Internal Revenue Manual Part 5.14

Part 5. Collecting Process Chapter 14. Installment Agreements Section 11. Defaulted Installment Agreements, Terminated Agreements and Appeals of: Proposed Terminations (Defaults), and Terminated Installment Agreements 5.14.11 Defaulted Installment Agreements, Terminated Agreements and Appeals of: Proposed Terminations (Defaults), and Terminated Installment Agreements •

5.14.11.1 Overview

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5.14.11.2 Reason for Termination of Installment Agreements Without Notice to Taxpayers

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5.14.11.3 Reasons for Proposing Termination (Defaulting) of Installment Agreements

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5.14.11.4 Defaults and Terminations: IDRS Monitored Agreements

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5.14.11.5 Default and Termination Procedures for IBTF Installment Agreements: Centralized Case Processing and Field Actions

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5.14.11.6 Defaults and Terminations: Manually Monitored Installment Agreements

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5.14.11.7 Considerations after Default or Termination, Including Reinstatement

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5.14.11.8 Lien Determinations: Defaulted/Terminated Installment Agreements

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5.14.11.9 Appeals of Defaulted and Terminated Agreements

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Exhibit 5.14.11-1 Status of Agreements and Possible Actions

5.14.11.1 (09-26-2008) Overview 1. When taxpayers provide inaccurate information or do not meet the terms of their agreements, the

agreements may be terminated. Taxpayers may appeal proposed terminations. This chapter provides procedures for default and termination of agreements for both IDRS and manually monitored agreements. Exhibit 5.14.11.1–1 is a table defining the status of agreements (New, Current, Defaulted, and Terminated) with permissible actions for each status.

5.14.11.2 (09-26-2008) Reason for Termination of Installment Agreements Without Notice to Taxpayers 1. The Internal Revenue Service may terminate installment agreements without advance notice if the Secretary (or his duly authorized representative, e.g. revenue officer or other contact employee) believes that collection of the tax covered by the installment agreement is in jeopardy.

Caution: See IRM 5.14.1.5 regarding levy restrictions. Collection is considered to be in jeopardy (see IRM 5.14.1.5(2)) if one of the conditions allowing a jeopardy assessment exists. See Policy Statement P4–88 and IRM 5.11.1.3.9 regarding Notices of Levy.

5.14.11.3 (09-26-2008) Reasons for Proposing Termination (Defaulting) of Installment Agreements 1. The Internal Revenue Service may propose termination of (place in default) installment agreements if

taxpayers:(See IRM 5.14.11.3(2) for additional information relative to defaulting agreements for each of these reasons.) A. fail to pay an installment payment when due under the terms of an agreement;

B. fail to pay another tax liability at the time such liability is due;

Note: This includes other TINs for the same taxpayer. Examples would be a sole proprietor and an IMF or a partnership and an IMF. C. fail to provide a financial condition update upon request; D. provided information prior to the date such agreement was entered into that was inaccurate or incomplete; or, E. fail to pay a modified payment amount based upon updated financial information. (See IRM

5.14.4.1.1.) 2. Use the following procedures (if applicable) for defaulting agreements for each of the above reasons. A. For IRM 5.14.11.3(1)(a) (fails to pay an installment payment when due under the terms of the

agreement), non-receipt of the installment payment is grounds for proposing default. These defaults may be completed either systemically or manually (See IRM 5.14.11.4 and IRM 5.14.11.5). Defaults may be initiated by field, Centralized Case Processing, ACS or Campus personnel. B. For IRM 5.14.11.3(1)(b) (fails to pay another tax liability at the time such liability is due), non-

receipt of a payment is grounds for proposing default. These defaults may be completed either systemically or manually (See IRM 5.14.11.4 and IRM 5.14.11.5). Defaults may be initiated by field, Centralized Case Processing, ACS or Campus personnel. C. For IRM 5.14.11.3(1)(c) (fails to provide a financial condition update upon request), non-receipt

of requested information is grounds for proposing default. These defaults may be completed manually or systemically. Defaults may be initiated by field, Centralized Case Processing, ACS or Campus personnel. D. For IRM 5.14.11.3(1)(d) (provides information prior to the date such agreement was entered into

that was inaccurate or incomplete), document case histories regarding the circumstances of the case. These defaults may be completed manually by field, Centralized Case Processing, ACS or Campus personnel. E. For IRM 5.14.11.3(1)(e) (fails to pay a modified payment amount based upon updated financial

information), non-receipt of a payment is grounds for proposing default. These defaults may be completed manually only. Defaults may be initiated by field, Centralized Case Processing, ACS or Campus personnel. 3. Installment agreements may not be defaulted nor terminated for reasons other than those listed in this section.

Note: IDRS allows coexistence of delinquent return status and status 60 (i.e., an entity can have a TDI open on one module and status 60 on other modules). The TDI does not cause default of the status 60 balance due accounts.

5.14.11.4 (09-26-2008) Defaults and Terminations: IDRS Monitored Agreements 1. When a taxpayer does not meet the terms of an installment agreement, she or he will be notified in writing and given 30 days to comply with the terms of the agreement before the agreement is terminated. A taxpayer with an IDRS-monitored installment agreement will receive notice CP 523, Defaulted Installment Agreement — Notice of Intent to Levy. (See IRM 5.14.8.2.) The notice or letter is sent by certified mail for taxpayers with domestic addresses, or by registered mail if taxpayers have foreign addresses. Defaulted Installment Agreement notices must be provided for all defaulted agreements (except in jeopardy situations) including those proposed terminations because the taxpayer provided

inaccurate or incomplete information prior to entering into the agreement. See IRM 5.14.1.5(2) for cases involving jeopardy situations. 2. An account on which the taxpayer has received CP 523 or Letter 2975 (DO) is commonly referred to as

a "defaulted agreement" , but the agreement will not be terminated until the expiration of the 30 day period beginning on the date the notice is issued. 3. No levies may be issued on tax periods included in agreements for 90 days after mailing Notice 523 or Letter 2975 (DO). (See IRM 5.14.1.5 – Levy Restrictions and Installment Agreements.) Note that this 90 day period includes the following timeframes: A. thirty (30) days after a Notice 523 is mailed, proposing termination of an agreement. For IDRS

monitored agreements, the Notice 523 is mailed when the account status changes to 64.

Note: Allow an additional 15 days beyond this timeframe for taxpayers to mail appeals of defaulted agreements. B. For an additional 30 days after the date of the termination of the agreement.

Note: Although the termination date of record for the agreement is 30 days from the date of the Notice 523, allow an additional 15 days beyond this second 30 day period for taxpayers to mail appeals of terminated agreements.) 4. If there is no response from the taxpayer, the account status will change from status 64 to either status 22 or 26. This status change occurs thirteen (13) weeks (or cycles) after mailing Notice 523. The 13 cycle period allows for 90 days between the date of the notice and the change to balance due status. 5. TC 971 AC 063 remains on tax modules for taxpayers in installment agreement status until 90 days have passed since Notice 523 is sent. The TC 971 AC 063 may not be reversed during this period of time. See IRM 5.14.1.5.

Note: If the installment agreement also included a backup Form 53, "Report of Currently Not Collectible Taxes" , when the taxpayer defaults the installment agreement, the 530 code is input, the taxpayer receives Notice 523 and the TC 971 AC 163 automatically uploads. 6. If installment agreements are not reinstated after they default and agreements are terminated, then, at the

end of 13 cycles, Masterfile generates TC 971 AC 163 to reverse TC 971 AC 063. This process is triggered by the status change from 6X to any other status. The systemic upload of TC 971 AC 163 also provides for: A. change in failure to pay penalty rate, if previously reduced, to one-half (0.5) percent; B. removal of the installment agreement indicator; and C. allow systemic levies.

