4.1.10. Return Preparer Program Coordinator

(1) The Return Preparer Program (RPP) is an IRS-wide effort to enforce compliance of tax return preparers. Tax return preparers are a critical component of tax administration and provide a unique opportunity to impact taxpayer behavior and compliance with tax laws. The IRS encourages compliance among tax return preparers through a variety of means by conducting enforcement activities to identify and address the most egregious return preparers.

(1) Authority to administer the Return Preparer Program includes, but is not limited to, the following:

(1) The Director, Headquarters Examination, is the executive responsible for providing policy and guidance for field employees, and ensuring consistent application of policy, procedures, and tax law to effect tax administration while protecting taxpayers’ rights. See IRM 1.1.16.3.5, Headquarters Examination, for additional information.

(2) The Director, Examination – Exam Case Selection, reports to the Director, Headquarters Examination, and is responsible for providing guidance on selection of cases and delivery of inventory, input on the work plan, and setting direct assignment criteria for routing of examination work. See IRM 1.1.16.3.5.3, Exam Case Selection, for additional information.

(3) Field Case Selection (FCS), under the Director, Examination – Exam Case Selection, is the group responsible for providing policy guidance on the selection of cases and delivery of inventory for field examination. See IRM 1.1.16.3.5.3.1, for additional information.

(1) Periodic program reviews are conducted by Field Case Selection to:

1. Assess the effectiveness of specific programs within Examination or across the organization,

2. Determine if procedures are followed,

3. Validate policies and procedures, and

4. Identify and share best/proven practices.

(1) See IRM 4.1.1.1.4Planning and Special Programs, Planning, Monitoring and Coordination Program Reports and IRM 4.1.5.1.4Case Building, Classification, Storage and Delivery Program Reports for Program Control information applicable to this section.

(1) The following table lists acronyms commonly used throughout this IRM and their definitions:

(1) The following table lists commonly used terms and associated definitions referenced throughout this IRM:

(1) The following table lists related resources which contain additional guidance examiners may reference regarding the Return Preparer Program:

(2) Useful internal websites not listed elsewhere in this document include:

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2. AIMS/ERCS Knowledge Management Exam Systems Knowledge Base - Site Pages - GrpbyChap (sharepoint.com)

3. Return Preparer Knowledge Management Return Preparer Information (sharepoint.com)

4. LB&I Return Preparer Program Penalty Consideration (sharepoint.com)

(1) The RPC will be responsible for:

1. Planning and coordinating compliance activities related to return preparers.

2. Ensuring uniformity in the application of return preparer requirements by advising compliance personnel on appropriate compliance actions.

3. Monitoring activities of the Return Preparer Program, identifying problems within the program and notifying the appropriate National Headquarters Office analyst with appropriate recommended solutions.

4. Conducting presentations at meetings and training sessions for examiners on program topics utilizing national outreach and educational presentations.

5. Maintaining referrals in SB/SE Referral on potentially egregious return preparers received from various sources.

6. Evaluating referrals received for potential Program Action Case (PAC) development.

7. Preparing documentation for PAC approval.

8. Coordinating all compliance activity of income tax returns prepared by return preparers approved for a PAC.

9. Maintaining preparer penalty cases in the SB/SE Referral and Non-PAC Penalty databases.

10. Monitoring and reporting on preparer penalty cases worked by examination groups.

11. Reviewing preparer penalty cases closed by examination groups.

    Exception: Preparer penalty cases resulting from 6701 investigations authorized by the LDC and penalty cases worked in the Return Preparer Penalty Working Group (RPPWG) will not be tracked or reviewed by the Area RPC.

12. Communicating with the examiner and the Fraud Enforcement Advisor (FEA) when a return preparer is in fraud development status (Audit Information Management System (AIMS) Status Code 17).

13. Initiating compliance activity for certified public accountants (CPA), attorneys, or enrolled agents (EA) who misrepresent their status before the IRS and the Annual Filing Season Program (AFSP) under Rev. Proc. 2014-42. See IRM 4.1.10.11, Misrepresentation on Form 2448, Power of Attorney and Declaration of Representative.

