Source: http://www.irs.gov/irm/part5/irm_05-019-019.html
Timestamp: 2014-12-20 14:29:10
Document Index: 94083077

Matched Legal Cases: ['§ 931', '§ 877', '§ 911', '§ 937', '§ 933', '§ 933', '§ 933', '§ 932', '§ 1401', '§ 937', '§ 932', '§ 901', '§ 164', '§ 1401', '§ 1401', '§ 10', '§ 6103', '§ 6103', '§ 6103', '§ 6331', '§ 6503', '§ 301', '§ 6109']

Internal Revenue Manual - 5.19.19 Campus Compliance International Case Processing (CCICP)
5.19.19.1
5.19.19.2
5.19.19.3
5.19.19.4
5.19.19.5
(1) This transmits revised IRM 5.19.19, Liability Collection, Campus Compliance International Case Processing. Material Changes
(2) IRM 5.19.19.1.2(2) updated links.
(3) IRM 5.19.19.1.2.1(9) updated telephone and fax numbers.
(4) IRM 5.19.19.1.2.2 added to provide guidance on identity theft.
(5) IRM 5.19.19.1.2.3(1) updated IRM cites.
(6) IRM 5.19.19.1.3(5) and (6) updated IRM cites.
(7) IRM 5.19.19.2.1(3) updated IRM cites.
(8) IRM 5.19.19.3(8) removed identity theft guidance and moved to IRM 5.19.19.1.2.2.
(9) IRM 5.19.19.3.1(4) updated to include guidance for filing current year Form 1040NR and Form 1040NR-EZ with payment in
(10) IRM 5.19.19.3.1(5) updated with correct IRM cite.
(11) IRM 5.19.19.3.1(7) and (8) corrected guidance on substantial presence test and updated for clarity.
(12) IRM 5.19.19.3.3.2 updated to provide clarity on filing requirements for bona fide residents of American Samoa.
(13) IRM 5.19.19.3.3.3 updated to provide clarity on filing requirements for bona fide residents of Commonwealth of North
(14) IRM 5.19.19.3.3.4(5) updated to include possible requirement to attach Form 5074 to tax return.
(15) IRM 5.19.19.3.3.6 updated to provide clarity on filing requirements for bona fide residents of U.S. Virgin Islands. (16) IRM 5.19.19.3.3.6.1 updated to provide clarity on U.S. Virgin Islands bona fide residents with self-employment income.
Moved IRM 5.19.19.3.3.6.1(4) through (8) to new IRM 5.19.19.3.3.6.2, Taxpayers Who Are Not Bona Fide Residents of the USVI.
(17) IRM 5.19.19.3.3.6.3 updated to provide clarity on U.S. Virgin Islands cover over.
(18) IRM 5.19.19.3.3.9.1(1) updated guidance for processing of Form 1116.
(19) IRM 5.19.19.4(3) added to provide guidance on doing complete research and addressing and closing all issues at the same
(20) IRM 5.19.19.4.2 removed guidance on passport information requests.
(21) IRM 5.19.19.4.2(1) updated link to list of MCAR Coordinators.
(22) IRM 5.19.19.4.3(3) added note to check the box for Spanish letter if taxpayer resides in Puerto Rico.
IRM 5.19.19 supersedes IRM 5.19.19, dated 4/24/2012.
All Small Business/Self-Employed (SB/SE) Campus Compliance Employees, Automated Collection System (ACS) and Support (ACSS),
Compliance Service Collection Operation (CSCO).
Rocco A. Steco, Acting Director, Collection Policy
5.19.19.1 (09-03-2014)Overview
This manual provides guidance to the Campus Compliance function when working international accounts. This IRM is to be used
in conjunction with the rest of IRM 5.19, Liability Collection. The goal is to improve taxpayer service to international taxpayers and to ensure that Campus Compliance is able to assist
the taxpayer in resolving their balance due and delinquent investigations accurately. 5.19.19.1.1 (09-03-2014)Taxpayers and Accounts Meeting International Criteria
A U.S. citizen’s or resident alien’s worldwide income is generally subject to U.S. income tax, regardless of where the taxpayer
is living. A taxpayer living overseas is also subject to the same rules for filing income, estate, and gift tax returns and
for paying estimated tax that apply to a U.S. citizen or resident alien living in the United States.
An alien is a resident, for U.S. tax purposes, if he/she is admitted to the U.S. for permanent residence, is considered substantially
present in the U.S. for the year, or makes an election to be considered a U.S. resident. For additional information on resident
aliens refer to Pub 519, U.S. Tax Guide for Aliens.
A resident alien is an immigrant to the U.S., or a nonimmigrant who meets certain residency requirements or makes a special
election to be taxed as a resident.
A nonresident alien is in the U.S. only temporarily. For example, this person may be a tourist, a student or a temporary worker
under a qualifying visa.
Claims referencing IRC § 931, Income from sources within Guam, American Samoa, or the Northern Mariana Islands
5.19.19.1.2 (09-03-2014)Available International Tools and Research Engines There are various IRS publications available to assist campus compliance employees and international taxpayers with determining
liability for filing U.S. tax returns, due dates, where to file, etc.
The following websites can be used to research various international issues: Question/Issue
Tax Law index
http://rnet.web.irs.gov/
Other types of internal and external research tools available for employees are: IDRS
RTR (Remittance Transaction Research) www.411.com
Electronic payments can be researched and verified via IDRS command code (CC) Electronic Federal Tax Payment System (EFTPS).
See IRM 2.3.70.2, Command Code EFTPS, for guidance on using this CC to verify if payments were applied correctly.
The Transcript Delivery System (TDS) can be used to send Wage and Income information documents to the taxpayer. Note:
See IRM 21.2.3, Transcripts, for procedures on using TDS for researching tax account and return information. TDS delivers tax account and return information
to the user with an appropriate cover letter (when applicable).
5.19.19.1.2.1 (09-03-2014)General Information
The purpose of this section is to provide guidance when working international balance due accounts, including those for taxpayers
in U.S. territories, for both Individual Master File (IMF) and Business Master File (BMF) as well as working delinquent return
(DelRet) cases.
Assisting taxpayers in resolving their balance due or DelRet is the responsibility of all campus compliance contact representatives
or tax examiners, whether speaking with a taxpayer or responding to taxpayer correspondence.
A balance due, or Tax Delinquent Account (TDA), account occurs when the taxpayer has an outstanding liability for taxes, penalties
Be sure to prevent unauthorized disclosures of taxpayer information at all times. For additional guidance see IRM 5.19.1.1.1,
Disclosure Overview: Verifying Identity of Contact Party.
All actions taken on taxpayer accounts and/or actions promised by the taxpayer must be documented on AMS. For additional guidance
see IRM 5.19.1.1.2, Documenting Account Actions.
For additional information regarding acronyms, abbreviations used throughout various IRMs, see IRM 5.19.1.1.4, Acronyms and Explanations for IRM 5.19.1.
