4.17.4. Procedures

(1) There are four types of CIP requests.

(2) Part 1 CIP - A Part 1 CIP authorization is requested when fewer than 50 taxpayer contacts are anticipated for a field office compliance initiative. Form 13502 Compliance Initiative Project Authorization - Part One, is used to request a Part One CIP Authorization.

(3) Part 2 CIP- A Part 2 CIP authorization is requested to expand a Part 1, when the Part 1 reveals documented non-compliance, or when there is an otherwise established compliance risk. Form 13498 Compliance Initiative Project Authorization - Part Two, is used to request a Part Two CIP Authorization.

(4) National Office CIP - A National Office CIP authorization is one requested by a headquarters function. Form 13502 or Form 13498 is used based on the descriptions in paragraph 2 and 3 above. See IRM 4.17.4.9, National CIP.

(5) Cross-functional CIP A Cross-functional CIP authorization is one jointly requested by two or more business operating divisions. Form 13502 or Form 13498 is used based on the descriptions in paragraph 2 and 3 above. See IRM 4.17.4.10, Cross Operating Division CIP Approval Process.

(1) Provide information to explain the basis for selecting the proposed project. If the authorization request is for Part One CIP only, identify the circumstance from IRM 4.17.4.3, Part One CIP Authorization Request that permits the use of Part One CIP. Explain the issue(s) and additional information such as;

• Source of the idea (referral, etc.)

• Data used to determine there is a compliance risk

• Results or research from similar past projects

  Note: Similar or prior projects need to be considered even if they are from different exam areas or divisions. Authorization must contain clear justification for repeating a project. The authorization request must also contain the results to date of the previous project, including the no change rate and other applicable metrics.

• Objectives and expected results

(1) A market segment is generally a group containing similar characteristics. Examples of market segments include but are not limited to the following:

• Business Type – Services, Construction, Retail

• An Issue – Passive Activity Losses, Low Income Housing Credit

• Form Type – Schedule C, Form 1041

  Note: An issue appearing on multiple form types does not require multiple CIP’s. Multiple simultaneous Part I CIP’s for identical issues but different form types are not permitted.

• New businesses

(2) The market segment section should also include:

• Thresholds and parameters used to identify the population

  Note: Thresholds and parameters must be supported by research. This could include internal or external data from sources such as EOAD, IBMIS or Subject Matter Experts

• Projected fallout by Activity Code

• CDE Filter ID, if applicable

(1) Describe the data needed or to be used, including the source and whether it is internal or external. If the request is to secure data, include the expected delivery date, delivery medium, amount of time needed to use the data, and ultimate disposition. Also provide an assessment of the accuracy of the data if it is external and a description of the procedures to be used for securing and storing it, if applicable.

(1) List the tasks necessary to complete the project, the estimated time to accomplish them, and the projected task completion dates. Ensure sufficient time is allowed for each task and the overall project completion date is reasonable. Coordinate with other impacted functions/units to provide reasonable time allocations. Action plan dates should coincide with the final project completion date.

(2) The CIP Authorization should have a specific project completion date.

(3) If the authorization request covers more than 2 tax years, justification must be included.

(1) Review and approval procedures are based on the originator. Generally, Part One CIP’s require concurrence from analysts/coordinators, front line managers and senior managers. Approval is generally the first level executive with authority to commit exam resources and direct case selection.

(2) Concurrence represents the agreement of impacted parties. Approval is the final authorization to proceed with case selection.

(3) Concurrence and approval should be as follows:

(4) Disclosure - Disclosure must sign for concurrence on any CIP authorization that involves the external release of taxpayer information to gather third party data.

(5) National Database Maintenance - Completed Authorizations must be forwarded to the HQ SB/SE CIP Analyst for updating the CIP database.

(1) In addition to IRM 4.17.4.3.5, Review, Concurrence and Approval Part One CIP Only and IRM 4.17.4.4.4, Review, Concurrence and Approval Part Two Authorization Requests LB&I authorization review is conducted in the following order:

1. Industry forwards CIP and Workload Selection Form to the LB&I CIP Analyst.

2. LB&I CIP Analyst forwards the CIP to the Compliance Planning & Analytics (CP&A) Research Manager. The methodology proposed for identifying/selecting returns must be approved by the CP&A Research Manager.

3. LB&I CIP Analyst forwards the CIP to the Risk Identification Control Board for review and concurrence.

4. CIP is presented by the CIP owner to the LB&I CIP Oversight Committee.

5. CIP is presented to Directors of Field Operations (DFO’s) during monthly conference calls.

6. CIP is presented to the Executive Governance Board (EGB). Minutes from both the DFO calls and EGB calls should be forwarded to the LB&I CIP Analyst by the originating Industry.

   Note: If an authorization request originates in Compliance Planning & Analytics (CP&A), and is a regular workload selection CIP, approval from the EGB would not be required.

7. Final review is conducted by the CP&A, Operations Planning & Support Senior Manager, and final approval is from the CP&A, Director.

(1) Documented consideration should be given to identify alternative non-enforcement ways to improve voluntary compliance as enforcement is generally very labor intensive. Examples are:

• Taxpayer outreach/education. See IRM 4.17.2.6, Communications and Stakeholder Outreach (CSO) Managers/Directors

• Revisions to forms or publications

• Legislative or regulatory changes

• Agreements with state or local business licensing authorities for tax compliance requirements

(1) Describe the measure(s) that will be used to evaluate noncompliance. Examples are:

• Returns secured

• Dollars collected

• Number of returns examined

• No change rate

• Dollars recommended per return/hour

• Reasons for non–compliance (see IRM 4.10.16, Examination Operational Automation Database (EOAD)

Note: If a Part One CIP is expanded to a Part Two CIP, the results of the Part One must be included in the Part Two CIP authorization.

• Information from feedback forms from examiners

(1) Describe the estimated resources needed to execute the project. Include hours/FTE’s to be expended by type of employee (RO, RA, TCO, TE, etc.). Also include costs over and above those that would normally be incurred. For example:

• Specialized training

• Mandatory Referral Items such as engineering appraisals or Foreign Tax Credits

• Data acquisition

• Unusual items such as extensive travel

• Unusually high rate of appeal or default

(1) Review and approval procedures are based on the originator. Generally, Part Two CIP’s require concurrence from analysts/coordinators, CSO, front line managers, senior managers and executives. Approval is generally the second level executive with authority to commit exam resources and direct case selection, and/or the Director of Exam Case Selection.

(2) Concurrence represents the agreement of impacted parties. Approval is the final authorization to proceed with case selection.

(3) Concurrence and approval should be as follows:

(4) Disclosure - Disclosure must sign for concurrence on any CIP authorization that involves the external release of taxpayer information to gather third party data.

(5) National Database Maintenance - Completed Authorizations must be forwarded to the HQ SB/SE CIP Analyst for updating the CIP database.