Source: https://www.irs.gov/irm/part4/irm_04-023-011
Timestamp: 2019-09-19 17:05:45
Document Index: 402997713

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4.23.11 Prompt Action in Deficiency and Overassessment Cases | Internal Revenue Service
4.23.11 Prompt Action in Deficiency and Overassessment Cases
4.23.11.1 Overview
4.23.11.1.1 Employment Tax Early Payment Program
4.23.11.2 Preparation and Acceptance of Waiver Form
4.23.11.3 Advance Payments - General
4.23.11.3.1 Advance Payments - IRC 6603 Deposits
4.23.11.4 Form 3244A, Payment Posting VoucherExamination
4.23.11.4.1 Form 3244A, Remarks
4.23.11.4.2 Forwarding Form 3244A
4.23.11.5 Timely Processing of Payments
4.23.11.5.1 Payments Of $100,000 Or More
4.23.11.6 Subsequent Payments
4.23.11.6.1 Section 3121(q) Payments Made Directly to Examiner
4.23.11.6.2 Section 3121(q) Payments Not Made Directly to Examiner
4.23.11.7 Restricted Interest Cases
4.23.11.8 Assessments
4.23.11.9 Quick Assessments
4.23.11.9.1 Quick Assessments on Trust Fund Recovery Penalty and IRC 6020(b) Cases
4.23.11.9.2 Investigating Employee Responsibilities for Quick Assessments
4.23.11.9.3 Forwarding Quick Assessments to Campus
4.23.11.9.4 Forwarding SB/SE Employment Tax Quick Assessments to Cincinnati Centralized Case Processing (CCP)
4.23.11.10 Prompt Assessments
4.23.11.10.1 Procedures for Recommending Prompt Assessments
4.23.11.11 Jeopardy Assessments
4.23.11.12 Transferee Assessment
Section 11. Prompt Action in Deficiency and Overassessment Cases
(1) This transmits a revision to the Table of Contents and text for IRM 4.23.11, Employment Tax, Prompt Action in Deficiency and Overassessment Cases.
(2) IRM 4.23.11.1.1(2). Added Note to define "case."
(3) IRM 4.23.11.1.1.(3). Clarified that the Form 9440 is to be used for both agreed and unagreed unpaid cases and provided detailed instructions for completion for employment tax examiners. Deleted references to IRM sections that were not relevant.
(4) IRM 4.23.11.1.1(4). Case closing instructions provided for cases with Form 9440.
(5) IRM 4.23.11.2. Revised to reflect the new Policy for Use of Fax (fax policy) to eliminate the dollar ceiling for acceptance of consents to assess additional tax and taxpayer closing agreements. In addition, consents to extend the time to assess tax, which were not previously allowed by fax, are now acceptable. Deleted (3).
(6) IRM 4.23.11.2(3) and (4). Revised to reflect instructions in IRM 4.10.8.14, Corrected Reports.
(7) IRM 4.23.11.4(1). Added Note for Transaction Coding.
(8) IRM 4.23.11.5. Renamed, Timely Processing of Payments.
(9) IRM 4.23.11.6.1. New subsection, Section 3121(q) Payments Made Directly to Examiner, with procedures for examiners to follow when payment is received by the examiner. Information from PSP Alert 2014-016, Processing Payments of Sec 3121Q Assessments.
(10) IRM 4.23.11.6.2. New subsection, Section 3121(q) Payments Not Made Directly to Examiner, with procedures for examiners to follow when the taxpayer deposits but fails to report the amount on the correct Form 941. Information from PSP Alert 2014-016, Processing Payments of Sec 3121Q Assessments.
(11) IRM 4.23.11.8. Removed references to IRC 6861 and IRC 6867 for jeopardy assessments as they don’t apply to employment taxes and deleted paragraphs (2) and (3). Added information with regard to IRC 6862 to (1).
(12) IRM 4.23.11.12(3). Added cite IRM 4.11.52.
This material supersedes IRM 4.23.11 dated November 3, 2014.
This section contains instructions and guidelines for all Large Business & International (LB&I), Tax Exempt/Governmental Entities (TE/GE), and Small Business/Self Employed (SB/SE) employees when dealing with employment tax issues.
4.23.11.1 (11-03-2014)
This section details the steps for deficiency and overassessment cases.
In accordance with the Service’s continuing effort to reduce the Accounts Receivable Dollar Inventory (ARDI) and Currently Not Collectible (CNC) Accounts, managers must strive for quality assessments and promote an increased emphasis on early collections. It is the general practice of the Service to request advance payments on agreed adjustments to employment tax returns and delinquent returns secured during an examination. Managers will also provide information and assistance on the collection processing in all deficiency cases.