(2) The RPC will serve as the Area contact for:

1. Office of Professional Responsibility (OPR)

2. Return Preparer Office (RPO)

3. Lead Development Center (LDC)

4. Criminal Investigation (CI)

5. CI Refund Fraud and Investigative Support (RFIS)

6. Treasury Inspector General for Tax Administration (TIGTA)

7. Central Authorization File (CAF) unit

8. Campus Function

9. Stakeholder Liaison functions

(3) To facilitate the development of the Return Preparer Program, the RPC should develop a good working relationship with the following:

1. SB/SE Exam Headquarter Return Preparer Program and Policy Analysts

2. CI Field Office Questionable Refund Program, Return Preparer Program Coordinators, and CI Refund Fraud and Investigative Support (RFIS), located in campus.

3. Return Preparer Office (RPO).

4. Lead Development Center (LDC).

5. Area PSP E-File Coordinator - A referral source for PACs.

6. Office of Professional Responsibility (OPR).

7. Area TIGTA personnel who handle misrepresentations by powers of attorney.

8. Area Fed/State Coordinator - Some states have Fed/State agreements that include sharing information about questionable/problem return preparers.

9. TE/GE Exempt Organization Examination Technical Coordinator and the EO Financial Investigations Unit.

10. SB/SE Examination Technical Services Fraud Coordinators and Office of Fraud Enforcement (OFE) Fraud Enforcement Advisors (FEA).

11. Office of Servicewide Penalties (OSP).

(1) The overall priority of the Return Preparer Program, as part of the Exam Plan, will vary from year to year. General priorities within the program are as follows:

1. Return Preparer Referrals — RPCs will input, track and monitor all referrals received in Area Offices in SB/SE Referral, which is housed in the Return Preparer Database. RPCs should ensure referrals received are entered within 14 days of receipt and considered for compliance action within 120 days of receipt.

2. PAC - Development, approval, and delivery of local and national program work based on available resources, monitoring and terminating.

3. Ghost Preparer case delivery and assistance.

4. Return Preparer Penalties - Provide education, assistance, monitoring, and review related to civil preparer penalties.

5. Other Return Preparer Compliance activities including, but not limited to, preparer misrepresentation, referrals to other functions and assisting compliance personnel with preparer research requests.

(1) PACs originate from referrals from the following sources:

1. Form 14719, SB/SE Return Preparer Referral

2. Return Preparer Office (RPO)

3. Criminal Investigation (CI)

4. SB/SE Lead Development Center (LDC)

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6. Office of Professional Responsibility (OPR)

7. Treasury Inspector General for Tax Administration (TIGTA)

8. Large Business & International (LB&I)

9. Tax Exempt and Government Entities (TE/GE)

10. E-file monitoring visits

11. Due Diligence Program Visits

12. Campus Processing

13. Preparers identified during workload classification

14. Other sources

(1) The RPC should review available information about the return preparer by researching their Social Security Number (SSN), Preparer Tax Identification Number (PTIN), Electronic Filing Identification Number (EFIN), and Employer Identification Number (EIN) to determine if a PAC is warranted.

(2) Factors to consider for initiating a PAC should include, but are not limited to:

• The egregious nature of the questionable conduct; e. g. does the preparer engage in a widespread practice of making material errors and/or demonstrate intentional misconduct.

• Volume of client taxpayers affected by the preparer’s conduct.

• Available resources of the examination groups receiving PAC examinations.

• Type(s) of returns involved (e.g. 1040) and the tax years available.

• Materiality of potential adjustments.

• Prior compliance activities; e.g. preparer penalties previously asserted, DDV/ERO visitations, and/or RPO compliance letters.

(3) Additional factors to consider with PSP management include:

• Exam Plan workload and planning needs.

• Refund and EITC rate.

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(1) In SB/SE, when a preparer has been identified for a potential PAC, the RPC must deconflict with CI by sending an e-mail to the CI RPC and/or the CI Refund Crimes Deconfliction mailbox ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to ensure that any civil action will not conflict with an open criminal investigation.

