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Part 8. Appeals

Chapter 1. Appeals Function

Section 8. Employee Tax Compliance

8.1.8  Employee Tax Compliance

Manual Transmittal

December 06, 2011

Purpose

(1) This transmits a revised IRM 8.1.8, Employee Tax Compliance.

Material Changes

(1) New material added in 8.1.8.2(3) explaining the process for adding codes to identify a case as an employee tax case on ACDS.

(2) Amended the instructions in section 8.1.8.2(2) to route new cases from Atlanta APS directly to the AO or SO assigned to work the case.

(3) Note added in 8.1.8 3 to bring emphasis to the sensitivity of employee tax cases and the importance of not identifying the case as an employee tax case, other than where specifically instructed to mark the case.

(4) Amended 8.1.8.3(2), 8.1.8.5(2), 8.1.8.6(1), 8.1.8.6(5) and 8.1.8.7(2) to designate the approved ATM reviewer to input ACAPDATE date at closing, rather than request that the AO or SO's regular ATM input ACAPDATE.

(5) Added section 8.1.8.6 to provide directions on processing timely CDP cases.

(6) Added section 8.1.8.7 to provide directions on processing CDP cases that require an equivalent hearing.

(7) Throughout the IRM, sections were updated to reference responsibilities of AO and SO that were previously referenced as only AO.

(8) Clarified in 8.1.8.5 the function of Atlanta APS to include mailing the letter by certified mail.

(9) Several editorial changes were made to correct spelling and grammar.

(10) Organizational titles were updated.

(11) As a result of the above changes, substantial renumbering of this section has occurred.

Effect on Other Documents

Supersedes IRM 8.1.8 dated 03-30-2009.

Audience

Appeals

Effective Date

(12-06-2011)

Susan L. Latham
Director, Tax Policy and Valuation

8.1.8.1  (12-06-2011)
Employee Tax Compliance Cases - Background

  1. Employee Tax Compliance (ETC) cases involve an examination or collection activity of Internal Revenue Service (IRS) employees. When a taxpayer employee does not agree with the examination findings, they have the option of exercising their right to an appeal. When working ETC cases, Appeals limits its scope to:

    • Facts of the case

    • Applicable law

    • Appropriate resolution

  2. Appeals is not involved in any potential disciplinary actions.

8.1.8.2  (12-06-2011)
Receiving ETC Cases

  1. All ETC cases are routed from the originating Compliance function to the Appeals Processing Service (APS) in Atlanta at the address below using a Form 3210, Documental Transmittal, and identifying it as an employee audit on Form 3198.

    Internal Revenue Service
    Atlanta Appeals Office
    401 W. Peachtree St., NW
    Suite 1455, Stop 1100-D
    Atlanta, GA 30308-3539

  2. Upon receipt of the case, APS:

    • Acknowledges receipt of the case by returning a signed Form 3210 to Compliance;

    • Cards in the case;

    • Assigns the case based on the pre-approved assignment list;

    • Sends an encrypted message to the Appeals Team Manager (ATM), the Appeals Officer (AO) or Settlement Officer (SO), and designated TPP Program Analyst notifying them of the case assignment;

      Note:

      These cases may not be assigned to AO or SO that are not on the pre-approved list without prior clearance, due to their sensitive nature.

    • Mails case file directly to the AO or SO assigned to work the case.

  3. The TPP Program Analyst updates the case in the Appeals Centralized Database System (ACDS) to designate the case as an employee audit case utilizing the special project update menu. Cases are generally coded as A1 to denote employee audit. Other codes may be utilized for special projects on an as needed basis.

8.1.8.3  (12-06-2011)
Working ETC Cases

  1. Only designated AOs and SOs are assigned these highly sensitive cases. The AO or SO works the ETC case in accordance with IRM 8.7.1, Technical and Procedural Guidelines, renders a decision, and generates the appropriate closing letter(s) to the taxpayer and/or power of attorney. Priority treatment is given to the extent possible.

    Note:

    Due to the sensitive nature of these cases, AOs and SOs are prohibited from identifying the case in the Notes section of ACDS or in any other way as an employee audit case. The only indication that the case is an employee audit case is a code entered by the TPP Analyst that oversees the ETC IRM.

  2. The AO or SO ensures the complete case is sent for review and approval to the designated ATM reviewer in Field Operations East or Field Operations West . The AO or SO sends an encrypted e-mail notifying the Field Operations East or West designated ATM reviewer that a file is being forwarded for review. The statute on the case is noted and any other priorities are discussed in advance of mailing.
    There are two designated ATM reviewers, one in Field Operations East and one in Field Operations West, designated to:

    • Review and approve the case.