Use TC 972 AC 063 only when TC 971 AC 063 was input in error.

Note: Before 01–01–2000, TC 971 AC 163s were not generated by status changes. 7. CP 523 directs taxpayers to reply to campuses.

5.14.11.5 (09-26-2008) Default and Termination Procedures for IBTF Installment Agreements: Centralized Case Processing and Field Actions 1. The procedures provided in IRM 5.14.11.5(2) through (10) below should be followed for accounts in default for failure to pay additional liabilities when due, or failure to make installment payments.

2. The Centralized Case Processing employee should verify that CP 523 notice was sent by the Campus. 3. If CP 523 notice was not sent, input command code IADFL. This will cause: A. the account to update to status 64; and B. issuance of the default notice CP 523.

Note: See IRM 5.14.11.4, which explains the notice and actions that can be taken. 4. If payment was received from the taxpayer, notate the case history and verify that the case was reinstated to status 60. 5. If, after receipt of payment, the case was not reinstated to status 60, verify that there is no other reason for the default condition, then request reinstatement of status 60. 6. If payment was not received, attempt to contact the taxpayer and request payment. If no payment is received within 45 days from the date of the CP 523, and the agreement has not been reinstated or a new agreement reached, the agreement will be automatically terminated on the 46th day: A. Letter 1058(DO) may be issued if it has not been issued previously. (See IRM 5.14.11.6 and IRM 5.11.1.2.2.2 regarding issuance of Letter 1058(DO).) or, B. if Letter 1058 has previously been issued and 180 days have passed, Letter 3174P should be

used. (See IRM Exhibit 5.11.1–3.) 7. If taxpayers do not respond within 90 days from issuance of notice CP 523, follow the procedures provided in IRM 5.14.11.6 (4). A. After input of the TC 971 AC 163, transfer the case to the appropriate group pursuant to zip code

and grade level using the ICS parameter tables. (See IRM 5.14.11.5(7)(b).) B. If an Other Investigation (OI) is currently assigned to a field employee, transfer the case to that employee. C. Ensure that the case history is documented with the actions taken, including a record of responses received from taxpayers and third parties. 8. If the taxpayer did respond to the default notice, follow the procedures in IRM 5.14.11.7, IRM 5.14.11.8, and IRM 5.14.11.9. 9. If not resolved pursuant to the procedures listed in IRM 5.14.11.5(8), cases should be transferred to appropriate collection field groups pursuant to zip code and grade level using ICS parameter tables. If there is currently an OI assigned to Collection, transfer the case to that employee. (See IRM 5.14.7.5 regarding OIs and IRM 5.14.8.4 regarding monitoring.) 10. If Appeals is conducting an investigation and or hearings on an unrelated issue, the case should be held

in Centralized Case Processing until Appeals makes a determination. See IRM 5.14.11.5(16)(e) regarding appeals of installment agreement terminations. A. If assistance is needed from the collection field group before the case is transferred to the field, an OI may be sent to the collection field function to perform specific requests. B. If Appeals determines an installment agreement is not the proper case resolution, or if the resolution cannot be completed within Centralized Case Processing, forward the case to the appropriate collection field group pursuant to the zip code and grade level of the case listed in the parameter tables located in ICS. If there is currently an OI assigned to field Collection, transfer the case to the proper employee. C. Before transferring it to collection field function, the Centralized Case Processing employee

should ensure that 30 days have passed since termination of the installment agreement and the case is ready to proceed with collection action. The employee should also ensure that all actions taken are documented in the case history and TC 971 AC 163 is input on appropriate modules.

11. Before sending cases back to collection field function, the directions in IRM 5.14.11.5(10)(b) should be

followed. 12. The procedures provided in IRM 5.14.11.5(13) through (16) should be followed for agreements defaulted because taxpayers failed to make required federal tax deposits or failed to file returns at the time such returns were due, after contact by the centralized case processing employees. 13. Verify deposits were required. This may be verified by A. taxpayer contact; or B. summons of bank records; or C. Other Investigation to the collection field function to verify.

14. If the taxpayers file the required returns or make delinquent deposits, leave the agreement in status 60 and monitor as before. 15. If it is verified that taxpayers are no longer required to file returns or make deposits, notate cases accordingly and continue monitoring. 16. If taxpayers do not file required returns or make delinquent deposits, and it was verified that such returns or deposits were required, then: A. on the first day after the due date of the return, follow the 6020(b) procedures provided in IRM 5.1.11.9, including completion of Letter 1085 or 1616. B. mail Letter 1085 or 1616 along with Letter 2975 proposing termination of the installment

agreement.

Note: Termination based upon a proposed assessment may only be employed in the case of tax returns that may be prepared under IRC 6020(b). C. if the taxpayer has not responded after the 30 day period provided in Letter 1085 or 1616 (plus

15 days for mail time), check IDRS to ensure taxpayers have not filed the returns. If returns have not been filed, immediately process proposed returns in accordance with IRM 5.1.11.9.

Note: Prompt assessment of returns should be considered if enforcement action is being considered and the liabilities for returns are to be included on levies. D. If the taxpayer has not made the required deposits, or fully paid the amount due on the return proposed (or assessed) under IRC 6020(b) after the default period (30 days from Letter 2975 plus 15 days for mailing), then the agreement is considered terminated.

Note: Letter 1058 can be sent if not sent previously. See IRM 5.14.11.5(6). E. (See IRM 5.14.11.5(10) regarding Appeals involvement on cases where appeals are ongoing on other issues.) Taxpayers may appeal proposed terminations (defaults) of agreements. The appeal period is 30 days, plus 15 days for mail time from the date Letter 2975/CP 523 was sent. Taxpayers may appeal terminations of agreements. The appeal period is 30 days plus 15 days for mail time from the date of termination. (see IRM 5.14.11.5(11)) F. Timely appeals must be resolved before levy action on balance due accounts included in terminated installment agreements. This requirement also applies to appeals that have been initiated, but not resolved (see IRM 5.14.1.5.)

5.14.11.6 (09-26-2008) Defaults and Terminations: Manually Monitored Installment Agreements 1. When an agreement defaults, taxpayers with IDRS-monitored agreements receive CP 523, Defaulted

Installment Agreement — Notice of Intent to Levy. In the case of taxpayers with manually-monitored

agreements, Letter 2975(DO) Notice of Defaulted Installment Agreement under IRC section 6159(b) — "Notice of Intent to Levy under IRC section 6331(d)" — will be issued when an agreement defaults. Like the CP 523, Letter 2975 (DO) gives the taxpayer 30 days to comply with the terms of the agreement before an installment agreement is terminated. Letter 2975(DO) must be issued no less than 30 days before the date of termination in all non-jeopardy situations. 2. Issue Letter 2975(DO) as follows: A. complete the identification information at the top of the letter; B. provide the reason the agreement defaulted (see IRM 5.14.11.3); C. compute penalty and interest to 30 days from the date of the letter; D. include Publication 594, The IRS Collection Process, and a non-postage-paid return envelope with the letter; E. include Publication 1660, Collection Appeal Rights. (See IRM 5.14.9.4 — Collection Appeals

Program); and F. deliver Letter 2975(DO) in any of the following ways: (1) give it to the taxpayer in person; (2)

leave it at the dwelling or usual place of business of the taxpayer; (3) send it by certified or registered mail (return receipt requested).