(2) In LB&I, when the return preparer’s activity warrants the initiation of a PAC, the RPC will contact the Office of Tax Shelter Analysis (OTSA) for coordination to ensure there is no conflict with an open criminal investigation or tax promoter investigation. The RPC will also coordinate with SB/SE to ensure there is no conflict.

(1) Before initiating a PAC the RPC will deconflict with the LDC because a return preparer can violate both IRC 6694 and IRC 6701.

(2) If there is not an LDC lead in the Return Preparer Database:

1. The RPC may initiate the PAC and update SB/SE Referral accordingly.

(3) If there is an LDC lead in the Return Preparer Database:

1. If there is a lead with no disposition, the RPC should contact the LDC at their general e-mail box ≡ ≡ ≡ ≡ ≡ ≡ requesting an update on the referral status. The LDC will respond to the RPC with clearance or non-clearance.

Note: If the LDC provides clearance, the RPC can move forward with initiating the PAC and the RPC will update SB/SE accordingly.

Note: If the LDC does not provide clearance, the RPC will close the referral and update SB/SE Referral accordingly.

2. If there is a lead with a disposition and the disposition is not "LDC Approved 6700 Investigation" RPC may initiate the PAC and will update SB/SE Referral accordingly.

3. If there is a lead with a disposition "LDC Approved 6700 Investigation" a PAC cannot be pursued. The RPC should forward the information to the LDC so they can consider as part of their investigation.

(1) The RPC must secure approval from the appropriate management officials in order to initiate a PAC.

(1) The RPC will identify, classify, and select an initial sample of 20 client returns from the preparer’s client list.

(2) These cases will generally be worked by tax compliance officers (TCO) unless the complexity of the issues require assignment to a revenue agent (RA).

(3) Every PAC should have a Lead Examiner (LE) assigned to it. The LE should be assigned some of the client cases to work. In addition, the LE is responsible for working with the RPC and the examiners to ensure that all closed audit packages are received. Once all client cases have closed the LE is responsible for reviewing closed audit packages to determine if there is a pattern of significant and repetitive deficiencies and further compliance action is warranted on the preparer. When a determination is made the LE will discuss their findings with the RPC for concurrence.

(1) The RPC will establish ERCS exam controls for each client return selected for examination in the initial sample:

1. Source Code 49 will be used for the primary returns that are selected as part of the PAC. If multi-year cases are developed in PSP for delivery to group, only the primary return should reflect Source Code 49. All related and multi-year examinations should reflect the appropriate source codes when establishing and auditing related returns and multi-year examinations.

2. Status Code 08.

3. Appropriate tax year.

4. Valid AIMS Assignee Code (AAC) for PSP (PBC, SBC, EGC).

5. Valid activity code.

6. Appropriate national PAC project code (no local project codes should be used).

7. Local PAC tracking code.

8. Aging Reason Code 49 should be reflected on all return preparer program returns including primary and multiple-year returns.

9. Appropriate local ERCS freeze code.

(2) The RPC will update the status of returns selected for examination in the initial sample to Status Code 08.

(3) A unique local ERCS freeze code (designated specifically for use with PACs) should be input on ERCS for all client returns in the initial sample. The RPC is required to release this freeze code upon receipt and review of the closed audit package from the examiner.

(4) There may be situations in which PAC client cases have been established but due to limited resources are unable to be delivered. These cases should be surveyed using disposal code 35 and the RPC should review the subsequent year for PAC consideration. If pursuing the subsequent year is warranted the RPC should complete a PAC Expansion Memo and follow procedures in IRM 4.1.10.4.10, Expanding PACs in SB/SE.

(1) Generally, each client return case file will include the supporting documentation listed in the following paragraphs.

