4.1.2. Workload Identification and Survey Procedures

(1) PSP is responsible for identifying and delivering returns to Field Exam. Those returns can come from a variety of sources. This chapter covers how to determine the number of returns needed, how to place a DIF order, and procedures for surveying excess inventory.

(2) The Planning and Special Programs (PSP) Territory Manager (TM) must ensure the correct mix of returns (e.g. purpose groups, workstreams, activity codes within DIF, etc) are available in PSP and the field to accomplish the exam plan.

(3) The PSP TM (or designee) must determine the volume and activity code of DIF returns needed. To facilitate that effort a "return needs analysis" and a "return starts analysis" should be completed on at least a bimonthly basis.

(4) The PSP TM (or designee) should analyze non-DIF direct examination staff year (DESY) application, non-DIF inventory, projected future inventory and projected year-end accomplishments in relationship to the exam plan in conjunction with a return order.

(5) All return orders must be approved by the FCS analyst responsible for DIF.

(1) IRM 1.1.16.5.5.3, Exam Case Selection.

(2) IRM 1.2.1.2.36, Policy Statement 1-236, Fairness and Integrity in Enforcement Selection.

(3) IRM 1.2.1.5.7, Policy Statement 4-9, Highest Integrity Expected.

(4) IRM 1.2.1.5.10, Policy Statement 4-21, Selection of Returns for Examination.

(1) Director, Exam Case Selection (ECS) is the executive responsible for providing policy guidance on the selection of cases and delivery of inventory for SB/SE Examination.

(2) Program Manager, Field Case Selection is the program manager responsible for providing policy guidance on the selection of cases and delivery of inventory for SB/SE Field Exam.

(3) The PSP Territory Manager is the territory manager responsible for the selection of cases and delivery of inventory within an SB/SE Exam Area.

(4) The Program Manager, Field Exam Workload Planning and Analysis is responsible for developing the Field Exam work plan.

(1) The following are reports and/or systems that may be used in the returns needs, starts, or order calculations.

• A-CIS

• Compliance Data Environment (CDE) Inventory Report

• CDE select rates (CDE Select Rate Report)

• Status 06 report of CDE inventory

• Statutes (CDE Statute Report or SSIVL)

• New starts (A-CIS Open and Closed Case databases or ERCS Tableau)

• Started returns (Status 12 and above) by status code, Tables 36 and 37, SSIVL, or ERCS Tableau

• Unstarted returns (Status 10 and below) by status code, Tables 36 and 37, SSIVL, or ERCS Tableau

• Volume and timing of return orders (Classification/Order Plan)

• Return Order and Delivery System (ROADS)

• Exam Plan

• Starts & DIF Mix Report (WPA)

• ERCS Tableau

• CDE Tableau

(1) This is a list of acronyms and their definitions.

(1) See IRM 4.1.1.1.6, Terms, for a listing of common terms used in PSP.

(1) IRM 4.1.1, Planning, Monitoring, and Coordination.

(2) IRM 4.1.5, Case Building, Classification, Storage and Delivery.

(1) The Return Starts Analysis is used to calculate the primary starts by examiner. It is used by the Return Classification coordinator (also known as Spigot or DIF coordinator) to prepare the ROADS group delivery form. See IRM 4.1.5.5.1, ROADS Group Delivery Form. The Return Starts Analysis is also used by Field Case Selection (FCS) analyst to prepare the ROADS return needs analysis (RNA) bimonthly. See IRM 4.1.2.2.2, ROADS Return Needs Analysis.

(2) Primary starts by examiner is calculated as the average primary starts divided by the average examiners (as defined below). The calculation should be made by the post of duty (POD) and examiner type (RA, TCO Grade 9 or below, or TCO Grade 11) level.

• Average primary starts - the higher of the average primary starts over the last 12 cycles or the lower of; the average primary starts for the highest 6 of the last 12 cycles or 150% of the average primary starts over the last 12 cycles.

• Average examiners - the total count of examiners by POD and examiner type divided by 12 cycles.

(1) The ROADS Return Needs Analysis (RNA) is used to order DIF inventory by post of duty (POD) and activity code to meet the DIF optimal mix in the area exam plan. After determining the number of returns needed, The PSP Territory Manager (or designee) should determine the activity codes needed to deliver a balanced DIF optimal mix. Additionally, PSP is responsible to monitor the mix of returns started each month to support the area exam plan or optimal DIF mix.