When referring or redirecting accounts to other functions or areas, follow IRM 5.19.1.2, Referrals or Redirects. For non toll free telephone numbers to be provided to international taxpayers living abroad ONLY, use the table below:
267-941-1004
267-941–1023
267-941-1037
954-423-7074
954-423-7577
OIC - Accepted Offers Only
EFAX 855-286-3805 Taxpayer Advocate Service - Pacific US Territories
808-566-2986
Taxpayer Advocate Service - Caribbean US Territories and International (English) 787-522-8601
787-522-8691
Taxpayer Advocate Service - Caribbean US Territories and International (Spanish )
787-522-8600 787-522-8691
5.19.19.1.2.2 (09-03-2014)Identity Theft
Identity theft occurs when someone uses another's personal information such as their name, social security number, or other
identifying information without their permission to commit fraud or other crimes. If an international taxpayer makes an allegation of identity theft, or if an employee suspects that identity theft has occurred,
follow the guidance in the following IRMs:
IRM 21.9.2, Individual Master File (IMF) Accounts Management Identity Theft
Compliance Services Collection Operations (CSCO), Automated Collection System (ACS)
IRM 5.19.6.26, Identity Theft
5.19.19.1.2.3 (09-03-2014)International Address Changes
When considering inputting address changes, refer to IRM 3.13.5.28, Address Changes from Oral Statements/Telephone Contact, and IRM 3.13.5.47, Information Required on Address Changes. Once it is determined that the taxpayer resides overseas and the address is validated, update CC ENTITY to reflect the foreign
address and location code. Input transaction code (TC) 030 with Document Code 63 on CC ENREQ to identify the taxpayer as living
The format of a foreign address will differ depending on the postal system of the country. In general, a foreign address consists
of a street address, city or town name, other administrative divisions and postal code. A postal code can be a series of letters,
digits, or a combination of letters and digits depending on the postal system. Due to limitation of characters, the address
may need to be altered so that the mail can still be delivered.
International accounts are identified by international File Location Codes 20, 21, 60, 66, 78, and 98. File Location Codes 21, 66, and 78 contain all returns with a U.S. territory address with a 5-digit zip code, which include
Puerto Rico, American Samoa, Guam, U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands.
File Location Codes 20, 60, and 98 are used for returns with: A foreign country addressForm 2555/2555-EZForm 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Form 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax, or Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property InterestsDual Status NotificationForm 1040NR/1040NR-EZ, U.S. Nonresident Alien Income Tax Return/U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents
5.19.19.1.3 (09-03-2014)Determine Correct Filing Requirement and/or Tax Liability
Taxpayer may indicate verbally or in writing they are not required to file specific tax returns, for example, they are bona
fide residents of another country, they have renounced their U.S. citizenship or residency and/or they have already filed
the return(s) in question.
If the taxpayer states they no longer reside in the U.S. and no longer receive U.S. source income or are no longer self employed,
Is the taxpayer employed in the country where they are residing? If so, U.S. citizens and/or residents are taxed on worldwide
income; it does not matter whether the income is U.S. sourced.
If the taxpayer states they are no longer a U.S. citizen or resident, but are working in their home country or overseas and
had a balance owed or delinquent return prior to renouncing their U.S. citizenship or residency, you must obtain all earned
income information, regardless of whether it is a U.S. source or not. See IRM 21.8.1.11.20, IRC § 877A - Mark-To-Market Exit Tax.
When speaking or corresponding with the taxpayer do not pursue collection if you are not able to determine the correct tax
liability. However, you must address any delinquent returns as well as securing updated addresses, telephone number(s) and
levy sources. For additional guidance see IRM 5.19.1.3.2, Taxpayer Information, and IRM 5.19.1.3.4.2, Obtain and Verify Levy Sources. 5.19.19.2 (09-03-2014)Balance Due Overview
Balance due accounts and return delinquencies are systemically monitored through computer analysis (weekly TDA/TDI analysis)
and placed in a specific status based on risk categories, repeater codes, selection codes and/or other characteristics of
the specific account or delinquency.
Several notices are generated to the taxpayer informing them of their outstanding liability. When a taxpayer balance due inquiry is received, it is important to be aware of the Master File and Collection Status Codes
and Definitions to determine whether you should work the account or refer it to another office for additional guidance.
For ACS Incoming Calls, see the electronic ACS Guide (e-ACSG) on SERP under "e-guides"
Written requests received in CSCO and ACS Support Operations must be controlled within 14 days and acknowledged within 30
days from IRS received date if the case cannot be closed. Sites using AMS for controlling and monitoring inventory follow
AMS guidelines for case control and acknowledgment of taxpayer correspondence. If correspondence is received from a previous
area after the 30 days expires and no interim letter was issued, you must send an interim letter within five business days
of receipt in your area. Follow all other IDRS control procedures in IRM 21.5.1.4.2.2, Integrated Data Retrieval System (IDRS) - Control Procedures.
5.19.19.2.1 (09-03-2014)Payment Options and Ability to Pay
Taxpayers unable to pay their balance due may qualify to be reported currently not collectible (CNC) or may submit an OIC.
Refer to IRM 5.19.1.7, CNC and OIC.
Input CC STAUP to suspend further notices for nine cycles prior to referring the balance due inquiry to another office/area.
The taxpayer requests an installment agreement (IA) and the account meets pending IA criteria.
See IRM 5.19.1.5.4.7, Pending IA Criteria.
The account meets Taxpayer Advocate Service (TAS) criteria.
See IRM 21.1.3.18, Taxpayer Advocate Service Guidelines , and IRM 13.1.7.2, TAS Case Criteria . The taxpayer is requesting innocent spouse relief.
See IRM 5.19.1.2.1.(5), Innocent Spouse.
The taxpayer is requesting information on collection appeal rights.
See IRM 5.19.8, Collection Appeal Rights.
5.19.19.2.1.1 (09-03-2014)Financial Analysis
This section provides additional guidance for conducting financial analysis on international accounts. Refer to IRM 5.19.1.6,
Securing Financial Information, for general guidance when conducting financial analysis.
There are no National or Local Standards allowable living expenses for international taxpayers. When figuring foreign taxpayer
expenses, refer to http://mysbse.web.irs.gov/Collection/international/contacts/default.aspx, International Allowable Living
Expenses Contacts, for more information.
Before closing accounts as CNC or granting an IA, you must secure financial information. Note:
Accounts for certain individuals may be reported as CNC hardship if a Collection Information Statement can be verified, even
if there are unfiled returns. See IRM 5.16.1.2.9(9), Hardship. This applies to an account for an individual or joint IMF assessment including an account for a sole proprietorship, a general
partner, or a Single Member Owner who is liable for a Limited Liability Company.
Any verbal/internal verification or paper substantiation received from the taxpayer must be clearly documented. Substantiation
of income and/or expenses can include, but is not limited to:
5.19.19.3 (09-03-2014) International Return Delinquency Process Overview
This section provides a general overview on international accounts (including the U.S. territories), taxpayer filing requirements,
types of returns to file, income, exemptions, deductions, and credits.
U.S. citizens and resident aliens living or traveling outside of the U.S. generally are required to file income tax returns
and pay estimated taxes in the same way as taxpayers residing in the U.S.
Taxpayers outside the U.S. are allowed an automatic two month extension to file an income tax return. However, if they pay
the tax after the regular due date, interest and penalties will be charged from the regular due date until the date the tax
If the taxpayer outside the U.S. has a two month extension, the six month extension only gives the taxpayer an additional
four month extension. Both extensions start at the same time.
Taxpayer is not a U. S. citizen or green card holder.
Income is from
Interest paid by U.S. Obligors - General Interest on Real Property Mortgages
Capital Gains Industrial Royalties Copyright Royalties-Motion Pictures and Television, or other
Real Property Income and Natural Resources Royalties Pensions/Annuities
Social Security Payment AND TP’s country of citizenship was verified. Note:
CSCO employees: Input TC 590 cc 76 using CC FRM49.ACS employees: Input TC 590 cc 26 using CC FRM49. Enter ACS history code."TOC0,21,59026"
CSCO/ACS/ACSS employees: Send a 2269C letter, with the appropriate paragraphs, advising taxpayer that failure to file within 75 days could subject
the taxpayer to a fine and/or criminal penalties and of possible Substitute for Return (SFR) processing. If account on ACS, enter ACS history code "TOI5,75,2269C"
Taxpayer is a U. S. citizen or green card holder.
