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Part 5. Collecting Process

Chapter 1. General Collecting Procedures

Section 11. Delinquent Return Accounts (Cont. 1)

5.1.11  Delinquent Return Accounts (Cont. 1)

5.1.11.6 
No Return Secured

5.1.11.6.3 
Enforcement Referrals - Individual Master-file(IMF) Del Rets

5.1.11.6.3.2  (03-01-2007)
Referral to HINF - SFR (Formerly, Substitute for Return for Revenue Officer)

  1. Refer a Del Ret(s) using the HINF - SFR (formerly SFR for RO) referral process ONLY if the case is ineligible for an ASFR referral. Generally, HINF - SFR referrals involve a Del Ret with an open Bal Due module, and/or a nonfiler with more than 60 IRP documents, conditions that make it ineligible for an ASFR referral. In addition the case must meet:

    1. IRP must be posted to the Information Returns Master-file for the nonfiled year (IRMF), and;

    2. A Bal Due will result

  2. The HINF - SFR process is virtually the same process as ASFR, using IRP to calculate tax due, however the referral is processed by the Campus Examination function using a referral to an electronic mailbox through secure e-mail. Refer a Del Ret(s) to HINF-SFR by:

    1. Use "Option E, Exam Referral" to close the ICS Del Ret module(s);

    2. Document the Total IRP HINF amount(s) for each tax year(s) in ICS history, and;

    3. Document the reason for not using an ASFR referral in ICS history, (see section 5.1.11.6.3.1.(3)) and;

    4. Prepare a secure e-mail "e-referral" to :*CTR CS HINF-SFR GCP.

    5. Use"HINF-SFR" as the subject of your e-mail

    6. Include the following in your E-mail message to *CTR CS HINF-SFR GCD:

    Subject : HINF-SFR

    Taxpayers TIN: NNNNNNNNN (no dashes)

    Non-filed Tax Year(s) and total IRP Income:YYYY $$,$$$

    Note:

    Paper referrals to HINF-SFR (formerly SFR for RO) are no longer acceptable and worksheets are not required.

  3. If contact is made with a taxpayer whose return was referred to HINF-SFR, attempt to secure the return(s), however, do not issue a summons if the taxpayer refuses to file.

  4. If a return is secured for a period referred to HINF-SFR, and an assessment has not posted to the module,(no TC 290 or TC 300) retain a copy and process the date-stamped original return through normal channels as a " return secured" (TC599cc69).

  5. If a return is secured for a period referred to HINF-SFR and an assessment has been made (TC 290 or TC 300), retain a copy and process as a Request for Reconsideration of a SFR assessment. See Interim Guidance; SBSE 05-05-0906-035 dated September 1,2006, and IRM 5.1.20 for detailed instructions.

5.1.11.6.3.3  (03-01-2007)
Referrals to Examination IMF (F 3449)

  1. Prepare Form 3449 Referral Report to Examination for an IMF Del Ret ONLY if it cannot be referred to ASFR or HINF-SFR because there is insufficient, or no IRP posted to the IRMF for the delinquent year. In addition, all IMF F3449 Del Ret referrals must meet HINF criteria, (see LEM 5.1.11.6.3.3). To complete F3449, follow the steps outlined below:

    1. For IMF referrals, state the income, (must meet current LEM criteria, see LEM 5.1.11.6.3.3) the amount of withholding, and compute the potential tax due using Filing Status 1 or 3 with no deductions and 1 exemption. State which documents or sources were used to compute income and withholding. Thoroughly document the non-IRP income and sources on F 3449;

      Note:

      If married, prepare a separate Form 3449 for each liable spouse for individual income tax referrals. Filing a joint return is an election made by the taxpayer. Compute tax only on the basis of an individual. Use Filing Status 3 to compute the tax.

    2. Describe the source and amount of income for the taxpayer, i.e.self employed computer programmer, insurance salesman, trust fund income for IMF, etc.;

      Note:

      The majority of the high income must be from a non-IRP source. If the majority of the nonfiler's income was reported as IRP, a F3449 referral is NOT appropriate, see IRM 5.1.11.6.3.1, or 5.1.11.6.3.2.

