All adjustment requests must be analyzed to determine whether each recommended action falls within the scope of "on-line" adjustment which may be accomplished through area IDRS terminals, or whether it must be transmitted to Service Center Collection (SCC) for processing. Adjustments meeting the criteria for area input must be researched on IDRS and perfected to ensure all necessary data elements are present.

The authority to assess and abate ad valorem penalties is neither the sole responsibility of the area offices nor the service centers. The area office has primary authority for all cases that have been worked in the area office. To ensure that the primary authority's abatement decision is not unknowingly reversed at a later date, the Individual Master File and Business Master File (IMF & BMF) will not accept an attempted adjustment that is currently in Master File BAL DUE (Balance Due Account) status or was in that status during the prior twelve months UNLESS the adjustment action is accompanied by a priority code "3" when input by the area.

Payment tracer and credit transfer requests must be analyzed and perfected to ensure all area research steps have been taken, required documentation is attached, and all data elements are present.

Alert your supervisor for possible field coordination to improve quality, if a particular originator shows a trend of an increasing number of errors.

On-line adjustments may be done to increase or decrease tax, penalties or interest with proper managerial approval, taking into consideration statutory requirements.

Refer adjustments on which doubt exists to the SCC where documents are available for more detailed research. Documents should not be requisitioned for the purpose of determining whether an adjustment should be made.

Listed below are adjustments which may be input by the area office. They include, but are not limited to:

All penalties except those asserted by Examination and MFT 55, Reference Number 618 (Trust Fund Recovery Penalty (TFRP)) and Reference Number 616 (W–4 Penalty) as specified in IRM 5.4.2.3(1)(e) and 5.4.2.3(3)(a), may be abated or assessed with the use of the proper priority codes and the signatures of the initiator and managerial approval.

Collection criteria Adjustment requests involving the following issues MUST be submitted on Form 3870 and referred to SCC after processing per IRM 5.4.2.7 (Collection criteria is defined as: cannot pay, will not pay, wishes to pay later; IDRS statuses 22, 24, 26, 6n, 41, 42, 43, 44, 46, 71, 72, 91; trust fund recovery penalty; military deferred; SFR (for definition and exception see (3)(e) below); ETAP (for definition and exception see (f) below); Questionable W4 Penalty; IRC 6020(b) with closing codes 63 or 64; and bankruptcy cases):

Route the following adjustment requests to the service center Adjustments/Correspondence function, if they:

Forms 3870 accepted for reconsideration by the area Examination function will already be in Examination as noted on the related BAL DUE or notice per IRM 5.3. If the Form 3870 has not been routed to Examination, reject to the originator through their group manager using Form 8564–A, Non-Remittance Reject Notice, when the following criteria is met:

Adjustment and Refund Offset requests will be received on a variety of forms, such as those shown below, but they must be annotated in red "Form 3870" in the upper margin:

Credit transfer requests will be received on a variety of forms, such as those shown below, but they must be annotated in red "Form 4159" in the upper margin:

Payment tracer requests will be received on Forms 4159, 4907, turnaround notices, or other documents containing the necessary elements and annotated in red "Form 4159" in the upper margin.

A recent (30 days or less) transcript of the module being adjusted should be attached to the request by the initiator. If not, request transcript using MFTRD.

There are specific data elements which must be present on each adjustment, payment tracer, or credit transfer request. If necessary, the initiator should be contacted for the missing data. Any requests lacking required managerial approvals should be rejected back to the originator. To provide easy identification, the items below must be present when it is received from the originator and underlined in red or added in red by the reviewing tax examiner:

Adjustment requests meeting the criteria for area office input, payment tracer and credit transfer requests must be researched on IDRS using Command Code SUMRY/TXMOD:

Perfect Part 1 of the adjustment document by adding any missing data elements per IRM 5.4.2.4 and entering the following elements in red to facilitate terminal input:

Ensure that all data elements necessary for terminal input are included on the document prior to initialing, dating and forwarding for input, and that a BAL DUE is attached to the Forms 3870 or 4844 (for refund offset) which will fully satisfy the liability.

If a BAL DUE is not attached to Forms 3870 or 4844 fully satisfying the liability, reject the request to the originator via Form 8564–A.

When requests for terminal action are made on an all-purpose form, the Case Processing Support employee will indicate in red in the upper right hand corner of the form, the correct IDRS format to be used by the terminal operator.