If a taxpayer is bankrupt ("B" code on Form 5546, Examination Return Charge-Out Sheet) or is currently working with Collection on payment of taxes previously assessed ("C" code on Form 5546 or Collection status "26" ), Collection will be consulted before proposing additional deficiencies. See IRM 4.20.1.2, Examiner’s Responsibilities, for information on examiner responsibilities.
At the time a tax deficiency is proposed or a delinquent return is solicited, the examiner will furnish a calculation of the tax, projected interest, penalties due, the current interest rate on underpayments and an explanation of the advantages of making an advance payment. Publication 1, Your Rights as a Taxpayer, and Publication 5146, Employment Tax Returns: Examinations and Appeal Rights, provided at the start of the examination, should be reviewed with the taxpayer. In addition, Publication 594, The IRS Collection Process, will also be furnished to provide an opportunity for the taxpayer to discuss the IRS collection process and ask any questions.
Examiners must request full payment in all agreed employment tax cases. An examiner can accept payment by check or money order, or cash. If a taxpayer desires to make payment by cash, Collection assistance in accepting the payment should be requested through the manager. Also, office locations that have Wage and Investment (W&I) Division Field Assistance groups are able to assist in processing cash payments.
The taxpayer's ability to pay is determined using a "tiered interview." The "tiered interview" consists of the questions:
Can you pay at first notice?
Can you borrow to pay the first notice?
In each instance, the examiner should attempt to secure full payment. However, if the taxpayer indicates they will be able to pay the amount due upon receipt of the first notice, no further requests for payments need to be made by the examiner.
If the taxpayer is not able to pay in full within 120 days of the first notice, consideration should be given to an installment agreement. This should be coordinated with Collection, as set forth in IRM 4.20.3, Examination Collectibility - Soliciting Payment.
4.23.11.1.1 (02-07-2017)
Employment Tax Early Payment Program
If attempts to secure payment of an agreed employment tax case are unsuccessful and the taxpayer is unable to pay immediately or upon receipt of the first notice, the examiner will:
Review payment plans and explain the interest and deposit penalty provisions to the taxpayer. See IRM 4.23.8.3, Interest-Free Adjustments, and subsequent sections for further information on the interest-free provision and deposit penalty rules. See IRM 20.1.4.21.5, Adjusted Returns (Forms 941–X, 943–X, 944–X, 945–X, and CT-1X, for examples.
Consider if an installment agreement is available to the taxpayer. This should be coordinated with Collection, as set forth in IRM 4.20.3, Examination Collectibility – Soliciting Payment.
The taxpayer will owe interest if full payment is not made by the assessment date, even if the interest-free provisions otherwise apply.
For agreed, unpaid employment tax cases worked in Area 212 (Specialty, Employment Tax Examination) with a total deficiency greater than $100,000, examiners will:
Initiate a collection referral using the Specialist Referral System (SRS).
Provide available financial information secured from the taxpayer during the audit via a separate, encrypted email to the Collection Area Coordinator.
The SRS referral and additional information will be provided to the appropriate Collection Group Manager to be addressed.
A "case" for employment tax purposes consists of all employment tax forms included in the taxpayer case file under examination, (e.g., Form(s) 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, Forms 941, Employer's QUARTERLY Federal Tax Return, and other related returns). Related entities picked up as part of the package audit are considered separate cases.
In all unpaid cases (agreed or unagreed), a Form 9440, Taxpayer Levy Source and Contact Information, is required to be completed to assist collection efforts.
Tax Examiners in Employment Tax Examination are exempt from preparing this document.
Employment Tax Field Specialists (RAs, ROEs, or TCOs) will complete Form 9440 as follows:
Line 1: Business name
Line 2: Business EIN
Line 3: Officer or primary shareholder's name, if known
Line 4: Officer or primary shareholder's TIN if known
Line 5: Business phone number
Line 6 - N/A
Lines 7(a)-(d): Include any banking/financial information obtained during the examination
Lines 8(a) and (b): N/A. Employment tax examiners are not expected to perform research to find this information as it does not relate to the employment tax examination.
Lines 9 - 11: Complete with examiner specific information
Upon closing, the examiner will check the box on Form 3198, Special Handling Notice for Examination Case Processing / Form 3198-A, TE/GE Special Handling Notice for Exempt Organizations (EO), in the "Forms Enclosed" section to indicate Form 9440 is in the file. The Form 9440 will be attached to the left inside of the folder as the top document.
