Source: http://www.irs.gov/irm/part1/irm_01-005-002.html
Timestamp: 2015-10-10 01:36:15
Document Index: 438327256

Matched Legal Cases: ['§801', '§4302', '§3502', 'art 801', '§801', 'art 801', 'ART 801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', 'art 801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801', '§801']

Internal Revenue Manual - 1.5.2 Uses of Section 1204 Statistics
Section 2. Uses of Section 1204 Statistics
1.5.2 Uses of Section 1204 Statistics
Restructuring and Reform Act of 1998 (RRA 98) Section 1204
Regulation 801
Section 1204 Employee
Tax Enforcement Results (TERs)
Records of Tax Enforcement Results (ROTERs)
Section 1204 and Regulation 801 Decision Table
Exhibit 1.5.2-1
Exhibit 1.5.2-2
Questions and Answers for Small Business/Self-Employed and Wage and Investment Operating Divisions
Exhibit 1.5.2-3
Small Business/Self-Employed (SB/SE) and Wage and Investment (W&I) Operating Divisions Section 1204 Work Activity Determination
(1) This transmits revised IRM 1.5.2, Managing Statistics in a Balanced Measurement System, Uses of Section 1204 Statistics.
(1) The following sections were added, renamed, or revised:
IRM 1.5.2.1, Overview, renamed from Uses of Statistics Overview and revised.
IRM 1.5.2.2, Background, new.
IRM 1.5.2.3, Authorities, renamed from Legal Requirements/Authorities and revised.
IRM 1.5.2.4, Definitions, renamed from Key Terms/Definitions and revised.
IRM 1.5.2.5, Acronyms, new.
IRM 1.5.2.6, Responsibilities, new.
IRM 1.5.2.7, Restructuring and Reform Act of 1998 (RRA 98) Section 1204, spelled out RRA 98 in title.
IRM 1.5.2.8, Regulation 801, revised §801.5.
IRM 1.5.2.9, Section 1204 Employee, revised.
IRM 1.5.2.9.1(5), Exercise of Judgment, new.
IRM 1.5.2.10, Tax Enforcement Results (TERs), revised.
IRM 1.5.2.12, Quantity Measures, revised.
IRM 1.5.2.16, Related Resources, revised.
Exhibit 1.5.2-2, Questions and Answers for Small Business/Self-Employed and Wage and Investment Operating Divisions, revised questions 16, 26, and 36, and added new questions 53 through 57.
IRM 1.5.2 dated May 10, 2012 is superseded.
All IRS executives, managers, and employees.
Robin L. CanadyChief Financial Officer
1.5.2.1 (01-14-2015)Overview
The IRS regulations on the use of statistics are designed to make sure that records of tax enforcement results (ROTERs) are
not used to improperly influence the handling of taxpayer cases. These rules reinforce the requirement that employees make
decisions on pursuing enforcement of the tax laws (including but not limited to determining tax liability and ability to pay)
that are based solely on the correct application of the law to the facts of each case and the exercise of reasonable administrative
judgment in light of the circumstances of each taxpayer.
This IRM: Contains general background information on the use of enforcement statistics
Defines key terms under Section 1204
Provides detailed procedures on the use of ROTERs
Explains the Section 1204 prohibited and permitted use of ROTERs
Use this IRM to: Determine whether or not the use of a statistic is a ROTER
Determine if the way a ROTER is used violates Section 1204
Determine allowable and unallowable uses of quantity and quality measures
The Chief Financial Officer (CFO), Corporate Planning and Internal Control Unit (CPIC), Office of Internal Controls, is responsible
for this IRM.
1.5.2.2 (01-14-2015)Background
Section 1204 of the IRS Restructuring and Reform Act of 1998 (RRA 98) was put into place to ensure IRS manages statistics
to protect taxpayer rights:
Section 1204(a) prohibits the IRS from using any ROTER to evaluate employees or to impose or suggest production quotas or
Section 1204(b) requires that employees be evaluated using the fair and equitable treatment of taxpayers as a performance
Section 1204(c) requires each appropriate supervisor to self-certify quarterly whether ROTERs were used in a prohibited manner.
1.5.2.3 (01-14-2015)Authorities
Our system of taxation depends on the taxpayers' belief that:
The tax laws they follow apply to everyone.
The IRS will respect and protect their rights under the law.
In July 1998, Congress passed the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98), Pub. L. No. 105-206,
112 Stat. 685 (1998).
RRA 98, Section 1201, establishes an IRS performance management system with goals or objectives for individual, group, or
RRA 98, Section 1201, Subpart I, Chapter 95, Section 9508, addresses a general workforce performance management system in
lieu of the performance appraisal system established under 5 USC, §4302. It states that the Secretary of the Treasury shall,
within one year after the date of enactment of this section, establish an IRS performance management system that maintains
individual accountability by:
Establishing one or more retention standards for each employee related to the work of the employee and expressed in terms
of individual performance, and communicating such retention standards to employees
Making periodic determinations of whether each employee meets or does not meet the employee’s established retention standards
Taking actions, in accordance with applicable laws and regulations, with respect to any employee whose performance does not
meet established retention standards, including denying any increases in basic pay, promotions, and credit for performance
under 5 USC, §3502
RRA 98, Section 1204, prohibits the use of ROTERs to evaluate or to impose or suggest production quotas or goals for any IRS employee.
Title 26 Code of Federal Regulations, Part 801 (Regulation 801), establishes an overall IRS performance measurement system
and governs the use of ROTERs. Regulation 801 supports Section 1204 by prohibiting the use of ROTERs to improperly influence
the handling of taxpayer cases.
In October 2005, Regulation 801 was revised to allow imposing or suggesting quantity goals for organizational units. The revision
authorizes using quantity measures to evaluate the performance of supervisory employees, non-Section 1204 employees, and organizational
units. The amended regulation: Continues to provide that performance measures, based in whole or in part on quantity measures, will not be used to evaluate the performance of any non-supervisory employee who is responsible for exercising judgment with respect
to tax enforcement results (TERs)
Does not alter in any way the RRA Section 1204 prohibition on the use of ROTERs to evaluate employee performance or to impose
or suggest production quotas or goals for any employee
The performance evaluation aspects of the IRS Section 1204 program migrate into the performance management area. According
to IRM 6.430, Performance Management integrates the processes that the IRS uses to:
Communicate and clarify organizational goals to employees
Identify individual and, where applicable, team accountability for accomplishing organizational goals
Identify and address developmental needs for individuals and/or teams
Assess and improve individual, team, and organizational performance
Use appropriate measures of performance as the basis for recognizing and rewarding accomplishments
Use the results of performance appraisals as a basis for appropriate personnel actions
The four steps of IRS performance management are:
Evaluating performance Recognizing performance 1.5.2.4 (01-14-2015)Definitions
This section provides definitions for terms used throughout this IRM.
Appropriate supervisor is the Section 1204 executive in an operating/functional division that directly or indirectly supervises one or more Section
1204 employees. An appropriate supervisor can identify additional appropriate supervisors.
Employee evaluation includes any written document used to appraise or measure an employee's performance to provide:
Required or requested performance rating (annual, mid-year, ad hoc)
Recommendation for an award
Assessment of an employee's qualifications for promotion, reassignment or other change in duties
Assessment of an employee's eligibility for incentives, allowances or bonuses
Ranking of employees for release/recall and reductions in force
See Regulation §801.3(e)(1)(ii). The definition of an "employee evaluation"
specifically includes only the five items above. This definition indicates when/where to use TERs and that ROTERs cannot
be used. Individual case reviews, progress reviews and workload reviews, are excluded in this definition.
Exercise of judgment in applying tax law is the process of making decisions to recommend or determine whether or how the IRS should pursue enforcement of the tax law, including but not limited to the taxpayer's tax liability or ability to
pay. The result is that reasonable people handling the same type cases may evaluate factors differently and achieve different
One or more cases is a term used in the definition of a ROTER, specifically "TERs reached in one or more cases."
Section 1204 applies to the result reached in a single case, as well as results reached in more than one case. A manager
cannot use a TER from a single case to evaluate an employee or to suggest or impose production quotas or goals.
Quality measures consist of items identified from statistically valid sample outcomes used to measure organizational units.
Quantity measures consist of outcome-neutral production and resource data that do not contain information regarding the TER reached in any
case or cases involving particular taxpayers.
Records of tax enforcement results (ROTERs) are data, statistics, compilations of information, or other numerical or quantitative recordations of the tax enforcement
results reached in one or more cases.
Retention standard for the fair and equitable treatment of taxpayers is an IRS employee performance standard based on Section 1204(b), which requires that employees be evaluated on the fair
and equitable treatment provided to taxpayers and behaviors that meet or do not meet the standard.
Section 1204 employee is an employee or the manager of an employee (all levels of management) who exercises judgment in recommending or determining
whether or how the IRS should pursue enforcement of the tax laws, or an employee whose duties involve providing direction
or guidance for field programs involving Section 1204 work activities including IRM guidance. The work activity performed,
not the employee's title, location or operating/functional division, identifies whether an employee should be considered a
Section 1204 employee. (Exception: The Whistleblower Office is not subject to Section 1204.)
Section 1204 manager is a manager/supervisor at any level who supervises one or more Section 1204 employees.
Section 1204 organizational unit is a unit or office within an operating/functional division that includes at least one employee who conducts Section 1204
Tax enforcement result (TER) is the outcome produced by an employee's exercise of judgment in recommending or determining whether or how the IRS should
pursue enforcement of the tax laws.
To impose a production quota or goal includes any communication (whether written or oral) which requires a Section 1204 employee to achieve a particular TER outcome
through his or her performance activities.
To suggest a production quota or goal means to engage in conduct from which a reasonable person would infer that the manager would evaluate the employee more favorably
if the employee achieved a specific enforcement result regardless of the merits of the particular case(s).
1.5.2.5 (01-14-2015)Acronyms
The table below identifies acronyms used in this IRM:
Automated Underreporter Program CAWR
Consolidated Annual Wage Report
Chief Financial Officer or Chief Financial Office
Corporate Planning and Internal Control
DATC/ASTA
Deferred Adverse Tax Consequence/Alternative Strategies for Tax Administration
National Quality Review System OPR
Social Security Administration TEACH
Temporary Employee Action Code History
Total Employee Performance System
Tax Enforcement Result
1.5.2.6 (01-14-2015)Responsibilities
The IRS Section 1204 program requires the cooperation and assistance of many IRS organizations.
IRS Operating/Functional Divisions - Implement the Section 1204 program in their respective areas; provide managers' quarterly self-certification reporting,
and assist the Chief Financial Officer (CFO) in various program aspects, e.g., the CFO Independent Review.
CFO - Provides overall program direction for the IRS Section 1204 program.
Human Capital Office (HCO) - Provides human capital strategies and tools for recruiting, hiring, developing, retaining, and transitioning a highly-skilled
and high-performing workforce to support IRS mission accomplishments.