Income is from: Interest paid by U.S. Obligors - General
Interest on Real Property Mortgages Interest paid to a Controlling Foreign Corporation
Taxpayer is not a U.S. citizen or green card holder and does not reside in the U.S.
Income is from Form W-2 wages and/or Form 1099 (non-employee compensation). I
If taxpayer states not liable and does not indicate whether work was performed in the U.S., send a 2269C letter, indicating
earnings reported on IRPTRL and request additional information regarding where the work was performed.
If taxpayer states not liable and indicates the work was performed outside of the U.S., then: For CSCO employees: Input TC 590 cc 76 using CC FRM49. For ACS employees: If account on ACS, input TC 590 cc 26 using FRM49 and input ACS history code "TOC0,21,59026"
. Input appropriate history items on IDRS and enter comments on AMS documenting all actions taken. 5.19.19.3.1 (09-03-2014)International Filing Requirements (Miscellaneous)
This section provides information on joint filers (citizen, resident with a non-citizen/resident, Earned Income Tax Credit
(EITC) and the overseas taxpayer).
Individual taxpayers identified as living in a U.S. territory (Guam, U.S. Virgin Islands, American Samoa, Commonwealth of
the Northern Mariana Islands or Puerto Rico), have different filing requirements than domestic taxpayers. See Publication
International taxpayers can elect to exclude some or all of the income in a foreign country if they meet the criteria. The
income exclusion is provided under IRC § 911. Refer to the instructions of Form 2555 for the amount of foreign income that
may be excluded for the given tax year. To claim this exclusion, the taxpayer must file Form 2555 or Form 2555-EZ, with Form
1040. The computation of Form 2555 or Form 2555-EZ is based on foreign income. For this purpose, foreign earned income is
the income the taxpayer received for services performed in a foreign country during a period their tax home is in a foreign
country and they meet either a bona fide residence test or the physical presence test. Earned income is pay for personal services performed, such as:
Current tax forms 1040NR and 1040NR-EZ are filed in Austin, TX. Returns with payment are filed in Charlotte, NC. A taxpayer
can claim itemized deductions only if they have effectively connected income. See IRM 21.8.1.11.10, Effectively Connected Income.
Generally, the rules for filing income, estate and gift tax returns, including paying estimated tax, are the same whether
the taxpayer lives abroad or in the United States. If the taxpayer lives overseas they are given an automatic two month extension
to file. However, any tax due must be paid by April 15th to avoid interest and penalty. This also applies to taxpayers in
the military service on duty outside the U.S. and Puerto Rico, unless the taxpayer is in combat zone. See IRM 5.19.2.5.4.1.1,
Combat Zone IMF Procedures, for additional guidance.
Nonresident aliens may not to be liable for filing a return when investing in the U.S. (stocks, bonds, etc.). To be eligible,
taxpayers must complete Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding. Taxpayers should use this form if they are claiming treaty benefits or are providing the form only to claim they are a foreign
person exempt from backup withholding. They should also complete Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Non-resident Alien
Individual, and submit to their broker who will submit to the IRS. Many times they do not complete these forms and their income is reported
Taxpayers are considered a U.S. resident for tax purposes if they are in the United States for at least 31 days in the current
year and meet the substantial presence test. This test is met if the total number of days present in the year in question,
plus 1/3 of the days present in the preceding year, plus 1/6 of the days present in the second preceding year add up to 183
days or more. See the example below:
TY 2008 - 120 days present (120 days)TY 2007 - 120 days present (40 days= 1/3 of actual days)TY 2006 - 120 days present (20 days= 1/6 of actual days)Total days above = 180 days. In this example the taxpayer would not be considered a resident under the substantial presence test.
All international taxpayer income must be reported in U.S. dollar equivalents. Taxpayers may use the yearly average exchange
rate; however, the daily rate may be used for specific transactions. Exchange rates can be found on the "Foreign Currency
and Currency Exchange Rates"
page at www.irs.gov; keyword search term "exchange rates"
5.19.19.3.2 (09-03-2014)Processing IMF Responses
Research all IDRS command codes and available resources to determine taxpayer income sources. Once the taxpayer information
has been verified, follow the guidelines stated in this section.
If the taxpayer states that he is not liable for U.S. tax because he is a nonresident alien, or not a U.S. citizen, verify
his income via CC IRPTR. Follow the table below for guidance:
Income is from stocks and bonds and the taxpayer was present less than 183 days in the U.S., Research of CC IRPTR indicates income from stocks and bonds, Taxpayer is not liable to file U.S. tax return.
CSCO employees - Input TC 590 cc 75. Update AMS of actions taken. ACS employees: Input TC 590 cc 26. Input history item "TOCO,21,59026"
. Update AMS of actions taken.
Income is from stocks and bonds and the taxpayer was in the U.S. 183 days or more, Research of CC IRPTR indicates income from stocks and bonds, Taxpayer is liable as they meet the substantial presence test. Send taxpayer 2269C, with appropriate paragraphs to advise
that failure to file within 60 days will subject them to a fine and/or criminal penalties or possible ASFR. If account on ACS, enter history code "TO15,75,2269CSNT"
Taxpayer states they do not have U.S. income, and they are not U.S. citizens or residents, CC IRPTR indicates that the income is reported from capital gains for U.S. source, Verify the country of citizenship. Refer to Publication 901 for additional guidance on treaty information.
Send taxpayer 2269C or appropriate letter. If country on Tax Treaty table, advise the taxpayer that they are taxed at a flat
If the account is on ACS, enter history code "TOI5,75,2269CSNT"
Taxpayer is not a U.S. citizen and the income is from sale of U.S. home/property and the agent withheld taxes at the time
of sale, CC IRPTR indicates income is from sale of home, Verify if Form 8288, U.S. Withholding Tax Return for Disposition by Foreign Persons of U.S. Real Property Interests, was filed. If no information is available, refer to IRM 21.8.5 , Miscellaneous FIRPTA Related Issues, or IRM 21.8.5.3, Form 8288-B, Withholding Certificate Background, for guidance. Taxpayer is not a U.S. citizen,
CC IRPTR indicates income is from pensions/annuities, and: Income was earned in the U.S. Inform taxpayer they are required to file a return.
Taxpayer is not a U.S. citizen, CC IRPTR indicates income is from pensions/annuities, and: Income was not earned in the U.S.
Advise taxpayer to file Form W-8BEN. Note:
Advise the taxpayer they are required to file a return. Taxpayer is not a U.S. citizen, Non employment compensation income (NEC) was reported on CC IRPTR, and the work was performed outside the U.S.,
Advise the taxpayer to request that their employer send an amended Form 1099, and close the module as not liable. Update AMS of actions taken.
For ACS/ACSS: Input TC 590 cc 26. Input history code "OADT,21,59026"
Send taxpayer a 2268C or another appropriate letter advising taxpayer to file Form 1040NR.ACS employees: Input history "OADT,75,2269CSNT"
If research of CC RTVUE indicates taxpayer used the standard deduction on the previous year's federal U.S. tax return, income
does not have to be claimed. Input TC 590 cc 76.For ACS/ACSS employees: Input history "TOC0,21,59076"
Taxpayer is not a U.S. citizen,
CC IRPTR indicates mortgage interest paid, Send 2268C letter requesting explanation from taxpayer whether the interest paid for a home is their residence or rental income.