4.23.11.2 (02-07-2017)
Preparation and Acceptance of Waiver Form
A waiver should disclose the type of tax, period or periods involved, the amount of deficiencies and /or overassessments (and penalties, if any), and is properly signed by the taxpayer or their authorized representative. The following forms, when completed, fulfill these requirements:
Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment,
Form 2504-S, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (including section 530 statement), and
Form 2504-WC, Agreement to Assessment and Collection of Additional Employment Tax and Acceptance of Overassessment in Worker Classification Cases,
Service personnel may not alter a waiver completed by a taxpayer or request that a taxpayer execute a blank waiver.
A timely-filed waiver form is considered a valid claim for refund when a taxpayer agrees to an overassessment determined by the Service.
Pursuant to a November 19, 2015 memo from the Deputy Commissioner for Services and Enforcement entitled "Revision of Policy for Use of Fax in Taxpayer Submissions" , the Policy for Use of Fax (fax policy) has been revised to eliminate the dollar ceiling for acceptance of consents to assess additional tax (including various Forms 2504 and other consents) and taxpayer closing agreements (e.g., Form 906, Closing Agreement on Final Determination Covering Specific Matters, or Classification Settlement Program (CSP) agreements) received by fax. In addition, consents to extend the time to assess tax, which were not previously allowed by fax, are now acceptable. In all cases, the examiner must document in the case history:
That taxpayer contact has been made,
The date of contact, and
The desire of the taxpayer to submit the document by fax.
If an error made in computing a deficiency, overassessment, or penalty shown on a previously executed report/waiver reflects a tax greater than the correct amount, a corrected report showing the lesser amount will be prepared. A copy should be given to the taxpayer; however, no signature on the new report/waiver is required. Note on the corrected report, "Refer to the taxpayer’s signature on the report dated (date)" . See IRM 4.10.8.14, Corrected Reports.
If an error is made on the report/waiver that reflects a tax less than the correct amount , the examiner has two alternatives. First, the examiner may prepare a corrected report and solicit a new waiver. Or, the case may be processed for the amount shown on the original executed report/waiver if it falls under the Error Tolerance levels of SB/SE Delegation Order 4.41. The group, or function discovering the error, will prepare a memo to Centralized Case Processing (CCP) signed by a person authorized by the delegation order. See IRM 4.10.8.14 and SB/SE Delegation Order 4.41, Error Tolerance Levels at: http://mysbse.web.irs.gov/RefLibrary/imd/delorders/functional/examination/21542.aspx.
When the correction of an error results in the increase of a deficiency not processed under (4) above for any period shown on a waiver, a supplemental waiver will be secured for the difference between the deficiency or penalty, as corrected, and the amount shown on the original waiver. The supplemental waiver will be clearly identified as such and stapled on top of the original waiver, and the case will be processed in the usual manner. If the correction of an error results in the decrease of an overassessment not processed under (4) above, a new waiver will be secured for the amount of the corrected overassessment.
When a waiver covers multiple periods, the rules in (3) through (5) above must be applied separately to each period involved and not to the net effect of the waiver. For example, if a waiver shows additional taxes for each of two periods, but corrections result in a substantial tax increase for one period and a substantial tax reduction for the other period, a new waiver should be solicited even though the net effect of the corrections may favor the taxpayer.
4.23.11.3 (11-03-2014)
Advance Payments - General
Advance payments are defined as remittances intended for application to anticipated, pending, or proposed deficiencies or additional assessments, including any remittances received as a result of solicitations to pay by examiners. All remittances received with delinquent returns secured by examiners are payments, but they are not advance payments.
There are two types of advance payments:
IRC 6603 deposit - discussed at IRM 4.23.11.3.1, and
A payment of tax deficiency.
Examiners must ensure to properly identify the type of taxpayer payment.
The examiner will solicit payment of the deficiency in agreed field and office examination cases.
An examiner will not solicit a remittance from a taxpayer until the examination is completed and an agreement is secured. If the taxpayer offers a remittance prior to the completion of the examination as a means of stopping the accrual of interest, such remittance will be accepted to terminate interest accrual on the amount paid as of the date of the remittance. See IRM 4.23.11.3.1.
When a case involves restricted interest, the examiner will not solicit the interest due. If the taxpayer desires to make full payment of the balance due, the examiner will check the "Restricted Interest" box on the Form 3198. At this time, advise the taxpayer that the restricted interest provisions apply and cannot be computed at this time; the interest will be computed at closing by a tax examiner in CCP. See IRM 20.2.5.6, Restricted Interest.
Exempt Organizations (EO) should to follow local procedures.
The employee who accepts the advance payment will classify it either as:
One tendered after the deficiency has been determined and an agreement has been secured from the taxpayer and before the tax has been assessed, or
One tendered before the deficiency has been determined and before an agreement has been secured from the taxpayer.
Employees who receive remittances must transmit them to the teller unit at the appropriate Campus for deposit no later than the next workday after receipt.
