4.26.15. General Program

(1) Authority for the IRS to conduct BSA examinations includes the following sources:

1. 31 USC 5318(a), General Powers of Secretary, provides the Secretary of the Treasury with authority to administer provisions of the BSA.

2. 31 CFR 1010.810(b)(8), Enforcement, gives the Commissioner, IRS, the delegated authority to examine certain financial institutions to determine compliance with BSA requirements.

3. A Memorandum of Agreement dated April 8, 2003 delegates examination and penalty authority for Foreign Bank Account Reports (FBARs) from the Financial Crimes Enforcement Network (FinCEN) to the IRS. See IRM 4.26.1-2, FBAR Delegation to IRS.

4. A Memorandum of Understanding and Delegation of Authority to Examine Non-Financial Trades and Businesses, dated April 10, 2015, delegates examination authority under Title 31 for Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, from FinCEN to the IRS. See IRM 4.26.1-3, Form 8300 Title 31 Delegation to IRS.

5. Related authority: IRC 7601, Canvass of Districts for Taxable Persons and Objects, Authorizes the Secretary of the Treasury to Inquire into Taxpayers’ Tax Liability. IRC 7602, Examination of Books and Witnesses, Authorizes the Secretary to Examine Books and Witnesses for Specific Purposes Including Determining and Collecting Federal Tax Liabilities.

(2) See IRM 4.26.1 Bank Secrecy Act, Introduction and Program Structure.

(1) Director, Examination – Specialty Policy is the executive responsible for BSA Examination policy and procedures.

(2) Director, Examination – Specialty Examination is the executive responsible for BSA examination operational compliance.

(3) Chief, BSA Policy is responsible for ensuring general information about basic BSA examiner responsibilities and IRM sections is communicated to and carried out by BSA examiners.

(1) The following table contains acronyms, and their definitions, used throughout this IRM.

(1) The IRS adopted the Taxpayer Bill of Rights in June 2014. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the Taxpayer Bill of Rights see http://irweb.irs.gov/AboutIRS/tbor/default.aspx.

(2) Helpful information sources include:

• The BSA Policy SharePoint site

• A list of SB/SE BSA Policy Analysts, their contact information and program assignments, are found on the BSA Policy SharePoint

• FinCEN - Financial Crimes Enforcement Network

• 31 CFR Chapter X, Financial Crimes Enforcement Network, Department of the Treasury

• 31 USC 5311, Declaration of Purpose, et seq (Title 31)

• IRC 6050I, Returns Relating to Cash Received in Trade or Business, etc. (Title 26)

• IRC 6721, Failure to File Correct Information Returns

• IRC 6722, Failure to Furnish Correct Payee Statements

(3) The BSA program is required to follow all servicewide examination procedures and those set forth in the SBSE examining process IRM. However, the following material provides additional information relating to the processing and examination of Bank Secrecy Act program returns:

• IRM 4.26.3 - Examination Case Selection (ECS)

• IRM 4.26.4 - FinCEN Query (FCQ)

• IRM 4.26.5 - Bank Secrecy Act History and Law

• IRM 4.26.6 - Bank Secrecy Act Examiner Responsibilities

• IRM 4.26.7 - Bank Secrecy Act Penalties

• IRM 4.26.8 - Special Procedures

• IRM 4.26.9 - Examination Techniques For Bank Secrecy Act Industries

• IRM 4.26.10 - Form 8300 History and Law

• IRM 4.26.11 - BSA Examiner Responsibilities for Form 8300 Examinations

• IRM 4.26.12 - Examination Techniques for Form 8300 Industries

• IRM 4.26.13 - Structuring

• IRM 4.26.14 - Disclosure

• IRM 4.26.15 - General Program

• IRM 4.26.16 - Report of Foreign Bank and Financial Accounts (FBAR)

• IRM 4.26.17 - Report of Foreign Bank and Financial Accounts (FBAR) Procedures

(1) Access to BSA information through FCQ for tax purposes is governed by the Memorandum of Understanding (MOU) between the Financial Crimes Enforcement Network (FinCEN) and IRS dated September 24, 2010. See IRM 4.26.14-2, Memorandum of Understanding Dated September 24, 2010.

(2) The MOU allows compliance employees electronic access to SAR information or the ability to receive SAR data when authorized by their operating division and business unit leaders.

(3) SAR information requests are limited to active examination and collection cases and case-building activities.

(4) Training on SAR information access and security is mandatory prior to any authorized access. For a full discussion of SAR access and security, see IRM 4.26.14, Disclosure. Also see IRM 4.26.15.5.2.

(1) Income tax examinations resulting from the BSA program are assigned the following project codes:

• 432 — Leads from the Form 8300 program

• 441 — Leads from the Title 31 program

(2) If fraud is discovered as part of an income tax examination and the case is updated to status 17, the project code should be changed to reflect the fraud issue:

• From 432 to 146 - Form 8300 fraud

• From 441 to 147 - Title 31 fraud

(3) The examiner should ensure that multiple years and any related return pick-ups also reflect the appropriate BSA project codes.

(1) A referral received by a compliance function from Criminal Investigation (CI) may be derived from information filed by financial institutions on SARs. These reports are confidential and the information must be protected from unauthorized disclosure.