    3. Attach all documentation substantiating income. This includes:
      1) IDRS/CFOL research
      2) Del Ret supplements
      3) Summoned documents
      4) Relevant case history

    4. Secure managerial approval;

    5. Forward approved part 1 and 2 of the Form 3449 to:

      Internal Revenue Service

      Brookhaven Campus Classification

      Stop 634, Team 302

      1040 Waverly Avenue

      Holtsville, NY 11742

    6. Retain Part 3 of Form 3449 in the Del Ret file;

    7. Close the oldest module of each MFT on the Del Ret using Option E,"Exam Referral" (see Section 11.7.5 of this IRM).

    8. Prepare a terminal input request for input of TC 592 if an erroneous referral was made.

  2. Do notrefer the taxpayer to Examination using F3449 if:

    • The case may be closed by criteria established in Section 11.6.1.1 of this IRM;

    • The IMF case can be referred as an ASFR or HINF-SFR (SFR for RO) using the criteria established in Section 11.6.3.1 or 11.6.3.2 of this IRM;

    • All attempts to locate the taxpayer or their legal representative have been unsuccessful.

      Exception:

      Make a referral if the taxpayer has material current high income and/or clear ownership of substantial assets that may be attached to satisfy a potential tax liability even if you are unable to contact or locate the taxpayer.

  3. Refer to Examination only those Business Master File (BMF) taxpayers that cannot have returns prepared under authority of Internal Revenue Code section 6020(b) or when there is an employee classification issue.

5.1.11.6.4  (05-27-1999)
Referrals Concerning Underreported Tax

  1. If an IMF delinquent return(s) is secured or a return is secured for a return(s) that has been previously assessed as an SFR, the revenue officer will not attempt to audit, examine or verify the correctness of the return secured. However, the revenue officer will ensure that it is valid, (e.g.; signed and completed) and attempt to resolve obvious discrepancies and omissions:

    1. Compare the income reported on the return with the information on the Del Ret supplement or IRPTR summary and attempt to resolve obvious omissions and discrepancies;

    2. Ensure that the proper schedules are filed according to the types of income shown on the Del Ret supplement or IRPTR summary;

    3. Determine if any income that has not been subject to withholding or reported on Form 1099 or other such IRP documents has been reported on the return;

    4. Compare withholding reported to the IRS to that stated on the return.

  2. If income has not been reported by the taxpayer or there is an overstatement of credits and indications of fraud do not exist, attempt to resolve the discrepancy with the taxpayer. If the differences and the amount in question exceeds the amount shown in LEM 5.2.1, consider a referral to CI.

  3. If not appropriate for a referral to CI, process the return and prepare Form 3449 with a narrative and the amount of underreported tax. The information will be referred to Examination function through CCP.

  4. When there is a discrepancy in the information reported on a secured BMF return resulting in an underreporting of taxes and no signs of fraud or willfulness exist, refer the case to your Area Field Territory Manager on Form 3449. Form 3449 should include an estimate of the dollar amount of the misstatement and the source or object resulting in understatement.

5.1.11.6.5  (05-27-1999)
Excise Tax Returns

  1. Form 720, Quarterly Federal Excise Tax Return, may be prepared under the authority of IRC 6020(b) if a taxpayer fails or refuses to file.

  2. Do not prepare the returns under IRC 6020(b) if preparation will involve extensive scrutiny of books and records or will pose complex legal questions. Refer the taxpayer to Examination on Form 3449 and provide all facts relative to the preparation of the return.

5.1.11.6.6  (05-27-1999)
Referrals to the Tax Exempt and Government Entities (TEGE)

  1. If a revenue officer encounters a responsible officer of an exempt organization who refuses to file a required exempt organization return, a referral should be sent using Form 5666 to:

    IRS Exempt Organizations

    Examination Classification Unit

    MC 4920 DAL

    Dallas, Texas 75242

  2. A summons does not have to be served prior to referring a case to TEGE.

  3. Attach an explanatory cover memo and include all information on the referral to assist TEGE in preparation of the return.