Perfect Part 3 of Collection criteria (as defined in IRM 5.4.2.3) Form 3870 and closed BAL DUEs submitted with amended returns/claims for area input of TC 470 and a History item "3870 to XXSC" as detailed below, and route Part 1 of Form 3870 as well as amended returns and claims to SCC via Form 3210:

If a Collection criteria (as defined in IRM 5.4.2.3(1)) Form 4159 is noted TC 470 CC90, perfect the associated BAL DUE for area input of these codes as well as of a History item "4159 to XXSC" . Route the Form 4159 to SCC via a separate Form 3210.

Route Collection criteria (as defined in IRM 5.4.2.3(1)) credit transfer requests on NMF accounts and Unidentified Remittance File transfers to SCC via Form 3210.

Ensure a copy of the BAL DUE is attached to fully satisfying requests on NMF accounts or attach a copy before routing.

Perfect the original closed BAL DUE, if the account is on IDRS, for area input of TC 470, CC93 and a History item "Cred Trans to XXSC" . If the account is not fully satisfied, no CC is required.

Send Non-Collection criteria requests to the Service Center Adjustment/Correspondence function via Form 3210, after the following processing:

Edit TC 470 CC 90 on BAL DUEs (no CC on notices) for cases accepted for reconsideration by Examination, and route for terminal input.

Payment tracer requests should include a photocopy of the payment document being traced. If not attached, return to the initiator through his/her manager via Form 8564–A.

Use the following research actions:

Credit transfer requests must contain sufficient information for both the account to be debited and the account to be credited to accurately transfer the available credit. If this data is missing or unclear, process per IRM 5.4.2.4(4).

Command Code TXMOD is required to select the primary account and to store the TIN, File Source, Name Control, MFT, and tax period followed by Command Code AD(xnn). D or C in the third position of this Command Code indicates whether the primary account stored is the debit or credit side of the transfer. Document Code 24, 34, or 48 in the last two positions identifies the type of adjustment to be made. TIN, File Source, Name Control, MFT and tax period for the secondary account are input with this Command Code.

The tax examiner will review and annotate or underline the credit transfer document with the appropriate IDRS command code and other required data elements in red to facilitate area terminal input. Since credit transfers may be submitted on a variety of forms, it is important to note that the command code selected depends upon the form submitted and analyzed:

When Command Code ADD34/ADC34 is used with Form 4256, the subsidiary code must be completed for BMF, MFT 02 cases only. Enter "1" if the debit is TC 662 to transfer from a subsidiary corporation to a parent corporation and the subsidiary is not liable for a return. All other BMF cases are "0" . No entry in this field is required for IMF cases.

The Case Processing Support may process documents for TAS that areas are authorized to input. This includes adjustments, credit transfers, miscellaneous transactions, etc.

TAS cases can be controlled on IDRS by the person to whom the case is assigned if that function has Command Code ACTON capabilities or by the Case Processing Support.

Adjustment documents will be clearly marked "TAS" and will be received in duplicate. After terminal input, the duplicate copy will be returned to the initiator or the Problem Resolution Officer (area option) with a print of the module(s) adjusted. For further information see lRM 13.1, Taxpayer Advocate Service Handbook.

The term, Non-Return Related Civil Penalties, relates to all civil penalties not assessed in a tax return module using MFT Codes (IMF–MFT 30; BMF–MFTs 02, 05, 51, and 52). The Non-Return Related Civil Penalties are assessed on the IMF and BMF Master Files in the regular taxpayer account using a unique Civil Penalty MFT Code (MFT 55 for IMF, MFT 13 for BMF).

The Civil Penalty tax module is not a separate entity from the regular taxpayer account. It is simply an additional tax module in an account sharing the same taxpayer entity information with the tax return modules in the account. All penalties assessable as Non-Return Related Civil Penalties on IMF should be assessed against the responsible individual. MFT 55 does not accept joint assessments.

SCC processes all input for trust fund recovery penalty assessments, except for establishing the required name line and/or entity needed on telephonic requests for quick or prompt assessments as explained in (4) below.

The originator will route to Case Processing Support a copy of all Forms 2859, Request for Quick or Prompt Assessment and Index File, and Forms 2644, Recommendation for Jeopardy/Recommendation for Termination Assessment, relating to telephonic requests, when the original file is forwarded to SCCB. These requests must be processed on the day received in Case Processing Support.

These assessments are input to Master File through IDRS using Command Code ADJ54, transaction code 290 with a zero amount, and the three digit reference number and amount. Once posted to Master File, the civil penalty module will reflect transaction code 240. Notices containing an explanation of the assessment and appeal rights will be generated by Master File based on the reference number input with the penalty assessment.