For ACS employees: Input history "TOC0,21,59076"
Taxpayer is a U.S. citizen, living overseas,
Verified via CC IRPTR the type of income or no income reported
Whether there is or is not any income reported on CC IRPTR, then the taxpayer must be informed that U.S. citizens are taxed
on their "worldwide"
earned income. Send taxpayer 2269C or any other appropriate letter. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
If account on ACS, input history "TOI5,75,2269C"
Taxpayer is a U.S. citizen and they state they reported their income to the foreign country where they reside, Taxpayer must be informed that U.S. citizens are taxed on their "worldwide"
earned income. Refer taxpayer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
5.19.19.3.2.1 (09-03-2014)U.S. Nonresident Alien Income Tax Return
Form 1040NR or 1040NR-EZ is filed by nonresident aliens who have U.S. source income. The Master File Tax (MFT) code is 30,
and the document locator number (DLN) will start with 20, document code 72 or 73. Form 1040NR, U.S. Nonresident Alien Income Tax Return, is used by all nonresident alien individuals whether or not engaged in trade or business within the United States; it is
required for filing nonresident alien fiduciary (estates and trusts) returns.
The form can be viewed on CC TRDBV/RTVUE. 5.19.19.3.3 (09-03-2014)U.S. Territories' Tax Systems
U.S. territories operate their own independent tax systems, which are partly based on the same tax laws as the U.S., but also
incorporate tax laws particular to the territory. Below are the five U.S. territories:
The Commonwealth of the Northern Mariana Islands Guam
Individuals born in the U.S. territories are U.S. citizens, except in the case of American Samoa, where such individuals are
U.S. Nationals who are treated as U.S. citizens for tax purposes.
5.19.19.3.3.1 (09-03-2014)U.S. Territorial Categories of Taxpayers
Special filing requirements apply to taxpayers who reside in and/or earn income in any U.S. territory. The types of tax return(s) and other tax forms a territorial resident must file depends upon several factors:
If the taxpayer has income from a territory, the taxpayer may either have to file a U.S. tax return or territorial tax return
The American Jobs Creation Act of 2004 (AJCA) clarified and supplemented the U.S. tax rules dealing with U.S. territories
for determining if a person is a bona fide resident of a territory and whether income is territory sourced or effectively
connected with conduct of a territorial trade or business. Refer to IRC § 937 and Pub 570, Tax Guide for Individuals With Income From U.S. Possessions, for additional information.
In order for the taxpayer to establish a residence in the territory, the taxpayer must meet the bona fide residence test:
Income received from sources within, or that was effectively connected with the conduct of a trade or business in, the territory
must be identified separately from U.S. or foreign source income.
EITC may not be claimed on a U.S. income tax return by a taxpayer whose main home, and the home of the qualifying child, is
in a territory.
All employers in the territories pay their social security tax and Medicare tax to the U.S. government on Form 941-SS, Employer's QUARTERLY Federal Tax Return (American Samoa, Guam, the Commonwealth of Northern Mariana Islands, and the U.S.
Virgin Islands), Form 941-PR, Employer's Quarterly Federal Tax Return (Puerto Rican Version), or Form 944-PR, Employer's Annual Federal Tax Return (Puerto Rico Version). See Pub 80, Federal Tax Guide for Employers in US Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
5.19.19.3.3.2 (09-03-2014)American Samoa
American Samoa has its own separate and independent tax system. American Samoa’s income tax system is based partly on the
same income tax laws and tax rates that apply to the United States.
If the taxpayer is a U.S. citizen or resident alien and a bona fide resident of American Samoa during the entire tax year,
they generally must file the following returns:
Amounts received for services performed as an employee of the U.S. or any of its agencies cannot be excluded and is deemed
U.S.-source income.
Taxpayers filing a U.S. income tax return and excluding American Samoa source income will not be allowed any deductions from
gross income or credits against tax that directly or indirectly relate to excluded income.
If the taxpayer is a bona fide resident of American Samoa during the entire tax year, but a nonresident alien of the U.S.,
they must file the following returns:
A U.S. tax return reporting income from worldwide sources, excluding American Samoa source income other than amounts for services
performed as an employee of the U.S. or any of its agencies.
U.S. armed forces - bona fide residents of American Samoa include military personnel whose official state of legal residence
(home of record) is American Samoa.
U.S. government employees – If the taxpayer is employed in American Samoa by either the U.S. government or any of its agencies,
or by the government of American Samoa, they are subject to tax by American Samoa on their pay from either government. Wages and salaries paid to U.S. citizens by the governments of the U.S. and American Samoa are subject to U.S. federal income
tax. These payments do not qualify for the exclusion of income from sources within American Samoa.
If a taxpayer is a U.S. government employee and a bona fide resident of American Samoa, he will report the wages from that
employment on a return filed with both the United States and American Samoa. On his U.S. income tax return, he will get a
credit for taxes withheld and paid to the United States on those wages; on his American Samoa income tax return, he will get
a foreign tax credit for the net income taxes paid to the United States on that income.
If the taxpayer is not required to file a U.S. tax return but has income that is effectively connected with a trade or business
in American Samoa, they must file Form 1040-SS with the U.S.
Procedures to settle cases of double taxation are provided in bilateral agreements between the U.S. and the territories. See
Pub 570, Tax Guide for Individuals with Income from U.S. Possessions.
5.19.19.3.3.3 (09-03-2014)Commonwealth of the Northern Mariana Islands (CNMI)
The CNMI has its own separate and independent tax system based partly on the same laws and tax rates that apply to the U.S.
and partly on local taxes imposed by the CNMI government.
U.S. citizens who are bona fide residents of CNMI during the entire tax year must report their gross income from worldwide
sources on their Northern Mariana Islands tax returns.
If the taxpayer is a U.S. citizen, resident alien or nonresident alien and a bona fide resident of CNMI during the entire
tax year, they must file their tax return with CNMI. The taxpayer must include income from worldwide sources.
If the taxpayer properly files their return with, and fully pays their income tax to CNMI, then they are not liable for filing
an income tax return with, or for paying to the U.S. for the tax year.
Department of Finance, Division of Revenue and Taxation, Commonwealth of the Northern Mariana Islands, P.O. Box 5234, CHRB,
If the taxpayer has income sources with CNMI and is a U.S. citizen or resident alien, but they are not a bona fide resident
of CNMI during the entire tax year, they must file their income tax return with the U.S. The taxpayer will not be liable for
filing an income tax return with, or paying tax to CNMI for the tax year. The taxpayer must send his or her U.S. income tax
return to: Department of Treasury, Internal Revenue Service, Austin, TX 73301-0215
The taxpayer may also be required to attach Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands, to the income tax return filed with the United States.
If the taxpayer has no U.S. filing requirement, but has income that is effectively connected with a trade or business in CNMI,
they must file Form 1040-SS with the U.S. to report their self-employment income and, if necessary, pay self-employment tax.
If the taxpayer must pay estimated tax, they should make their payment to the jurisdiction where they would file their income
tax return if their tax year were to end on the date when their estimated tax payment is first due.
Estimated tax payments to either jurisdiction will be treated as payment to the jurisdiction with which they file the tax
Joint payments of estimated tax are made to the jurisdiction where the spouse who has the greater estimated adjusted gross
income would have to pay (if a separate payment were made).
If the taxpayer makes their first payment early, follow the rules above to determine where to send it. If they sent it to
the wrong jurisdiction, all later payments must be made to the jurisdiction to which the first payment should have been sent.
Credit for income taxes withheld at the source (estimated tax payments and withholding credits) are to be taken into account
in determining if the return results in a balance due or overpayment regardless of the jurisdiction in which they were received.
Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing
authorities of CNMI. The tax coordination agreements contain provisions allowing the competent authorities of the U.S. and
the relevant territory to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions. See Pub 570 ,
Tax Guide for Individuals with Income from U.S. Possessions.