  4. Employee Plans, Form 5500 series (MFT 74) are no longer worked in Collection Field function. If a Del Ret includes a Form 5500 delinquency and the plan number is 001–500, the revenue officer will:

    1. Prepare Form 5666, EP Referral;.

    2. Attach a copy of the Del Ret and case file history;

    3. Close the ICS Del Ret using Option E, and;

  5. Send the referral to:

    IRS TE/GE Div 2nd floor

    Employee Plans Classification

    9350 Flair Dr

    El Monte, Ca 91731

  6. If a Del Ret is for any other Form 5500 series or where the plan number is 501 or higher, close the ICS Del Ret using Option C and sub-menu action "Not Liable" which will post a TC 590 cc 50 to the module.

5.1.11.6.7  (05-27-1999)
Employer/Employee Relationship Questions

  1. The Employment Tax Program is responsible for determining when income of independent contractors or officers of corporations should be reported as wages subject to income tax and or FICA. The program responsibilities involve determining the appropriateness of the following:

    1. Withholding of income tax on wages of employees reported on Form 941, 941–M, 944 and Form 1042;

    2. Employer tax and employee tax (Social Security) under the General Insurance Contribution Act Form 941, Form 942, Form 943, Form 944 and Schedule H (Form 1040);

    3. Employer tax and employee tax for retirement purposes imposed on employers of individuals performing railroad services and the railroad employee representatives tax reported on CT–1 and CT–2;

    4. Withholding on certain gambling winnings reported on Form 941, Form 945 and Form 1042 by the payor of winnings;

    5. Backup withholding;

    6. Tax for unemployment insurance under the Federal Unemployment Act reported on 940;

    7. Withholding of tax under IRC 1441 and 1442.

  2. Refer a case to the area Employment Tax Program or the PSP Support Manager in Compliance when it is determined during an investigation that a taxpayer may be treating employees as independent contractors or officers may be taking draws, loans, dividends, professional or administrative fees, etc., to avoid reporting taxable wage. Refer potential Employee/Employer relationship determinations on Form 3449 relating all the facts of the case and close the ICS Del Ret using Option E.

  3. Internal Revenue Manual 4600, Employment Tax Handbook, contains additional information for all functions pertaining to the administration of Employee/Employer classification issues.

5.1.11.6.8  (03-01-2007)
IRC 6020(b) Authority

  1. The following returns may be prepared, signed and executed by revenue officers under the authority of IRC 6020(b):

    1. Form 940, Employer’s Annual Federal Unemployment Tax Return;

    2. Form 941, Employer’s Quarterly Federal Tax Return;

    3. Form 943, Employer’s Annual Tax Return for Agricultural Employees;

    4. Form 944, Employer's Annual Federal Tax Return;

    5. Form 720, Quarterly Federal Excise Tax Return;

    6. Form 2290, Heavy Vehicle Use Tax Return;

    7. Form CT–1, Employer’s Annual Railroad Retirement Tax Return;

    8. Form 1065, U.S. Return of Partnership Income.

  2. Pursuant to IRM 1.2.44.5, Delegations of Authority, Order Number 182 (rev. 7), dated 5/5/1997, revenue officers GS-09 and above, and Collection Support Function managers GS-09 and above, have the authority to prepare and execute returns under IRC 6020(b).

5.1.11.6.8.1  (05-27-1999)
Taxpayer Contact

  1. When the taxpayer is contacted, set a specific date for filing. Secure sufficient information so that an accurate return can be prepared if the taxpayer fails to file by the specified date.
    Example:

    1. Total wages, number of employees, and tax withheld for each delinquent return (Forms 941, 944 and 943).

    2. Name of states in which wages were paid (Form 940).

    3. Number of partners in the partnership, their names, addresses, social security numbers/employer identification number , each partner's interest percentage in the partnership, and the partnership's gross income (Form 1065/K-1). If possible, obtain copies of the partnership agreement and copy of the last filed Form 1065.