Note: If there is no response from the taxpayer, agreements are terminated 30 days after sending Letter 2975. 3. See IRM 5.11.1.2.2.3 regarding the issuance of Letter 1058 after the 45 days from the issuance of Letter 2975, if the taxpayer does not appeal. A. As long as the taxpayer has not timely appealed the default or termination of their installment agreement and Letter 1058 was issued after 45 days from the issuance of Letter 2975(DO), Letter 1058 is considered valid and does not have to be rescinded. 4. After 90 days have passed from the issuance of Letter 2975 and A. the installment agreement has not been reinstated; B. a new installment agreement has not been placed into effect and/or will not be entered into soon; C. the taxpayer has not requested a Collection Appeals Program hearing for the default or termination of the installment agreement; or D. the taxpayer has not requested a Collection Due Process hearing, then the contact employee should request input of TC 971 AC 163 on all appropriate periods. (See IRM 5.14.11.4(5)).

Note: In addition to checking the case history, recent correspondence and other casefile documentation, check IDRS for TC 520 CC 76 or 77 to determine if there is an active CDP Appeal. (See IRM 5.1.9.3.6.1)

Note: IDRS TC 971 AC 275 indicates that a CDP Appeal request (not yet opened as a case) has been received. IRM 5.11.7 – Automated Levy Programs – will provide further information after this programming request is implemented. 5. No levies may be issued on tax periods included in agreements for 90 days after mailing Letter 2975(DO) to taxpayers. See IRM 5.14.11.4(2) and IRM 5.14.11.4(3) for timeframes. 6. See IRM 5.14.1.5(2)(c) which allows levies on other periods not included in the installment agreement

being defaulted or terminated.

5.14.11.7 (09-26-2008) Considerations after Default or Termination, Including Reinstatement 1. If a taxpayer visits a local office in response to a defaulted or terminated installment agreement notice, appropriate action should be taken based on the circumstances of the case. Before reinstating a defaulted or terminated agreement, consider: A. the taxpayer’s reason for default or termination.

B. the taxpayer’s ability to pay (see IRM 5.14.9.2 for managerial approval requirements on defaulted or revised installment agreements); C. the statute expiration date (see IRM 5.14.2); D. updating levy sources, address, and telephone numbers; E. a payroll deduction agreement or Direct Debit Installment Agreement; F. the necessity of filing or refiling a Notice of Federal Tax Lien (NFTL) (See IRM 5.14.11.8 and

IRM 5.14.1.4.2); G. if the taxpayer is in compliance with estimated tax requirements and/or has adequate withholding; H. if the taxpayer is in compliance with federal tax deposits; and, I.

if the taxpayer is in compliance with filing of all required returns due.

2. Defaulted or terminated agreements may be reinstated with no managerial approval, and no financial statement analysis only if: A. The agreement is in default or was terminated because of an additional liability and if addition of

that new liability will result in no more than two additional monthly payments and the agreement will not extend beyond the CSED. A lien determination is required for these agreements. B. The agreement meets streamlined or IBTF Express criteria and the taxpayer has not defaulted an

installment agreement in the 12 months prior to the current default. These agreements require no lien determination. (See IRM 5.14.5.2 and IRM 5.14.5.4 regarding Streamlined and IBTF Express criteria.) 3. In all other cases, except those listed in IRM 5.14.11.7(2), financial statement analysis is required to reevaluate the taxpayer’s ability to pay.

A. Note: If agreements are in default (not yet terminated) they must be reinstated if taxpayers remedy the default (unless there is another reason for default). (See list of reasons for default/termination in IRM 5.14.11.3.) 4. If the agreement is in default or was terminated solely due to missed payments under the terms of the agreement, whether or not the taxpayer was given a systemic skipped payment before receiving the CP 523, subsequent skipped payments may be permitted in emergency situations. Managerial approval is required. Do not allow skipped payments if the agreement will not fully pay the taxes before the CSED.

Note: CSED waivers may only be secured with new partial payment installment agreements. Waivers secured with existing installment agreements will not be approved. (See IRM 5.14.2.2(4) and IRM 5.14.9.2(8).) 5. If a taxpayer skips more than two payments in a twelve-month period, including the systemic skip, the agreement will be defaulted by CSCO unless the taxpayer provides a new or revised financial statement. Taxpayers need not appear in person for re-evaluation of their financial condition. Re-evaluation may take place by telephone, by FAX, or by other correspondence. 6. If routine IDRS research shows that the taxpayer has moved out of the area, use the ICS transfer process to reassign the case to the appropriate location. If contact is made with taxpayers in these situations:

A. attempt to secure the taxpayer’s telephone number, any new income and asset information and

the taxpayer’s new address. B. If the taxpayer indicates that her/his financial condition is significantly different, note the file before transferring the case. C. Advise the taxpayer to contact the new office for financial review. D. If the installment agreement has less than twelve months remaining, it should not be transferred unless the taxpayer has requested transfer or the agreement is in default status. 7. In the event an agreement or other IDRS action is required, except as noted in IRM 5.14.11.7(9), prepare Form 4844, Request for Terminal Action. The reason for the revision and managerial approval, as required by IRM 5.14.9.2, will be noted in the Remarks Section of Form 4844. Attach new Forms 433-D or 2159 and CIS to the form, if appropriate. 8. If the taxpayer contacts the area office and the interview determines that a hardship exists, prepare Form 53 and file a Notice of Federal Tax lien, if appropriate. Secure necessary approval of Form 53 and forward the entire assembly, including a copy of the lien, to CSCO. Explain the required CSCO action in the Remarks Section of Form 4844. 9. Correspondence responses received in the area office and requiring CSCO action on the installment agreement will be transmitted to CSCO.

5.14.11.8 (09-26-2008) Lien Determinations: Defaulted/Terminated Installment Agreements 1. Notice of Federal Tax Lien Filing on Periods Covered By Agreement: A. If, upon approval of an installment agreement the taxpayer was notified (either by checking a box on Form 433D or Form 2159, or it is indicated in the case history) that a Notice of Federal Tax Lien: •

has already been filed;

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will be filed immediately; or,

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will be filed when tax is assessed,

then no action is necessary beyond ensuring that the Notice of Federal Tax Lien was filed in the proper jurisdiction.

Note: If the taxpayer moved to a new jurisdiction, a Notice of Federal Tax Lien may be filed in the new jurisdiction immediately, without regard to IRM 5.12.1.4. B. If, upon approval of an installment agreement, the taxpayer was notified (either by

checking a box on Form 433D or Form 2159, or per the case history) that a Notice of Federal Tax Lien "may be filed if this agreement defaults" , then a federal tax lien may be filed immediately when the CP 523/Letter 2975 is mailed (or given to the taxpayer, or left at the taxpayer ’s last known address or place of business.) C. If no information regarding filing of the Notice of Federal Tax Lien was provided in the case history, nor on Form 433D or Form 2159 (no box was checked): •

If it is determined the government’s interest is at risk, a lien may be filed when the CP 523/Letter 2975 is mailed, (given to the taxpayer, or left at the taxpayer’s last known address or place of business. (See IRM 5.12.1.2.16 for at risk situations.)

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If collection is in jeopardy, then the lien may be filed. (See IRM 5.1.4 Jeopardy, Termination, Quick and Prompt Assessments.)