(2) The current available inventory and projected return needs should be analyzed at least on a bimonthly basis. Return needs should be analyzed by POD to prevent shortages. Return needs should be determined for RA, TCO Grade 9 or below, and TCO Grade 11 separately.

(3) A proper RNA should take the following into consideration:

1. Area exam plan and DIF optimal mix

2. Current number of examiners and average primary starts by POD

   Note: In order to properly project DIF inventory needs, the Return Classification coordinator should be aware of upcoming training that may impact the volume of examiners available to work DIF returns.

3. Available inventory in status 06, 08, and 10 for DIF and non-DIF

   Note: This data can be found on SSIVL, ERCS, ERCS Tableau, CDE Tableau, etc.

4. Fiscal year to date primary new starts by activity code for DIF and by purpose group/workstream for Non-DIF

Note: ACIS Closed Case Database, ACIS Open Case Database, ERCS, or WPA reports can be used to obtain this data.

(4) The RNA determines the DIF inventory to be ordered by POD and mix of activity codes to cover a period of time, normally a 3-4 month period. The DIF order is determined as follows:

1. Total inventory needs by POD is calculated by multiplying the number of examiners (RA or TCO) times number of future months for inventory need times the average primary new starts per cycle as calculated by the return starts analysis. See IRM 4.1.2.2.1, Return Starts Analysis.

   Note: Consider making adjustments to staffing counts for PODs with 1 or 2 examiners to increase the number of returns ordered.

2. Current inventory is calculated as primary status 10 inventory plus primary status 08 inventory plus [status 06 inventory times select rate].

   Note: Inventory may be “discounted” (removed from the calculation of current inventory) if it does not support the area exam plan or optimal DIF mix. This could occur at the purpose group/workstream level for non-DIF inventory or at the activity code level within DIF.

   Example: Available inventory in CDE, PSP, or campus may be “discounted” for inventory with short statutes. This discount should not be applied to inventory with greater than 18 months remaining on the statute.

   Exception: Special program work (such as National Research Program (NRP)) may not need to be discounted.

3. DIF return needs is calculated as total inventory needs (step 1) minus current inventory (step 2).

4. DIF order is the breakdown of ‘number of DIF return needs’ by POD and activity code. The activity code breakdown of the order should support the DIF optimal mix. The RNA calculates the appropriate activity code need by considering the DIF fiscal year to date primary new starts and existing DIF inventory in status 10 or below.

   Example: If a POD needs 10 DIF returns and an order of 5 DIF activity code 280 plus 5 DIF activity code 284 would result in the area’s DIF delivery matching the DIF optimal mix, the area should order these returns rather than returns in other activity codes.

5. Sufficient available unclassified inventory is required from which to order the DIF returns. The PSP Territory Manager (or designee) must determine if there is sufficient inventory available above DIF level cutoffs established by Field Case Selection from which to secure the “DIF order.” If there are not enough returns are not available to order, the returns must be reallocated to the next best activity codes to support the DIF optimal mix.

(5) The PSP Territory Manager (or designee) requests approval of the “DIF order” (after any adjustments due to insufficient inventory) through Field Case Selection.

(6) Typically, the approved DIF order will be input using Compliance Data Environment (CDE). The orders may take 1 to 2 weeks to be ready for classification.

(1) The following types of returns are computer scored under the DIF System:

1. Individual

2. Corporation

3. S Corporation

4. Partnership

5. Fiduciary

(1) All individual returns are computer scored under the DIF system. DIF returns are generally ordered, but some returns are delivered to examination as automatics for manual screening without a return order being placed. These returns are identified as automatics by the use of audit codes. Audit codes can be found on Form 5546, Examination Return Charge-Out Sheet, and on page 2 of the AMDISA print. Audit codes are listed in IRM 3.11.3-3, Audit Codes.

(2) Correspondence (CORR) returns are certain individual low and medium income non-business returns that are conducive to correspondence examinations. Returns identified as "CORR" can not be ordered by area offices. They can only be ordered at a national level.