    4. Type of truck, number of axles, gross weight of vehicle and tax due (Form 2290).

  2. Advise taxpayers who are personally contacted that failure to file by the specified date will be considered a refusal to file. This could subject the taxpayer to a fine, criminal penalties, or both, under IRC 7203.

  3. Explain the trust fund recovery penalty, if applicable.

  4. If collection of the tax on a delinquent return appears to be in jeopardy, follow the procedures for prompt and jeopardy (IRM 5.1, section 4) assessments.

  5. If the taxpayer is in a receivership or probate proceeding, follow the procedures for quick assessments in lRM 5.1, Section 4.

  6. A summons is not required before using IRC 6020(b) procedures. However in some cases, a summons may be the appropriate action if the revenue officer cannot establish an estimated amount of tax liability, and the taxpayer is being uncooperative. See IRM 25.5, Summons Handbook, for further guidance.

  7. A field call is required before using IRC 6020(b) authority to obtain information and ensure that the entity is liable for the return.

  8. If the taxpayer fails to file employment, excise and partnership tax returns by the specified date, prepare the returns under the authority of IRC 6020(b).

5.1.11.6.8.2  (05-27-1999)
Preparation and Approval of 6020(b) Returns

  1. ICS now provides revenue officers the ability to prepare returns and letters on their ICS laptop. Compliance Territory Managers are encouraged to fully utilize the ICS 6020(b) program. However at local management option, and with the concurrence of the Compliance Services, Case Processing, Territory Manager, the Centralized Case Processing Unit may perform all phases of the IRC 6020(b) clerical and review process using information from section I of F5604. This includes signing of returns and submitting them for routine processing.

  2. Use Form 5604, Section 6020(b) Action Sheet, to initiate returns under the authority of IRC 6020(b). The revenue officer should fully document the ICS history with a complete explanation of the basis for the assessment(s). The explanation should include information such as wages paid, income tax withheld, FTD's or payments, and any calculations or other information they used to establish the correct liability for each tax period. This information is important because it could be utilized later should the taxpayer request an appeal, file suit, or file Form 911 with the Taxpayer Advocate office.

  3. Attach a copy of the ICS history documentation that explains the basis for the assessment(s) to Form 5604. This will eliminate the need for the revenue officer to complete the "basis for assessment" section on Form 5604.

  4. Use the taxpayer’s records or other reliable sources to determine the amount of wages paid, the amount of income tax and FICA tax withheld, and other necessary information. Use the following to prepare Forms 940, 941, 942, 943 and 944:

    1. Compute daily wage information times 91 days.

    2. Compute weekly wage information times 13 weeks.

    3. Compute monthly wage information times 3 months.

    4. Compute annual wage information by multiplying appropriate days, weeks and months times amount(s) provided.

  5. Use the following method of tax computation for preparing returns when actual wage amounts are not available.

    1. Withholding is 20% of the wage amount when the actual amount is not provided by the taxpayer;

    2. FICA should reflect the correct rate for the applicable period;

    3. Use the wage amount from the last period satisfied (LPS) adjusted by the inflation factor to compute wages for IRC 6020(b) returns. The inflation factor is a percentage (2.5%) applied against the wage amount from the LPS. To compute the inflation factor for a delinquent period, multiply 2.5% times the number of quarters between the Del Ret period and the last period satisfied (LPS). Then, add the inflation factor to the wage amount from the LPS. This total is the wages to be used on the IRC 6020(b) return;

    4. Use annual wage amounts to prepare 6020(b) returns for F 944 delinquencies;

    5. If a "final" return is prepared under IRC 6020(b), be sure to indicate it as "final" under " date last wages paid" ;

    6. The inflation factor is not applicable if the Del Ret module is BEFORE the LPS module data;

    Example:

    Do not calculate the inflation factor if the LPS is 200206 and the delinquent period is 199912.