(2) Because disclosure of SAR information is restricted by 31 USC 5318(g), Reporting of Suspicious Transactions, the examiner must not:

1. Disclose that a SAR report has been filed,

2. Propose an adjustment based solely on an amount listed on a Criminal Investigation Information Item (Form 3949),

3. Disclose a source or possible source of the information,

4. Conduct the examination in a way the taxpayer could reasonably conclude any of the above, or

5. Issue a summons for specific SAR information.

(3) If during the course of an examination, a request is received to identify the source of and/or the information that caused the examination to begin, the examiner should not reveal SAR information or the fact that a SAR was filed. The suggested response is "I cannot disclose that information. The authority to withhold that information is in Internal Revenue Code Section 6103(e)(7)."

(1) Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, is a dual-purpose form. It satisfies filing requirements under both Title 26 under IRC 6050I, Returns Relating to Cash Received in Trade or Business, etc., and Title 31 under 31 USC 5331, Reports Relating to Coins and Currency Received in Nonfinancial Trade or Business.

(2) Form 8300 is part of the Title 26 Required Filing Checks.

(3) An Exam Revenue Agent may potentially come across a Form 8300 issue while investigating a tax matter when the business deals with significant cash. The agent would want to be alert to the following situations:

1. Transactions occurred which involved the receipt of cash in excess of $10,000.

2. There were consecutive or related transactions in excess of $10,000.

3. Forms 8300 were filed on any transactions involving cash in excess of $10,000 and/or transactions over $10,000 involving a combination of currency and monetary instruments.

4. A single transaction greater than $10,000 structured as multiple transactions each less than $10,000.

5. Transactions in excess of $10,000 where cash and non-cash payments appears to be combined to avoid the filing requirements.

6. A pattern or series of transactions of less than $10,000 conducted over a relatively short period of time by or for the same person.

(4) When Form 8300 violations are discovered or suspected in a Title 26 case, the Title 26 examiner may examine the taxpayer's Form 8300 compliance under Title 26 without violating Title 26 disclosure rules. The agent should discuss the findings with their Group Manager to determine whether to continue to develop the Form 8300 issues that have been identified during the case or whether to make a referral to BSA. See the Bank Secrecy Act Referral Decision Matrix at Exhibit 4.26.15-1.

(5) If the agent determines, with management concurrence, to continue to develop the Form 8300 issues, the agent will need to set up a separate case file for the Form 8300 examination. This is separate from the income tax examination case file and time will be applied to the Form 8300 case for work completed. The Form 8300 case should be established on ERCS.

1. Form 8300 cases are set up in ERCS under MFT "PX", "Year", "Name of entity" and "EIN".

2. Project code 1527 with the appropriate tracking code should be placed on all established cases.

(6) Examiners must request to stop Form 8300 correspondence so that BSA Compliance Department, Detroit does not send a penalty letter to a filer that has already been audited by a field examiner. See IRM 4.26.11.12.7, Stopping Correspondence.

(7) See IRM 4.26.11, BSA Examiner Responsibilities for Form 8300 Examinations, and IRM 4.26.12, Examination Techniques for Form 8300 Industries, for further guidance on setting up, working and closing the Form 8300 case.

(8) If the agent determines a referral to BSA is the best course of action, then a Form 5346 should be prepared and sent to BSA Exam Case Selection (ECS) for consideration for a Form 8300 compliance exam. The Form 5346 should be as complete and accurate as possible. The agent needs to ensure the correct legal name and Tax Identification Number are provided to BSA ECS for case building purposes. The agent should summarize all Form 8300 issues discovered during the audit in the "Other Information" section of the Form 5346. Form 5346 should be emailed to: *SBSE BSA Info Reports/Referrals. The agent should notate in the subject line "Form 5346-General Program".

(1) Title 31 is not part of the Title 26 Required Filing Checks.

(2) Title 31 BSA compliance cannot be examined during a Title 26 examination unless a Related Statute Determination (RSD) has been made. See IRM 4.26.14.2.2, Related Statute Procedures.

(3) Title 26 tax examiners or revenue officers cannot refer discovered or suspected BSA violations unless an RSD has been made. See IRM 4.26.14.2.2.

(4) Special considerations apply to FBAR violations.

(1) Foreign accounts are commonly discovered during a Title 26 tax case. Examiners can consult FCQ to verify if the taxpayer filed a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).

(2) Foreign assets or accounts may also trigger a Form 8938, Statement of Specified Foreign Financial Assets filing requirement. Form 8938, is a Title 26 requirement, not a BSA requirement. A comparison of Form 8938 and FBAR requirements may be found at: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements.

(3) BSA does not accept referrals for FBAR examinations. Each operating division is responsible for examining its own FBAR cases. The case examiner who discovers the suspected FBAR violation has the greatest knowledge of the facts of the case and is expected to address the FBAR issue.

(4) The Title 26 taxpayer cannot be examined for suspected FBAR violations unless an RSD has been made. The taxpayer should not be questioned regarding FBAR compliance until the RSD is made. See IRM 4.26.17, Report of Foreign Bank and Financial Accounts (FBAR) Procedures.

(5) For assistance in working FBAR cases, see IRM 4.26.16. Report of Foreign Bank and Financial Accounts (FBAR), for FBAR law and IRM 4.26.17, Report of Foreign Bank and Financial Accounts (FBAR) Procedures, for FBAR procedures.