All examiners will post payments received during their examinations as a Transaction Code (TC) 640, "Advanced Payment of Determined Deficiency" .
4.23.11.3.1 (11-03-2014)
Advance Payments - IRC 6603 Deposits
IRC 6603 codifies the taxpayer's right to make a deposit in lieu of a payment to stop the accrual of interest on a potential deficiency. It also provides for the accrual of interest on a deposit returned to the taxpayer to the extent that the deposit is attributable to a disputable tax. Rev. Proc. 2005-18 provides the requirements for a remittance to be treated as an IRC 6603 deposit, including:
A written statement from the taxpayer identifying and describing the amount of disputable tax at the time the deposit is made
Without the written statement, the remittance may be treated as a payment of tax. If the remittance is treated as a payment of tax, the taxpayer cannot contest the determination in Tax Court; if the taxpayer wishes to contest the determination in court, the taxpayer must sue for a refund in federal district court or the Court of Federal Claims. (If the taxpayer pays the full deficiency, there is no deficiency and the Tax Court does not have jurisdiction.)
For additional information, see IRM 4.4.24.6, 6603 Deposits (formerly known as Cash Bond), and IRM 20.2.4.8.2, IRC 6603 Deposits.
4.23.11.4 (02-07-2017)
Form 3244–A, Payment Posting Voucher—Examination
Upon acceptance of an advance payment (tendered before or after a deficiency has been determined and an agreement has been secured from the taxpayer), the responsible examiner will complete a separate Form 3244-A, Payment Posting Voucher - Examination, for each tax period and class of tax involved, as follows:
SSN/EIN: Enter the taxpayer identification number
Form No./MFT: Form numbers and MFT codes are found in Document 6209, IRS Processing Codes and Information
Tax Period: Enter "YYYYMM" , e.g., - quarterly return ending June 30, 20XX is shown as "20XX06"
Transaction/Received Date: Enter the date the remittance was received by the responsible examiner or the Service, whichever is earlier: e.g., July 30, 20XX is shown 07–30–20XX
Taxpayer: Enter the taxpayer’s full name, address, and ZIP code
Transaction Data: Enter the total amount of the payment opposite the Transaction Code (any breakdown is entered in Remarks)
The examiner will use TC640 for all cases where the deficiency has not been assessed or TC670 if the assessment has been made. Coding the payment appropriately will prevent erroneous refunds.
Remarks: See IRM 4.23.11.4.1 below
6603: Check this block only for advance payments accepted before the deficiency can be determined (e.g., unagreed cases). By checking this box, Designated Payment Code (DPC) "12" is automatically entered for TC "640" . The "6603 box" can only be checked if the requirements of IRC 6603 have been met. See IRM 20.2.4, Interest - Overpayment Interest.
Prepared By: Enter the preparer's name and office symbol.
4.23.11.4.1 (11-03-2014)
Form 3244–A, Remarks
Indicate the pertinent information regarding the transaction, including:
The check number of the check submitted by the taxpayer.
The amount of payment allocated for tax, penalty, and interest, as well as any special instructions. See Document 6209, IRS Processing Codes and Information, for the applicable transaction codes.
If Examination has no record of ever having the case file, the remarks section must indicate that fact.
If the date of an agreement precedes the date of the advance payment by more than 30 days, enter the agreement date.
If the first payment is not for full amount of deficiency, enter "Part Payment" ; or if part payment is other than the first payment, designate the payment, e.g., "2nd Payment."
Note restricted interest cases. See IRM 4.23.11.7.
If a payment received applies to more than one period, indicate "split remittance" in the remarks section of each Form 3244–A.
A separate Form 3244-A must be completed for each period to prevent a payment being input only for the first tax period. Indicate on each Form 3244-A the amount of payment to be applied to that period.
4.23.11.4.2 (05-13-2008)
Forwarding Form 3244–A
Each compliance function has developed its own set of guidelines for processing Form 3244–A. Those guidelines are to be followed if they differ from the following processing steps:
Part 1 of Form 3244-A and the taxpayer's remittance will be forwarded to the applicable Servicing Campus on the same day, or following day, of receipt. Use Form 3210, Document Transmittal, to transmit the form and payment.
Parts 1 and 3 of Form 3210 are forwarded to the appropriate Campus with the Form 3244–A. Part 4 of Form 3210 will be retained by the originator for control purposes; Part 2 may be discarded.
Part 2 of Form 3244–A is attached to the face of the appropriate tax return or IDRS print.
The same process is followed regardless of the type of payment (i.e., advanced payment or IRC 6603 deposit).