  6. Prepare IRC 6020(b) returns for either, unfiled quarterly F941s or, unfiled annual F944, but not both for the same period. The open Del Ret will determine which return is delinquent, and eligible for 6020(b) processing, (e.g.; Do not prepare 6020(b) F941 returns to close an open F944 delinquency). Do not change FRs for the 941/944 changeovers manually.

  7. Use the following procedure for preparing Partnership returns:

    Note:

    Do not prepare a Partnership return under the provisions of IRC 6020(b) if Revenue Procedure 84–35 applies to a small partnership (10 or less partners) that meets "reasonable cause" provisions for failure to file, and you have verified that each partner has individually and fully reported his share of partnership income (see section 11.7.1 for Del Ret closing actions).

    1. For Form 1065, complete the name, address, and EIN portion of the form along with the number of schedule K-1s that will be attached. If you know the gross receipts, then also complete lines 1a, 1c, and 8. These lines should all contain the same amount. This is all that is completed on Form 1065.

    2. Schedule K-1 should also be completed and attached to Form 1065. A Schedule K-1 is completed for each known partner. Partners can be individuals, other partnerships, trusts, S-Corporations, or Corporations. On all cases, complete the Partner's identifying number, name, address, and zip code, as well as the Partnership's identifying number, name, address, and zip code.

    3. If the revenue officer does not know what the Partnership's income was for the tax year, then do not complete any thing else on the Schedule K-1.

    4. If the revenue officer knows what the Partnership's income was for the tax year (line 8 on Form 1065), then complete line 1 on Schedule K-1. If the revenue officer knows what each partner's distribution of income percentage is, then prepare each K-1 appropriately. If the distribution of income percentage is unknown, then divide the distribution of income equally among the partners, and reflect that amount on the K-1. Example: $100,000 total distributive income (Line 8 from the Form 1065) and four partners. Then $25,000 will be reported on each partner's K-1.

    5. Partnerships don't pay tax, but instead pass through income and deductions to their partners, who then report it on their income tax returns. Therefore, it is important to know that the main objective of ensuring the Form 1065 and Schedule K-1 is filed, either voluntarily by the Partnership or under IRC 6020(b) authority, is to ensure that the partners have accurately reported their share of the Partnership income. It is important for the revenue officer to appropriately follow up on each partner's filing requirements for the delinquent tax year. If appropriate, revenue officers should consider a referral to Exam, Form 3449, if partners failed to report Partnership income. If potential fraud exists, then the revenue officer should follow 6.2 of this section, Referrals to Criminal Investigation.

  8. Prepare a return for the current tax period if that period becomes delinquent during the IRC 6020(b) process.

  9. Prepare the tax returns in sets. A completed set includes an original and one copy of each return for each tax period.

  10. Mail Letter 1085 or 1616 along with the original returns and all applicable enclosures, to the taxpayer. ICS macros should contain Letters 1085, and L1616 (used for Partnership returns). Retain a copy of the letter and tax returns in the case file.

  11. Should a taxpayer file bankruptcy after a letter 1085 or 1616 has been mailed, immediately inform Insolvency and provide them with copies of the proposed returns. Unless instructed otherwise, continue 6020(b) processing.

5.1.11.6.8.3  (05-27-1999)
Appeals of Unagreed IRC 6020(b) Cases

  1. If the taxpayer requests an appeals conference:

    1. Forward the case to Appeals on Form 12209 ,12835, or Form 3210, Document Transmittal.

    2. Establish a control at either the group level or in the Collection Support Function while the case is pending in Appeals.

  2. If a Collection Support Function is notified of an appeal on a proposed IRC 6020(b) assessment, it will return its file to the initiator if a narrative is required to support the recommendation.

  3. To place the Del Ret module in suspense while the taxpayer exercises the right of appeal choose "Option I, Surveyed " from the Close Del Ret menu on the Del Ret Module Summary screen.

  4. The Group manager or Collection Support manager will periodically follow up with Appeals concerning the status of the case.