Leadership, Education and Delivery Services Division (LEADS) - Provides servicewide training delivery services and training technology support in the Enterprise Learning Management System
(ELMS), leadership and cross-functional training programs, training policy guidance, and quality assurance for all IRS training
Agency-Wide Shared Services (AWSS) - Manages the IRS performance management system (HR Connect) and identifies the IRS Section 1204 employee population.
Treasury Inspector General for Tax Administration (TIGTA) - Completes the annual Mandatory Review of IRS Compliance With Restrictions on the Use of Enforcement Statistics.
General Legal Services (GLS) - Reviews and confirms ROTERs identified in the TIGTA audit and CFO Independent Review. Also provides guidance in response
to CFO questions concerning Section 1204 law.
1.5.2.7 (01-14-2015)Restructuring and Reform Act of 1998 (RRA 98) Section 1204
Section 1204 (Basis for Evaluation of IRS Employees) provides that: The IRS may not use ROTERs (1) to evaluate employees or (2) to impose or suggest production quotas or goals with respect to
The IRS will use the fair and equitable treatment of taxpayers by employees as one of the standards for evaluating employee
Each appropriate supervisor will certify quarterly by letter to the Commissioner of Internal Revenue whether or not TERs are
being used in a manner prohibited by Section 1204(a).
This section applies to evaluations conducted on or after July 22, 1998.
1.5.2.8 (01-14-2015)Regulation 801
Regulation 801 as amended is found at 26 CFR Part 801 and is reprinted below:
PART 801--BALANCED SYSTEM FOR MEASURING ORGANIZATIONAL AND EMPLOYEE PERFORMANCE WITHIN THE INTERNAL REVENUE SERVICE§801.1 Balanced performance measurement system; in general. §801.2 Measuring organizational performance. §801.3 Measuring employee performance. §801.4 Customer satisfaction measures. §801.5 Employee satisfaction measures. §801.6 Business results measures. §801.7 Examples. §801.8 Effective/applicability dates. Authority: 5 USC 9501 et. seq.; sects. 1201, 1204, Pub. L. 105-206, 112 Stat. 685, 715-716, 722 (26 USC 7804 note).Source: TD 8830, 64 FR 42835, Aug. 6, 1999, unless otherwise noted.Supplementary (preamble) information: The inclusion of some outcome-neutral production data as examples of quantity measures (for example, cycle time and number
or percentage of overage cases (§801.6(c)) does not prohibit an organizational unit's use of this or other outcome-neutral
production data as quality measures.
§801.1 Balanced performance measurement system; in general. (a) In general. -- (1) The regulations in this part 801 implement the provisions of sections 1201 and 1204 of the Internal Revenue Service
Restructuring and Reform Act of 1998 (Public Law 105-106, 112 Stat. 685, 715-716, 722) (the Act) and provide rules relating
to the establishment by the Internal Revenue Service (IRS) of a balanced performance measurement system. (2) Modern management practice and various statutory and regulatory provisions require the IRS to set performance goals for
organizational units and to measure the results achieved by those units with respect to those goals. To fulfill these requirements,
the IRS has established a balanced performance measurement system, composed of three elements: Customer Satisfaction Measures;
Employee Satisfaction Measures; and Business Results Measures. The IRS is likewise required to establish a performance evaluation
system for individual employees. (b) {Reserved}.[TD 9227, 70 FR 60215, Oct. 17, 2005. Redesignated and amended by TD 9426, 73 FR 60628, Oct. 14, 2008]
§801.2 Measuring organizational performance. The performance measures that comprise the balanced measurement system will, to the maximum extent possible, be stated in
objective, quantifiable and measurable terms and will be used to measure the overall performance of various operational units
within the IRS. In addition to implementing the requirements of the Act, the measures described here will, where appropriate,
be used in establishing performance goals and making performance evaluations established, inter alia, under Division E, National
Defense Authorization Act for Fiscal Year 1996 (the Clinger-Cohen Act of 1996), (Public Law 104-106, 110 Stat. 186, 679);
the Government Performance and Results Act of 1993, (Public Law 103-62, 107 Stat. 285); and the Chief Financial Officers Act
of 1990, (Public Law 101-576, 108 Stat. 2838). Thus, organizational measures of customer satisfaction, employee satisfaction,
and business results (including quality and quantity measures as described in §801.6) may be used to evaluate the performance
of or to impose or suggest production goals for, any organizational unit.[TD 9227, 70 FR 60215, Oct. 17, 2005. Redesignated and amended by TD 9426, 73 FR 60628, Oct. 14, 2008]
§801.3 Measuring employee performance. (a) In general. All employees of the IRS will be evaluated according to the critical elements and standards or such other performance criteria
as may be established for their positions. In accordance with the requirements of 5 USC 4312, 4313 and 9508 and section 1201
of the Act, the performance criteria for each position, as are appropriate to that position, will be composed of elements
that support the organizational measures of Customer Satisfaction, Employee Satisfaction and Business Results; however, such
organizational measures will not directly determine the evaluation of individual employees. (b) Fair and equitable treatment of taxpayers. In addition to all other criteria required to be used in the evaluation of employee performance, all employees of the IRS
will be evaluated on whether they provided fair and equitable treatment to taxpayers. (c) Senior Executive Service and special positions. Employees in the Senior Executive Service will be rated in accordance with the requirements of 5 USC 4312 and 4313 and employees
selected to fill positions under 5 USC 9503 will be evaluated pursuant to work plans, employment agreements, performance agreements
or similar documents entered into between the IRS and the employee. (d) General workforce. The performance evaluation system for all other employees will: (1) Establish one or more retention standards for each employee related to the work of the employee and expressed in terms
of individual performance; (2) Require periodic determinations of whether each employee meets or does not meet the employee's established retention standards;(3) Require that action be taken in accordance with applicable laws and regulations, with respect to employees whose performance
does not meet the established retention standards; (4) Establish goals or objectives for individual performance consistent with the IRS's performance planning procedures; (5) Use such goals and objectives to make performance distinctions among employees or groups of employees; and (6) Use performance assessments as a basis for granting employee awards, adjusting an employee's rate of basic pay, and other
appropriate personnel actions, in accordance with applicable laws and regulations. (e) Limitations. (1) No employee of the IRS may use records of tax enforcement results (as defined in §801.6) to evaluate any other employee
or to impose or suggest production quotas or goals for any employee. (i) For purposes of the limitation contained in this paragraph (e), employee has the meaning as defined in 5 USC 2105(a). (ii) For purposes of the limitation contained in this paragraph (e), evaluate includes any process used to appraise or measure an employee's performance for purposes of providing the following: (A) Any required or requested performance rating. (B) A recommendation for an award covered by section 45 of Title 5, USC 5384; or section 1201(a) of the Act. (C) An assessment of an employee's qualifications for promotion, reassignment or other change in duties. (D) An assessment of an employee's eligibility for incentives, allowances or bonuses. (E) Ranking of employees for release/recall and reductions in force. (2) Employees who are responsible for exercising judgment with respect to tax enforcement results in cases concerning one
or more taxpayers may be evaluated on work done on such cases only in the context of their critical elements and standards.(3) Performance measures based in whole or in part on quantity measures (as described in §801.6) will not be used to evaluate
the performance of any non-supervisory employee who is responsible for exercising judgment with respect to tax enforcement
results (as defined in §801.6).[TD 9227, 70 FR 60215, Oct. 17, 2005. Redesignated and amended by TD 9426, 73 FR 60628, Oct. 14, 2008]
§801.4 Customer satisfaction measures. The customer satisfaction goals and accomplishments of operating units within the IRS will be determined on the basis of information
gathered through various methods. For example, questionnaires, surveys and other types of information gathering mechanisms
may be employed to gather data regarding customer satisfaction. Information to measure customer satisfaction for a particular
work unit will be gathered from a statistically valid sample of the customers served by that operating unit and will be used
to measure, among other things, whether those customers believe that they received courteous, timely and professional treatment
by the IRS personnel with whom they dealt. Customers will be permitted to provide information requested for these purposes
under conditions that guarantee them anonymity. For purposes of this section, customers may include individual taxpayers,
organizational units or employees within the IRS and external groups affected by the services performed by the IRS operating
unit.[TD 8830, 64 FR 42835, Aug. 6, 1999. Redesignated by TD 9426, 73 FR 60626, Oct. 14, 2008]
§801.5 Employee satisfaction measures. (a) The employee satisfaction numerical ratings to be given to a Business Operating Division (BOD) or equivalent office within
the IRS will be determined on the basis of information gathered through various methods. For example, questionnaires, surveys,
and other information gathering mechanisms may be employed to gather data regarding satisfaction. The information gathered
will be used to measure, among other factors bearing upon employee satisfaction, the quality of supervision, and the adequacy
of training and support services. All full and part-time permanent employees of a BOD or equivalent office who are in pay
and duty status will have an opportunity to provide information regarding employee satisfaction under conditions that guarantee
them confidentiality.(b) Effective date. Section 801.5T is effective on or after November 13, 2014 and expires on or before November 10, 2017.
[TD 9227, 70 FR 60215, Oct. 17, 2005. Redesignated by TD 9426, 73 FR 60628, Oct. 14, 2008. Redesignated by TD 9703 79 FR 67351,
Nov. 13, 2014]
§801.6 Business results measures.(a) In general. The business results measures will consist of numerical scores determined under the quality measures and the quantity measures
described elsewhere in this section. (b) Quality measures. Quality measures will be determined on the basis of a review by a specially dedicated staff within the IRS of a statistically
valid sample of work items handled by certain functions or organizational units determined by the Commissioner or his delegate
such as the following: (1) Examination and Collection units and Automated Collection System (ACS) units. The quality review of the handling of cases involving particular taxpayers will focus on such factors as whether IRS personnel
devoted an appropriate amount of time to a matter, properly analyzed the facts, complied with statutory, regulatory and IRS
procedures, including timeliness, adequacy of notifications and required contacts with taxpayers. (2) Toll-free telephone sites. The quality review of telephone services will focus on such factors as whether IRS personnel provided accurate tax law and
account information. (3) Other work units. The quality review of other work units will be determined according to criteria prescribed by the Commissioner or his delegate.