4.23.11.5 (02-07-2017)
Managers are responsible for ensuring timely remittance processing by employees under their supervision. If a Form 5919, Teller’s Error Advice, indicating late remittance processing is received, it is the manager’s responsibility to initiate corrective and/or disciplinary action.
All employees who receive remittances must transmit them immediately to ensure receipt in the remittance processing function within 24 hours.
4.23.11.5.1 (11-03-2014)
Payments Of $100,000 Or More
When remittances exceeding $100,000 are received, managers have a responsibility to determine what steps or what locations should be used to expedite the deposit.
Employee Responsibilities: An employee should immediately notify their manager upon receipt of a remittance of $100,000 or more. Payments should be sent on the day of receipt via overnight traceable mail. Convert any cash to a money order before mailing.
Manager Responsibilities: Managers will determine how to ensure a timely deposit is made. See IRM 1.22.1, Mail and Transportation Management - Mail and Transportation Management Overview. See also IRM 3.30.123.20.2, Instructions for Field Exam Payments of $100,000 or More.
Contact the Facilities Management’s Administrative Mail Coordinator to determine the most cost-effective means of delivery, including the consideration that the cost of transportation of the remittance is commensurate with the interest to be gained by an expeditious deposit.
4.23.11.6 (05-13-2008)
When a remittance is received for a delinquent return or a deficiency case, either of which was already released to the appropriate Campus, prepare Form 3244–A. Enter the amount of the total payment opposite TC 670 and enter a zero opposite TC 570. The TC 570 will prevent the payment from refunding until the examination deficiency has posted.
Forward the remittance and Part 1 of Form 3244–A to the appropriate Campus using Form 3210. Retain Part 2 of Form 3244–A with Part 4 of Form 3210. When the acknowledgement Form 3210 is received, destroy both Part 2 of Form 3244–A and Part 4 of Form 3210.
4.23.11.6.1 (02-07-2017)
Section 3121(q) Payments Made Directly to Examiner
A tax liability resulting from an examination of unreported tips (IRC 3121(q)) is reported by the taxpayer as a current period liability. The taxpayer is instructed through a notice and demand letter to report the tax on the Form 941 quarter that corresponds to the date of the notice and demand (generally a Form 941 quarter that has not yet posted). The taxpayer must deposit the tax within the time period required under his depository rules and make these deposits through electronic funds transfer.
Occasionally, a taxpayer may send payment directly to the examiner and not deposit it as instructed in the notice and demand letter. Examiners who receive these payments must prepare Form 3244-A.
When preparing Form 3244-A, examiners should follow the procedures found in IRM 4.23.11.4. Ensure that the box "Tax Period" is the period corresponding to the date of the notice and demand. Enter the Designated Payment Code (DPC) "99" (Miscellaneous Payment) in the box next to Code "670" .
4.23.11.6.2 (02-07-2017)
Section 3121(q) Payments Not Made Directly to Examiner
IRM 4.23.7.7.4(15) requires an examiner to monitor the posting and payment of an IRC 3121(q) tax. If the taxpayer makes the proper IRC 3121(q) tax deposit but fails to report the tax on the line titled "Section 3121(q) Notice and Demand – Tax due on unreported tips" on the Form 941, the examiner will prepare Form 3177, Notice of Action for Entry on Master File, to prevent the advance payment from being inadvertently refunded. This will ensure the Campus freezes this payment until the taxpayer files a Form 941-X to properly report the IRC 3121(q) tax.
When preparing the Form 3177:
Circle the code "570" , "Additional Liability pending" ,
Enter "01" under "MFT Code" , and
Enter the 941 period corresponding to the date of the notice and demand under "Taxable Period" .
Fax the form to CCP. See CCP Exam Efax Numbers at http://mysbse.web.irs.gov/examination/cp/cont/28100.aspx.
4.23.11.7 (11-03-2014)
The IRC provides that, under certain conditions, interest on underpayments and overpayments of tax is prohibited or limited to specific accrual periods. These special interest accrual periods are different than those that would result if the underpayments and overpayments were subject to the regular interest provisions of IRC 6601, "Interest on Underpayment, Nonpayment, or Extensions of Time for Payment, of Tax" , and IRC 6611, "Interest on Overpayments." These prohibitions give rise to the term "restricted interest."
The sections of the Code which authorize the restriction of interest on employment taxes are IRC 6205(a) (underpayments) and IRC 6413(a) and (d), (overpayments).
In all employment tax cases which involve a manual computation of interest, Form 3198 / Form 3198-A, will be attached to the outside of the case jacket. This form serves as a notification of the interest restriction.
IRS computer systems are capable of systemically generating some restricted interest calculations. When IRS computer systems are incapable of calculating interest, it must be manually computed and input.