These instructions apply to penalty assessments asserted on Form 8278, Computation and Assessment of Miscellaneous Penalties. See Exhibit 5.4.2–4. In some instances, Form 3198 (Special Handling Notice) or other document may be attached to identify the individual against whom the assessment is made. This is necessary in order to establish a civil penalty module with the correct name line.

Penalty case files will contain Form 8278, completed by the originator and the source document of the penalty.

Incomplete case files and cases with missing entries, or joint names on Form 8278 will be returned to the originator.

Form 8278 may be used to assess penalties under more than one Code Section if the additional Code Section(s) apply to the same taxpayer, calendar year and entity.

To provide easy identification for terminal input, underline the following entries on Form 8278 Computation and Assessment of Miscellaneous Penalties in red pencil:

The civil penalty module will allow posting of only one penalty assessment per taxpayer per cycle. The system will, however, accept input of multiple transactions and cycle each input automatically. Therefore, multiple concurrent assessments for the same taxpayer will be processed as follows:

Cases input with blocking series 53X, CP Notice 55 will be generated to alert the service center to associate Forms 5147, IDRS Transaction Record, for subsequent penalty assessments to the penalty case file containing the input and source documents. Singular penalty assessments will be placed in the 52X blocking series.

Cases which are to be associated with a previously established penalty case file for the same taxpayer will be identified by the originator. Tax examiners will annotate Forms 8278 with blocking series 53X for these cases. Blocking series 52X will be used for cases not requiring association.

Generally, the civil penalty name line (CVPN) will automatically be extracted from Master File. However, there may be instances when the penalty name line will need to be established. An example of this would be the case when a civil penalty is assessed against either a husband or wife who normally file a joint return. Master File would show a joint entity with both taxpayers' names. The civil penalty module should reflect only the name of the individual against whom the penalty is imposed. The case file will identify the taxpayer against whom the penalty is to be assessed. To determine whether establishment of a CVPN is warranted, refer to criteria in (3)–(8).

There are specific data elements that must be present on the forms or added by the tax examiners to provide easy identification. Enter all required input elements and/or underline them in red prior to forwarding for input.

A hard copy MFTRA will be requested for all civil penalty cases (complete entity and all active modules).

If the Master File (MF) name line of the taxpayer being assessed the penalty is joint or ever has been, a CVPN must be established using CC INCHG, TC 013, RF 55, entering only the name of the taxpayer to whom the penalty applies. Establishment of CVPN applies to MFT 55 ONLY, and no other entity change information is permitted. Information to otherwise update the entity, such as an address change, should be input before establishing the CVPN.

If the name line is single, the special action to establish the CVPN is not warranted. The civil penalty may just be assessed. Master File will automatically extract and establish the penalty name line.

For MFT 13 or 55, if the MFTRA shows no record, then a MF entity must be established using CC INCHG, TC 000 with a "mail file" requirement of "1" for MFT 55, and "mail file" of "0" for MFT 13, for the year of the penalty assessment (the taxpayer's complete name and address must be input). The penalty may then be assessed.

For MFT 13 and 55, if a penalty is to be asserted for a year prior to when the taxpayer first filed a return, a MF name line must be established for the year the penalty is to be assessed using CC INCHG, TC 013. The penalty may then be assessed. Master File will automatically extract and establish the penalty name line.

The entity changes cited in (3) and (6) above will post to the civil penalty module only. Other related Master File accounts remain unchanged.

With the implementation of the Microfilm Replacement System (MRS), the area offices can now request Master File transcripts directly through IDRS terminals as opposed to routing requests through the service center. See IRM 5.4.3.7, MRS Terminal Research. Since the authority to certify transcripts and other forms and documents has been delegated to the Area Director (or his/her delegate) through Delegation Orders Nos. 4 and 198, the areas have the option of doing their own certification.

Requests for certified transcripts for non-Master File accounts will continue to be directed to the service center Accounting activity.

Case Processing Support will process the requests for certification of transcripts initiated in the area offices. They will also input the transcript requests through IDRS terminals.

When requesting information or certified transcripts of accounts, area personnel will use Form 4338, Information or Certified Transcript Request. An information transcript is normally requested to resolve a problem. A certified transcript will be requested only if formal certification is necessary to satisfy legal requirements.

When Form 4338 and Form 4338–A are received in Case Processing Support, they will be forwarded to Case Processing Support Tax Examiners. Each form will be reviewed and perfected using the instructions on the back of the form. If the form is incomplete, returned it to the requester with appropriate comments.