(c) Quantity measures. Quantity measures will consist of outcome-neutral production and resource data that does not contain information regarding
the tax enforcement result reached in any case involving particular taxpayers. Examples of quantity measures include, but
are not limited to --(1) Cases started(2) Cases closed(3) Work items completed(4) Customer education, assistance, and outreach efforts completed(5) Time per case(6) Direct examination time/out of office time(7) Cycle time(8) Number or percentage of overage cases(9) Inventory information(10) Toll-free level of access(11) Talk time(d) Definitions - (1) Tax enforcement results. A tax enforcement result is the outcome produced by an IRS employee's exercise of judgment in recommending or determining
whether or how the IRS should pursue enforcement of the tax laws. Examples of tax enforcement results include a lien filed,
a levy served, a seizure executed, the amount assessed, the amount collected, and a fraud referral. Examples of data that
are not tax enforcement results include a quantity measure and data derived from a quality review or from a review of an employee's
or a work unit's work on a case, such as the number or percentage of cases in which correct examination adjustments were proposed
or appropriate lien determinations were made.(2) Records of tax enforcement results. Records of tax enforcement results are data, statistics, compilations of information or other numerical or quantitative
recordations of the tax enforcement results reached in one or more cases. Such records may be used for purposes such as forecasting,
financial planning, resource management, and the formulation of case selection criteria. Records of tax enforcement results
may be used to develop methodologies and algorithms for use in selecting tax returns to audit. Records of tax enforcement
results do not include tax enforcement results of individual cases when used to determine whether an employee exercised appropriate
judgment in pursuing enforcement of the tax laws based upon a review of the employee's work on that individual case. [TD 9227, 70 FR 60215, Oct. 17, 2005. Redesignated by TD 9426, 73 FR 60628, Oct. 14, 2008]
§801.7 Examples .(a) The rules of §801.3 are illustrated by the following examples: Example 1 . (i) Each year Division A's Examination and Collection functions develop detailed work plans that set goals for specific
activities (e.g., numbers of audits or accounts closed) and for other quantity measures such as cases started, cycle time,
overage cases, and direct examination time. These quantity measure goals are developed nationally and by Area Offices based
on budget allocations, available resources, historical experience, and planned improvements. These plans also include information
on measures of quality, customer satisfaction, and employee satisfaction. Results are updated monthly to reflect how each
organizational unit is progressing against its work plan, and this information is shared with all levels of management.(ii) Although specific work plans are not developed at the Territory level, Headquarters management expects the Area Directors
to use the information in the Area plans to guide the activity in their Territories. For 2005, Area Office 1's work plan has
a goal to close 1,000 examinations of small business corporations and 120,000 taxpayer delinquent accounts (TDAs), and there
are 10 Exam Territories and 12 Collection Territories in Area Office 1. While taking into account the mix and priority of
workload, and available staffing and grade levels, the Examination Area Director communicates to the Territory Managers the
expectation that, on average, each Territory should plan to close about 100 cases. The Collection Area Director similarly
communicates to each Territory the expectation that, on average, they will close about 10,000 TDAs, subject to similar factors
of workload mix and staffing.(iii) Similar communications then occur at the next level of management between Territory Managers and their Group Managers
and between Group Managers and their employees. These communications will emphasize the overall goals of the organization
and each employee's role in meeting those goals. The communications will include expectations regarding the average number
of case closures that would have to occur to reach those goals, taking into account the fact that each employee's actual closures
will vary based upon the facts and circumstances of specific cases.(iv) Setting these quantity measure goals, and the communication of those goals, is permissible because case closures are
a quantity measure. Case closures are an example of outcome-neutral production data that does not specify the outcome of any
specific case such as the amount assessed or collected.Example 2 . In conducting a performance evaluation, a supervisor is permitted to take into consideration information they developed
showing the employee failed to propose an appropriate adjustment to the tax liability in one of the cases the employee examined,
provided that information is derived from a review of the work done on the case. All information derived from such a review
of individual cases handled by the employee, including time expended, issues raised, and enforcement outcomes reached should
be considered and discussed with the employee and used in evaluating the employee.Example 3 . When assigning a case, a supervisor is permitted to discuss with the employee the merits, issues, and development of techniques
of the case based upon a review of the case file.Example 4 . A supervisor is not permitted to establish a goal for proposed adjustments in a future examination.(b) [Reserved]. [TD 9227,70 FR 60215, Oct. 17, 2005. Redesignated and amended by TD 9426, 73 FR 60628, Oct. 14, 2008]§801.8 Effective/applicability dates .(a) The provisions of §801.1 through 801.7 apply on or after October 17, 2005.[TD 9426, 73 FR 60628, Oct. 14, 2008]Approved: October 7, 2008Linda E. Stiff Deputy Commissioner for Services and Enforcement Eric Solomon,Assistant Secretary of the Treasury (Tax Policy)
1.5.2.9 (01-14-2015)Section 1204 Employee
A Section 1204 employee is: An employee or the manager of an employee (all levels of management) who exercises judgment in recommending or determining
whether or how the IRS should pursue enforcement of the tax laws
An employee whose duties involve providing direction or guidance for field programs involving Section 1204 work activities
An analyst who writes a compliance IRM is a Section 1204 employee.
The work activity performed identifies whether an employee should be considered a Section 1204 employee, not the employee’s
title, location, or operating/functional division.
1.5.2.9.1 (01-14-2015)Exercise of Judgment
The exercise of judgment in applying tax law refers to the process of making decisions to recommend or determine whether or how the IRS should pursue enforcement of the tax law (including but not limited to the taxpayer's tax liability or ability to
pay). These deliberations can result in reasonable people handling the same cases and, in good faith, discerning or evaluating
factors differently.
Decisions relating to recommending or determining whether or how the IRS should pursue the enforcement of the tax laws are
Section 1204 judgments. Examples of such judgments include, but are not limited to:
Determination to conduct a seizure
Determination to file a lien
Decision to disallow an unsupported itemized deduction
Generally, Section 1204 and Regulation 801 do not cover judgments that include decisions relating to:
Perfection of returns (such as correcting return errors)
Mathematical computations (such as interest or penalty calculations)
Reconciliation of contradictory return information (such as claiming child tax credits but not listing children)
Application of mandatory IRM provisions (decisions based on IRM policy that do not require interpretation)
Judgment relating to processing and handling tax returns and return information not covered by Section 1204, includes but
is not limited to: Extracting
Generation of non-discretionary documents and computations resulting from mathematical and administrative corrections
Routine decisions about the application of basic principles of law or regulation
Threshold income amounts for deductibility of medical expenses on Schedule A do not involve the discerning or evaluation of
facts, law or principles which require the use of subjective factors such as experience, legal principles, and fairness considerations.
Section 1204 managers must use judgment when:
Planning performance expectations
Using IRS performance management guidance within the boundaries of the provisions of RRA 98, Section 1204
1.5.2.9.2 (05-10-2012)Imposing a Production Quota or Goal
Any managerial communication, either oral or written, that requires a Section 1204 employee to achieve a TER is considered
imposing a production quota or goal. Example:
Requiring an employee to achieve a certain average dollar amount collected per return.
Requiring an employee to effect a certain number of seizures during a rating period.
Requiring an employee to refer a certain number of cases for prosecution during a particular period of time.
1.5.2.9.3 (05-10-2012)Suggesting a Production Quota or Goal
Any managerial communication, oral or written, from which a reasonable person would infer that the manager will evaluate an
employee more favorably if a specific enforcement result is achieved, regardless of the merits of the particular case(s),
is considered suggesting a production goal or quota. Example:
A suggestion occurs if an employee reasonably infers from conversations with the manager that the manager would evaluate the
employee more favorably if the employee increased the number of seizures in a given period of time regardless of the merits
A manager may not suggest to a Section 1204 employee that they should achieve the same TER in Case B as they achieved in Case
A. This suggests a production quota or goal to the employee and is a Section 1204(a) violation.
Determining whether a production quota or goal was suggested to an employee depends on considering all relevant facts and
circumstances, including whether there is a good business reason for using the statistic. Consider the following in making
this determination: What is the ROTER and how is it related to an employee's decision-making process?
What is the business reason for communicating the ROTER to the intended recipient?
Does the intended recipient have a need to know?
What is the business risk of not providing the ROTER to the intended recipient?
What is the potential undesirable outcome that could come from the misuse of the ROTER?
What is the risk that the intended recipient would reasonably believe that the communication suggested a production quota
When considering the risk, weigh the following factors: The degree of organizational knowledge and understanding of the employee
The organizational climate at the time and place of the communication
The guidance explaining how the ROTER can or cannot be used
The manner in which the communication is delivered
The expectation of follow-up with respect to the ROTER and the nature of the expected follow-up
The probable employee perception of the communicated ROTER
The probable public perception of the communicated ROTER
1.5.2.10 (01-14-2015)Tax Enforcement Results (TERs)
A tax enforcement result (TER) is the outcome produced by an IRS employee's exercise of judgment in recommending or determining
whether or how the IRS should pursue enforcement of the tax laws. A TER includes but is not limited to: Lien filed
Levy served
Seizure executed.
Amount - tax or penalties assessed
Amount - tax or penalties collected
Type of case closure (agreed, no change, full paid, abatement)
Prosecution recommended (indictment/conviction)
Type of relief provided
A TER does not include quality review data, an employee's case work review or a work unit's work on a case such as a number
or percentage of correct examination adjustments proposed or appropriate lien determinations made. See IRM 1.5.2.8, Regulation §801.6.
A TER is not a quantity measure. A quantity measure, by definition, is outcome neutral. See IRM 1.5.2.12, Quantity Measures, for more information.
1.5.2.10.1 (05-10-2012)Permitted Use of TERs
TERs may be cited and discussed in employee reviews (but not employee evaluations) to determine if the employee:
Exercised appropriate judgment
Applied the laws in one or more cases properly
TERs may be cited to provide guidance on future actions necessary for one or more specific cases.
A manager may reference an individual case to illustrate whether or not the employee's performance met specific performance
standards. Example:
In a case review, a manager discovers that an employee failed to consider all relevant facts or correctly apply laws resulting
in an incorrect proposed assessment of $1 million. The manager may comment on the TER reached, as materiality is a factor
relating to the employee's judgment, and may document the TER in the write-up of the individual case review.
During a workload review, a manager may comment to a revenue agent or revenue officer (RO) on the methods used, the level
and quality of the research, and the TERs reached in each of several cases separately based on the merits of each individual
case. The manager may comment on the dollar amount or the case size only as relevant to the time and efforts expended in each
During a progress review, a manager may comment on an RO's decisions in several cases on filing liens and issuing levies.
Since each lien or levy is a TER, the manager and RO may discuss the appropriateness of each of the collection tools used
or not used (including the appropriateness of each based on the amounts at issue), and the manager may make general observations
about the RO's judgment in each case considering the amounts at issue and the expected and actual TERs.
In a case review, a manager may inform an employee that the time spent and/or methods used on a $100,000 collection case were
either excessive, unwarranted, or insufficient, considering the amount at issue.
A manager may make recommendations on enforcement actions in a specific case. Example:
A manager may inform a revenue agent that, based on the facts of the case to date, a penalty should be asserted in a particular
A manager may inform an RO that specified levies should be served or indicate that the next appropriate course of action would
be seizure of specific property.
A manager may inform an employee that the IRS has handled cases involving similarly situated taxpayers, inform the employee
of best practices in those cases, and may refer employees to other employees to obtain guidance based on similar cases.
A revenue agent is assigned to an examination involving a taxpayer who has claimed improper deductions in a tax shelter. The
manager may suggest that the employee obtain information about the tax shelter from other employees with experience in examining
that shelter or similar shelters.
An RO is assigned a collection case where assets may have been placed offshore. The manager may suggest that the RO contact
experienced personnel to discuss best practices.
1.5.2.10.2 (05-10-2012)Prohibited Use of TERs
Although neither Section 1204 nor Regulation 801 contain restrictions on TER use, the IRS determined that managers must not
include TER outcomes in a written performance appraisal or employee evaluation. TER terms may be used as part of a list of enforcement tools, or indicate that the employee properly made a determination
whether a particular tool was appropriate.