(2) IDRS supporting documents that may be provided:

1. TRPRT Print

2. RTVUE

3. AMDISA

4. INOLES

5. IMFOLI

6. IMFOLT

7. IMFOLR

8. IRPTRL

(3) Other supporting documents provided to support the examination may include:

1. Original Tax Return

2. Classification Check Sheet

3. CDE Print

4. MeF print

5. ERCS print

(4) White Paper -A memo for the examiner that includes PAC specific information:

1. Identified issues.

2. Project code, tracking code and aging reason code.

3. Coding instructions to the examiner to expand the examination, if warranted.

4. Refer examiners to guidance pertaining to preparing, conducting and documenting taxpayer interviews. See IRM 4.10.2.7.4(1) , Preliminary Research, IRM 4.10.3.4.1.1, Initial Interviews, IRM 4.10.9.7.5, Workpapers: Documenting Initial Interview and IRM 4.10.3.4.6, Interviews. RPC should not develop or suggest interview questions for PAC client cases.

5. PAC Check Sheet – This is a feedback sheet to collect information regarding the results of the client examinations. The examiner should complete and forward Form 15296, SB/SE Program Action Case (PAC) Check Sheet, directly to the RPC’s centralized email address as part of the closed audit package at the conclusion of the case.

6. Preparer penalties should be considered and documented per IRM 4.10.9.7.10, Return Preparer Penalty Consideration.

7. Examiner responsibilities.

(5) Case Delivery - Cases will be electronically delivered via CDE to examination groups and include the documentation in: IRM 4.1.10.4.8 (2) through IRM 4.1.10.4.8 (4).

1. To support the PAC the RPC will conduct a presentation at the beginning of the PAC using approved national education and outreach materials. These presentations will include information on PAC procedures, details of the preparer’s egregious and/or questionable issues and information/documents that should be noted/completed as part of the closed audit package. The RPC should also discuss how to properly document lead sheets to assist the RPC and LE in determining if further compliance action is warranted on the preparer.

(1) The RPC can use the following methods to monitor the progress of a PAC. PAC monitoring should be completed, at a minimum, on a quarterly basis.

1. ERCS reports of open client returns (Status 10/12) by tracking code and project code will alert the RPC if the returns are being worked in a timely manner.

2. Contact group managers at least quarterly to discuss the progress of each PAC.

3. Closely monitor aging PACs to assist in bringing them to termination. Aging PACs are PACs initiated more than three years ago that have not been expanded, or expanded PACs with an expansion approval date more than one year ago.

4. Monitor closed client return examination results by reviewing Form 15296, SB/SE Program Action Case (PAC) Project Check Sheet.

5. If a pattern of no show closings occur, discuss the issue with the group manager. At a minimum, discuss having the examiner secure a current client address and/or summon the client, as necessary.

6. If a pattern of no change or closures with issues of only minimal significance becomes apparent, talk to the group manager and examiners. If the client returns have been found to be substantially correct and/or the issue(s) of concern are not found, not adjusted, or not the fault of the preparer, the examiner should discuss with the RPC so the RPC can determine if the PAC should be terminated. Open client examinations should be completed as part of the PAC and remaining client returns in the initial sample should be reviewed with the RPC to determine if the returns should be surveyed.

7. Ensure each examiner has considered the return preparer penalty provisions of IRC 6694 and IRC 6695 and documented facts supporting any applicable preparer penalty recommendations for the RPC and LE consideration.

8. Prior to releasing PAC freeze codes, the RPC should review the closed audit package to determine whether the relevant PAC issues have been addressed and/or whether appropriate PAC procedures and examination techniques have been applied and discuss the findings with the group manager and examiner, as necessary. Once the case is determined to be correct, the RPC will authorize release of the freeze code.

9. Review imported PAC A-CIS data and closed case data results in SB/SE Referral using the Open PAC Monitoring Report.

10. Maintain activity record Form 9984, Examining Officer’s Activity Record, for each PAC in SB/SE Referral on the Activity Record tab. The RPC should maintain a contemporaneous record of actions on the PAC.

(2) After completing the initial sample of client returns, the RPC and LE must determine whether PAC examination results are sufficient to warrant preparer penalties and/or a referral to the LDC or CI.

(3) If PAC results are insufficient to determine if preparer penalties are warranted, such as a high volume of no shows, the RPC should consider expanding the PAC and selecting an additional sample of client returns for examination. See IRM 4.1.10.4.10, Expanding PACs in SB/SE.

(1) A PAC expansion is when additional client returns will be examined outside the initial sample of 20.

