**CHAPTER 400 -- INVESTIGATIONS**

**(400)-390** **[Remittance Test Investigations]{.underline}**

390.1 [Overview.]{.underline}

A Local Investigative Initiative (LII) that probes a potential theft of
a taxpayer remittance from an Internal Revenue Service (IRS) office or
lockbox facility is also known as a remittance test.

The remittance test program is a continuous proactive activity conducted
throughout the year. The purposes of these investigations are as
follows:

-   To test the various processing systems at IRS Submission Processing
    Centers, IRS field offices and IRS lockbox facilities to assure that
    negotiable remittances (e.g., cash, money orders made out in blank,
    returned refund checks, etc.) are not being fraudulently diverted;
    and

-   To identify any control weaknesses that jeopardize the protection
    and safeguards over revenues received.

This section includes the following information related to remittance
test investigations:

-   [Remittance Test Initiation
    Procedures](#RemittanceTestInitiationProcedures)

-   [Controlled Remittance Test](#ControlledRemittanceTests)

-   [Uncontrolled Remittance Test](#UncontrolledRemittanceTests)

-   [Documentation of Remittance Test](#DocumentationRemittanceTest)

-   [Unrecovered Remittance](#UncoveredRemittances)

-   [Theft is Suspected](#TheftIsSuspected)

-   [Initiating Spin-Off
    Investigations](#InitiatingSpinOffInvestigations)

-   [Use of Investigative Imprest Funds in Remittance
    Test](#ImprestFundsInRemittanceTest)

-   [Report Format](#ROIFormat)

These guidelines are intentionally basic in nature due to the variations
in operating practices among IRS Submission Processing Centers, IRS
lockbox facilities and IRS field offices. Special Agents (SA) should
contact the TIGTA Office of Audit (OA) for reports or information on
noted problem areas and control weaknesses disclosed by program reviews
of the functional area being tested.

390.1.1 [Acronyms
Table.](../../acronyms-table/acronyms-table.doc#AcronymsTable)

390.2 []{#RemittanceTestInitiationProcedures .anchor}[Remittance Test
Initiation Procedures.]{.underline}

TIGTA Office of Investigations (OI) has committed to conducting
remittance tests at IRS lockbox banks during the peak filing period of
each year. The Special Agent-in-Charge (SAC) is responsible for
establishing a test program schedule for remittance tests conducted at
IRS lockbox facilities during other times of the year, and at IRS field
offices and Submission Processing Centers. Scheduling of such tests
should cover the whole year at different times of peak and non-peak
filing periods for each IRS lockbox facility and/or IRS Submission
Processing Center within the SAC's jurisdiction. Consideration should be
given to conducting tests during different work shifts and in different
work units. A remittance test should be random unless there is
reasonable suspicion of wrongdoing by a specific IRS or lockbox
employee.

A request to initiate a LII remittance test conducted yearly during peak
and non-peak filing periods, does not require approval by the Deputy
Assistant Inspector General for Investigations (DAIGI) or completion of
the TIGTA OI Investigative Initiative Recommendation form. These LII
remittance tests are discussed with and approved by the SAC through the
Assistant Special Agent-in-Charge (ASAC). The ASAC documents the SAC's
approval in the Chronological Case Worksheet (Form OI 6501). All other
remittance tests, such as those incorporating new techniques, must be
approved in accordance with the procedures in [Section
320.4](../../../../../../../../efoia_temp/chapter400-inv/400-320/chapter400-320.doc#LocalInvInitiativeSIISIIP).

Once approved, initiate a LII in the Performance and Results Information
System (PARIS) for each remittance test conducted, using the Financial
Fraud Profile and violation code 416 - Theft/Embezzlement - Tax
Remittance (Lockbox), or violation code 419 - Theft/Embezzlement - Tax
Remittance (Non-Lockbox), as applicable. Title the LII using the
designation of the IRS Submission Processing Center, IRS lockbox
facility or IRS field office being tested. Document the LII as a Master
Project Case in PARIS and enter any employee or non-employee spin-off
cases initiated as a result of the LII.