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If collection is not in jeopardy or the government’s interest is not at risk, the Notice of Federal Tax Lien should not normally be filed for 90 days after the date CP 523/Letter 2975(DO) is issued.

2. Notice of Federal Tax Lien Filing on Newly Assessed Periods: If a new liability is assessed after approval of an installment agreement, a lien determination should be made on the additional balance due tax period(s). (See IRM 5.12.2.8.1.) 3. Documentation: When filing a Notice of Federal Tax Lien on taxpayers with defaulted or terminated installment agreements, document case histories regarding the lien determination. (See IRM 5.12.2.8.1.) 4. Case Closure: If a Notice of Federal Tax Lien was filed on a period and the 45 days have not passed and the installment agreement is granted: A. retain sufficient documentation to respond to a Collection Due Process (CDP) appeal, if

later filed; or, if in the judgment of the revenue officer a CDP appeal is likely the case may be kept open until 45 days have passed. (See IRM 5.14.1.4.2.) B. if it was determined the case should remain open and 30 days pass after filing Notice of

Federal Tax Lien and the taxpayer or power of attorney verifies no request was made, close the case without waiting the additional 15 days. C. if the taxpayer does appeal the Notice of Federal Tax Lien, procedures in IRM 5.1.9.3

must be followed.

Note: See IRM 5.14.1.4.2 regarding Notice of Federal Tax Lien and installment agreements.

5.14.11.9 (09-26-2008) Appeals of Defaulted and Terminated Agreements 1. Taxpayers may request a CAP hearing with Appeals for both: •

proposed terminations (also known as "defaults" ) of installment agreements and

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actual terminations of installment agreements.

The right to this type of appeal is provided in Notice 523 and Letter 2975(DO). Taxpayers who request an appeal will follow the instructions in IRM 5.1.9.4.1, "Request for a CAP Appeal." No levy action may be taken on the periods included in the agreement, during the time period when taxpayers may appeal defaulted and terminated agreements. See IRM 5.1.9.4 and IRM 5.14.1.4(2) and IRM 5.14.9.4 on the "Collection Appeals Program." 2. The right to appeal a termination of an installment agreement is provided by law. Therefore, the taxpayer has 30 days from: A. the date of proposed termination (default) of the installment agreement (Letter 2975(DO)/CP 523) to submit Form 9423, "Collection Appeal Request," if a CAP is requested for a proposed termination (default); and additionally B. the termination of the installment agreement, to submit Form 9423, "Collection Appeal Request,"

if a CAP is requested for a termination of an installment agreement. Also, 15 days is allowed for mailing time. Taxpayers need to be advised of the requirements and timeframes for requesting CAP hearings for defaults or terminations.

Exhibit 5.14.11-1 (09-26-2008) Status of Agreements and Possible Actions

Status Of Agreements And Possible Actions (Exhibit 11-1) DEFAULTED NEW (No prior IA; or 46 days (Up to 46 days after termination and no from issuance TERMINATED (46 to 90 days after CURRENT response or after Appeals of Letter default Letter 2975/523, if no appeal. Has (Agreement in decision. Minimum 91 days 2975/523 , if TC 971 AC 063 but no TC 971 AC 163 status 60 after after default Letter 2975/523 no appeal. Has reversal. Note: 91 days after 2975/523 with approval. TC 971 and beyond with no appeal. TC 971 AC no appeal, reinstatement is considered AC 063 input) After input of TC 971 AC 163. 063 but no TC "New IA)" $105 user fee) 971 AC 163 reversal) CAN: NEW CURRENT DEFAULTED TERMINATED EXTEND CSED YES (Only YES (Only ON with a with a "new" ASSESSMENTS partial partial YES (Only with a "new" partial payment NO IN payment payment installment agreement) AGREEMENT installment installment (IRM 5.14.2.2) agreement) agreement) YES (Only EXTEND CSED YES (Only with a ON YES (Only with a with a "new" "new" ADDITIONAL "new" partial partial YES (Only with a "new" partial payment partial PERIODS NOT payment installment payment installment agreement) payment IN THE agreement) installment installment AGREEMENT agreement) agreement) YES (Unless YES (Unless we we informed FILE OR informed the the taxpayer REFILE NFTL taxpayer that a lien that a lien YES (Unless we informed the taxpayer that (IRM 5.12.1; YES would not be filed would not be a lien would not be filed and collection is 5.14.1.5.2 and and collection is not filed and not in jeopardy or at risk.) 5.14.11.7) in jeopardy or at collection is risk.) not in jeopardy or at risk.) REVISE OR MODIFY (NAME, YES SOURCE OF (considered to YES (considered to be a reinstatement) $45 PAYMENT, NA YES be a user fee DATE OF reinstatement) PAYMENT, $45 user fee AMOUNT OF PAYMENT) ADJUST PAYMENT YES (Payment AMOUNT amount may be (AGREEMENT adjusted on SPECIFIES NA YES defaulted NA INCREASE OR agreements DECREASE ON when they are CERTAIN DATE; reinstated.) FINANCIAL UPDATE)

Status Of Agreements And Possible Actions (Exhibit 11-1) REINSTATE YES ($45 user (CASE IN NA NA YES ($45 user fee) fee) STATUS 6X) REQUIRE MANAGER APPROVAL NO (Yes, if a (SAME YES (No, if no YES (No, if module is added MANAGER default in the agreement is that needs a CSED MUST SIGN last 12 months YES (No, if no default in the last 12 Guaranteed, extension - note that FORM 900(s) and agreement months and agreement is Guaranteed, Streamlined, this forms a "new" AND APPROVE is Guaranteed, Streamlined, or IBTF Express.) or IBTF partial AGREEMENT(S) Streamlined, or Express paymentagreement. ON THE SAME IBTF Express.) ) DATE CSED EXTENSION IS OBTAINED) YES (No, if no YES (No, if default in the agreement is REQUIRE NO (Yes, if last 12 months YES (No, if no default in the last 12 Guaranteed, FINANCIAL financial review is and agreement months and agreement is Guaranteed, Streamlined, FORM required.) is Guaranteed, Streamlined, or IBTF Express.) or IBTF Streamlined, or Express.) IBTF Express.)

Part 5. Collecting Process Chapter 1. General Collecting Procedures Section 5. Balancing Civil and Criminal Cases 5.1.5 Balancing Civil and Criminal Cases •

5.1.5.1 Parallel Investigations

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5.1.5.2 IRS Policy Concerning Parallel Investigations

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5.1.5.3 Collection and Criminal Investigation De-confliction

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5.1.5.4 Commencement of Parallel Investigation

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5.1.5.5 Coordination Meetings

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5.1.5.6 Interviews

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5.1.5.7 Witnesses

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5.1.5.8 Information Sharing

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5.1.5.9 Undercover Operations and Search Warrants

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5.1.5.10 Administrative Summons

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5.1.5.11 Cases Under Jurisdiction of the Chief Counsel or the Department of Justice

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5.1.5.12 Advisory Processing - CI Notification of Cases Under TC 914

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5.1.5.13 Civil Liability Collection - Probation Cases

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5.1.5.14 Advisory Actions - New Probation Case Receipts

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5.1.5.15 Revenue Officer Collection Determinations - Probation Cases Conditioned Upon Payment of Civil Tax Liability

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5.1.5.16 Advisory Monitoring of Open Probation Cases

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5.1.5.17 Reporting Non-Compliance to Criminal Investigation - Revenue Officer and Advisory Responsibilities

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5.1.5.18 Disclosure of Return Information to U.S. Probation Officer