The examiner completes the check-box and enters the interest start date on Form 3198 / Form 3198-A, "6205 Interest-Free adjustment date." Complete the Form 5344 with a TC308 and interest start date to ensure the taxpayer is not overcharged interest.
See IRM 4.23.8.3, Interest-Free Adjustments, and subsequent subsections for more information.
4.23.11.8 (02-07-2017)
The assessment of a deficiency or an additional tax (except in bankruptcy and receivership proceedings) falls within the following categories:
Quick Assessment: A quick assessment is made if the statutory period for assessing an additional tax or an agreed deficiency is about to expire. See IRM 4.23.11.9 for procedures on making a Quick Assessment.
Prompt Assessment: A prompt assessment is made if collection appears to be at risk and the intention is to protect the government’s interest and revenue. See IRM 4.23.11.10 for procedures on making a Prompt Assessment.
For more information on Quick/Prompt Assessments, refer to IRM 4.4.25, AIMS Procedures and Processing Instructions - Quick Assessments.
Jeopardy Assessment: A jeopardy assessment is made in situations where, prior to the assessment of a deficiency or tax, it is determined that collection of such deficiency or tax would be endangered if regular assessment and collection procedures are followed. IRC 6862, "Jeopardy Assessments of Taxes other than Income, Estate, Gift and certain Excise Taxes" , grants the Service the authority for making a jeopardy assessment for employment tax cases. The assessment can be made even if the due date for filing the tax return has not expired. See IRM 4.23.11.11 for procedures on making a jeopardy assessment.
Termination Assessment: Termination assessments do not apply to employment taxes. See IRC 6851 for additional information.
Regular Assessment: A regular assessment includes all assessments not processed as (a), (b), (c), or (d) above.
4.23.11.9 (11-03-2014)
Generally, quick assessment action is pursued if the assessment statute expires in 60 days or less. Requests for quick assessments are made by telephone or fax when statute or bar date expiration is within 10 days. Refer to IRM 4.23.10.17.1, Partial Assessment/Quick Assessment Processing, for general procedures. See IRM 4.23.11.9.4.
Form 5344, Examination Closing Record, Form 5599, TE/GE Examined Closing Record, or Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, are used to request quick assessments. In addition, Form 2859, Request for Quick or Prompt Assessment, is used in situations (a) through (d) below, or when the statute or bar date expiration is more than 30 but less than 60 days. A Quick Assessment is necessary if:
The statute of limitations will expire within 60 days, or it is determined that terminal closing (Command Code AMCLS) and assessment processing (Command Code ADJ47) actions cannot be completed before the 60-day period,
There are additional and/or delinquent taxes due in certain bankruptcy cases, (quick assessment procedures generally DO NOT apply to bankruptcy petitions filed after October 1, 1979. However, the bankruptcy stay does not prohibit the making of an assessment, and therefore, does not toll the assessment statute for bankruptcy cases filed on or after October 22, 1994.)
There are deficiencies involving bankruptcy and receivership cases under IRC 6871, "Claims for Income, Estate, Gift, and Certain Excise Taxes in Receivership Proceedings, etc.," or
An amended return is received and the statute will expire within 120 days.
A quick assessment does not provide authority to take immediate collection action for payment of the tax liability assessed. The taxpayer is allowed 21 calendar days if the deficiency is less than $100,000 and 10 business days if $100,000 or more. See IRC 6601(e)(3) and IRM 20.2.5.4, Notice and Demand and Debit Interest. However, if the taxpayer is in a receivership or probate proceeding, an immediate proof of claim may be filed.
Quick assessment procedures do not change (update) the existing Master File entity information. If entity information on any return being processed differs from that shown on IDRS using command code ENMOD, a Form 2363, Master File Entity Change, must be prepared to change the Master File entity to agree with the information on that return.
To eliminate unpostable conditions, research a transcript of the module involved to determine whether:
The module is established on Master File,
TIN and name lines agree with the Form 2859, Request for Quick or Prompt Assessment, information,
The period was not previously assessed,
No freeze codes exist, and
The proper transaction codes are being input and are not duplications.
If an account contains a TC 520/521 and/or a "right-V" freeze, an assessment is generally allowed while the taxpayer is in bankruptcy status. Following local procedures, the examiner will contact either the Examination Bankruptcy Coordinator or Technical Services for direction. Examiners should explain that they have a case for quick assessment but research indicates the taxpayer is in bankruptcy. If advised to make the assessment, the examiner should note the name and title of the person authorizing the assessment as well as the reason this assessment may be made in the "Remarks" section of Form 2859. Forward a copy of Form 2859 to Technical Services. If the examiner is advised the taxpayer is in bankruptcy and not to make an assessment, forward the case file to the Examination Bankruptcy Coordinator, with a Form 3198 / Form 3198-A attached to the outside of the case file with the information about the bankruptcy and the name and title of the person in Technical Services providing the information in the "Remarks" section of the Form 2859.