(2) PAC expansion should be considered in situations where a large pattern of no show closings occur, no change or closures of issues with minimal significance is apparent or when PAC client cases have been established but due to limited resources are unable to be delivered.

(3) If additional client returns will be examined outside of the initial sample of 20, consideration must be given as to how many additional client returns will be examined.

(4) In order to expand a PAC, the RPC will need to:

1. Prepare a PAC Expansion Memo and request approval from the PSP Territory Manager.

2. If approved, upload the PAC Expansion Memo into SB/SE Referral.

3. Closely monitor the results of the expanded PAC.

4. If results indicate the preparer is not responsible for the errors on the returns, remaining unopened cases may be surveyed and the PAC can be terminated.

(1) A PAC should be terminated when all client returns have been closed and the preparer penalty case, if warranted, has been established. This includes client returns that may have been selected as part of an expansion.

(2) The RPC will generate the PAC Termination Memorandum in SB/SE Referral and include a narrative summarizing what egregious and/or questionable issues were observed.

(3) The RPC will submit the PAC Termination Memorandum and any other relevant documents to the PSP Territory Manager for signature.

(4) Following approval of the PAC termination, the RPC will upload a copy of the signed PAC Termination Memorandum and update SB/SE Referral accordingly. The RPC should also update SB/SE Referral as to whether or not a preparer penalty is being pursued at PAC termination.

(5) When all cases associated with the PAC have closed to status code 90 the RPC should request the tracking code be marked inactive.

(6) If the RPC and LE determine that a preparer penalty is warranted see IRM 4.1.10.7 for the preparer penalty establishment procedures.

(1) At the conclusion of a PAC if criminal activity is identified the RPC should make a referral to CI.

(2) If CI accepts the preparer case, there may be civil penalties that can be assessed against the preparer at a later date.

1. Once CI has accepted the preparer referral exam should not contact the preparer without CI approval.

2. The RPC will update SB/SE Referral and put the PAC in "Pending CI Approval" until CI allows civil activity.

3. The RPC will monitor the suspense inventory and periodically contact CI to determine case status.

4. When the criminal prosecution is completed or dropped, the RPC should establish the IRC 6694(b) penalty case and the IRC 6694(a) and IRC 6695 (as applicable and based on statute) and assign to the LE.

5. Civil penalties under IRC 6694(b) have no statute of limitations on assessment. Civil penalties under IRC 6694(a) and IRC 6695 have a 3 year statute of limitations on assessment. See IRC 6696(d) and IRM 20.1.6.18, Statute of Limitations.

(3) If a referral is made to CI at PAC termination and CI does not accept it, the RPC should pursue civil preparer penalties. See IRM 4.1.10.7 for preparer penalty establishment procedures.

(1) PAC Penalty Creation: Per IRM 4.1.10.4.11(7), PAC Termination, if the RPC and LE determine that a preparer penalty is warranted the RPC will:

1. Update PAC Update tab in SB/SE Referral indicating that a preparer penalty will be pursued.

2. Complete Form 5809, Preparer Penalty Case Control Card.

3. Establish the record(s) on ERCS.

4. Upload a copy of Form 5809, Preparer Penalty Case Control Card, in SB/SE Referral.

5. Create RGS file for preparer penalty case.

6. Send Letter 3164-N, Third Party Contact to Preparers, only if the LE intends to contact clients of the preparer as part of their penalty case.

7. If Letter 3164-N, Third Party Contact to Preparers, is not sent, transfer the ERCS record(s) and the RGS penalty case file to the LE to work and update the PAC preparer penalty case status on the Preparer Penalties tab in SB/SE Referral to “pending”.

8. If Letter 3164-N, Third Party Contact to Preparers, is sent, the RPC will update the PAC preparer penalty case status on the Preparer Penalties tab in SB/SE Referral to “pending” upon sending the third party letter to the preparer and must wait 45 days prior to transferring the ERCS record(s) and the RGS penalty case file to the LE to work.