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5.1.5.19 Actions when taxpayer relocates to another state

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5.1.5.20 Restitution payment processing

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5.1.5.21 Advisory Closing Actions for Probation Cases

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5.1.5.22 Requests to Suspend Collection Action on Non-Tax Criminal Cases

5.1.5.1 (01-01-2007) Parallel Investigations 1. The Internal Revenue Code (IRC) contains both civil and criminal provisions to address fraud. Revenue officers may conduct civil investigations before, during or after criminal investigations of the same taxpayer. If the investigation is conducted simultaneously with the criminal investigation, the process is referred to as a parallel investigation. 2. Collection employees should be alert to the presence of a TC 914, Active Criminal Investigation, on related tax modules in pre-contact analysis. The TC 914 is not an entity code but the presence of the code on any module in the case may indicate the need to apply parallel investigation procedures. 3. Parallel proceedings involve simultaneous investigations or litigations of separate civil and criminal aspects of a case involving a common individual or entity. Some potential civil remedies that could occur in a parallel proceeding are IRC 6672 Trust Fund Recovery Penalty Investigations, injunctions for pyramiding taxpayers, Notice of Federal Tax Lien filings, issuance of levies, jeopardy levies, service of summons, and pursuit of erroneous refunds. 4. Civil and criminal parallel investigations are conducted as separate investigations. They are not joint investigations but do require significant coordination between the Operating Divisions throughout the civil investigation and litigation processes. While regularly scheduled coordination meetings are required, CI must not direct the revenue officer’s actions in the civil investigation.

5.1.5.2 (01-01-2007) IRS Policy Concerning Parallel Investigations 1. Policy Statement 4-26 (P-4-26), Criminal and Civil Aspects in Enforcement (formerly Policy Statement 4-84), provides guidance on taking civil enforcement action when the taxpayer is also involved in a criminal investigation. This compliance strategy is intended to identify the best alternative from the full range of civil and criminal sanctions available, prevent additional loss of tax revenue, and foster voluntary compliance. 2. If CI and Collection cannot agree on an approach, P-4-26 describes the procedures for elevating and resolving any disagreements.

5.1.5.3 (01-01-2007) Collection and Criminal Investigation De-confliction 1. If a conflict exists when a criminal and collection investigation are ongoing at the same time, the affected operating divisions must resolve the conflict and determine how and when the civil and criminal actions should proceed.

2. A six way meeting will be held with the revenue officer, the revenue officer group manager, the special agent, the supervisory special agent (SSA), SBSE Counsel, and Criminal Tax Counsel. The local Fraud Technical Advisor should also be consulted. If a case is open in the U.S. Attorney’s Office or the Department of Justice, representatives from those offices should also be invited to the meeting. 3. A decision will be made as to whether to conduct parallel investigations, to proceed solely criminally, or to proceed solely civilly. In some instances, civil action may be suspended temporarily, for example, to permit CI to complete an undercover investigation or execute a search warrant. In such cases, a date should be set for a follow up meeting to revisit the issue of going forward with collection actions. 4. In cases where civil action is to be suspended, the following actions will occur: A. CI will control all modules to be suspended by input of TC 914. B. Collection will document the ICS history and request input of STAUP 91 when collection is temporarily suspended. C. Cases that are temporarily suspended will be retained in inventory. The ICS history should be documented. D. A date will be established for a follow-up meeting to revisit the issue of going forward with collection actions and reversing the CI controls. The follow-up meeting date should be no more than 90 days from the date of STAUP 91.

Note: Collection Statute Expiration Dates (CSED) and Trust Fund Recovery Expiration Dates (ASED) for these cases are monitored by the assigned revenue officer. 5. Any disagreements on how to proceed should be elevated and resolved in accordance with the

guidelines in P-4-26. Any disagreements with the U.S. Attorney and/or Department of Justice should be brought to the attention of the Special Counsel for Civil/Criminal Coordination, Tax Division, Department of Justice.

5.1.5.4 (01-01-2007) Commencement of Parallel Investigation 1. Once agreement is reached that a parallel investigation will take place, criminal investigators and revenue officers conducting the parallel investigation should coordinate the development of the evidence that will support both the criminal and civil actions while being mindful of the legal requirements and constraints. 2. Ongoing communication is essential for a successful parallel investigation.

5.1.5.5 (01-01-2007) Coordination Meetings 1. A coordination meeting must take place within 30 days of the decision approving the parallel investigation. The participants must include the Revenue Officer, Special Agent, their respective managers and SBSE Area Counsel and criminal tax attorneys. The local Fraud Technical Analyst (FTA) should also be consulted. If a matter has been referred to DOJ/USAO, DOJ/USAO attorneys should be included in coordination activities. 2. Civil and criminal investigators and IRS attorneys should continually coordinate their efforts. Case status meetings should be held at least quarterly until the collection actions are complete. These coordination meetings will facilitate sharing important case developments. 3. The purpose of the case status meeting is to communicate the case developments and facilitate information sharing between Collection and CI. In grand jury cases, CI will not be able to share information subject to grand jury secrecy rules and IRC disclosure provisions. The revenue officer should be prepared to discuss the collection plan of action and the impact of these actions on the criminal proceeding. CI will not direct the actions in the collection investigation.

4. Use of special investigative techniques, such as undercover operations, or instances where there is the active pursuit of a search warrant should be communicated with SBSE Collection when practical. The timing of collection actions may affect special agent safety during a special investigative technique or the execution of a search warrant. Therefore, close coordination and communication is necessary when CI utilizes these techniques. Any decisions on how and when to proceed should be weighed in favor of special agent safety concerns. 5. If concerns are raised about the criminal investigation or the collection investigation, those concerns or

objections should be resolved by consultation among the collection and criminal personnel and their supervisors, Counsel attorneys and their managers. When the matter has been referred, the Department of Justice and/or Assistant United States Attorney’s Office should also be included in the decision making process.

5.1.5.6 (01-01-2007) Interviews 1. The revenue officer will advise the special agent assigned to the parallel investigation of all meetings with the taxpayer(s). 2. If the special agent has informed the taxpayer under investigation of his or her Fifth Amendment rights, the revenue officer must explain to the taxpayer or his or her representative at each meeting that the revenue officer is conducting a civil investigation and the information provided will be shared with criminal investigation. 3. If a taxpayer under investigation inquires about criminal implications or whether the taxpayer is the subject of a criminal investigation before CI has contacted the taxpayer, the revenue officer must be careful to provide accurate information and not mislead the taxpayer. The revenue officer should inform the taxpayer that they are conducting a civil investigation, and that the information obtained can be shared with Criminal Investigation. Under no circumstances should the revenue officer inform the taxpayer that the case has been referred to Criminal Investigation (CI). This is CI's responsibility. The revenue officer should immediately notify the special agent of the contact with the taxpayer. 4. There is no specific prohibition on conducting joint revenue officer and special agent interviews of taxpayers. However, revenue officers and special agents must clearly identify themselves and their roles at these meetings and prepare a joint Memorandum of Interview (MOI). The MOI should be prepared by the special agent and signed by both interviewers. The revenue officer should receive a copy of the MOI, while the special agent retains the original. All interview notes must be provided to the special agent. 5. CI may in some cases request that the revenue officer not contact the taxpayer or representative. In such cases, the revenue officer should refrain from issuing Letter 3164P or any appointment letters to the taxpayer or representative. SBSE Area Counsel should be involved in any decision to conduct an investigation without contacting the taxpayer or representative.