In a case review, workload review, progress review, or other employee documentation that is not an employee evaluation, the
facts and details related to an individual TER may only be mentioned to fairly describe the employee's performance (that is,
the employee's knowledge, skills, and abilities as applied to the case) with emphasis placed on the employee's efforts rather
than on the result. In an employee evaluation, neither TERs, ROTERs, nor quantity measures may be used.
In an employee evaluation, a manager may briefly state that a revenue agent was able to locate a significant amount of unreported
offshore income, but should emphasize the particular efforts that made the TER noteworthy, and should not mention specific
dollar amounts. Example:
In support of an award, a manager may not state that an RO was able to locate sufficient funds in two accounts to result in
"full pay."
The narrative should emphasize the particular efforts made. Reference to a specific TER or dollar amount may not be mentioned.
In an evaluation, a manager may not state an RO was able to get a "full pay"
in 11 of 14 cases, even if efforts of the RO are emphasized, because the aggregation of TERs constitutes a ROTER. Example:
In an evaluation, a manager may not state that an employee issued liens on six of seven cases reviewed. The narrative should
focus on processes undertaken, not results achieved. The evaluation could be reworded to note that the employee made appropriate
lien determinations on their cases.
The review and discussion of an employee's performance on a case should be based on that case and not external matters (for
example, TERs from other similar cases).
1.5.2.11 (05-10-2012)Records of Tax Enforcement Results (ROTERs)
ROTERs are data, statistics, and compilations of information or other numerical or quantitative recordations of the TERs reached
in one or more cases. ROTERs include but are not limited to: Number of liens filed
Number of levies served
Number of seizures executed
Number of fraud referrals
Total dollars assessed
Percentage of agreed cases
Number of "full paid"
Number of prosecutions recommended
Percentage of Taxpayer Advocate cases where relief was granted
Amount of revenue protected
1.5.2.11.1 (05-10-2012)Permitted Use of ROTERs
ROTERs may be used for forecasting, financial planning, resource management, and the formulation of case selection criteria.
See Regulation §801.6(d)(2).
ROTERs do not include TERs of individual cases when used to determine whether an employee exercised appropriate judgment in
pursuing the enforcement of tax laws based on a review of the employee's work on that individual case. See Regulation §801.6(d)(2)
and §801.7(a) Example 3.
The IRS has determined that ROTER data may be made available as follows, provided that such data will never be used to evaluate
any employee or to suggest or impose production quotas or goals: Compilations of national statistics as to ROTER information such as amount assessed, collected, etc., may be disclosed to
the public, on IRS web sites, to IRS executives, and selectively to IRS employees on a "need-to-know"
ROTER information may be disclosed to managers if it relates to performance of units under their span of control.
ROTER information may be disclosed for use among units involved in forecasting, planning, resource management, and the formulation
of selection case criteria on a "need-to-know"
Territory/department and area/operation information may be shared with groups, but only for such functions as mentioned in
The Small Business/Self-Employed (SB/SE), Director, Collection, supervises eight area directors, who each have subordinate
territory and group managers. A group manager may be provided with ROTER data, such as the amount collected by that group.
The territory manager may be provided information for each group in the territory. An area director may be provided that information
for each group and territory in the area. Providing ROTER information in an employee evaluation (including an award) is prohibited.
An area director or technical services employee (whose group does not conduct taxpayer examinations and is not in that chain
of command) observes a substantial increase in the number of fraud referrals in a territory. The area director or technical
services employee may contact the territory manager to ask about the increase in the example above.
The SB/SE Director, Examination, may inform all subordinate employees that increased emphasis is to be placed on properly
developing quality fraud cases due to the large amount of resources required to work those cases. Decisions on management
resource allocation does not suggest a production quota or goal.
1.5.2.11.2 (05-10-2012)Prohibited Use of ROTERs
According to Section 1204(a), the IRS may not use ROTERs to evaluate employees or to impose or suggest production quotas or
goals. Example:
A manager informs revenue agents in a group meeting that one agent did an outstanding job by obtaining changes in the last
10 of his cases and that another agent did an outstanding job by averaging changes of $50,000 per case. Both of the statements
are prohibited by Section 1204(a) because each suggests a production goal.
Examples of suggesting goals or imposing a production quota for a ROTER include requiring an employee to achieve a certain
average dollar amount collected per return, requiring an employee to make a certain number of seizures during a rating period,
or praising an employee for referring a certain percentage or number of cases for prosecution or fraud referral. See Regulation
§801.7, Example 4.
Including ROTERs in self-assessments does not violate IRS RRA 98 Section 1204 or Regulation 801; however, to dispel the appearance
of impropriety, it is IRS policy that bargaining unit and non-bargaining unit employees should not use ROTERs in self-assessments.
If a manager, management official, or confidential management/program analyst submits a self-assessment with ROTERs, it should
be returned to the employee for removal of the ROTERs.
It is a Section 1204(a) violation if a ranking official or panel uses the information in the ranking process or if a supervisor
uses the information when evaluating employees' performance.
1.5.2.11.3 (05-10-2012)One or More Cases
The phrase "one or more cases"
is contained in the ROTER definition, specifically "TERs reached in one or more cases."
The definition intentionally references one case to make it clear that Section 1204 can apply to the result reached in
a single case, as well as results reached in more than one case. Example:
If you praise an employee for submitting a fraud referral, it is only one referral, but since your focus is on achieving the
TER rather than on the steps taken to identify and develop fraud, it is a ROTER violation.
A narrative in a performance evaluation that focuses on an employee's successful collection of $50,000 in a levy action is
a ROTER violation, even though the reference is to only one case.
A manager cannot use a TER from a single case to evaluate an employee or suggest production quotas or goals. Example:
A manager cannot advise or imply that an employee should achieve the same TER in Case B as they achieved in Case A.
The definition specifically allows managers to discuss with employees the results that they achieved in individual cases.
A manager may discuss with an employee his/her exercise of judgment in achieving a particular TER in a case when based on
a review of the employee's work on that individual case.
1.5.2.12 (01-14-2015)Quantity Measures
Quantity measures consist of outcome-neutral production and resource data that do not contain information regarding the TER
reached in any case or cases involving particular taxpayers. An organizational unit may use any outcome-neutral data, such as overage cases or cycle time, as a quantity measure. Examples
of quantity measures include, but are not limited to: Cases started
Customer education, assistance, and outreach efforts completed
Direct examination/investigation time
Toll-free level of access
Number or percentage of overage cases Cycle time
See Regulation §801.6(c).
1.5.2.12.1 (05-10-2012)Permitted Use of Quantity Measures
Quantity measures may be used to evaluate the performance of any organizational unit and may be disseminated as determined
by each organizational unit.
Quantity measures may be used to impose or suggest production goals for any organizational unit and may be disseminated as
determined by each organizational unit.
Quantity performance measures may also be used to evaluate supervisory (or management) employees responsible for exercising
judgment with respect to TERs. Example:
An area director may inform territory managers and employees that for a certain type of examination, a goal for average time
per case is 10 hours, and another goal is to close 90 percent of new cases within six months. This use of a quantity measure
does not violate Regulation 801 or any IRM provision. The area director must make it clear that circumstances in an organization
or the complexity of inventory for certain employees may warrant a different closure rate. This example does not suggest or
impose a production goal or quota for an employee. Example:
A territory manager, in evaluating a group manager, notes that the time per case in the group was far above the goal for the
group. The territory manager should use appropriate diagnostic tools to determine whether there are good reasons for the high
amount of time spent per case. Having done so, the territory manager may mention in the group manager's evaluation that the
time was far above the goal, in addition to discussing the manager's actions.
1.5.2.12.2 (05-10-2012)Prohibited Use of Quantity Measures
All employees of the IRS will be evaluated according to the critical elements and standards established for their positions.
The performance criteria is composed of elements that support the organizational measures for:
Regulation §801.3(a) indicates organizational measures do not directly determine the evaluation of individual employees. Performance measures based in whole or in part on quantity measures will not be used to evaluate the performance of any non-supervisory employee who is responsible for exercising judgment with
respect to TERs. See Regulation §801.3(e)(3).
A group manager informs non-supervisory employees responsible for exercising judgment with respect to TERs that for a prior
period, the group's average was 12 hours per case closure. The manager states their goal is to close cases in an average of
ten hours per case. The group manager describes best practices to accomplish this goal. This is allowable as an organizational
or employee goal, but the goal cannot be used in the evaluation of these employees. The employees must be evaluated exclusively
on performance based on their critical elements, and the evaluations may not cite the goal as a benchmark. The manager must
evaluate the employee's use of time based on individual cases, rather than on any assumptions as to case closing norms.
Employees who are responsible for exercising judgment with respect to TERs in cases concerning one or more taxpayers may be
evaluated on work done only in the context of their critical elements and standards. See Regulation §801.3(e)(2). 1.5.2.13 (05-10-2012)Quality Measures
Quality measures are determined by a specially dedicated IRS staff such as National Quality Review System (NQRS) analysts.
Quality measures are based on the review of statistically valid work item samples handled by organizational units. Examples
of quality measures include, but are not limited to:
Customer accuracy percentage
Regulatory accuracy percentage
Procedural accuracy percentage
Timeliness quality percentage
Professionalism quality percentage
Quality measures may be used in all the same ways as quantity measures.
Quality measures may be used to evaluate non-supervisory employees.
1.5.2.13.1 (05-10-2012)Permitted Use of Quality Measures
Performance measures based on quality measures may be used to evaluate employee performance. Performance measures based on
quality measures may also be used to impose or suggest production goals for any employee.
A manager may advise an employee that unnecessary steps were taken in their cases, increasing cycle time. The manager should
go on to describe the appropriate steps that the employee should have taken.
Quality review accuracy rates for the current period show a team's error rate is increasing. The manager may share this information
with employees in an effort to identify corrective actions needed. There is no prohibition in Regulation 801 or the IRM against
sharing quality statistics.
A manager may establish time frames that must be met within a certain number of days. Overemphasis on time frames, however,
could lead employees to focus solely on the time frame instead of on the appropriate case resolution.
1.5.2.14 (05-10-2012)Sharing Data
ROTER data concerning one organizational unit may not systematically be shared with other units at the same level. It may
only be shared with organizations to which it pertains.
ROTER data may be made available, provided that such data will never be used to evaluate any employee according to the definition
of "evaluate"
in Regulation §801.3(e)(1)(ii), and it will never be used to suggest production quotas or goals.
There is no prohibition against sharing organizational quantity or quality statistics.
Using results for diagnostic tools or workload indicators to compare one unit against other units may be appropriate for:
Seeking process enhancements to support improvement of the over-arching balanced measure(s)
The performance of any one unit at any level of the organization must not be used as a standard by which the performance of
other units are evaluated due to differences that exist in:
The types of taxpayers served
Specific issues being worked
However, results may be used to identify and share best practices.
1.5.2.15 (06-01-2010)Section 1204 and Regulation 801 Decision Table
The RRA 98, Section 1204 and Regulation 801 Decision Table can be used to determine if a particular measure/data may be used
for a specific purpose. See Exhibit 1.5.2-1.