The tax examiner will prepare Form 6882, IDRS Master File Information Request. Instructions are in Exhibit 5.4.2–7. Item 11, Requests may be expedited by checking the "Expedite Output" block and securing approval of the supervisor. The tax examiner will complete Form 6882 as if he/she was the requester to assure that it is returned to him or her. Complete Item 12 and check Requester's Remarks blocks, indicating that the request is for "Information or Certified Transcript Request" .

The completed Form 6882 will be forwarded to the terminal section for input.

The tax examiner will suspend Form 4338 and Form 4338–A pending receipt of Master File information. If the requested information or a "no record" message is not received, a follow-up request should be submitted. Local guidelines should be established to assure that follow-up is completed.

A statement of certification is needed when transcripts are used to process civil litigation cases. IDRS should be utilized when appropriate. IDRS may show cases controlled by other areas. If necessary, contact these areas to insure that transcripts will reflect the latest information available.

For Certification of Computer Transcripts, the tax examiner, will verify that there are no pending or subsequent posted transactions.

Certification of Form 4340 is required when a detailed explanation of the taxpayer's account is requested to satisfy legal requirements. It may also be required in instances of an urgent nature such as requests for court use, proofs-of-claim, problem resolution, Area Directors, etc.

The tax examiner will forward a completed draft Form 4340 and all research information to the typing function, including the request, Form 4338 or Form 4338–A. The typing function will type the information on an original Form 4340.

The typed Form 4340 and research information including the request Forms 4338 or 4338–A should be reviewed for accuracy. Thereafter, they will be forwarded to the Area Director (or his/her delegate) who will date and sign it at the time of certification.

In those instance when a Form 2855, Certificate of Official Record is required, prepare Form 2866, assemble Form 2866 with Form 4340, and transmit the completed document as follows. For documents which are not to be submitted by the government in court, follow the instruction in IRM 11.3, Disclosure of Official Information Handbook. For documents to be submitted by the government in court, follow the instructions in IRM 11.3. Draft copies of Form 4340 and Form 2866 should be furnished to the typist providing proper content.

Forms 53 with a "Yes" indicated in item 10 will be edited with the specific BMF filing requirements requiring cancellation by researching via Command Code SUMRY prior to forwarding for input.

Mandatory follow-ups will be monitored monthly by a designated employee if a field employee has determined the request is appropriate based on local, regional and national guidelines. See IRM 1.4.4 Compliance and Customer Service Manager's Handbook — Collection Managers.

Follow-ups will be processed per (3)/(4) below if manual monitoring is done and per (6) if systemic monitoring is available.

Approximately thirty days before the follow-up date, unless the accounts are already on IDRS, Case Processing Support will establish Master File accounts on IDRS using CC ACTON.

Case Processing Support must request a copy of the transcript for NMF accounts requiring follow-up.

If the case has reached the follow-up date on the Form 53, prepare a Form 2209, Courtesy Investigation, and route the case file to the originator noting that follow-up action is needed.

Route Part 4 of Form 2209 to the files function for suspensing per IRM 5.4.3.40 after noting the 45 day response date.

Forward the computer generated Form 2209 and the case file on cases with a valid follow-up date to the originator.

Delinquent Returns (DEL RETs) on IRS employees are identified by Selection Code 92. Collection function will note in red, "SC92" , on the face of a 3 x 5 card, which will be stapled to the upper-left corner of the Delinquent Return (DEL RET). Attach such a card, if it has not already been done, and forward for input and filing.

Form 2209 is used to request case assistance from or to propose case transfer to another office or area.

When Form 2209 assemblies are received from another area, Case Processing Support will determine if it has been sent to the correct area.

Responsible and willful persons can become jointly liable with a business taxpayer for certain excise taxes which the business has reported on BMF Form 720, Quarterly Federal Excise Tax Return. When assessed against an individual, he/she will owe the same tax liability as the business taxpayer who filed the Form 720. The responsible person will also be liable for interest and certain penalties from the same data as the business taxpayer.

The personal liability for excise tax provision is a tool to be used to collect certain excise taxes reported on Form 720 by the business taxpayer. Taxes reported on Form 720 which are subject to assessments of personal liability are identified on the return as the "IRS Numbers" listed below for diesel fuel, gasoline, or aviation fuel. These abstract numbers apply to taxes imposed at the source (refiner, distributor, terminal operator, etc.) and not to the end used of the product. As such, the tax is not subject to the Trust Fund Recovery Penalty procedures.