers are not willing to execute a statute extensions, issue the statutory notice of deficiency without giving appeal rights to the RS and NRS.

  5. TS is responsible for ensuring the other information section of the RAR is correct with the determination made. The correct processing instructions should be listed on the RAR, Form 3198, Special Handling Notice, or Form 12317 , Special Notice, for all pre-assessment cases.

  6. TS is responsible for preparing notices of deficiency that include innocent spouse determinations in pre-assessment cases, per normal unagreed case procedures. The innocent spouse determination should appear on the RAR in the " Other Information" section, as well as on any waiver issued with the notice. In the "Other Information" area enter: See IRM 25.15.12.23, 25.15.12.23.2 , and 25.15.12.23.3for additional information of what should be on Form 4089. T

    Note:

    When relief is being allowed, the NRS has not appealed, and a statutory notice of deficiency has not been issued, issue the statutory notice of deficiency in the NRS's name only.

  7. TS shall update the required stages of the ISTS as mandated in IRM 25.15.14.2.

25.15.10.4  (03-21-2008)
Procedures for Post Assessment Denied Cases

  1. Once a reviewer completes the streamline procedures, prepares and mails the preliminary determination letter, the case should be updated to Status 22. The case should be kept for 45 days before a final determination letter (FDL) is mailed. ISTS should be updated to Stage 08 with activity APPR and then to Stage 11 with the appropriate code section and reason code for the determination made.

  2. For disallowed claim cases where the taxpayer agrees and signs the waiver ( Form 870-IS), the case can be closed upon receipt of the signed waiver and mailing of the acknowledgement letter.

  3. If no protest is received by the 45th day, an FDL should be mailed certified to the RS and Letter 3323 to the NRS. The case should be updated to Status 24 and filed with the 90 day suspense cases. The case should be kept in 90 day suspense for 110 days. ISTS should be updated to Stage 12 and 14. The amount of relief (tax, penalties, and interest) denied should be input based on IRM 25.15.14.4.1.14 . If no petition is received, the case should be closed to Case Processing with the following instructions:

    1. Update ISTS to Stage 27 upon receipt, and Stage 30 upon completion.

    2. Input TC 290 .00 with Adjustment Reason Code 97.

    3. Close the Audit Information Management System (AIMS) controls with the input of TC 300 .00.

    4. Input TC 972 AC 065.

    5. Reverse TC 130 if no longer needed on the account. Refer to IRM 25.15.9.1.5.2(7)(c) for information on determining if a TC 130 should be reversed.

  4. If a protest is received, the protest should be reviewed to determine if additional facts were presented that would affect the current determination. If the determination would not change:

    1. Input the required closing transactions, update ISTS to Stage 14 for the amount disallowed. See IRM 25.15.14.4.1.14 for determining the amount in Stage 14. Stage 07 should be input using Activity APPLXXX.

    2. Forward the case to Appeals.

  5. If a protest is received, and additional facts are presented that change the current determination:

    1. Change the work papers to reflect the current determination based on the additional information.

    2. Update ISTS to Stage 10. Before issuance of the second determination letter, update to Stage 25 and then Stage 11. Do not use the same date for Stage 25 and Stage 11. Stage 25 should be the day before Stage 11.

    3. Prepare and mail second preliminary determination letter to both spouses and suspend case based on the new determination letter date.

25.15.10.5  (03-21-2008)
Procedures for Post Assessment - Partially and Fully Allowed Relief

  1. Once a reviewer completes the streamline procedures and prepares and mails the preliminary determination letter to both spouses separately, the case should be updated to Status 22. The case should be kept for 45 days before an FDL is mailed. ISTS should be updated to Stage 08 with activity APPR and then to Stage 11 with the appropriate code section and reason code for the determination made.

  2. If no protest is received by the 45th day, an FDL should be mailed certified to the RS and Letter 3323 to the NRS. Update case to Status 24 and file with the 90 day suspense cases. The case should be kept in 90 day suspense for 110 days. ISTS should be updated to Stage 12 including the amount of relief (including taxes, penalties, and interest) disallowed and allowed. See IRM 25.15.14.4.1.13 and IRM 25.15.14.4.1.14 for determining the amount of relief allowed/disallowed. If no petition is received, the case can be closed to Case processing. See IRM 25.15.10.6.

    Note:

    For fully allowed cases, the letter should be prepared using the name, telephone number and ID number of the CCISO processing manager.

25.15.10.6  (09-01-2006)
Routing Procedures for Non-Protested Accepted and Partially Allowed Cases.

  1. Small Business/Self-Employed (SB/SE) Division should send all non-protested allowed, and partially allowed Post Assessment cases to CCISO for transferring liabilities to MFT 31. All items below must be completed or the case will be rejected to the originator.

    1. Close AIMS Controls. Do not input TC 290 .00 when closing AIMS control, CCISO will do this. Form 5344 must be attached showing closed AIMS controls.

    2. Prepare Form 2275, Records Request - Charge and Recharge, to recharge the document to CCISO.

    3. Make any account adjustments necessary for non-innocent spouse issues.

    4. Input TC 971 AC 102 to establish the MFT 31 account.

    5. Give explicit processing instructions on Form 3870 , Request for Adjustment. All requests for a manual refund must list the complete name and address of the recipient.

    6. Update ISTS to Stage 23 once the case is ready to mail.

    7. Prepare Form 3210, Document Transmittal, listing all cases by name and TIN. Be sure to identify the cases where refunds are applicable by indicating on Form 3210, "Refund Due" , next to the listed case. Send the completed Form 3210 and case file to:
      IRS
      Attn: Processing Unit
      Stop 840F
      PO Box 120053
      Covington, KY 41012

25.15.10.7  (03-21-2008)
Duties of Lead Reviewer for Innocent Spouse in Technical Support (TS)

  1. Ensure the local office is consistent in making determinations based on law, facts, and circumstances of each case. This requires keeping current on innocent spouse tax law and procedures.

  2. Coordinate and conduct review of the incoming cases. Cases should be worked in the following order:

    1. TAS cases marked expedite;

    2. Open docketed cases;

    3. TAS cases not marked expedite;

    4. Open examination cases; and

    5. Date received in Review.

  3. Assist Case Processing as needed. This includes resolving problems arising after the processing is complete (e.g. offsetting of an overpayment after a claim was filed, etc.).

  4. Return phone calls or designate them to be returned the same day or by close of business the next day.

  5. Check cases as they default from 30 day to ensure they contain the proper information, are assembled properly and all FDLs are signed and ready for issuance. Ensure the Case Processing closing instruction documents ( Form 1725, Form 564, etc.) are complete and correct. Ensure ISTS was updated correctly.

  6. Follow-up to ensure case processing was completed accurately.

  7. Assist other reviewers when necessary.

  8. Inform Revenue Officers and TAS of determinations made on their cases by sending them a copy of the determination letter and Form 3870/ Form 3465. The Lien Clerk should be given copies of the letters if liens exist and partial or full relief was determined.

  9. Maintain and update existing Innocent Spouse Review desk procedures.

  10. Validate and return to the W&I Innocent Spouse Analyst the quarterly Innocent Spouse Inventory Validation Listing (IVL) when received.

Exhibit 25.15.10-1  (05-01-2005)
Streamline Procedures

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