5.1.5.7 (01-01-2007) Witnesses 1. Revenue officers and special agents should attempt to use different witnesses to prevent the possibility of inconsistent testimony and potential discovery issues raised during the civil or criminal judicial process. 2. If the decision is made to use the same witness, the SBSE Counsel Attorney, Criminal Tax Attorney and DOJ or Assistant US Attorney assigned to the case should be consulted and coordinate any selection of these witnesses.

Note: The term 'witness' in the context of this section refers to any third party interviewed by revenue officers in the conduct of a civil collection investigation.

5.1.5.8 (01-01-2007) Information Sharing

1. Sharing information between revenue officers and government attorneys assigned to the case is a key ingredient in developing civil and criminal cases simultaneously and efficiently. 2. Information sharing between civil and criminal functions is appropriate unless prohibited under the grand jury secrecy rules of Rule 6(e) of the Federal Rules of Criminal Procedures and disclosure provisions of IRC § 6103, Confidentiality and Disclosure of Returns and Return Information. Judicial districts and appellate courts have diverse rulings on what constitutes grand jury information; therefore, the determination about what information can be shared will be made on a case by case basis. 3. Special agents generally develop as much evidence as practical before using the grand jury process. This can be done through summonses, search warrants, witness interviews, and undercover operations. This will allow CI to share information obtained with SBSE. Information obtained from CI should be included in civil investigation files as the information may be useful in future civil actions at the conclusion of the criminal case, including probation cases including civil liability resolution. 4. In the six-way meeting noted above, SBSE Collection should request that non-grand jury information be separated from grand jury material for civil investigation purposes. 5. Revenue officers must inform CI that civil files are available. Access to all available information in the civil file must be provided to CI. Criminal attorneys have a duty to disclose certain information to criminal defendants; therefore, it is absolutely necessary for the special agents and criminal attorneys to be made aware of and provided with all the information in the collection file, including documents, interview notes and any other information that SBSE gathers. The sharing of information should be done so that there are no unnecessary delays.

5.1.5.9 (01-01-2007) Undercover Operations and Search Warrants 1. Collection actions generally will be temporarily suspended if CI is conducting an undercover operation or developing probable cause to execute a search warrant. Nevertheless, the benefits of an undercover operation or search warrant should be weighed against the need to prevent additional tax revenue loss. 2. Information obtained through a search warrant is generally not grand jury information. Search warrant information obtained during the grand jury process can be made available to revenue officers if no grand jury information was included in the affidavit for the search warrant. 3. Use of search warrant or undercover evidence should be coordinated with Area Counsel, CI and their respective Counsel and the Assistant US Attorney.

5.1.5.10 (01-01-2007) Administrative Summons 1. IRC § 7602(d) does not allow a summons to be issued or enforced concerning any person if a Department of Justice (DOJ) referral has been made by the IRS for such person. IRC § 7602(d)(2) defines a " referral" as either an IRS recommendation to the DOJ for tax related grand jury investigation or criminal prosecution of the taxpayer or a criminal investigation request from the DOJ made to the IRS pursuant to IRC § 6103(h)(3)(B). Coordination between SBSE and CI is critical because pursuing a grand jury investigation or making a prosecution recommendation precludes using summonses in collection investigations. 2. IRC § 7602(d)(3) states for purposes of what constitutes a referral that each taxable period and each type

of tax is treated separately. An administrative summons for unrelated periods or types of tax will generally not impede the criminal investigation. 3. If a taxpayer has been referred to DOJ for grand jury investigation or criminal prosecution and the

revenue officer wants to issue an administrative summons to the taxpayer, the revenue officer and approving manager should speak with Area Counsel, the special agent, and Criminal Tax Counsel along with any DOJ attorney or Assistant US Attorney assigned to the case prior to issuing the summons. During this conference, the parties will determine whether an administrative summons would be permissible under IRC § 7602(d)(1) and whether the issuance of a summons would adversely affect the criminal investigation or prosecution.

5.1.5.11 (01-01-2007) Cases Under Jurisdiction of the Chief Counsel or the Department of Justice 1. When Counsel's criminal tax attorneys are assisting CI prior to referral to the DOJ, the case is considered under jurisdiction of Chief Counsel. Jurisdiction is established when Counsel accepts the CI referral. 2. When the DOJ has accepted the referral of the case, it is considered under jurisdiction of DOJ. 3. IRC §§ 6103(h)(2) & (3) allows DOJ attorneys from both the civil and criminal sections to contact either

civil or criminal investigators to solicit case information that may help perfect the matter referred to DOJ. Requests should be in writing and coordinated with CI and Disclosure. Grand jury information can be disclosed only to those parties on the grand jury list. Revenue officers will generally not possess grand jury information, but should be aware that disclosure of any such information in their possession cannot be disclosed except in these very limited circumstances. Contact local Counsel in the event there is any question about the information requested. 4. Technical Services Advisory (Advisory) is often the default point of contact for these cases. When Advisory receives requests from Counsel or DOJ on these cases, it will determine whether the case is being actively investigated or in an inactive status such as queue assignment or CNC. •

For active cases, determine the case assignment, provide Counsel/DOJ with the group manager contact and note the ICS history.

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For inactive cases, determine the Counsel contact that will receive the Advisory report noted in (7) below and open a control.

5. For cases under active collection investigation, the Director, Collection Area Operations is responsible for coordinating collection activities with the authority having jurisdiction over the criminal case. DOJ jurisdiction cases, active cases will be coordinated through Area Counsel as well. A transmittal memorandum from the Director, Collection Area Operations will be addressed to SBSE Area Counsel and will include: •

Pending civil matters

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Dates of assessment for all periods for which collection action is proposed.

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All outstanding liabilities of the taxpayer and related entities and modules

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Balance owing on the assessed amounts

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Civil action already taken on any outstanding liabilities.

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Assets owned by the taxpayer

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Value of the taxpayer’s assets

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Other claims, if any, against the taxpayer’s assets.

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Conclusion as to whether personal contact with the taxpayer would be necessary

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Advice as to whether collection activity other than levy, such as filing a notice of lien, would be sufficient to protect the interest of the United States.

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Actions the Area Director plans to take on these accounts in the event Area Counsel (and, when appropriate, the DOJ) concurs with the Area Director’s determination that the proposed civil action will not prejudice the pending criminal features.

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Conclusion as to whether even the passive-type collection activity would tie up the taxpayer’s assets to the extent that the taxpayer would be unable to finance a defense of the potential criminal prosecution.

6. Area Counsel will be responsible for:

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Reviewing the proposed civil actions

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Notifying the area director of any proposed actions they feel might imperil the criminal case.

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Referring the case to the Chief Counsel for resolution in the event that area counsel and the area director do not reach an agreement.

7. Advisory will report to Area Counsel on the inactive cases noted above, including the following information. •

a description of the inactive status of the case (queue, CNC, etc.);

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the taxpayer's compliance with any installment agreement for assessed liabilities.

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contact information in the event further case information is required.

5.1.5.12 (01-01-2007) Advisory Processing - CI Notification of Cases Under TC 914 1. Criminal Investigation (CI) will notify the Advisory Territory Manager of each new case by issuing a Notification Memorandum to the Advisory Territory Manager. 2. For cases under active Collection investigation (SC 26), including any related entities identified in the

Notification Memorandum or Compliance Initiative Program (CIP) cases, Advisory will forward the Notification Memorandum to the appropriate Field Collection Territory Manager. Receipt and transmittal of the Notification Memorandum will be documented in ICS history. 3. For cases that are in notice stream or queue status, no further action is required.