EO should send forms to Mandatory Review.
4.23.11.9.1 (10-19-2010)
Quick Assessments on Trust Fund Recovery Penalty and IRC 6020(b) Cases
A quick assessment of a proposed Trust Fund Recovery Penalty assessment on an employment, excise, or partnership tax return prepared and signed under authority of IRC 6020(b) may be made if a proof of claim covering the liability is filed in a receivership or probate proceeding. In Trust Fund Recovery Penalty cases, a quick assessment may also be made if the expiration of the statutory assessment period is imminent (i.e., less than 60 days) and a waiver extending the assessment period cannot be obtained.
When a quick assessment is made on an unagreed liability, the taxpayer shall be afforded the same appeal rights, without prior payment and claim for refund, that are available to a protesting taxpayer prior to assessment.
All collection activity should be withheld until the administrative appeal rights have been exhausted.
4.23.11.9.2 (11-03-2014)
Investigating Employee Responsibilities for Quick Assessments
If a quick assessment is required, the investigating employee will:
Prepare Form 2859 in quadruplicate (instructions provided on the form). Send the original and one copy to the Campus, one copy is retained by preparer, and in bankruptcy cases one copy is sent to Technical Services, (EO sends to Mandatory Review)
Transmit a copy of Form 2859 to the Technical Services Manager if receivership proceedings are involved, (EO sends to Mandatory Review)
Prepare Form 4844, Request for Terminal Action, requesting input of TC 599, if applicable,
Prepare Form 2363, Master File Entity Change, to indicate final filing requirements, if applicable,
Forward Forms 2363 and 4844 to the appropriate function within the area for input. Do not attach these forms to the Form 2859 or the return. The unit in the Campus which processes the assessments cannot process these requests for IDRS input, and
Annotate returns attached to Form 2859 as "Back-up for Quick Assessment."
If interest needs to be assessed, it is the responsibility of the person preparing the Form 2859 to provide the computation.
4.23.11.9.3 (10-19-2010)
Forwarding Quick Assessments to Campus
Forward the original and two copies of Form 2859, along with the related returns and documents under separate cover and identified as "Quick Assessment" , to CCP to be transmitted to the Campus as follows:
Form 2859 and attachments can be forwarded directly to the Campus Accounting Branch.
For Trust Fund Recovery Penalty assessment, the Accounting Branch then forwards the appropriate documents to the Collection Branch after assessment.
If TSIGN (TDA/TDI Assignment Code) of the balance due is being requested, Form 2859 and attachments, as well as the TSIGN request, must be forwarded to the Campus Collection Branch.
The Campus Accounting Branch will note the reference number and the "23-C" date on a copy of Form 2859 and returns this copy to the initiator to be placed in the case file.
When a quick assessment of a proposed Trust Fund Recovery Penalty is made, the Campus Accounting Branch sends Parts 3, 4, and 5 of Form 3552, Prompt Assessment Billing Assembly, to the initiator. The initiating officer will immediately deliver or send Parts 3 and 4, along with Publication 1, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, to the taxpayer.
4.23.11.9.4 (10-19-2010)
Forwarding SB/SE Employment Tax Quick Assessments to Cincinnati Centralized Case Processing (CCP)
To expedite processing procedures for quick assessments of employment tax returns and adjustments, SB/SE Employment Tax field groups should:
Inform the CCP Manager by phone that assessment information is to be faxed and request identification of the fax recipient.
Prepare a fax cover sheet for transmittal with all relevant information, including identification of all parties, the forms attached, and the number of pages.
The fax will consist of:
Completed Form 3198 with the "Partial Assessment" box checked,
Form 2504, Form 2504-S, or Form 2504-WC signed by the taxpayer, if applicable,
Completed report including Form 4666, Summary of Employment Tax Examination,Form 4667, Examination Changes - Federal Unemployment Tax, Form 4668-B, Report of Examination of Withheld Federal Income Tax for Withholding Reported on Forms 1099 and W-2G, and Form 4668, Employment Tax Examination Changes Report, and
Form 5344, Examination Closing Record, for each period to be assessed. Complete the form through Item 15.
CCP will make the partial assessment within ten days and fax back the copies of Form 5344 marked "Request Completed" and TXMODA’s showing the pending assessments to associate with the case file. (EO should send forms to Mandatory Review.)
Upon closing the case, Form 5344 or Form 5599, TE/GE Examined Closing Record, must be completed for all periods. For periods where there is no additional assessment due to the processing of the partial assessment, show a TC 300 with a zero amount.