Determine if the measure/data is a ROTER; if so, it's restrictions are governed by Section 1204. Note:
The revision of Regulation 801 did not remove or alter in any way the prohibitions on the use of ROTERs established by Section
1204, and continues to prohibit the use of ROTERs to evaluate employee performance or to impose or suggest production quotas
or goals for any employee.
Determine if the measure/data is a quantity measure; if so, it's permissible use is governed by Regulation 801.
The revision of Regulation 801 removed the limitations on the use of quantity measures for organizational units in evaluating
the performance of, or imposing or suggesting quantity goals.
You must also determine the organizational unit or type of employee to which the measure/data is applied. If the measure/data
is not a ROTER or a quantity measure, neither Section 1204 nor Regulation 801 applies.
The summary below provides information for determining if a particular measure/data may be used for a specific purpose.
Using TERs or ROTERs to impose or suggest production quotas or goals for any employee is prohibited.
Using quantity measures to impose or suggest production goals for any employee is allowed.
Using quality measures to impose or suggest production quotas or goals for any employee is allowed.
Using TERs or ROTERs to evaluate any employee is prohibited.
Using quantity measures to directly evaluate non-supervisory employees is prohibited.
Using quality measures to evaluate any employee is allowed.
Using quantity measures to evaluate supervisory employees is allowed, but may lead to a ROTER violation if organizational
goals are used to directly determine a supervisory employee's performance rating.
1.5.2.16 (01-14-2015)Related Resources
IRM 1.5.1, The IRS Balanced Performance Measurement System.
IRM 1.5.3, Manager's Self-Certification and the Independent Review Process.
IRM 1.5.5, Section 1204 and Regulation 801 Guidance for Criminal Investigation (CI).
IRM 1.5.8, Guidance for Taxpayer Advocate Service (TAS).
IRM 6.430, Performance Management.
26 CFR 801, Balanced System for Measuring Organizational and Employee Performance Within the Internal Revenue Service
Exhibit 1.5.2-1 Section 1204 and Regulation 801 Decision Table
The table below provides questions to determine if a particular measure/data may be used for a specific purpose.
Is the data a ROTER?
ROTERs are data, statistics, compilations of information or other numerical or quantitative recordations of the tax enforcement
results reached in one or more cases, but do not include tax enforcement results of individual cases when used to determine
whether an employee exercised appropriate judgment in pursuing enforcement of the tax laws based upon a review of the employee's
work on that individual case. See Regulation §801.6(d)(2).
Is the ROTER being used to evaluate or to impose or suggest production quotas or goals for any employee (including managers
and executives)?
Prohibited by Section 1204 and Regulation 801.
RRA 98 Section 1204 does not apply.
The IRS shall not use ROTERs to evaluate employees or to impose or suggest production quotas and goals with respect to such
employees. (RRA 98, Section 1204) No employee of the IRS may use ROTERs (as described in Regulation §801.6) to evaluate any
other employees or impose or suggest production quotas or goals for any employee. See Regulation §801.3(e)(1) Section 1204 employees include all levels of management.
Is the data a quantity measure?
Section 1204 does not apply to quantity measures; however, Regulation 801 does. See steps 4 - 7.
Neither RRA 98, Section 1204, nor Regulation 801 apply.
Quantity measures consist of outcome-neutral production and resource data that does not contain information regarding the
tax enforcement result reached in any case that involves particular taxpayers. See Regulation §801.6(c).
Is the quantity measure used to impose or suggest production goals for:
An organizational unit? A supervisory Section 1204 employee?
A non-supervisory Section 1204 employee? A non-Section 1204 employee?
Not prohibited by Regulation 801.
Quantity measures include measures such as cases started or closed, time per case, work items completed, hours expended, inventory
information etc. which are outcome neutral and not ROTERs. Revised Regulation 801 removed the limitations on the use of quantity
measures for imposing or suggesting goals for both organizational units and employees. See Regulation §801.6(c).
Is the quantity measure used to evaluate the performance of an organizational unit?
Organizational measures of customer satisfaction, employee satisfaction and business results (including quality and quantity)
may be used to evaluate the performance of or to impose or suggest production goals for, any organizational unit. See Regulation
§801.2.
Is the quantity measure used to evaluate the performance of:
A supervisory Section 1204 employee?
A non-Section 1204 employee?
A performance measure may be based, in whole or in part, on a quantity measure. The performance criteria for each position,
as are appropriate for that position, will be composed of elements that support the organizational measures of customer satisfaction,
employee satisfaction, and business results; however such organizational measures will not directly determine the evaluation
of individual employees. See Regulation §801.3(a).
Is the quantity measure used to evaluate the performance of a non-supervisory Section 1204 employee?
Prohibited by Regulation 801.
Regulation 801 does not apply.
Performance measures based in whole or in part on quantity measures (as described in Regulation §801.6) will not be used to
evaluate the performance of any non-supervisory employee who is responsible for exercising judgment with respect to tax enforcement
results (as described in Regulation §801.6). See Regulation §801.3(e)(3).
Exhibit 1.5.2-2 Questions and Answers for Small Business/Self-Employed and Wage and Investment Operating Divisions
The following questions and answers discuss the use of Tax Enforcement Results (TERs) and Records Of Tax Enforcement Results
(ROTERs) within Small Business/Self-Employed and Wage and Investment Operating Divisions.
Question 1. Are Individual Master File (IMF) Refund Accuracy Rate, Notice Accuracy, Refund Timeliness - Paper (days), and
Refund Dollars Subject to Interest IMF Returns ROTERs subject to Section 1204/Regulation 801?
No. Each statistic cited in the question reports the accuracy (first two) or timeliness (last two) of employee collective
efforts - all of which are quality measures. They do not meet the definition of TER or quantity measures, so they are not
subject to the prohibitions in Section 1204(a) or Regulation 801. Question 2. Are statistics which measure taxpayer actions (e.g. the number of returns and return information filed electronically
as well as by paper) ROTERs? No. Statistics which measure taxpayer or other third party actions do not consider the exercise of judgment by employees in
recommending or determining whether or how the IRS should pursue enforcement of the tax laws and, thus, are not ROTERs and
Section 1204/Regulation 801 does not apply. Question 3. Is the measurement of telephone "idle time"
a ROTERs? "Idle time"
refers to the period of time in which an employee is not conducting or wrapping up telephone calls. "Idle time"
is a quantity measure. It does not measure any exercise of judgment in regard to recommending or determining whether or
how the IRS should pursue enforcement of the tax laws, so it is not a ROTER. Question 4. What activities relating to the assessment and abatement of penalties are subject to Section 1204/Regulation 801?
Abating or waiving penalties based on communications with the taxpayer may involve Section 1204 judgments. This is the case
with abatement or waiver requests in which the taxpayer asserts that he or she had reasonable cause for noncompliance or exercised
due diligence. While the IRM gives extensive guidance on evaluating reasonable cause or due diligence assertions, it cannot
cover all possible circumstances and employees often must weigh the taxpayer's response and exercise discretion in accepting
or rejecting the taxpayer's request. Therefore, making determinations of reasonable cause or due diligence for penalty abatement
or waiver is a Section 1204 activity. In other instances, taxpayers will respond to penalty notices by presenting new facts
indicating that the penalty does not apply. Other penalty abatements arise due to adjustments to the underlying tax on which
they are computed. While the tax adjustment may involve Section 1204 judgment depending on the type of judgment involved,
the related penalty abatement is merely mathematical and does not involve Section 1204 judgment in and of itself. Question 5. Are Questionable Refund cases ROTERs for purposes of Section 1204/Regulation 801? Yes. The determination of whether a matter is a Questionable Refund requires the exercise of judgment in determining tax liability
- an analysis of legal principles, tax law, and the taxpayer's circumstances. The degree and depth of analysis required for
a Questionable Refund meets the test for the exercise of Section 1204 judgment. Question 6. Are tax examiners who adjust a taxpayer's income or loss considered "Section 1204 employees"
as defined for the purpose of applying Section 1204/Regulation 801?
No. If the duties being performed by tax examiners performing adjustment work involve the receipt and processing of taxpayer
generated adjustments to returns, then these employees are not Section 1204 employees for purposes of that task because they
are not auditing the returns and making corresponding adjustments, but rather are only inputting into the Integrated Data
Retrieval System (IDRS) the return information provided by the taxpayer. Question 7. A broad base of campus employees set up installment agreements based on established guidelines. Form 9465, Request
for Installment Agreement, provides taxpayers an opportunity to have IRS establish an installment agreement. These requests
are granted with no analysis of financial status or any requirement to determine ability to pay. Would this be considered
an enforcement result under Section 1204/Regulation 801 and would examiners doing this work be considered Section 1204 employees?
The determination of whether Section 1204/Regulation 801 applies requires a review of the tasks performed by the employee
and a determination whether the employee exercises judgment in regard to recommending or determining whether or how the IRS
should pursue enforcement of the tax laws. The decision of whether to set up an installment agreement is clearly a decision
determining a taxpayer's ability to pay. But not all decisions on issuing an installment agreement involve the kind of judgment
in regard to determining a taxpayer's ability to pay covered by Section 1204/Regulation 801. For example, the IRM has established
non-discretionary criteria regarding streamlined installment agreements. If the taxpayer seeks an installment agreement and
meets the IRM criteria, the taxpayer is entitled to such an agreement and the employee (whether in the campus or elsewhere)
who handles the request is not exercising the type of judgment with regard to determining ability to pay covered by Section
1204/Regulation 801. Thus, when handling a streamlined installment agreement, the employee is not a Section 1204 employee.
A different result occurs, however, if the taxpayer does not meet non-discretionary criteria for an installment agreement.
In such circumstances, an employee may have to exercise judgment in regard to determining a taxpayer's ability to pay. For
example, an employee may have to review a taxpayer's financial situation to determine whether an installment agreement is
an appropriate resolution. In this case, the employee would be a Section 1204 employee. Question 8. In the case analysis phase of the Automated Underreporter Program (AURP), the tax examiner compares the information
on the taxpayer return to the information provided by payers to ensure it has been reported. If there is a discrepancy, a
notice of discrepancy (CP 2000) is generated to the taxpayer requesting they provide an explanation and/or verification of
the discrepant amounts. Is this process subject to Section 1204/Regulation 801 and are employees performing this work Section
1204 employees?
No, the process and acts undertaken to reconcile Form 1099, Form W-2, and related payment or wage statements with returns
are not TERs and are not covered by Section 1204/ Regulation 801. Question 9. If the taxpayer timely responds to the notice with a signed full agreement to the proposed tax or credit adjustment,
the agreement is processed by the clerical staff. Is this covered under Section 1204/Regulation 801 and are employees performing
this work Section 1204 employees?
The receipt and processing of a full agreement does not require an exercise of judgment with regard to recommending or determining
whether or how the IRS should pursue enforcement of the tax laws. Rather, these tasks involve decision making regarding processing
and accounting functions, not determinations on tax liability or ability to pay; those determinations were made by others.
Question 10. The Return Social Security Administration (SSA) program identifies failure to file Form W-2 with the SSA. A civil
penalty is assessed when the employer fails to file with the SSA. However, if the taxpayer submits information to show that
he or she filed the Form W-2, the penalty is abated. Would employees performing this work be considered Section 1204 employees?