    • Return the approved closed case to APS in Atlanta, Georgia for processing.

    • Input ACAPDATE on ACDS.

8.1.8.4  (12-06-2011)
Requesting Computations

  1. If a computation is needed:

    • Send Form 3608 using secure e-mail to the designated Tax Computation Specialist (TCS) manager. (Notate case is an Employee Audit in the e-mail and on Form 3608.)

    • The designated TCS manager assigns it to one of the approved TCS's for Employee Audit cases.

    • The TCS prepares the Settlement Computation or Notice of Deficiency.

    • When complete, the TCS sends the computations back to the originating AO for review.

8.1.8.5  (12-06-2011)
Unagreed Non-Docketed ETC Exam Cases

  1. If the taxpayer does not agree with the Appeals determination, the AO:

    • Completes an unagreed ACM, and CARATS record, and

    • Requests TCS prepare a Notice of Deficiency to be included in the case file, along with envelopes, transcripts with the most recent address, and a power of attorney.

  2. The case goes to the designated ATM reviewer Field East or West who:

    1. Approves the case.

    2. Signs the Notice of Deficiency.

    3. Input ACAPDATE on ACDS.

    4. Routes the case to the Atlanta APS office.

  3. Atlanta APS mails the letter by certified mail and monitors the 90-day period. If petitioned, Atlanta APS forwards the case to Counsel for answer. Appeals statute guidelines apply at all times. See IRM 8.1.8.2.

8.1.8.6  (12-06-2011)
Unagreed Non-Docketed ETC Timely CDP Cases

  1. If the Taxpayer does not agree with Appeals determination in a timely requested Collection Due Process (CDP) ETC Case:

    1. The SO completes a form 5402, an ACM and CARATS record, and

    2. The SO prepares a Notice of Determination, along with envelopes and transcripts with the most recent address to the taxpayer and the power of attorney.

  2. The case goes to the designated ATM reviewer Field Operations East or West who:

    1. Approves the case.

    2. Signs the Notice of Determination .

    3. Input ACAPDATE on ACDS.

    4. Routes the case to the Atlanta APS office.

  3. Atlanta APS mails the Notice of Determination by certified mail and monitors the 60 day period. If petitioned, Atlanta APS forwards the case to Counsel for answer. If not petitioned, Atlanta APS will send the case to Memphis Campus APS for backend processing and closing.

  4. If the taxpayer signs waiver Form 12257 indicating agreement with Appeals determination in a timely requested CDP hearing:

    1. • The SO completes a Form 5402, an ACM and CARATS record, and

    2. • The SO prepares a Letter 4382, acknowledging receipt of the waiver, along with envelopes and transcripts with the most recent address to the taxpayer and the power of attorney.

  5. The case goes to the designated ATM reviewer Field Operations East or West who:

    1. Approves the case

    2. Signs the Form 12257 letter and letter 4382.

    3. Input ACAPDATE on ACDS.

    4. Routes the case to the Atlanta APS office.

    5. Atlanta APS will send the CDP case for closing to Memphis Campus APS for backend processing and closing.

8.1.8.7  (12-06-2011)
Unagreed Non-Docketed ETC CDP Cases That Require An Equivalent Hearing

  1. If the taxpayer is provided with an equivalent hearing in an ETC case (because the taxpayer did not timely request a CDP hearing):

    1. The SO completes Form 5402, an ACM and CARATS record, and

    2. The SO prepares a Decision Letter, whether the outcome is agreed or unagreed, along with envelopes to the taxpayer and the power of attorney

  2. The case goes to the designated ATM reviewer Field Operations East or West who:

    1. Approves the case

    2. Signs the Decision Letter.

    3. Input ACAPDATE on ACDS.

    4. Routes the case to the Atlanta APS office.

    5. Atlanta APS will send the equivalent hearing case to Memphis Campus APS for backend processing and closing.

8.1.8.8  (10-12-2007)
Docketed ETC Cases

  1. If the taxpayer files a petition, Atlanta APS forwards the case to Counsel. After the court makes a determination, the case is sent back to Atlanta APS for closing from ACDS.

8.1.8.9  (10-12-2007)
Closing ETC Cases

  1. Upon receipt of the closed case in Atlanta, APS:

    • Closes case off of ACDS.

    • Inputs the Status Code 21 into the Audit Information Management System (AIMS).

    • Mails the closing letter to the taxpayer and/or POA.

    • Processes and closes the case in accordance with IRM 8.20

    • Forwards all ETC cases to Compliance at the following address:
      Internal Revenue Service
      Attn: Technical Service
      31 Hopkins Plaza
      Baltimore, MD 21201


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