390.3 []{#ControlledRemittanceTests .anchor}[Controlled Remittance
Test.]{.underline}

Controlled remittance tests are designed to verify that employees in IRS
Submission Processing Centers, IRS field offices and IRS lockbox
facilities are not fraudulently diverting negotiable remittances.

390.3.1 [Investigative Procedures.]{.underline} [\*\*
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> See [Section 390.9](#ImprestFundsInRemittanceTest) for information on
> accounting for confidential expenditures used for remittance tests.

390.4 []{#UncontrolledRemittanceTests .anchor}[Uncontrolled Remittance
Test.]{.underline}

Uncontrolled remittance tests, sometimes referred to as "blind" tests,
are also designed to verify that employees in IRS Submission Processing
Centers, IRS field offices and IRS lockbox facilities are not
fraudulently diverting negotiable remittances.

390.4.1 [Investigative Procedures]{.underline}. [\*\*
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See [Section 390.9](#ImprestFundsInRemittanceTest) for information on
accounting for confidential expenditures used for remittance tests.

390.4.2 [Recovering Funds in the Unidentified Remittance
File.]{.underline} After a remittance is posted to the Unidentified
Remittance File, the SAC requests reimbursement of the remittance test
money using the TIGTA OI Remittance Test Reimbursement Memorandum, and
mails the signed memorandum to the IRS Submission Processing Center that
services the account.

See
[Exhibit(400)-280.5](../../../../../../../../G:/chapter400-inv/400-exhibits/exhibit400-280-5.doc)
for IRS Submission Processing Center addresses.

390.5 []{#DocumentationRemittanceTest .anchor}[Documentation of
Remittance Test.]{.underline}

Prepare a Memorandum of Interview or Activity (Form OI 2028-M) for each
remittance test conducted.

Record all denominations and serial numbers of U.S. currency, checks, or
money orders used.

The Form OI 2028-M should contain the following:

-   The identity of the person(s) tested;

-   The IRS Submission Processing Center, IRS lockbox facility or IRS
    field office, including work units and work shifts tested;

-   The identity of IRS or lockbox personnel who assisted; and

-   A brief explanation of how the test documents were placed into the
    work flow and recovered.

390.6 []{#UncoveredRemittances .anchor}[Unrecovered
Remittance.]{.underline}

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390.7 []{#TheftIsSuspected .anchor}[Theft is Suspected.]{.underline}

Establish liaison with the local United States Attorney's Office (USAO)
prior to conducting a remittance test to discuss guidelines regarding
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Prior to searching any place or container, the SA should determine
whether the employee has a reasonable expectation of privacy (REP) in
the area to be searched. If the employee has REP in the area to be
searched, the SA needs to obtain a search warrant unless a recognized
exception to the search warrant requirement applies

(e.g., consent).

Prior to searching the employee, the SA should attempt to obtain consent
to search. A consent search of a person who has not been arrested, does
not preclude successful prosecution if evidence of a theft is found.

If consent is obtained, conduct the search as directed by the local
USAO. A second SA should witness the search.

If the employee does not consent to a search of his or her person, then
one cannot be undertaken unless a search warrant is obtained or another
recognized exception to the search warrant requirement applies (e.g.,
search incident to an arrest).

Before any questioning, use another SA as a witness. When there is
probable cause to suspect an employee has committed the theft, contact
the local USAO for guidance, and if interviewed, advise the employee of
his or her Constitutional right against self-incrimination (i.e.,
Miranda or Beckwith rights).

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390.8 []{#InitiatingSpinOffInvestigations .anchor}[Initiating Spin-Off
Investigations.]{.underline}

Initiate an Employee Investigation using the Financial Fraud Profile and
violation code 419 - Theft/Embezzlement - Tax Remittance (Non-Lockbox)
when a theft occurs and the suspect is an IRS employee.