  5. When Form 5402, Appeals Transmittal Memorandum and Supporting Statement, is received from Appeals, follow the instructions on the form for disposition of the case.

  6. Appeals will:

    1. Sign the prepared return under the authority of IRC 6020(b).

    2. Complete Form 5604, Section 3.

    3. Process the return directly to the appropriate Campus for assessment with Part 1 of Form 5604.

5.1.11.6.8.4  (03-01-2007)
Preparing Returns for Assessment

  1. Process the returns for assessment under the authority of IRC 6020(b) if the taxpayer fails to file by the specified date or has not returned the 6020(b) returns signed.

  2. In all cases if payment of the proposed return is not received, follow procedures in Section 11.5.2 of this IRM.

  3. Revenue officers must; Sign, Title, Date, and enter the following on the bottom of the return:

    1. The statement —"This return was prepared and signed under the authority of Section 6020(b) of the Internal Revenue Code. Apply condition code 4."

  4. Enter the appropriate TC and closing code on the left margin of the return, (see Exhibit 5.1.11-3 of this IRM);

  5. Close the ICS Del Ret module under"Option A, Return Secured" using the appropriate sub-menu option (see section 11.7.1 of this IRM);

  6. Complete section III of F5604, attach a copy, and forward the signed, date-stamped, 6020(b) return to submission processing as a secured return.

5.1.11.6.8.5  (05-27-1999)
Unable to Locate and Unable to Contact Cases

  1. In unable to locate situations when the proprietors, partners or responsible officers and assets cannot be located:

    If Then
    Their SSNs can be determined Follow IRM Section 11.5.2 of this IRM for returns without full payment
    Their SSNs cannot be determined Close the Del Ret Module using Option B, "Unable to Locate" . See Section 11.7.2 of this IRM.

  2. In unable to contact situations:

    1. Process the returns via prompt assessment;
      or

    2. Prepare a pre-assessment Form 53, Report of Currently Not Collectible Taxes, at the time the return is signed.

5.1.11.7  (06-02-2004)
Del Ret Closures

  1. Disposition of the Del Ret will depend upon the circumstances of individual cases. This section describes Del Ret Module closing actions.

  2. For technical details on each type of case closure, refer to the specific sections listed in this IRM. Exhibits 11–1 and 11–2 will also furnish answers to a number of questions in the disposition of the Del Rets.

  3. The ICS system is a menu driven process. Users select literals from a menu which then generate transaction codes to IDRS.

  4. Closing the Del Ret on the ICS system is done using the "<F6> Close Del Ret menu" found on the " ICS Del Ret Module Summary screen" . Once an option is selected, ICS will generate a transaction code 59X and an applicable closing code for the closure.

  5. The following IRM sections will explain the selections available as a closing options from the "<F6> Close Del Ret menu" .

5.1.11.7.1  (06-02-2004)
Option A — Return Secured

  1. Select "Option A" from the "Close Del Ret" menu to close the Del Ret module(s) on ICS when a return is secured:

    1. Select the appropriate closing action from the sub-menu for the type return you secured.

    2. ICS generates a TC 599 with a cc to IDRS (the closing code depends on what closing action you selected) .

    3. Record money secured with a return via a sub menu within closing actions a) Taxable, c) Unassessable or, e) 6020(b) Agreed. This generates a TC 610 workstation transaction and updates the ICS module balance to reflect the payment.

  2. See section 11.5 of this IRM for specific details on types of returns secured.

5.1.11.7.2  (06-02-2004)
Option B — Unable To Locate

  1. Select "Option B, Unable to Locate" from the "Close Del Ret" menu to close the Del Ret when you are unable to locate a taxpayer.

  2. Do not close subsequent periods on the same type of tax if the earliest Del Ret module for each type of tax is closed.