(2) Non-PAC Penalty Creation: Examiners can refer Non-PAC penalties to RPPWG or they can initiate and work a preparer penalty case. If they initiate and work a preparer penalty case they will complete Form 5809, Preparer Penalty Case Control Card, and forward to the RPC for deconfliction. When deconfliction is obtained the examiner will create the RGS penalty case file and establish the preparer penalty case on ERCS. The form has three parts.

(3) Penalty cases are established on ERCS only. There are two methods of establishing these penalty cases:

1. If a penalty is being pursued relating to one taxpayer (client) use the client’s Taxpayer Identification Number (TIN) to create the ERCS record. The name control line in ERCS will be the name control of the preparer, preparer’s TIN, and the name control of the client.

   Example: PREP/123-45-6789/CLIE

2. If a penalty is being pursued relating to more than one taxpayer (client) use the return preparer’s TIN to create the ERCS record. The name control line in ERCS will be the return preparer’s name. Multiple preparer penalties can be consolidated under a single ERCS record and Form 5809. This method should be used when a preparer has more than one preparer penalty being pursued.

   Example: PREPLASTNAME,PREPFIRSTNAME

(4) A separate Form 5809 and ERCS record is created for each return preparer penalty. The Master File Tax (MFT) will be P1, P2, P3, P4, PC, PJ, PK, PL, PM and/or PN, depending on the type of penalty. See Document 6036, Examination Division Reporting System Codes Booklet, for a list of penalties by activity code.

(5) Civil penalties under IRC 6694(a)and IRC 6695, have fixed statutes of limitations on assessment under IRC 6696(d). Ensure when the ERCS record is created that the correct statute of limitations is entered. Civil penalties under IRC 6694(b) have no statute of limitations on assessment under IRC 6696(d). When the ERCS record is created alpha statute "XX" will be used. See IRM 20.1.6.21, Statute of Limitations.

(1) The RPC is responsible for monitoring open PAC and Non-PAC preparer penalty cases initiated in their area. The RPC should utilize the report and query functions in the SB/SE Referral and Non-PAC Penalty databases to track and monitor preparer penalty case status.

(2) The RPC can use ERCS/Tableau to monitor penalty cases by utilizing reports and filtering by tracking code or activity code.

(1) In SB/SE, the RPC will review all return preparer penalty cases and confirm the proper electronic case file assembly by following the outlined steps for closing civil penalty cases in RGS on Knowledge Management Exam Procedures Knowledge Base - Electronic Case Procedures - GrpbyChpt (sharepoint.com). Technical Services does not conduct reviews of return preparer penalty cases. All preparer penalty cases will be closed directly to the RPC from the group in Status Code 41 via Form 3210, Document Transmittal. Upon receipt of the preparer penalty file the RPC will update the Status Code to 44.

(2) In LB&I, the team manager will review all penalty cases. Cases in which a penalty is asserted will be closed to Centralized Case Processing (CCP), if agreed, or to Appeals, if not agreed. Send a completed copy of Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, Form 5816, Report of Tax Return Preparer Penalty Case, and Form 886-A, Explanation of Items, to the LB&I RPC.

(1) When reviewing closed preparer penalty cases the RPC will conduct the steps listed in the following paragraphs.

(2) Ensure the electronic case file has the appropriate return preparer penalty information.

(3) Ensure Form 5809, Original Copy, closing status is correct.

(4) Review Form 8278 to confirm it is correct and includes all the items listed below:

1. The group manager signed Form 8278prior to the examiner issuingForm 5816. See IRM 20.1.6.9.1.

2. The correct number of forms are completed. A form must be completed for each penalty type and tax year for each penalty assertion.

3. The correct SSN or EIN is listed on the form.

4. The correct MFT has been selected.

5. The statute date is correct.

6. The correct penalty code/penalty reference number has been selected.

7. The related tax return information has been completed on page 4.

8. If both IRC 6694(a) and IRC 6694(b) apply, ensure the combined assessment does not exceed the IRC 6694(b) penalty amount. See IRM 20.1.6.4.13.2(4).

9. TheIRC 6695 penalty was considered and applied, if warranted.

10. Verify if any advanced payment has been posted.

(5) The RPC will determine where the closed case should be forwarded based on the closure type listed in the following paragraphs.