Additional instructions for Form 5344 for quick and partial assessments can be found in IRM 4.4.25.15.1, Form 5344 or Form 5403 Entries.
For multiple quick assessments, field groups should inform the CCP team manager that the assessment information is being sent to the CCP using overnight mail. Overnight mail should only be used when the faxing of multiple assessment documents would be too time consuming and inefficient. (EO should send forms to Mandatory Review.)
4.23.11.10 (10-19-2010)
A prompt assessment is a manually processed assessment of a secured return where collection appears to be at risk and the intention is to proceed with collection action immediately upon request of the assessment. A prompt assessment may only be requested when prompt collection action is necessary to protect the government’s interest and revenue.
If the taxpayer is quickly placing property beyond the reach of the government, collection action may be taken, even though the 10-day notice and demand period and the 30-day notice of intent to levy have not passed. In addition, IRC 7429(a)(1)(A) requires written approval from Counsel for a jeopardy levy.
4.23.11.10.1 (05-13-2008)
Procedures for Recommending Prompt Assessments
Form 2859, Request for Quick or Prompt Assessment, will be prepared in quadruplicate.
If the initiator has not been designated to determine when collection is in jeopardy, Form 2859 should also be signed by a revenue officer who was designated such authority.
Annotate returns attached to Form 2859 as "Back-up for Prompt Assessment."
The original and two copies of Form 2859 should be attached to the tax return and will be forwarded, under separate cover and identified as "Prompt Assessment," to the Campus as follows:
Form 2859 and attachments are forwarded directly to the Campus Accounting Branch, and
For Trust Fund Recovery Penalty assessment, the documents are forwarded to the Campus Collection Branch by the Accounting Branch after assessment.
The Campus Accounting Branch notes the reference number and the "23-C" date on a copy of Form 2859 and will return this copy to the initiator to be placed in the case file.
Form 4844, Request for Terminal Action, must be prepared to request input of TC 599, if applicable.
4.23.11.11 (11-03-2014)
Jeopardy assessments are made in situations where, prior to the assessment of a deficiency or tax, it is determined that collection of such deficiency or tax would be endangered if regular assessment and collection procedures are followed.
All jeopardy assessments must be in full compliance with Policy Statement 4–88, found at IRM 1.2.13.1.27, which advises: "Jeopardy assessments should be used sparingly and care should be taken to avoid excessive and unreasonable assessments." At least one of the following conditions must exist:
The taxpayer is, or appears to be, preparing to quickly depart from the United States or to conceal himself/herself,
The taxpayer is, or appears to be, designing quickly to place his/her or its property beyond the reach of the Government either by removing it from the United States, by concealing it, by dissipating it, or by transferring it to other persons,
The taxpayer’s financial solvency is, or appears to be, imperiled. (This does not include cases where the taxpayer becomes insolvent by virtue of the accrual of the proposed assessment of tax, penalty, and interest), or
An individual is in physical possession of cash. An individual is in physical possession of cash, or its equivalent, in excess of $10,000 who does not claim such cash as theirs, or as belonging to another person whose identity can be readily ascertained and who acknowledges ownership of such case, so that the collection of tax on such cash is presumed to be in jeopardy within the meaning of IRC 6867. See Policy Statement 4-88.
A jeopardy assessment for SB/SE Employment Tax must be approved by:
Technical Services Group Manager,
Technical Services Territory Manager,
Collection Group Manager,
Collection Territory Manager,
Examination Territory Manager,
Special Agent In Charge, Criminal Investigation,
Associate Area Counsel, and
Chief, Employment Tax Examination.
See Delegation Order 4-21 (Rev. 1), Jeopardy and Termination Assessments. Effective Date: November 18, 2013.
See IRM 4.15.2.4.1.4, Preparing the Package, through IRM 4.15.2.4.1.6, Processing After Approval, for information on preparing the approval package, securing the appropriate approvals, and processing the approval package after approvals have been secured.
4.23.11.12 (02-07-2017)
Under IRC 6901(a)(2), assessment may be made of the liability of a transferee for employment taxes if the transferee liability arises from the liquidation of a partnership, corporation, or a reorganization within the meaning of IRC 368(a).
If the tax cannot be collected from the partnership or corporation, possible transferee liability can be explored. If the transferee agrees to pay the tax due, the examiner will prepare a supplemental return for the taxpayer involved. The transferee will evidence his/her agreement by signing the return as transferee under IRC 6901(a)(2). In an unagreed case, the transferee has the same appeal rights as any non-transferee taxpayer has in unagreed employment tax cases.
For additional information, see IRM 4.11.52, Transferee Liability Cases.