  3. ICS generates a TC 593 cc 57 to IDRS when the closure is verified.

  4. Group Manager approval is required.

5.1.11.7.3  (06-02-2004)
Option C — No Return Secured Taxpayer Not Required To File For This Period Only

  1. Select "Option C" from the "<F6> Close Del Ret menu" when a taxpayer is not required to file for a period.

  2. ICS generates a TC 590 and closing code (cc) to satisfy a particular period. However, the requirement to file for subsequent periods remains open.

  3. Select one of the following closing actions from the ICS sub-menu to generate the appropriate closing code:

    1. Not liable for return (BMF - NMF) — cc 50 is used when the taxpayer is not liable for this period but does plan to be liable for future returns.

    2. Income below filing requirement (IMF) — cc 51 is used after verifying and calculating that the taxpayer's total income is below the amount required to file for that year. Use cc SUPOL and cc IRPTR to help you verify income. Be sure to include the spouse's income when calculating married filing joint status.

    3. Little or no tax due (P-5-133) — cc 52 is used to close a case based on the Policy Statement P-5-133. See IRM 5.1.11.6.1. It is also used to close a Del Ret module on a Partnership Return based on Revenue Procedure 84–35. See IRM 5.1.11.6.8.2(6) for more information.

      Note:

      This closing action requires managerial approval before the closure is completed.

    4. T/P due refund — cc 53 is used after verifying the taxpayer's income and calculating that the tax due on the return, if it were filed, would result in a refund.

    5. T/P due refund 6020(b) — cc 63 is used when a 6020(b) return is prepared and there is more credit than tax resulting in a refund due the taxpayer. See section 11.6.8 of this IRM for 6020(b) procedures.

  4. For problems concerning multiple entities, see IRM 5.1.11.7.14 for additional guidance.

5.1.11.7.4  (06-02-2004)
Option D — No Return Secured Taxpayer No Longer Required To File (Final)

  1. Select "Option D" from the "<F6> Close Del Ret menu" when the taxpayer is no longer required to file a return, and the filing requirement for the MFT should be closed on the Master File.

  2. ICS generates a TC 591 to satisfy that period as well closing the filing requirements on all subsequent periods for that MFT so be sure to select "Option D" on the earliest period on each MFT.

    1. ICS generates a TC 591 cc 66 on all subsequent open Del Rets for that MFT.

    2. Close any other ICS modules for other MFTs related to the entity

    3. Prepare paper documents, (Forms 2363 or 4844) to close filing requirements on non ICS MFTs. Be sure to include the effective date of the actions.

    4. Create a ICS history item to document the actions taken on paper.

  3. A TC 591 will stop tax packages from being mailed to the taxpayer and stop future delinquency checks for that MFT.

  4. Select one of the closing action from the ICS sub-menu to generate the appropriate closing code:

    1. Business discontinued — cc 50 is used when an entity has discontinued and returns are no longer required. Close out all filing requirements on all MFT's after the closing date.

    2. Business transferred — cc 50 is used when a business has stopped operating under this entity and has established another entity to take its place. Close out all filing requirements on all MFT's after the transfer date.

    3. Change in Organization — cc 50 is used when an organizational change has taken place for the entity and a new entity has been established. In addition to any Del Rets close out all filing requirements on all MFTs after the change date.

    4. Discharged all employees — cc 50 is used when the business has discharged all of its employees yet the business has not closed. Close the 940, 941, 943,944 and 945 filing requirements after the discharge date.

    5. IRC 6020(b) - Program — cc 63 is used when a 6020(b) return is being prepared and it will be the final return for the business. See section 11.6.8 of this IRM for procedures on 6020(b).

    6. Other — cc 50 is used for any situations that do not fall into the above categories. For example, an IMF Del Ret where the taxpayer is deceased; in this situation prepare Form 2363 to request the input of a TC 540, "Deceased Taxpayer" , and create an ICS history item.

  5. To prevent future delinquencies on those periods or MFT's not appearing on ICS at the time of closing the Del Ret;

    1. Prepare paper documents 2363 or 4844 as appropriate.

    2. Request that a TC 591 with appropriate closing code be input.

    3. Be sure to give the effective date or the out of business date.

5.1.11.7.5  (06-02-2004)
Option E — Exam Referral

  1. Select "Option E, Exam Referral" from the "Close Del Ret" menu when you refer a case to Examination, ETE, TEGE, or HINF-SFR (formerly SFR for RO processing).