Note: Advisory will not be required to monitor CSED or ASED for cases under TC 914. Monitoring for STAUP 91 cases is a Collection Field function responsibility. 4. For NF 181 OIs open as of the effective date take the following actions: •

For SC 26 investigations, advise the assigned employee that Advisory is closing its monitoring activities and document the ICS history.

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For inactive cases, close the OI.

5.1.5.13 (01-01-2007) Civil Liability Collection - Probation Cases 1. Public confidence in the tax system requires that SBSE Collection exercise due diligence to ensure taxpayer compliance with civil liability resolution required as a condition of probation. 2. Probationary cases are considered a part of the Service’s balancing of civil and criminal aspects of enforcement. 3. To ensure proper emphasis on collection of civil liability, Advisory will issue an Other Investigation (OI)

to the appropriate field group on all new probation case receipts that are not in Status 26 to ensure that a collection determination is made on all Bal Due and Del Rets, including those periods where SBSE Examination has an open case to assess the delinquencies that were included in the prosecution. 4. These investigations are non-discretionary for revenue officer field groups. 5. Advisory is responsible for: A. Issuing follow-up status requests on outstanding OIs to ensure timely reports are generated by revenue officers. This action is essential to ensure CI and the Courts are notified of noncompliance, B. Keeping CI informed of the status of the case and

C. Reviewing revenue officer reports to ensure a collection determination is made on all Bal Due

and Del Rets, including those periods where SBSE Examination has an open case to assess the delinquencies that were included in the prosecution.

Note: CI is responsible for providing Advisory with the conditions of probation.

5.1.5.14 (01-01-2007) Advisory Actions - New Probation Case Receipts 1. CI will provide Advisory with notification of a new probation case by providing the conditions of probation directly to the Advisory Territory Manager. CI will use its Form 13308, Criminal Investigation Closing Report (Tax and Tax related only), to transmit the criminal case judgment and other necessary information. 2. For notifications that do not include the necessary documentation, Advisory will prepare a memorandum report for the Territory Manager that specifies the missing information, such as Judgment and Commitment Orders and plea agreements, necessary to the completion of the collection determination. The memorandum will also indicate that further case actions cannot occur without the documents specified. A. The Territory Manager will forward the memorandum to the appropriate CI SAC. B. A copy of the memorandum will be retained with the case documentation. 3. Advisory will take the following actions when notified of the conditions of probation. A. Review the conditions of the probation and contact CI, the local fraud coordinator or Area Counsel if questions arise. B. For SC 26 cases assigned to the SBSE Collection Field function, transmit the CI closing information using Form 3210 and document the Integrated Collection System (ICS) history. C. For cases that are not in SC 26, create a CI Probation SPBOI (Time Code 182). The paper case file, if one, opened under TC 181, will be used for the probation case. D. Issue an outgoing ICS OI for the appropriate field group to make a collection determination on the case. These investigations are not discretionary. Include the conditions of probation and asset information developed by CI in the outgoing ICS OI. Indicate that the taxpayer’s ability to comply must be evaluated and reported to Advisory. If there are paper documents, send to the appropriate field group manager and note the ICS history of the transmittal. E. In general, the ICS OI will be issued to a general program field group based on zip code assignment. In highly technical and specialized cases, assignment to an Abusive Tax Avoidance Transaction (ATAT) collection group will be warranted. The Technical Advisor will review all data available including but not limited to the CI Closing Report, Judgment and Commitment Order, and ICS case history and sub code. If one or more of the following criteria are met, the OI will be issued to the appropriate Collection ATAT group: 1. The taxpayer is a promoter 2. The taxpayer is an abusive preparer 3. Assessed amount is $250,000 or greater 4. Tax liability is $1,000,000 or greater 5. Established or archived case on ICS is coded with ATAT sub code 309 through 319 6. Indication of assets located offshore 7. Indication of complex forms of asset ownership utilizing multiple-layered entities and/or nominee or alter ego entities.

If there is uncertainty that the OI should be issued to an ATAT group, the advisor should contact the Collection ATAT Coordinator for guidance. If the Collection ATAT Coordinator determines that an OI has been inappropriately assigned to an ATAT Collection group, the OI can be reassigned to a general program Collection group based on zip code assignment. A current list of Collection ATAT Coordinators and the geographic area covered is maintained at http://abusiveshelter.web.irs.gov/AbusivePromotions/CollectionGroups.htm

5.1.5.15 (01-01-2007) Revenue Officer Collection Determinations - Probation Cases Conditioned Upon Payment of Civil Tax Liability 1. A taxpayer who is required to resolve their civil liabilities as a condition of probation is under court order to pay the obligation. Because these conditions are often the result of plea agreements, it is important to enforce the civil conditions and to report any instances of taxpayer non-cooperation, noncompliance or inability to pay promptly to Advisory. 2. Revenue officers will evaluate the conditions of probation and any asset information developed by CI in the course of their investigation and provided to the civil function, prior to taxpayer contact. 3. Revenue officers will contact Examination to determine the disposition of any unfiled returns subject to conditions of probation and include any proposed deficiencies in the total liability and case disposition. 4. Taxpayer or power of attorney contact will augment the information provided with the ICS OI to determine the taxpayer’s ability to pay. Field investigation will determine: A. Taxpayer assets and income, using the Collection Information Statement as an information source B. Verification of taxpayer statements C. Civil enforcement action indicated by the circumstances of the case D. When an installment agreement is indicated, that the liability can be paid in full prior to the expiration of terms of probation.

Note: As noted below, the status of probation cases is reported to CI 180 days prior to expiration of terms of probation. It is preferable that installment agreements provide for payment in full by the required reporting date. 5. Taxpayers must be advised •

That the terms of their probation require them to both pay all liabilities due and to comply with all filing and payment requirements that come due during the period of their probation.

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Their compliance will be monitored during the probationary period and any instances of noncompliance reported to the courts.

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That inability to pay situations will be reported to the courts for evaluation as a potential violation of the terms of probation.

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Revenue officers will send Letter 4015 (Catalog Number 47303M) to taxpayers to advise them of their responsibilities.

Note: Letter 4015 is presently being revised to provide for revenue officer signature. Until the revision is available, revenue officers should sign their name on behalf of the advisor. •

Revenue officers will contact Advisory to determine contact information for the letter as Advisory is responsible for monitoring closed case actions such as installment agreement status and current compliance.

ICS lien filing requests require the assignment of the Bal Due case. When filing of the Notice of Federal Tax Lien is indicated, revenue officers should request the assignment of the Bal Due case. The OI may be closed when the Bal Due case is assigned. Accounts may also be accelerated to SC 26 when other circumstances warrant. The collection determination must be concluded and reported to Advisory in any case. Revenue officers will report the results of the investigation to Advisory by memorandum report. The report will be routed through the group manager and will include the following information: •

A determination of collectibility on all open periods, including periods under Examination, especially those periods which were the basis for the prosecution

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For failure to file convictions, a summary of the review of the Special Agent Report (SAR), the Revenue Agent Report (RAR) and any available work papers for the reports

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A statement of filing for the notice of Federal tax lien

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Copies of collection information statements secured

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A summary of enforcement action taken against assets

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A summary of any voluntary payments made by the taxpayer

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If applicable, any installment agreements concluded with the taxpayer to pay within the period of probation, including a copy of the agreement

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Estimated tax payments required for current taxes

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Any non-cooperation by the taxpayer

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If applicable, a determination of uncollectible condition, with a copy of Form 53

Note: The revenue officer should contact the Examination Fraud Technical Advisor if assistance is needed in obtaining a copy of the SAR or RAR. •

A copy of Letter 4015.