(1) Corporation returns having no balance sheet or assets under $10,000,000 are computer scored under the DIF system. High asset returns, activity codes 219 through 230, are not DIF scored and are delivered automatically to classification at the Ogden Large Business & International (LB&I) Campus. The corporation DIF system includes:

(2) Miscellaneous corporate returns are not DIF scored. These returns may be sample ordered. These returns could be classified by screening them in the Statistics of Income (SOI) Division located at the receiving campus before shipment to SOI at the Ogden Campus. Miscellaneous corporate returns include:

(3) Certain corporation returns are identified as Specials. These returns can be identified and ordered by specific audit codes. These audit codes are listed in IRM 3.11.16.9.1, Audit Codes.

(1) S Corporation returns having assets under $10,000,000 are computer scored under the DIF system. The S Corporation system includes:

(2) Certain S corporation returns are identified as Specials. These returns can be identified and ordered by specific audit codes. These audit codes are listed in IRM 3.11.217.13.1, Audit Codes.

(1) A partnership includes a syndicate, group, pool, joint venture or other unincorporated organization, through or by means of which a business, financial operation, or venture is carried on, and which is not a trust, estate or corporation. A partnership files a Form 1065, U.S. Return of Partnership Income. The Partnership system includes:

(2) Certain partnership returns are identified as Specials. These returns can be identified and ordered by specific audit codes. These audit codes are listed in IRM 3.11.15.19.1, Audit Codes.

(1) A fiduciary is a trustee of a trust, or an executor, executrix, administrator, administratrix, personal representative, or person in possession of property of a decedent's estate. A trust or a decedent's estate is a separate legal entity for federal tax purposes. A fiduciary files a return using Form 1041, U.S. Income Tax Return for Estates and Trusts. The Fiduciary system includes:

(2) Certain fiduciary returns are identified as Specials. These returns can be identified and ordered by specific audit codes in CDE. These audit codes are listed in IRM 3.11.14.10.1, Audit Codes.

(1) Each year (or as required), SB/SE Headquarters Exam Case Selection establishes a national SB/SE DIF cutoff score for ordering DIF returns in each activity code. Only returns with a DIF score higher than the minimum should be ordered for classification unless there are unusual circumstances associated with a particular post of duty (POD). The following items should be considered when establishing the cutoff score for each activity code:

1. The predictive value of the DIF formula decreases at lower DIF levels.

2. Volume of returns needed to meet the exam plan and the lowest DIF score necessary to secure enough returns to meet the needs of each area and POD.

3. Filings which will not be available due to being accepted as filed or absorbed by other non-DIF work.

(2) Annually the FCS analyst will provide DIF cut-off levels by activity code to each area. The FCS analyst will use two reports (shown below) to compute the DIF cutoff score:

• Report 1 - Actual Return Counts (for the file year) includes: DIF Level, % Coverage Rate, Activity Code, and Actual Count.

• Report 2 - DIF Score Range includes: DIF Level, Coverage Rate, and DIF score by Activity Code.

(3) The PSP Territory Manager (or designee) is responsible for ensuring return orders do not exceed returns available above the DIF cutoff for their area for each activity code.

(4) Returns above the DIF cutoff score in each activity code will be exhausted before a request is submitted to order returns below the cutoff score.

(5) Departures from the DIF cutoff score should be discussed with the FCS analyst responsible for DIF.

(1) At the beginning of the fiscal year, each area should plan their classification details. The classification plan will be used to determine when to place a DIF return order and schedule classification details. Typically return orders are placed every other month. The PSP Territory Manager (or designee) will update the CDE Calendar with the planned classification details. Review the CDE Calendar for any planned down time such as data deployment or scheduled maintenance. The CDE Calendar can be found on https://irsgov.sharepoint.com/sites/SbEfEcs_Rod/Lists/Calendar/calendar.aspx.

(2) The PSP Territory Manager (or designee) will monitor the classification plan to ensure the following:

1. Returns are ordered ratably throughout the plan year

2. Returns are ordered timely in the correct activity codes

3. Classification is completed timely

4. Select rates are within acceptable levels

5. Returns are falling out in the correct posts of duty and

6. Unassigned inventory levels are neither too low nor too high.

(3) To order DIF returns use the ROADS Return Needs Analysis (RNA), or equivalent. See IRM 4.1.2.2.2, ROADS Return Needs Analysis. A general order can also be submitted. See IRM 4.1.2.3, Deciding to Order.