The status of a Section 1204 employee depends upon the precise duties performed by the employee. Reconciling databases between
the IRS and the SSA does not involve judgment in recommending or determining whether or how the IRS should pursue enforcement
of the tax laws covered by Section 1204/Regulation 801. When a civil penalty is automatically assessed based upon the determination
of a discrepancy between the SSA and the IRS records, the civil assessment is not an outcome produced by an employee exercising
judgment with regard to determining tax liability. However, when an employee exercises judgment in reviewing data provided
by the taxpayer rather than reconciling the mathematical contents of such data, then the employee does exercise judgment in
regard to determining tax liability and are therefore considered Section 1204 employees. Question 11. The Payer Master File (PMF) is a program to assess a civil penalty for late filed information returns. If the
taxpayer response meets reasonable cause criteria, the penalty is abated. Would this fall under Section 1204 employee criteria?
Yes. A Section 1204 employee is an employee who exercises judgment in regard to recommending or determining whether or how
the IRS should pursue enforcement of the tax laws. The deliberations undertaken in deciding reasonable cause criteria is the
exercise of judgment covered by Section 1204/Regulation 801 because it weighs factors in particular cases; there is no set
formula. Accordingly, an employee who makes decisions upon reasonable criteria in abating penalties is a Section 1204 employee.
Question 12. Math error issues are processing actions. However, accounts are increased and decreased. Does this constitute
action by a Section 1204 employee?
No. A Section 1204 employee is an employee who exercises judgment in regard to recommending or determining whether or how
the IRS should pursue enforcement of the tax laws. The reconciliation or correction of math errors requires decision making,
but that decision making is based upon the application of mathematical principles and does not require the exercise of judgment,
e.g., weighing factors appropriately, deciding reasonableness, and determining credibility covered by Section 1204/Regulation
801. Question 13. If the major portion of employees' performance is not enforcement activity, but a small percentage could be mixed
with their work, would their entire performance be considered enforcement and would they be considered Section 1204 employees?
Section 1204/Regulation 801 applies to the tasks performed by employees. An employee may be a Section 1204 employee for one
task, but not another. The difference depends upon whether the employee exercises judgment in regard to recommending or determining
whether or how the IRS should pursue enforcement of the tax laws in performing that task. Thus, the employee would be considered
a Section 1204 employee. Question 14. Are employees who work responses in document matching programs; e.g., Automated Under Reporter (AUR), considered
Section 1204 employees for the purpose of applying Section 1204/Regulation 801?
For purposes of applying Section 1204/Regulation 801, Section 1204 employees are employees who exercise judgment with regard
to recommending or determining whether or how the IRS should pursue enforcement of the tax laws. In document matching programs,
such as AUR, the vast majority of discrepancies are resolved in routine decision-making actions which relate to clear cut
reporting issues. The provisions for resolving these are straightforward and are covered in the IRM. These are not considered
as covered by the provisions of Section 1204/Regulation 801. There are, however, instances where working the responses to
discrepancies go beyond this routine, non-discretionary decision making. These instances involve disputed or disagreed issues
in document discrepancies where additional verification and/or technical law issues arise. These resolutions involve a detailed
knowledge of laws and regulations, and technical or professional judgment. In these instances the employees are considered
Section 1204 employees as they are using judgment with regard to determining tax liability and are therefore covered under
the provisions of Section 1204/Regulation 801. Question 15. In my group, individuals work correspondence received from taxpayers who are responding to an LT-18 letter (notification
of proposed A6020(b) automated substitute for return assessment). Are these employees considered Section 1204 employees under
Section 1204/Regulation 801 and is that work considered Section 1204/Regulation 801 work?
Whether an employee is a Section 1204 employee for purposes of applying Section 1204/Regulation 801 is determined by the tasks
performed by the employee, not the title or location of the employee. If the duties performed working the correspondence are
the processing of the A6020(b) assessment because the taxpayer provided us with more correct or accurate figures, then these
employees are not Section 1204 employees since they are only inputting onto the A6020(b) system the information provided by
the taxpayer. However, if the employee evaluates any facts, factors, or alternative courses of action from the taxpayer correspondence,
then they would be exercising judgment pertaining to the taxpayer's liability and Section 1204/Regulation 801 would apply.
Question 16. Are tax examiners processing levy responses considered Section 1204 employees?
Whether an employee is a Section 1204 employee for purposes of applying Section 1204/Regulation 801 is determined by the task
performed by the employee and not the title or location of the employee. As stated in this question, if the employee is only
inputting information received from the third party and is following non-discretionary procedures in issuing the next available
levy, that is not the kind of exercise of judgment sought to be protected by Section 1204/Regulation 801 and, therefore, is
not subject to either. However, the employee who recommended the levy action be input is considered a Section 1204 employee.
Question 17. Are tax examiners who work Taxpayer Advocate cases considered Section 1204 employees as defined for the purpose
of applying Section 1204/Regulation 801?
to recommending or determining whether or how the IRS should pursue enforcement of the tax laws. Whether an employee is a
Section 1204 employee for the purposes of applying Section 1204/Regulation 801 is determined by the tasks performed by the
employee, not the title or location of the employee. Tax examiners who work Taxpayer Advocate cases may or may not be Section
1204 employees. For example, the tax examiner processing the manual refund or working the payment tracer according to non-discretionary
criteria contained in the appropriate section of the IRM is not performing enforcement work. Certainly, these tax examiners
exercise decision making in performing their tasks, but this decision making is not the type of exercise of judgment with
regard to recommending or determining whether or how the IRS should pursue enforcement of the tax laws, which is covered by
Section 1204/Regulation 801. Conversely, a Taxpayer Advocate tax examiner is a Section 1204 employee when working a Correspondence
Examination reconsideration case. Question 18. Are tax examiners working Correspondence Examination deficiency cases or reconsideration cases considered to
be Section 1204 employees and is this work subject to Section 1204/Regulation 801?
Yes. Employees making determinations on correspondence examination deficiency and reconsideration cases are expected to review
the taxpayer's return or correspondence for new issues and to weigh the credibility and reasonableness of the taxpayer's assertions.
This clearly involves discretion in that two employees working the same case can reasonably come to different conclusions
as to the acceptability of the taxpayer's assertions. This type of judgment falls under the purview of Section 1204/Regulation
801. Question 19. Are tax examiners or tax auditors working innocent spouse claims considered Section 1204 employees for purposes
of Section 1204/Regulation 801?
Yes. Tax examiners or tax auditors working innocent spouse claims are considered Section 1204 employees for purposes of Section
1204/Regulation 801. They exercise judgment by evaluating taxpayer's statements from both the requesting spouse and non-requesting
spouse and applying community property laws, if applicable, to determine if relief should be granted. Question 20. A tax examiner decides to report an account as currently not collectible based on financial information submitted
by the taxpayer. Is this a TER for purposes of Section 1204/Regulation 801 and is the tax examiner working as a Section 1204
Yes. The activity produces a TER and the employee is working as a Section 1204 employee. The tax examiner analyzes financial
information provided by the taxpayer to determine ability to pay. Based on this financial analysis, the tax examiner exercises
judgment in determining if the taxpayer's income, expenses, or assets and liabilities would permit a taxpayer to pay. The
tax examiner compares the expenses to the allowable expense standards to determine if the expenses are reasonable or necessary.
Assets are analyzed to determine equity and the taxpayer's ability to borrow. This type of decision making in determining
the ability to pay requires the type of judgment covered by Section 1204/Regulation 801. Question 21. An employee engaged in processing returns refers a questionable return document or information item to Criminal
Investigation. Is the employee exercising Section 1204 judgment? No. In this scenario, the employee has not exercised judgment in regard to recommending or determining whether or how the
IRS should pursue enforcement of the tax laws. Rather, the employee has made a decision to refer the information to Criminal
Investigation for its analysis. Question 22. What work in the Campus Offer in Compromise program falls under Section 1204/Regulation 801?
Only the analysis of case information and documentation in determining the acceptance, rejection, or withdrawal of an offer
based on whether it is collectable involves Section 1204 judgment. Work performed in the campuses such as processing determinations,
monitoring compliance with the terms of accepted offers, and payment posting are not tasks requiring the type of judgment
covered by Section 1204/Regulation 801 and employees performing these tasks are not Section 1204 employees. Question 23. Are campus employees who classify estate tax returns considered Section 1204 employees as defined for the purpose
Yes. The classifier has the discretion to apply judgment in determining other estate returns that may have other audit potential
issues, or identify questionable items on the estate tax return or issue a closing letter. Question 24. Are tax examiners making determinations in Deferred Adverse Tax Consequence/Alternative Strategies for Tax Administration
(DATC/ASTA) cases considered to be enforcement employees?
Yes. DATC/ASTA programs are test programs for which only general guidelines are provided for examiners to follow. The examiners
are expected to exercise considerable discretion in reviewing and making determinations on taxpayer replies to notices. The
decisions made in this manner involve the type of judgment intended to be protected under Section 1204/Regulation 801. Question 25. I am a Automated Collection System (ACS) unit manager. I need to know if it is a Section 1204 violation to bring
up, in an evaluation, that a levy was not served when it was, in fact, the next appropriate action?
It is not a violation of Section 1204/Regulation 801 to review the case or to discuss the appropriate actions to be taken
with the employee, even if the action is an enforcement action. Section 1204/Regulation 801 provides a specific exception
in the definition of TERs for this purpose. In documenting the performance review, and in any subsequent evaluation, focus
on documenting the appropriateness of the decisions, in the context of the employee's critical job elements and standards,
and not on documenting the specific actions that were or were not taken. Question 26. If "case closures"
is no longer considered a ROTER, may a Section 1204 employee's production rate be addressed in performance counseling?
Yes, but not simply in terms of quantity of work done. As a diagnostic tool, an employee's production rate may alert the manager
to look at the employee's work practices to see if adjustments are in order. While the quantity measure may be mentioned in
discussions or evaluative recordation, the discussion with the employee must be conducted in terms of the critical job elements
and standards. The quantity measure benchmark may not be mentioned in an evaluation. The specific TER should not be mentioned
in a evaluation.
Question 27. May a Section 1204 employee's production rate be compared to the group's average?
and standards. The quantity measure benchmark may not be mentioned in an evaluation. Question 28. I am a manager and one of my Section 1204 employees is not working (producing) to my expectation. How may I convey
my concern to the employee without violating Section 1204/Regulation 801?
You may discuss the quantity of work accomplished by the employee as a diagnostic indicator. This indicator would dictate
the need for an analysis of the actual work activities, which could affect productivity. If areas are identified which could
be improved, they should be related to the critical job elements of the employee and discussed in those terms. If your employee
is not meeting one or several of those elements, you must address those issues to properly appraise the employee. You do that
by monitoring telephone calls and reviewing work processed to address areas that are possibly causing problems (e.g., if the
employee is not controlling the conversation, that may cause talk time to be longer, and therefore, fewer calls will be answered.)