If case circumstances warrant, balance due accounts should be accelerated to Status 26 for revenue officer assignment. Balance due and delinquent return modules subject to conditions of probation will not be assigned to the queue without a collection determination on assessed modules and coordination with the SBSE Examination function on any unfiled periods. The required reports will be submitted through channels to Advisory as soon as the investigation is concluded. A formal report is required no later than 180 days prior to the expiration of probation. Revenue officers are responsible for reporting the status of any assigned case subject to civil conditions of probation. This may include older case assignments where conditions were not previously addressed. When TC 910 is present, revenue officers should contact advisory to determine the status of the case and any reports needed for monitoring compliance. Taxpayer interviews in these cases should be conducted to address all case disposition requirements noted above.

5.1.5.16 (01-01-2007) Advisory Monitoring of Open Probation Cases 1. Advisory will review the revenue officer report for completeness. Any questions and follow-up actions will be addressed by Form 5942, Reviewer's Report - Technical Services Advisory to the group manager. 2. Advisory will monitor the probation case regularly to ensure the taxpayer is meeting the terms of his/her probation. 3. The Collection Field function report of collection determination is the basis for monitoring taxpayer compliance with civil resolution requirements, including the status of any installment agreements concluded with the taxpayer.

4. On an annual basis, Advisory will determine the taxpayer’s filing and payment status for all tax years, including last filed returns and compliance with any estimated tax payment requirements. Advisory will notify CI of any noncompliance. 5. If there are additional assessments resulting from Examination actions resulting from the criminal case that were not addressed by Field Collection, Advisory will issue an ICS outgoing OI to the revenue officer for a collection determination on those assessments.

5.1.5.17 (01-01-2007) Reporting Non-Compliance to Criminal Investigation - Revenue Officer and Advisory Responsibilities 1. Advisory is the focal point for reporting case conditions to CI. 2. For cases assigned to the Collection Field function (CFf), the revenue officer will inform Advisory of

the status of the case by memorandum through the field group manager and field territory manager, not later than 180 days prior to the expiration of the probationary period. The report will include •

A statement of the taxpayer’s cooperation to settle the tax liability

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Any determination that the tax is not collectible within the period specified in the probation order

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A statement of the taxpayer’s compliance with all filing and payment requirements.

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Any other specific information concerning taxpayer compliance.

Note: Revenue officers will report case status changes to Advisory promptly upon settlement of the account. 3. For cases reported by the CFf in (2) above, Advisory will review the revenue officer report. The

Advisory Territory Manager will add a covering memorandum report and forward the package to CI. 4. For all other probation cases, Advisory will generate the memorandum report to CI that includes: •

A statement of the taxpayer’s cooperation to settle the tax liability

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Any determination that the tax is not collectible within the period specified in the probation order

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A statement of the taxpayer’s compliance with all filing and payment requirements.

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Any other specific information concerning taxpayer compliance.

5. Case conditions will be reported not less than 180 days prior to the expiration of the probationary period. 6. Advisory will retain a copy of all memorandum reports with the probation case file.

5.1.5.18 (01-01-2007) Disclosure of Return Information to U.S. Probation Officer 1. IRC 6103(h)(4) allows disclosure of returns and return information to a U.S. Probation Officer for the purposes of informing the court of any non-compliance by a taxpayer during such taxpayer’s probationary period under the following circumstances: •

Information on Return(s) must relate to a taxpayer convicted of a criminal tax violation.

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A U.S. Probation Officer must be charged with the responsibility of determining whether such taxpayer is complying with the terms of probation that relate to the Internal Revenue Laws.

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Information on return(s) are limited to those years specified in the conditions of probation issued by the Court, or to the conviction years and those years for which the taxpayer is placed on probation.

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Disclosure of the returns and return information would not identify a confidential informant or seriously impair a civil or criminal tax investigation.

2. Advisory and other SBSE Collection employees are not authorized to disclose the information directly to U. S. Probation Officers. If contacted directly for information, employees should advise that the information will be provided to CI for the required coordination with the Disclosure Officer and the Assistant United States Attorney as appropriate.

5.1.5.19 (01-01-2007) Actions when taxpayer relocates to another state 1. When revenue officer investigation determines that the taxpayer subject to conditions of probation has moved to another state, Advisory will be notified of the new address and other relevant information. 2. Advisory may become aware of taxpayer relocation in its monitoring activities. 3. In all cases, Advisory will contact the CI function for the name, telephone number and address of the new probation officer. 4. The transferring Advisory group manager will notify the receiving Advisory group manager, stating that the case is being transferred with paper file to follow. •

Transfer the SPBOI 182 module to the receiving group

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Prepare a copy of the paper file (including court orders and contact information for the new probation officer)

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Transmit the file using Form 3210.

5. The forwarding function will update the retained paper file upon receipt of the Form 3210 acknowledgment. 6. )Further monitoring of the conditions of probation is the responsibility of the receiving Advisory

function. 7. Exception:In some instances the courts will allow a taxpayer to relocate but will retain control of the

case. In these instances, cases should not be transferred.

5.1.5.20 (05-01-2007) Restitution payment processing 1. Civil restitution orders normally specify that payments made in compliance with the order are made through the courts. Advisory processing of such payments should therefore be rare. 2. All restitution payments are processed by a centralized location at the following address: 3. Any payments received, along with identifying information should be sent to this address via Form 3210. Internal Revenue Service Attn: MPU, STOP 151 (Restitution) P.O. Box 47-421 Doraville, GA 30362 Fax: (770) 455-2162 4. Any payments received, along with identifying information should be sent to this address via Form 3210.

5.1.5.21 (01-01-2007) Advisory Closing Actions for Probation Cases 1. Probation cases should be closed when •

The conditions of probation are satisfied.

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The conditions of probation are terminated by the court.

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Non-compliance with terms of probation have been identified and referred to the CI SAC and the probation period has expired.

2. Enter history on ICS that describes the closing actions taken. 3. Close any open SPBOI – 182 on ICS.

5.1.5.22 (01-01-2007) Requests to Suspend Collection Action on Non-Tax Criminal Cases 1. For purposes of this section, a non-tax criminal case is defined as one in which the investigation or prosecution is not being made on behalf of the Internal Revenue Service. 2. The Director, Collection Area Operations, can suspend collection activity at the request of the Justice Department on a taxpayer who is the subject of a non-tax criminal case. 3. However, the Service may not inform the Department of Justice whether there is any ongoing collection

activity with respect to a particular taxpayer, or whether we have suspended, or will suspend, such activity unless the Department of Justice submits a written request meeting the requirements of IRC 6103(i)(2). 4. Telephone requests by a United States Attorney to suspend collection activity can be honored in emergency situations (such as when court action is imminent) provided a delay in collection activity would not be detrimental to the Service. In such cases: •

Disclosure of information — No information may be disclosed to the Department of Justice until the telephone request is followed up with a proper IRC 6103(i)(2) request.

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Suspension action — If suspended, review after 72 hours to determine if it should be continued. In all cases, the decision to suspend activity should come only from the Director, Collection Area Operations.

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If contacted by the U.S. Attorney, revenue officers and Advisors will make no comment on the case in question and refer the request, through channels, to the Director, Collection Area Operations.