  2. ICS generates a TC 595 cc 57 once the closure is verified

  3. Do not close subsequent periods on the same type of tax if the earliest Del Ret module for each type of tax is closed.

5.1.11.7.6  (06-02-2004)
Option F — CI Referral (IMF Only)

  1. Select "Option F, CI Referral (IMF Only) " from the "<F6> Close Del Ret menu" when a case is referred to the Criminal Investigation function.

  2. ICS will generate a TC 596 cc 57 once the closure is verified.

  3. Closing transactions should not be input for subsequent periods on the same type of tax if the earliest Del Ret module for each type of tax is closed.

  4. See section 11.6.2 of this IRM for specific details on CI referrals.

5.1.11.7.7  (06-02-2004)
Option G — Return Previously Filed

  1. If the return has been previously filed, secure a signed copy of the return with proof of payment, if appropriate. A careful analysis of the facts should be made to determine for which entity the previously filed return was intended. Verify fact of filing using CFOL command codes as shown in section 11.1.3.1 of this IRM.

    1. If the signed copy is for the Del Ret entity, forward the return for processing.

    2. Write on the top of the return "possible duplicate return " and close the Del Ret module on ICS using "Option "C, No Return Secured" . When the sub-menu is displayed select closing action "Return previously filed" . This will generate a TC 594 cc 58.

    3. If the signed copy is the spousal entity and the return is posted to spouse's SSN, close the Del Ret module on ICS, using "<F6> Close Del Ret menu" select "Option C, No Return Secured" . When the sub-menu appears select closing action "Spouse on joint return" . This will systemically generate a TC 594 cc 59.

    4. If the secondary SSN is incorrect on the jointly filed return, use Form 2363 Master File Entity Change to correct the secondary SSN of the entity.

    5. If fact of filing cannot be verified on the spouses SSN, secure an original tax return and forward for processing using procedures in section 11.5 of this IRM. Close the Del Ret with closing action "Spouse on joint return" .

    6. Where there has been an entity change and the return was not intended for the Del Ret entity a closing action of "Return Previously Filed" is not appropriate in this situation.

    7. When taxpayer is not liable for this module only, close on ICS using "Option C, No Return Secured" . When the sub-menu appears select closing action "Not Liable for Return " . This will generate a TC 590 cc 69.

    8. When taxpayer is no longer liable to file under this entity, close on ICS using "Option D, No Return Secured/Final" . When the sub-menu appears select closing action that best describes why the entity is no longer liable to file return. This will generate a TC 591 cc 50.

5.1.11.7.8  (06-02-2004)
Option H — Shelved

  1. Select "Option H, Shelved" from the "<F6> Close Del Ret menu" only when prescribed in IRM instructions or by direction from Headquarters.

  2. ICS generates a TC 598 cc 57 to IDRS once the closure is verified.

5.1.11.7.9  (06-02-2004)
Option I — Surveyed

  1. Select "Option I, Surveyed" from the "<F6> Close Del Ret menu" to generate a TC 597 on IDRS.

  2. The appropriate closing actions for a TC 597 are as follows:

    1. Routine — cc 57 is used only when prescribed in IRM instructions or by direction from Headquarters.

    2. 6020(b) Unagreed Appeal — cc 63 is used to close the Del Ret module(s) when the taxpayer exercises his appeal rights in unagreed IRC 6020(b) cases. See IRM 11.6.8.3 of this IRM for additional information.

5.1.11.7.10  (03-01-2007)
Option J— Transfer To ASFR (IMF Only)

  1. Select "Option J, Transfer to ASFR (IMF Only)" from the "<F6> Close Del Ret menu" when a case meets the criteria for referral to ASFR.

  2. ICS transfers the case by reassigning it to the Campus's ASFR function with TSIGN 8000.