Another example could be when you review cases, you may find unnecessary steps were taken which resulted in less work being
produced. By addressing issues that may affect productivity, you are not violating Section 1204/Regulation 801. However, when
you are evaluating an employee, you should not refer to quantity measures such as the average number of phone calls answered
or cases worked. Question 29. I am a ACS unit manager. May I use a Temporary Employee Action Code History (TEACH) list to select cases for
evaluative purposes? Yes, a TEACH list may be used. TEACH is a list of cases worked by an employee in a given day. The TEACH list is not a ROTER;
therefore, Section 1204/Regulation 801 does not apply. Nor is it a quantity goal because the list provides managers with a
universe of cases that may be selected for evaluative review. The case list can also be used as a diagnostic tool to pinpoint
issues that may warrant further discussion with an employee. However, managers should not use the TEACH list to calculate
a daily case count for evaluative purposes as that would violate Section 1204/Regulation 801. Question 30. During a conversation with my manager, she mentioned that I have not closed enough amended return cases. Is this
If "closing of amended return cases"
involves only the inputting of data into the IDRS, then this is not a ROTER since the inputting employee did not exercise
judgment in recommending or determining whether or how the IRS should pursue enforcement of the tax laws (step 1). Similarly,
the employee would not be a Section 1204 employee since they did not exercise judgment in regard to recommending or determining
whether or how the IRS should pursue enforcement of the tax laws. Since this is not a Section 1204 employee and the work done
does not involve ROTERs, the manager may discuss the number of amended return cases. However, if the employee exercised judgment
in regard to recommending or determining whether or how the IRS should pursue enforcement of the tax laws and that decision
resulted in the "closure of the amended return case,"
then the type of closure would be a ROTER, and the manager would be prohibited from telling the employee to close more
cases in a certain way since such an instruction would use a ROTER to impose a production quota or goal for the employee.
If the manager just asks for more case closures, that is imposing a goal for quantity measures, which is allowable. The only
restriction on quantity measures is that the manager cannot evaluate the employee on meeting a certain quantity measure benchmark.
Instead, the employee must be evaluated based on whether the number of closures was appropriate given the issues/complexity
of their particular cases. Question 31. Does measuring employee quality and quantity through the Total Employee Performance System (TEPS) violate Section
1204/Regulation 801?
TEPS is a tool employed in campuses to measure certain Section 1204 employee performance standards selected by management.
If used appropriately, TEPS does not violate Section 1204/Regulation 801. However, if TEPS contains a performance standard
which uses a ROTER to (1) evaluate any employee or (2) to impose or suggest production quotas or goals for any employee, then
the use of TEPS would violate Section 1204/Regulation 801. Thus, each performance measure is examined individually for conformance
with Section 1204/Regulation 801.
Question 32. I am a tax examiner working balance due accounts. In a conversation with my unit manager, she mentioned that
I have not pursued requesting installment agreements during my steps to work a balance due account. Is this appropriate?
It is appropriate to discuss actions that should have been followed during the course of resolving a case, because this is
part of the quality review of your case handling. This is true even if the actions are TERs. Question 33. If it is determined that only portions of the AUR program are subject to Section 1204/Regulation 801, how does
management deal with performance evaluations for employees who do the full range of AUR work?
If tasks performed in the AUR program are subject to the prohibitions in Section 1204/Regulation 801, management may not evaluate
employees based upon ROTERs that measure those tasks. Question 34. May a first-line manager discuss and solicit ideas for improving productivity when he or she meets with his or
her employees to formulate an action plan?
Yes. This type of discussion is appropriate.
Question 35. The director asked a territory manager to provide a weekly report on average "wait time"
at the Field Assistance counters during filing season. Is it appropriate to share this report with Field Assistance managers
and employees? Yes. "Wait time"
is a diagnostic tool intended to minimize taxpayer burden, not a ROTER or a quantity measure. It should also be used to
determine resource and training needs to better meet customer demand. However, overemphasis on wait time could lead employees
to focus on completing taxpayer contacts quickly and not on providing quality service. Question 36. May audit managers establish time frames for actions to be completed within a certain number of days?
Yes. Time frames are not ROTERs, nor is timeliness a quantity measure. However, managers need to be cautious on the use of
non-ROTERs. For example, overemphasis on time frames, even though not ROTERs or quantity measures, could lead employees to
focus on the time frame instead of focusing on the appropriate case resolution. Question 37. Are program completion dates a violation of Section 1204/Regulation 801, and if so, what impact will this have
on scheduled rates? How will we schedule?
No. Program completion dates are the scheduled completion of returns processing (timely filed Form 1040 processed by a certain
date) or program completions (Consolidated Annual Wage Report (CAWR)/ Federal Unemployment Tax Act/Account (FUTA) programs
completed and submitted to the receiving agency by a certain date). These dates are not ROTERs because program completion
date establishes a timing schedule only. "Scheduled rates"
is the term used to describe the work planning and control for allocation of resources to meet program completion dates.
As these scheduled rates are not ROTERs, they are not subject to Section 1204/Regulation 801. Question 38. Is it appropriate for Headquarters personnel to give Campus Exam work plans directly to the Exam operations manager
(the work plans identify program goals for Earned Income Tax Credit (EITC) closures, Automated Substitute for Return (ASFR)
Yes. In the work planning process, the Headquarters must use some ROTERs for such purposes as planning and forecasting inventory
levels. Because the use of ROTERs for the work planning process is permitted in Section 1204, the sharing of work plans between
the Headquarters and Examination department managers is not a violation of Section 1204/Regulation 801. Although they may
be used later in setting balanced measure goals, production statistics in work plans that are ROTERs do not represent goals
for evaluative purposes. It is important that, in sharing work plan data, managers at all levels should be cautious not to
share ROTERs or the results of analyses in any way that impose or suggest a production quota or goal against which employees
will be evaluated. Question 39. Can you give me an example of a diagnostic tool and how it would be used?
The number of Campus Examination closures per productive unit of effort is a diagnostic tool that may be used to "get behind
If a division is given a general expectation to improve production as part of its business results for the upcoming year,
it could use closures per productive unit of effort from the current fiscal year as a diagnostic tool. By analyzing its case
closures, the division could formulate an action plan that took all the obstacles into consideration and addressed ways to
avoid or minimize the impact of obstacles. As the new fiscal year progressed, the current closures per productive unit of
effort could be monitored to gauge the effectiveness of the action plan. If the action plan is not producing the desired outcome,
the action plan would then be thoroughly reviewed and revised as necessary. Question 40. I am a ACS manager. At the beginning of each week I use my team's Daily Workload report to see where I should
allocate resources. Is that a Section 1204/Regulation 801 violation?
No. Using the report is not a violation since the number of cases in inventory is not a ROTER. Workload planning and monitoring
are required to assist in the effective management of an operation. Question 41. My employees like to know the number of cases in the Daily Workload. Would it be a violation of Section 1204/Regulation
801 to share this information?
No. That is not a violation since the number of cases in a particular inventory is not a ROTER. The Daily Workload report
shows how many cases are in the inventory that can be worked on a specific day. Managers use the report to determine when
and where employees should work. Question 42. The area director comments to her staff that cycle time has increased over last year's accomplishment. Is it
a violation of Section 1204/Regulation 801 if the territory manager shares this with the group managers?
No. Cycle time is not a ROTER, neither is overage. They are measures of the span of time within which the process occurs and
not the production time to complete the process. Therefore, they are not directly related to producing TERs. Timely, quality
attention to taxpayer cases is the desired outcome. Question 43. At a manager's meeting, the territory manager states that the number of cases that are over 90 days old are high
and we need to reduce the overage inventory. Is this a violation of Section 1204/Regulation 801?
No. Age or amount in inventory is not a ROTER. Emphasizing the amount of cases in the inventory may result in premature closure.
Further research to determine the reasons for high inventory, e.g., inappropriate case processing, insufficient allocation
of resources, or a discussion of the results of program reviews are effective methods to ensure that the objectives are being
met. Question 44. I am a front-line manager. Program Analysis System (PAS) accuracy rates for the past month show that my unit's
error rate has increased. May I share this information with my employees?
Yes. PAS measures quality results (performance measured against elements and standards) are not ROTERs. Accordingly, they
may be shared. Question 45. At a staff meeting, the area director states that overage has increased by 10% this year. May the territory manager
communicate this to his/her section managers?
Yes. Overage data is not a ROTER.
Question 46. I am an ACS department manager. I advise my subordinate managers that we need to increase the issuance of levies
by 25%. Is this a Section 1204 violation?
Yes. This is a violation of Section 1204/Regulation 801. Levies issued is a ROTER. ROTERs may not be used to suggest production
quotas or goals for any employee. Question 47. Is it appropriate for a manager to discuss the amount of time working cases with individual front-line employees?
Yes. The amount of time used speaking to customers and concluding the contact (talk, handle, and wrap time) is available to
call site managers as a diagnostic tool. This can be a valuable starting point for a discussion with an employee in respect
to overall performance. Included in such a discussion would be the nature of specific contacts and the quality of service
provided to the customer. The amount of talk, handle, or wrap time is not a ROTER; it is a statistic which should be discussed
in conjunction with Quality and Customer Service. The actual performance of the employee is measured against their critical
job elements and standards. Question 48. Are tax examiners who work CAWR cases considered Section 1204 employees as defined for the purpose of applying
Section 1204/Regulation 801?
No. Working CAWR cases does not entail the exercise of Section 1204 judgment, and tax examiners performing this work are not
working as Section 1204 employees. Specifically, these tax examiners review new information from the taxpayer and process
it according to non-discretionary criteria contained in the appropriate section of the IRM. They do not discern or evaluate
facts, factors, circumstances, issues, law, alternative courses of action, equity, burdens of proof, or discretionary policies.
Question 49. How would it be possible for a Collection group manager to fill a GS-12, Revenue Officer (RO) position with someone
who has experience in seizures, suits, nominee liens (TERs), etc., if it is not appropriate to mention specific TERs in employee
appraisals, which are part of the application/ranking package? During the ranking process, how would a ranking panel determine
if the applicants had that type of experience? TER terms may be used in employee reviews (but not employee evaluations) to determine whether the employee made appropriate
determinations on actions needed or to describe tasks the employee has mastered, as long as outcomes are not discussed. In
the job application, the employee may describe tasks they have mastered, as long as they do not reveal case outcomes. If they
use terms such as "referrals"
(as in fraud referral), "closings"
(as in number of cases), or a number of any kind (except for quality measures), they must focus on actions taken and judgment
used, not results achieved. The ranking panel can review the application along with other items in the ranking package to
determine what experience and qualifications the applicants have. They can also address this during the interview by asking
the applicants to describe their experience relating to the qualifications of the position by describing the types of cases
they worked and the types of judgment used in those cases.
Question 50. Advisors do not take seizure actions, they review seizure cases against non-discretionary standards. Advisors
initiate lien re-file requests, but we should be able to comment on the advisor's case control responsibilities by mentioning
monitoring of lien re-file deadlines. Is using the word "seizure"
in an advisor's annual appraisal a 1204 violation?