5.19.19.3.3.4 (09-03-2014)Guam
Guam has its own tax system based on the same tax laws and tax rates that apply in the U.S. Bona fide residents of Guam are
subject to special U.S. tax rules. In general, all individuals with income from Guam will file only one return, either to
Guam or the U.S.
If a taxpayer is a bona fide resident of Guam during the entire tax year, they file their income tax return with Guam. This
applies to all bona fide residents who are citizens, resident aliens, or nonresident aliens of the U.S.
If a taxpayer properly files their return and fully pays their income tax to Guam, then they are not liable for filing an
income tax return with, or paying tax to the U.S. on their income, other than self employment tax.
If a taxpayer has income from sources within Guam and is a U.S. citizen or resident alien, and not a bona fide resident of
Guam during the entire tax year:
If the taxpayer is a nonresident alien of the U.S., who does not qualify as a bona fide resident of Guam for the entire tax
year, they must file the following returns:
5.19.19.3.3.5 (09-03-2014)Commonwealth of Puerto Rico
Puerto Rico is a self-governing commonwealth in association with the United States. The major difference between Puerto Rico
and the 50 states is that a bona fide resident of Puerto Rico is exempt from U.S. income tax on Puerto Rico source income.
Puerto Rico's tax system is patterned after the U.S. tax system with the exception of differences to their tax rates and laws.
See IRM 21.8.1.5, Puerto Rico. For additional guidance refer to Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.
U.S. citizens who are also bona fide residents of Puerto Rico for the entire tax year generally must include income from worldwide
sources on their Puerto Rico return.
U.S. citizens who are also bona fide residents of Puerto Rico who receive wages paid by the U.S. government for working in
Puerto Rico are subject to Puerto Rico tax and U.S. tax. These individuals are required to file both Puerto Rico and U.S.
tax returns. However, since wages paid by the U.S. government for working in Puerto Rico are considered Puerto Rico sourced,
these individuals will be able to claim a foreign tax credit on their U.S. tax return for income taxes paid to Puerto Rico.
Puerto Rican citizens and residents with income from a trade or business from sources within Puerto Rico who do not file Form
1040, must file Form 1040PR to report their self-employment (SE) income and pay self-employment tax, if applicable. Form 1040PR
is filed to: Report self-employment earnings and pay SE taxes
U.S. government employees in Puerto Rico are allowed to claim the Child Tax Credit (CTC) and the Additional Child Tax Credit
on their U.S. income tax return.
IRC § 933 allows individuals who are bona fide residents of Puerto Rico for an entire tax year to exclude their Puerto Rico
sourced income (except wages paid by the U.S. government for working in Puerto Rico) from their U.S. tax return.
IRC § 933 allows the same exclusion to those individuals who have been bona fide residents of Puerto Rico for at least two
years and later change their residence from Puerto Rico during a tax year.
Under IRC § 933, income received from Puerto Rico sources during residency in Puerto Rico is exempt from U.S. tax. However,
income received for services performed in Puerto Rico as an employee of the U.S. government is not exempt from U.S. tax.
Individuals who are bona fide residents of Puerto Rico for an entire tax year and only have Puerto Rico sourced income are
not required to file a tax return in the U.S. Individuals who are bona fide residents of Puerto Rico during the entire tax year, but a nonresident alien of the U.S. must
file the following returns:
Puerto Rico tax return reporting worldwide sources. If the individual has U.S. sourced income on the Puerto Rico tax return
they can claim credit against the Puerto Rico tax, up to the allowable amount for taxes paid.
A U.S. tax return reporting income from worldwide sources, but excluding Puerto Rico source income other than amounts for
services performed as an employee of the U.S. or any of its agencies.
There is no amended return for a Form 1040PR return. If the taxpayer needs to amend Form 1040PR, they can do so by sending
in a corrected Form 1040PR with a notation across the top "CORRECTION"
Non U.S. government employees are able to claim ACTC only. The ACTC is a refundable credit, claimed on Form 8812, Additional Child Tax Credit. The CTC is a credit against tax and claimed on Form 1040/1040A.
For BMF international taxpayers: Employers in the territories pay their Social Security tax and Medicare tax to the U.S. government
using Form 941PR or Form 944 PR. See IRM 21.8.1.5.4, Self-Employment Tax - Puerto Rico.
5.19.19.3.3.6 (09-03-2014)U.S. Virgin Islands (USVI) The U.S. Virgin Islands (USVI) has its own separate and independent tax system based partly on the same laws and tax rates
that apply to the United States and partly on local taxes imposed by the USVI government.
IRC § 932(c) allows a U.S. citizen who has been a bona fide resident of the Virgin Islands for the entire year to file an
annual tax return and pay the entire tax liability to the Virgin Islands.
Taxpayers who are not citizens or residents of USVI during the entire year, and have income from sources in the Virgin Islands
or income effectively connected with the conduct of a trade of business in the Virgin Islands are required to file identical
returns in both the U.S. and the Virgin Islands. Taxpayers must complete Form 8689 to determine the amount of tax payable
to the Virgin Islands when it is determined they need to file both returns. If the taxpayer is self employed, they are subject to SE tax, whether they file Form 1040 or not. If the taxpayer is not required
to file U.S. Form 1040, they must file Form 1040-SS. The 1040-SS mirrors a combination of the Form 1040 Schedules C, F, SE
and Form 8812. Citizens and residents of the U.S. Virgin Islands do not pay income tax to the U.S. on earned income while
they are in the U.S. They must file the self-employment tax with the IRS. In addition, USVI taxpayers are not entitled to the Additional Child Tax Credit (ACTC). Individual taxpayers may claim estimated tax payments or credit elect on the return they are required to file, regardless
of the jurisdiction (U.S. or Virgin Islands) in which the return was filed. See IRM 5.19.19.3.3.6.3, U.S. Virgin Island Cover Over, for additional information on "cover over"
5.19.19.3.3.6.1 (09-03-2014)U.S. Virgin Islands Bona Fide Residents With Self-Employment Income
Generally, under IRC §§ 1401 and 1402, U.S. citizens and resident aliens who are bona fide residents of the USVI must pay
self-employment tax on their net earnings from self-employment of $400 or more, regardless of where the income is earned.
Bona fide residents of the USVI who do not file a U.S. Form 1040 must file Form 1040-SS, U.S. Self Employment Tax Return,
with the United States to report their self-employment income to the IRS. Form 1040-SS resembles a combination of Form 1040
Schedules C, F, SE and Form 8812. It also has the provision in Part I, line 4 to enter the total tax from Schedule H. Form
1040-SS is now used for more than just reporting self-employment income and paying SE tax.
Bona fide residents of the USVI do not generally pay income tax to the U.S. on income earned while in USVI. Their income tax
return is filed with the government of the U.S. Virgin Islands, while their SE tax must be reported to the IRS. 5.19.19.3.3.6.2 (09-03-2014)Taxpayers Who Are Not Bona Fide Residents of the USVI
U.S. citizens who derive income from USVI sources and are not bona fide residents of USVI will have to file identical tax
returns with both the U.S. and USVI if:
They have income from sources in USVI or,
They have income effectively connected with the conduct of a trade of business in USVI.
The original tax return is filed with the U.S. and a copy of the U.S. return, including all attachments, forms and schedules,
is filed with USVI Bureau of Internal Revenue by the due date for filing Form 1040.
If there is a joint return and one spouse is a bona fide resident of USVI and the other spouse is not, the taxpayers should
file the return in the jurisdiction of the spouse who had the highest adjusted gross income for the tax year.
its political subdivision or territories. Any returns or inquiries received with addresses from these islands should be handled
as an international case.