(6) No change preparer penalty cases, agreed preparer penalty cases, and unagreed preparer penalty cases (not protested/appealed) will be updated on ERCS to status code 51 (CCP).

(7) Unagreed preparer penalty cases (protested/appealed) will be updated on ERCS to Status 90 (Closed).

1. If the proposed preparer penalty is for IRC 6694(a) or IRC 6694(b) and the preparer has responded to the 30 day letter, Letter 1125 ,Transmittal of Examination Report, with an adequate protest, close the electronic case file to Appeals in RGS and follow the outlined steps for closing civil penalty cases on RGS to Appeals on Knowledge Management Agreed, No-change, Protested Case Closing (sharepoint.com).

2. Verify if any advanced payment has been made on a protested/appealed case.

3. If the case involves a penalty that is entitled to post-assessment appeal, and there is a payment posting voucher in the case with an appeal request, fax Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, and Form 3244, Payment Posting Voucher, to the appropriate Field Office Resource Team (FORT) manager in CCP for assessment. See the CCP fax numbers on Knowledge Management: CCP Exam EFax Numbers (sharepoint.com)

   Note: See IRM 20.1.6.19.2, Post-Assessment Appeal Procedures, for information regarding penalties subject to post assessment appeals procedures.

4. Upon receipt of the completed faxed document by CCP, update the case on ERCS to Status Code 90 and close the electronic case file to Appeals in RGS and follow the outlined steps for closing civil penalty cases on RGS to Appeals on Knowledge Management ..

(8) When closing the case out of PSP, the RPC will make sure the penalty type and penalty amount are entered into ERCS.

(9) If a preparer penalty is asserted, the RPC will update SB/SE Referral or Non-PAC Penalty with the tax year, penalty type and penalty amounts and will upload, Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties.

(1) If a preparer penalty case has been established on ERCS, the preparer has not been contacted and it is determined that a preparer penalty is not warranted the preparer penalty case should be surveyed using Disposal Code 31 and Form 5351, Examination Non-Examined Closings, and Form 3210, Document Transmittal, should be completed. See IRM 4.4.21.5.2.2, Paperless Case File – Group Procedures, items 1 through 3. Upon completion, retain documentation following retention requirements.

(1) If a preparer penalty case has been established, is being worked in an exam group and CI subsequently informs SB/SE they are pursuing a criminal investigation, civil activity must be halted until the criminal investigation is complete.

1. The examiner will update the preparer penalty to status 41 and forward to the RPC for review.

2. The RPC will review the electronic preparer penalty case, including the statute, and update the status to 21 and forward the case to Technical Services pending the completion of the criminal case.

   Note: Refer to IRM 25.1.4.4.11, Fraud Suspense, and IRM 25.1.5.3, Grand Jury Suspense, for additional guidance.

   Note: Contact the Technical Services Fraud Coordinator for additional guidance. The current list of Technical Services Fraud Coordinators may be found at: Exam Procedures Knowledge Base - Technical Services - GrpbyChpt (sharepoint.com)

3. The RPC should update the SB/SE Referral penalty status as "Pending CI Approval" or the Non-PAC Penalty status as "CI Suspense".

4. When the criminal prosecution is completed or the criminal case is terminated, the civil preparer penalty case will be released back to exam for completion. The RPC should update the SB/SE Referral penalty status to "pending" or remove the "CI Suspense" as the Non-PAC Penalty status.

(1) Other circumstances in which a referral to OPR would be warranted include:

1. Inaccurate or unreasonable entries/omissions on tax returns, financial statements and other documents.

2. A lack of due diligence exercised by the practitioner as described under Circular 230 10.22.

3. A willful attempt by the practitioner to evade the payment or assessment of any Federal tax.

4. Cashing, diverting or splitting a taxpayer’s refund by any means, electronic or otherwise.

5. "Patterns" of misconduct under Circular 230 involving multiple years, multiple clients or unprofessional conduct demonstrated to multiple IRS employees.

6. Potential conflict-of-interest situations, such as representation of both spouses who have a joint income tax liability or when representation is affected by competing interests of the practitioner.

7. Any willful violation of Circular 230 provisions.