Even though advisors do not normally take enforcement actions, they do share policy regarding the appropriate use of TERs,
which makes them 1204 employees. You may use TER terms in annual appraisals of 1204 employees as long as the focus is on the
process and not the outcome. The following are examples where TER terms relating to seizure and lien re-file might be used appropriately in an annual
"Your review of the proposed seizure revealed that a number of required actions had yet to be taken and that all required
documentation was (or was not) in the file. "
"Your case control skills are excellent as evidenced by your timely and appropriate actions monitoring lien re-file deadlines."
Question 51. In a newsletter article, an RO discusses his success in stopping two erroneous refunds totaling over $3M. Is
Giving the dollar amount (even a "ballpark amount"
like "over $3M"
) is a ROTER issue. The RO may discuss his success in stopping two significant (or large) erroneous refunds, without mentioning
dollars. He should discuss his attention to detail in catching the errors and the process or steps used to correct them. Reword the article to say, "By intercepting these two checks, I protected the government's interest by stopping a significant
amount of money from being erroneously refunded."
Question 52. How can I mention an employee's good work on a fraud case in an evaluation without violating Section 1204 rules?
Focus on the employee’s recognition of badges of fraud, investigative skills, development of key fraud indicators, and appropriate
use of enforcement tools, not on the fraud referral or fraud penalty itself.
Question 53. Can I say the following in an annual appraisal: "You referred tax return preparers with questionable practices to the Office
of Professional Responsibility (OPR)?"
It would be inappropriate to include this narrative as written because "referred preparers with questionable practices to
the Office of Professional Responsibility (OPR)"
would be considered a case outcome/ROTER violation and would suggest changing to the following:
"You were able to recognize preparer questionable practices and take the appropriate next steps to resolve case issues."
Question 54. Is it permissible to share group-level ROTER results with all groups in a territory?
No. ROTER information may only be shared with groups to which it pertains, and it may never be used to impose/suggest goals
or to evaluate managers or employees. Per "Regulation §801.6(d)(2)"
and IRM 1.5.2.11.1, Permitted Use of ROTERs, ROTERs may only be used for purposes such as forecasting, financial planning, resource management, and the formulation of
case selection criteria.
Question 55: A managerial team investigated no change rates and recommended that territory managers and their managers get
behind the numbers for any groups with a rate of 20% or more. For those groups with a rate of 20% or more, review and discuss
all no changes with the agent before closing the case to ensure issues were properly handled, conclusions were correctly drawn,
and to increase the agent's knowledge. In addition, identify trends and recommendations to change the classification to reduce
the number of no change audits. Is this appropriate?
Section 1204(a) does not allow setting or suggesting production quotas or goals for ROTERs for any level of 1204 employee.
It is fine to ask managers to look behind the no change rate numbers in all groups, but pinpointing groups with no change
rates over 20% appears to suggest a production quota or goal, which is a ROTER violation. While Regulation §801.6(d)(2) says
ROTER information may be shared for purposes such as the formulation of case selection criteria, the proposal above goes further
than just "sharing" the results - it actually pinpoints certain percentages as "questionable" and adds additional steps for
groups with those high percentages, which is what makes this a violation. In addition, It targets only certain percentages as questionable and adds additional steps for agents in groups with those
high percentages. While everything after the first sentence is fine - even commendable - we can not target only groups with
"high" no change rates for these extra steps. All groups should have appropriate no change rates, which may be completely
different rates based on the type of work each group is receiving. If a group is spending significant time working cases that
end up being no change, then looking at both training and classification issues would be appropriate - but you cannot set
a specific benchmark for deciding what is a significant no change rate for all groups.
Question 56: Is having a closure goal that the manager is to meet allowable? Is breaking down the closure goal to each RO allowable?On Form 12450-A, Manager Performance Agreement, my territory manager gave me a commitment that states: "Execute the budget
and work plan to ensure your Operational Unit (OU) meets or exceeds the approved performance measures within budget and work
plan. Fully Successful: Delivering 85-90% of the total planned closure targets. Exceed: Delivering 91-95% of the total planned
closure targets." Per my TM, the territory number will be broken down to what each group manager is to deliver. The TM has
also stated that she wants that number then broken down to what each RO is to close.
If the stated percentages achieved lead directly to the stated ratings on the manager's appraisal, it would be an impermissible
use of the organizational measures to directly determine the evaluation of a Section 1204 manager and would violate Regulation
§801.3(a), IRM 1.5.1.12, Evaluating Performance of an Individual, and IRM 1.5.1.6, Performance Measures Quick Reference. If the choice is made to include direct numerical correlations in manager commitments, please be aware of how this may influence
judgment of individual performance. Example:
A senior manager may have a set goal as their commitment, but it doesn't mean that they will be judging their direct reports
solely based on meeting their own commitment goals; rather they logically would be judging direct reports on the actions they
took to make possible significant achievement on the Enterprise Operational Unit Plan. If the commitment presents the target
closure number solely as a goal without directly tying the manager's evaluation score to its attainment, there wouldn’t be
concern about the potential for improper use of that organizational goal in the manager's appraisal.
Question 57. A group manager set group closure goals with incentives for his employees to close out overage or potential overage cases.
There were no individual goals. The following group closure goals were illustrated on a poster.March Goal of Old and Potential Aged Cases - Total cases = 112:25 Cases = Group Potluck30 Cases = Buys Group Snack or Main Dish39 Cases = Buys LunchThere is no time frame for achieving the goal; however, each time an overage or potential overage case was closed, a sticker
was added to the poster. Is it okay for the group manager to reward his staff for meeting group closure goals?
Setting a goal for closing cases (even if they are overage and/or potential overage) is a quantity measure, per IRM 1.5.2.12.1, Permitted Use of Quantity Measures. Overage cases are considered quality measures ; however, because the group manager is rewarding employees for closing a certain
amount of overage/potentially overage cases, he is measuring the amount of overage/potentially overage cases that closed,
which is considered a quantity measure. There is no problem in setting goals and/or sharing information on how they are doing in accomplishing the plan, but rewarding
them for meeting the plan is rewarding them for quantity results, which is not allowed under Regulation 801.IRM 1.5.2.8, Regulation §801.3(a) indicates organizational measures do not directly determine the evaluation of individual employees.Performance measures based in whole or in part on quantity measures will not be used to evaluate the performance of any non-supervisory
employee who is responsible for exercising judgment with respect to TERs. See Regulation §801.3(e)(3).Regulation 801 allows (even encourages) us to set goals for quantity and quality measures down to the employee level, because
employees are expected to contribute to organizational goals. The only prohibition is that you cannot evaluate non-supervisory
employees on quantity measures. They can only be evaluated on the critical job elements (CJEs) tied to their work on specific
cases.It would be permissible to reward the group for all their efforts in working to meet the plan whether or not they actually
met it. There could be all kinds of reasons outside their control for not meeting the plan (staff pulled off to do training
or other projects, etc.) - so the reward should be for the work done, not for the final numbers achieved.
Exhibit 1.5.2-3 Small Business/Self-Employed (SB/SE) and Wage and Investment (W&I) Operating Divisions Section 1204 Work Activity Determination
The table below shows SB/SE and W&I work activity and whether the work activity is a section 1204 or non-section 1204 judgment.
SECTION 1204 Judgment NON-SECTION 1204 Judgment
23C Processing (Q, P, J)
Systemically Generated 6020(b) X
Accounts Maintenance (working transcripts)
ACS Support (individual levy) X
AIMS Processing
Adjust/abate ASFR/A6020(b) assessment (reconsiderations)
Generating ASFR
Processing ASFR/A6020(b) pre-assessment correspondence (other than P-5–133 determinations and disputed income items)
Processing ASFR/A6020(b) pre-assessment correspondence involving P-5-133 determinations and disputed income items. X
Agreed AUR cases-Assessments X
Backup withholding hardship determination
CAF/RAF Processing
Case Analysis for screening (before CP2000) Matching/comparing return information to system information. (Program Code 48X20)
Reconciliation of wages reported on Forms 941 to those reported to SSA (CAWR)
Centralized files and scheduling (Installment Agreements appointments)
Processing claims under $500 X
Classifying returns
Clerical/Case Prep
Clerical Functions (e.g., mail sorting, classification, batching)
Closing with secured returns X
Closing with previously filed returns
Coding a return
Certified copies (court)
Corr. Examination (including EITC)
Currently Non Collectible (CNC) determination
Accounts Management (AM) procedures and guidance followed results in this work activity being considered Non-Section 1204
judgment for Adjustment personnel.
DATC/ASTA determination
Default/non-response assessments X
Non-routine disputed/disagreed issues resolving discrepancies when additional expertise is required
These decisions involve detailed knowledge of tax law and regulations or material factors or technical judgment or professional
Resolving discrepancies between information provided by the taxpayer and third party reporting
This is routine decision making relating to clear cut issues provided for and covered in the IRM.
DMF Offset
Entity (Tele-Tin/FAX-TIN/TIN) X
Correcting entity
Correct entry (taxpayer or campus employee)
Estate Tax determination to file return based on application of P-5–133
Extension to file (2nd, automatic if timely & complete)
Fairness/equity determination (does not follow normal procedures)
Final Category A determination (allowing/not allowing CAT A claims/amended returns)
Foreign certification (PSC only) X
Developing a fraud referral X
Freedom of Information Act (FOIA) Privacy requests
Reconciliation of wages reported on Form 940 to those reported to state (FUTA)
IDRS input (e.g., STAUP)
Monitoring of informant claims X
Innocent spouse determination using decision tree
Input of Installment Agreements X
Streamlined Installment Agreements X
Issue notice/request for return based on prior returns, IRP information (systemically generated)
Calculation of interest and penalties (automated-not determining)
Lien, Levy determination (whether to file or release)
AM procedures and guidance followed results in this work activity being considered Non-Section 1204 Judgment for adjustment
Inputting Lien, Levy source X
Liable/not liable determination to file return based on application of P-5-133
Mail processing/association X
Determining ministerial exemption (from SSA)
Non-master file processing
Offer-in-compromise acceptance determination (whether to accept, reject, or advise the taxpayer to withdraw the OIC)
Processing Offer-in-compromise (all documents available)
Partnership control system (PCS) X
Identified (or locating) payments X
Moving payments
Penalty abatement adjusted by tax change and other non-discretionary decisions (e.g., disaster)
Penalty abatement (reasonable cause)
Use of the Reasonable Cause Assistant by AM results in this work activity being considered Non-Section 1204 Judgment for Adjustment
Penalty assessment (e.g., IRP, FTD)
Perfecting documents
Processability of a return
Quality Review and Correction of notices (Notice Review)
Questionable preparers in CIB X
Questionable refund in CIB (paper and EFDS)
RAC processing/posting
RAIVS (transcripts)
Examination reconsiderations (includes SFR reconsiderations)
Refund activity
Processing Reject returns
Assistance in return preparation (walk-in areas)
Determining correct schedule or form
Liable/not liable determination in SFR
Statute determinations
Posting TFRP to IDRS
Providing TIN
Expedite transcripts for disaster X
Unallowable coding
Resolving unpostable conditions X
Unpostable Resolution (freeze code, hold return)