IRC § 937 establishes new criteria for determining the residency of an individual in a U.S. territory. It also establishes
new criteria for determining whether income is sourced in a U.S. territory. See IRM 21.8.2.3.2, Residence and Source Rules Concerning U.S. Territories, for additional information.
Taxpayers must submit Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands. Using the form prevents the allocation amount from being more than the amount of payments/credits paid to USVI. The credit
for taxes paid to USVI is nonrefundable.
5.19.19.3.3.6.3 (09-03-2014)U.S. Virgin Islands Cover Over
Under IRC § 932 (c)(2), a bona fide resident of the U.S. Virgin Islands is generally required to report worldwide income to
the U.S. Virgin Islands. A bona fide resident of USVI, who reports and pays tax on his worldwide income to the U.S. Virgin
Islands is not required to file a return with the IRS. A bona fide resident of the U.S. Virgin Islands who has income tax withheld by the U.S. can file a USVI tax return and can
claim credit on that return for the tax withheld and paid to the IRS. The amount of U.S. withholding that the U.S. Virgin
Islands has allowed their taxpayers to use as a credit is paid over to USVI through the "cover over"
process. For additional information regarding "cover over"
, see IRM 21.8.1.6.4, U.S. Virgin Islands Cover Over Processing - Phase One, and following subsections.
The transfer of credits to satisfy the U.S. Virgin Islands tax liability is permissible even when the U.S. refund statute
has expired. A "cover over"
of U.S. withholding is not a refund.
Taxpayers who are not bona fide residents of the USVI are allowed on their U.S. income tax return a credit elect or estimated tax credit for taxes
withheld by U.S. Virgin Islands. The procedure relating to the government-to-government cover over of those taxes is contained
in IRM 21.8.1.6.4 , U.S. Virgin Islands Cover Over Processing - Phase One.
Taxpayers who are bona fide residents of the USVI are allowed on their USVI income tax return a credit elect or estimated
tax credit for taxes withheld by the United States. The procedure relating to the government-to-government cover of those
taxes is contained in IRM 21.8.1.6.4, U.S. Virgin Islands Cover Over Processing - Phase One.
5.19.19.3.3.7 (09-03-2014)Tax Treaties
The U.S. Congress has ratified many income tax treaties with foreign countries. These treaties may reduce or exempt U.S. source
income from taxation for the nonresident alien who is a citizen of the treaty country. Most income tax treaties provide at
least a partial exemption from tax for compensation for personal services, both independent and dependent, performed in the
U.S. by a qualifying individual. Refer to Publication 901, U.S. Tax Treaties.
The primary purposes of the tax treaties between the U.S. and another country is to avoid international double taxation and
prevent tax avoidance and evasion.
5.19.19.3.3.8 (09-03-2014)Foreign Earned Income Exclusion
All U.S. citizens and resident aliens living in foreign countries are subject to the same U.S. tax laws as persons living
in the U.S. These taxpayers may elect to exclude some or all of their income earned in the foreign country if they meet the
qualifications. Listed below are five important facts:
The Foreign Earned Income Exclusion: Citizens and resident aliens who live and work abroad may be able to exclude all or part
of their foreign salary or wages from their income when filing their U.S. federal tax return. They may also qualify to exclude
certain foreign housing costs.
General Rules: To qualify for the foreign earned income exclusion, a U.S. citizen or resident alien must have a tax home in
a foreign country and income received for working in a foreign country, otherwise known as foreign earned income. The taxpayer
must also meet one of two tests: the bona fide residence test or the physical presence test.
Claiming the Exclusion: The foreign earned income exclusion and the foreign housing exclusion or deductions are claimed using
Form 2555, Foreign Earned Income, which should be attached to the taxpayer’s Form 1040. A shorter Form 2555-EZ, Foreign Earned Income Exclusion, is available to certain taxpayers claiming only the foreign income exclusion.
Taking Other Credits or Deductions: Once the foreign earned income exclusion is chosen, a foreign tax credit or deduction
for taxes cannot be claimed on the excluded income. If a foreign tax credit or tax deduction is taken on any of the excluded
income, the foreign earned income exclusion will be considered revoked.
In the case of a joint return, each qualifying spouse may elect to exclude some or all of their foreign earned income. Each
spouse must file a separate Form 2555 or Form 2555-EZ.
Refer to the instructions of Form 2555 for the amount of foreign income that may be excluded for the given tax year. Taxpayers who paid or accrued foreign taxes to a foreign country on foreign source income, and are subject to U.S. tax on
the same income may be able to take either a credit or an itemized deduction for those taxes. If taken as a deduction, foreign
income taxes reduce U.S. taxable income; if taken as a credit, foreign income taxes reduces the tax liability.
In some instances nonresident aliens may also claim a credit for income tax paid to a foreign country on foreign source income
that is effectively connected with a trade or business in the U.S., using Form 1116 and Form 1040NR.
U.S. citizens or resident aliens avoid double taxation by electing, under IRC § 901(a) to claim the foreign tax credits using
IRC § 164 (A)(3) allows a U.S. citizen or resident alien who itemizes to claim a deduction on Schedule A for foreign income
taxes paid or accrued instead of taking the foreign tax credit.
Taxpayers excluding income from sources within certain territories of the U.S. may not take the foreign tax credit on Form
1116. If a taxpayer is a bona fide resident of American Samoa and excludes income from sources in American Samoa, Guam or
CNMI, he/she cannot take a credit for the taxes paid or accrued on the excluded income. Refer to Publication 514, Foreign Tax Credit for Individuals.
5.19.19.3.3.9 (09-03-2014)Self-Employment Tax
Generally, under IRC §§ 1401 and 1402, U.S. citizens and resident aliens, including those living abroad, must pay self-employment
tax on their net earnings from self-employment of $400 or more. Residents of the territories who are not U.S. citizens are
also subject to self-employment tax. The U.S. has social security agreements (“Totalization Agreements”) with many countries to eliminate taxes due under two social
security systems. Under IRC § 1401(c) self-employment income is exempt from self-employment tax by operation of a Totalization
Agreement if such self-employment income is subject to the social security system of a foreign country. Under a Totalization
Agreement, a worker generally pays social security and Medicare taxes only to the country in which he or she is working. To be exempt from self-employment tax, a self-employed taxpayer working in a country with which the U.S. has a Totalization
Agreement must attach a "Certificate of Coverage"
to their U.S. income tax return verifying that his or her income is subject to social security and Medicare coverage in
a foreign county. A Certificate of Coverage shows that the U.S. has a Totalization Agreement in effect with the specific country
where the taxpayer is working. If a taxpayer is unable to get such a statement from the foreign country, the taxpayer may
submit a statement issued by the U.S. Social Security Administration stating that the taxpayer’s wages are not covered by
When a U.S. employer sends a U.S. citizen or resident employee to work in a foreign country for less than five years, the
employee typically remains covered by the U.S. Social Security system.
U.S. citizens and residents of Puerto Rico working in the U.S. or in a U.S. territory as employees of a foreign government,
an instrumentality wholly owned by a foreign government, or an international organization, are also subject to self-employment
tax on their compensation. However, if the taxpayer also worked outside of the U.S. and the territories as an employee of
a foreign government, an instrumentality of such government, or an international organization, only the portion of the income
earned in the U.S. (or in the territories) is subject to self-employment tax.
Ministers and members of religious orders who have not taken a vow of poverty are also subject to self-employment tax on the
income they earn for ministerial services, unless the Service grants an exemption or the taxpayer is subject to the social
security laws of a foreign country under a Totalization Agreement.