Initiate a Non-employee Investigation using the Financial Fraud Profile
and violation code 416 - Theft/Embezzlement - Tax Remittance (Lockbox)
when a theft occurs and the suspect is a lockbox employee.

See [Section
280.8.2](../../../../../../../../G:/chapter400-inv/400-280/chapter400-280.doc#RecoveringUnjustEnrichments)
for information regarding theft and embezzlement cases.

Include the investigation number in the LII Report of Investigation
(Form OI 2028) and enter the employee or non-employee investigation as a
spin-off case of the LII in PARIS.

Refer the facts concerning any investigation disclosing a theft to the
USAO or an appropriate person in the Department of Justice (DOJ) for a
prosecutive opinion. See [Section
250.13](../../../../../../../../G:/chapter400-inv/400-250/chapter400-250.doc#ReferringCasesCrimAction)
for more information on referring cases for criminal action.

390.9 []{#ImprestFundsInRemittanceTest .anchor}[Use of Investigative
Imprest Funds in Remittance Test.]{.underline}

Use the investigative imprest fund to obtain money to conduct a
remittance test, in accordance with the following procedures :

-   For remittance tests initiated by TIGTA, use TIGTA investigative
    imprest funds, as needed.

-   All remittance test expenditures and recovered funds are accounted
    for using BOC 9103 and Project Code TGTREMITT. See [Chapter 600,
    Management Services, Section
    50.11.3](http://web.tigta.treas.gov/IMDS/chapter600-ms/600-50/chapter600-50.doc#Sec50_11_3)
    regarding the investigative imprest fund and confidential
    expenditures.

-   Handle as special moneys any test money being held as evidence.
    Money held as evidence is reported on a Statement of Special Moneys
    and Property Transaction (Form OI 141) at the time of seizure and is
    accounted for in the investigative imprest fund as having been
    expended. See [Chapter 600, Management Services, Section
    50.11.8](../../../chapter600-ms/600-50/chapter600-50.doc#Sec50_11_8)
    of the TIGTA Operations Manual for procedures on receipt and
    disposal of special moneys and property; []{.mark}

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-   Any test money not recovered will be accounted for in the
    investigative imprest fund as having been expended. See [Chapter
    600, Section
    50.11.3.10](../../../../../../../../G:/chapter600-ms/600-50/chapter600-50.doc#Sec50_11_3_10)
    of the TIGTA Operations Manual for procedures on accounting for
    confidential expenditures; and

-   Any test money that is recovered will be accounted for in the
    investigative imprest fund as a recovered confidential expenditure.
    See [Chapter 600, Section
    50.11.7.3](../../../../../../../../G:/chapter600-ms/600-50/chapter600-50.doc#Sec50_11_7_3)
    of the TIGTA Operations Manual for procedures on accounting for
    recovered funds.

390.10 []{#ROIFormat .anchor}[Report Format.]{.underline}

Report test results on Form OI 2028 following the instructions in
[Section 250.7](../../400-250/chapter400-250.doc#ROI). The Form OI 2028
should contain the following:

-   The number of tests conducted;

-   The identity of the persons tested;

-   The IRS Submission Processing Center, IRS lockbox facility or IRS
    field office tested;

-   The identity of IRS or other personnel who assisted;

-   A brief explanation of how the test documents were put into the work
    flow and recovered; and

-   References to any spin-off cases.

**Note:** It is not necessary to attach copies of IRS documents
reviewed. List specific details concerning preparation of documents or
remittances on the Form OI 6501.

Forward the Form OI 2028 as instructed in [Section
250.12](http://web.tigta.treas.gov/IMDS/chapter400-inv/400-250/chapter400-250.doc#ReferringROItoIRSActionInfo)
of this chapter. Send the original Form OI 2028 to TIGTA Records
Management and Control.