5.19.19.3.3.9.1 (09-03-2014)IMF International Individual Tax Returns
Form 1116, Foreign Tax Credit, (individual, estate or trust), and/or nonresident alien individual, nonresident alien trust, nonresident alien estate. Note:
Reassign all claims for the foreign tax credit to IMF International. Send through the Correspondence Imaging System (CIS)
via IMF International, or mail to:2970 Market Street1 D08.113Philadelphia, PA 19104 Form 2555, Foreign Earned Income, and Form 2555-EZ, Foreign Earned Income Exclusion
5.19.19.3.4 (09-03-2014) BMF/NMF International Tax Returns
Employers in the U.S. territories are also required to make Federal Tax Deposits (FTD); refer to Document 6209 § 10 for the
FTD requirements.
BMF Corporate Income Tax Returns
BMF Int'l Employment Tax Returns
BMF Foreign Withholding Tax Returns
BMF Foreign Estate Tax Returns
Foreign Trust and Estate Tax Returns
BMF Foreign Exempt Org Returns
BMF Foreign Information Statements
Forms 1120 and 1120-C with Form 1118, Foreign Tax Credit - Corporations
Form 940 – PR
Foreign and Possession Form 706
Foreign and Possession Form 990 Form 8805 Form 1120-F
Form 941PR / SS
Form 8804 Form 706-NA
Form 3520 Form 990-PF and Form 990-T with Form 1118
Form 1120-FSC and Form 8279 (FSC election)
Form 944PR / SS Form 8288
Form 5712 and Form 5712-A
Form 5735 Schedule P
5.19.19.3.4.1 (09-03-2014)Form 1042 and Form W-8 Series Withholding
To identify the types of income subject to withholding at the source, who is responsible for withholding the tax and at the
correct tax rate, refer to the following:
5.19.19.3.4.2 (09-03-2014)Other BMF Returns
Form 1065, U.S. Return of Partnership Income, is information only. There is no tax reported on this form. Income, losses, expenses, and operation of a partnership are
Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, is filed by a U.S. person on trust activities and operations to report certain activities, operations or transactions with
foreign trusts such as:
Reporting the death of a U.S. person if they were treated as an owner of a foreign trust, and reporting any portion of a foreign
trust that was included in the decedent's estate.
The transfer of property by a U.S. person, directly or indirectly, to a foreign trust whether or not the trust has one or
more U.S. beneficiaries.
5.19.19.4 (09-03-2014)Case Processing
This section provides information on processing ACS cases. The Service is only able to collect from taxpayers residing in foreign countries to the extent provided for in tax treaties.
See IRM 5.19.19.4.2, Other International Programs/Sources Available, which contains information on Mutual Collection Assistance Requests (MCAR).
Do complete research and work case to completion addressing and closing all issues at the same time.
Completing locator research on international cases requires you to be more creative in order to locate the taxpayer and/or
their assets. You are still required to conduct all required research, such as CC IRPTR, RTVUE, TRDBV and AMDIS, but you should
not limit your research to CFOL and Accurint. All research must be completed simultaneously when completing research, to avoid
delay of possible contact. Each case is different and the required research is based on the specific issues of the case.
All information collected by the IRS with regard to collecting a tax liability is protected by IRC § 6103; and disclosure
must meet IRC § 6103 standards.
Ensure any disclosure you make of taxpayer return information conforms to IRC § 6103(k)(6) (e.g., name, address and Taxpayer
Identification Number to a credit reporting agency to obtain a full credit report).
Analyze each such disclosure on a case by case basis to ensure the disclosure is necessary to obtain the desired information
(e.g., a report from the National Asset Locator Tool or a credit report), as follows: Is the specific return information disclosed limited to the minimum information necessary to obtain the report?
Before initiating any third party contact, ensure that the taxpayer and authorized representative have been notified in writing
at least 17 days earlier that such contacts may be made (unless verbal authorization has been obtained and documented). See
IRM 5.19.5.9, Notification of Third Party Contact.
5.19.19.4.1 (09-03-2014)Locator Sources
This section will be beneficial to the campus compliance employees when attempting to contact or locate the taxpayer and/or
third parties, etc. This section will also provide the employees with locator services available to use when working international
This section describes the various sources available to campus collection employees to facilitate locating international taxpayers
and their assets and also provides procedures to help protect taxpayer privacy when using these sources. As with a domestic
account, you should always attempt resolution using internal sources available to you. Refer to IRM 5.19.5.6.2, Attempts to Locate Taxpayer-Overview.
If there are usable levy sources, issue an LT11 if the PRI FNL NOT field is blank, otherwise issue levy per IRM 5.19.5.5.6,
Initial Levy Action. In addition, if there is more than one levy source, issue LP61 and LP62 to all other sources. Do not issue LP61 and LP62 to sources on which ACS cannot issue a levy. You must perfect any invalid levy addresses prior to issuing the levy, unless the address is outside of the U.S.
If there are no usable levy sources, but an unused phone number, you must make the outgoing call, if the time zone warrants.
If not, send case to Contact. If contact is made, follow IRM 5.19.1, Balance Due, for BalDues and IRM 5.19.2, Return Delinquency, for DelRets.
In addition to the internal locator services, such as CFOL, IDRS, and the use of third party letters (only within the US),
there are external sources that can be used. Some of these sources may be required depending on specific case issues.
If the international account has a domestic address, use http://www.411.com/ ; if the account has a foreign address, use http://www.numberway.com.
Use of asset and locator services research (Accurint) is required to verify real property ownership for IA or CNC (unable
to locate (UTL), unable to contact (UTC) and hardship) closures. This research tool is also required to locate taxpayers and conduct neighbor checks on CNC UTL/UTC closures.
Perform all searches by social security number (SSN), when available. For best results; a unique name search can be utilized
if no data is found via an SSN search.
After you conduct appropriate research and taxpayer ownership remains unclear, perform a property search by address; note
other possible addresses, potential for property owned in other states, etc. in the case analysis. Perform property deed and
property assessment searches.
When researching use File Reference Int'l. One of the most powerful tools for gathering information about an individual or business is the internet. The information
found on the internet can assist IRS employees in locating taxpayers and their assets. The decision regarding whether or not
you should use the internet to locate taxpayers and their assets must be based on the particular aspects of the case, just
as you would make any other decision to use any other collection tool. You can use the internet/intranet to help you locate
the taxpayer or their assets.
5.19.19.4.2 (09-03-2014)Other International Programs/Sources Available
Mutual Collection Assistance Requests (MCAR) - The U.S. has entered into a number of bilateral tax treaties that contain broad
provisions for assistance in collection. We currently have five mutual collection income tax treaty partners: Canada Denmark
The Netherlands Sweden Note:
The MCAR program is worked by field revenue officers in international groups, however, there may be times when a call may
be received inquiring about the program. If a call is received contact the MCAR coordinators immediately. The list of MCAR
coordinators can be found at the following website http://mysbse.web.irs.gov/Collection/international/mcar/default.aspx.
Campus Compliance does not have the authority to initiate an outgoing MCAR, however, both international and domestic revenue
officers who are trying to reach income or assets located in MCAR treaty partner countries can generate outgoing MCAR requests.
Transfers should be made on a case by case basis taking into consideration case specifics such as; type of taxes owed, type
of business, and size of liability.
Central Withholding Agreements - The Central Withholding Agreement (CWA) program is a pre-filing program for nonresident alien
athletes and entertainers performing independent personal services in the U.S. who wish to enter into a withholding agreement.
The purpose of the program is to foster compliance and give the nonresident alien athletes and entertainers the opportunity
to more accurately project their anticipated tax liability by entering into a CWA.
The Treasury Enforcement Communications System (TECS) is a database maintained by the Department of Homeland Security that
is used extensively by the law enforcement community. It contains information about individuals and businesses suspected of,
or involved in, violations of federal law. TECS can provide useful information about taxpayers so employees can attempt taxpayer
contact or locate asset information. Revenue officers can request that taxpayers with delinquent balances be entered into TECS, and the Service will then receive
information when those taxpayers travel into the U.S. for business, employment, or personal reasons. Employees must help maintain
the TECS database by requesting that appropriate taxpayers be entered into TECS or be deleted from TECS. Note:
It is important for each employee to understand the benefits the Service derives from TECS because such understanding should
ensure that each employee will do his/her part in maintaining TECS.
See IRM 5.1.18.14.2 for an important request from the Department of Homeland Security regarding TECS.
The taxpayers in TECS are primarily international taxpayers because the cases usually concern persons who reside abroad. However,
domestic taxpayers may also be entered into TECS.
Again, as with the above mentioned programs, before sending an account to the queue consider specifics of the case, or seek
guidance from the international TECS Coordinator as to whether the account should be placed on TECS. For addition information
on TECS, access the TECS page of the SBSE website at http://mysbse.web.irs.gov/Collection/international/tecs/default.aspx
and IRM 5.1.18.14, Treasury Enforcement Communications System.
5.19.19.4.3 (09-03-2014)International Account Time Frames
Consideration must be given to taxpayers who live abroad. This section provides guidance on time frames for international
taxpayers. Based on their location, additional time must be allowed for mailing and processing payments, returns and correspondence.
Allow 60 day for all LT/OL or LP letters issued to the taxpayer(s) or third parties, if the account has an international address. Note:
If the taxpayer resides in Puerto Rico, check the box in the letter field for a Spanish letter to be issued. An additional 10 days beyond the deadline must be given for all callbacks.
If the taxpayer promises to mail documents, provide twelve days beyond the established deadline if the taxpayer is now residing
within the U.S.; if they reside abroad (foreign address), provide 45 days beyond the deadline.
If a scheduled follow up date expires, correspondence or a telephone call is received, review the case at each event and take
all appropriate actions to ensure the case is processed in a timely manner.
5.19.19.4.4 (09-03-2014)Levy Action on International Accounts
This section contains information on issuing Notices of Levy on international accounts for ACS. IRC § 6331 authorizes levies to collect delinquent tax. Unless specifically exempt, any taxpayer property or rights to property
can be levied. However, the IRS may generally only levy when the following requirements are met:
The IRS sent the taxpayer a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the
No Collection Due Process (CDP) request is filed in response to the Final Notice of Intent to Levy and Notice of Your Right
to a Hearing, or
See IRM 5.19.4.3.1, Pre-Levy Requirements - Processing, for requirements to consider before issuing a levy.
Do not issue levies to foreign governments, United Nations employees, or companies/banks with addresses outside the U.S. It does not matter where the taxpayer resides, but where the levy source is located. Also, never send levies to another country's embassies, consulates, or missions, even if they are within U.S. borders. Note:
There are instances where funds held offshore can be reached by a levy if the bank has a branch in the U.S. or a territory
of the United States. Refer to IRM 5.21.3.2, Levy on a Domestic Branch of a Financial Institution.
The taxpayer has an account at ABC Bank & Trust located in Japan. ABC Bank & Trust is a U.S. based financial institution;
a levy can be issued to the bank.
Ensure there is a levy source available for ACS to send; see IRM 5.19.4.3.7. If there is no levy source available, do not
issue LT11. Check Information Returns Program (IRP) for a possible viable levy source. Determine if the taxpayer is employed or has an
open account. If a levy source is found that is viable then add it on IDRS/ACS and issue the levy. Document AMS of actions
taken and results.
If the taxpayer is in the military and there is no Combat Zone freeze on the account, then issue a levy. Make sure the levy
is sent to the correct address based on the taxpayer's status and branch of service. See IRM 5.19.4.3.4, Levy Determination. You must verify all levy source information and confirm each levy source on ACS when the confirmed indicator is N or when
the confirmed indicator is Y and the confirmed cycle field "CONF CYC"
has not been updated in the last 13 cycles. Delete levy sources that are no longer valid or are duplicates. (See IRM 5.19.4.4.8(1)
and (2), Next Action After Levy Response, for procedures and levy deletion codes.) Once you have determined enforcement action is appropriate, see IRM 5.19.4.3.12, Issuing Levies.
5.19.19.4.5 (09-03-2014)Lien Filing on International Accounts
This section provides guidance when filing federal tax liens on international or U.S. territorial accounts.
The federal tax lien arises when the Service meets the requirements - makes assessment and gives a notice and demand for payment,
and the taxpayer has neglected or refused to pay the tax within 10 days after notice and demand.
The purpose of filing the Notice of Federal tax Lien (NFTL) is to protect the government’s right of priority against certain
third parties, typically a purchaser, holder of a security interest, mechanic’s lien holder or judgment lien creditor. If the NFTL will not be filed, document the reason for not filing on AMS, such as:
Procedural reasons, i.e. no pre-lien (CP504 or LT11) notice has been issued or taxpayer filed bankruptcy.
If no pre-lien notice was sent, issue the ACS Letter 39. If on the phone with the taxpayer/power of attorney, inform them
the letter will be issued and the NFTL will be filed 60 days after the issuance of letter. See below table for when a federal tax lien should be filed or not:
A lien should be filed when:
A lien should not be filed when:
An IA is being established.
There is substantiated doubt of liability. The taxpayer has broken promises. The taxpayer provided verification of a loan in process.
For both loans and pending adjustments, provide a clear deadline by which the taxpayer must respond with proof the account
will be paid in full; explain a lien will be filed after the date if no response is received. The case is being closed with anything other than: Full payment, Full Abatement, Litigation. EXAMPLE: CNC.
It is verified the taxpayer is in bankruptcy or other litigation. Full Pay request of 60 days or less has been agreed to. The NFTL cannot be filed against property located outside the U.S. and U.S. territories.
On international cases the liens must be filed at :
Office of the Recorder of Deeds of District of Columbia Office of the Recorder of Deeds of the District of Columbia If the taxpayer owns property within the U.S. and the location is known, then a second lien can be filed in that location.
5.19.19.5 (09-03-2014) Recalculation of the Collection Statute Expiration Date (CSED)
IRC § 6503(c) suspends the statutory period for an assessed tax for taxpayers residing outside of the U.S. and territories.
It provides a suspension of the collection of an assessment during the period the taxpayer is outside of the U.S. for a continuous period of at least
six months. The taxpayer will be deemed to be absent from the United States for purposes of this section if he is generally
and substantially absent from the United States, even though he makes casual temporary visits during the period. See Treas.
Reg § 301.6503(c)–1(b).
Complete Form 8620 to correct the CSED within the guidelines set under IRM 5.1.19.3.7 , Taxpayer Living Outside the U.S., when working international accounts (not territorial ones), and the CSED is about to expire. 5.19.19.5.1 (09-03-2014)IRS Individual Taxpayer Identification Number (ITIN)
For taxpayers who do not qualify for a SSN, but need to file a tax return, IRC § 6109 allows for the creation of Individual
Taxpayer Identification Numbers (ITIN). This section provides guidelines on how the ITIN is used and how to apply for an ITIN.
ITINs are issued to help individuals comply with the U.S. tax laws and to provide a means to process accounts, tax returns
and payments for those that are not eligible for an SSN.
Issuance of an ITIN does not entitle the recipient to social security benefits, and it does not change their immigration
status or their right to work in the U.S.