4.24.20. Excise Tax Report Writing Guide

(1) This IRM provides guidance for report writing that examiners must understand and apply in the performance of their job duties. The processes and procedures provided in this IRM are consistent with the objectives and goals for Excise Tax Examination that are addressed in IRM 1.1.16.5.3.1, Excise Tax Examination.

(2) On a Form 720, Quarterly Federal Excise Tax Return, the entry of a dollar amount next to an IRS Number (IRS No.) constitutes a return of that tax. The entry next to an IRS No. of the word "none," "zero," or a comparable entry clearly indicating a denial of liability also constitutes a return of that tax. The entry of the word "none" across the return or in the summary portion indicates a denial of liability for all taxes listed on Form 720.

(3) The requirement for filing Form 720 applies separately to each tax listed by an IRS No. on the face of the return. For filing purposes, IRS Nos. that are left blank are considered non-filed even if the taxpayer or collector signed, dated, and submitted a Form 720 that was accepted by the agency.

(4) The examination report is the record of the examiner’s findings and recommendations regarding the examination of a taxpayer’s liability for excise tax. It may become the Government’s evidence in a court case. Because the taxpayer receives a copy of the examination report, it serves as a formal presentation to the taxpayer of the findings and recommendations of the examiner.

(5) Preparation of an examination report is a very important part of the examiner’s duties. The examination report should be clear and concise. All adjustments must be properly explained and supported in the examiner’s workpapers. They must contain appropriate references to the applicable laws, regulations, court decisions, rulings, etc., on which findings are based.

(6) Under no circumstances should a change report of excise tax adjustments be incorporated in an examination report covering income tax adjustments.

(7) Refer to IRM 4.10.8, Report Writing, for guidance.

(1) By law, the IRS has the authority to conduct examinations under Title 26, Internal Revenue Code, Subtitle F - Procedure and Administration, Chapter 78, Discovery of Liability and Enforcement of Title, Subchapter A, Examination and Inspection, which includes, but is not limited to, the following Internal Revenue Code (IRC) sections:

• IRC 7602, Examination of books and witnesses

• IRC 7605, Time and place of examination

(2) IRC 7522 requires that certain notices describe the basis for and identify the amounts of tax due, interest, additional amounts, additions to tax, and assessable penalties included in such notices. The notices specified include the first letter of proposed deficiency offering a review by Appeals, a notice of deficiency, and notices of tax due. While the statutory requirement is limited to the specified notices, the conference report notes the desire of Congress that the Service make every effort to improve the clarity of all explanations sent to taxpayers. H.R. Conf. Rep. No. 1104, 100th Cong., 2nd Sess., pt. 2, at 219, 1988-3 C.B. 473, 481.

(3) Treas. Reg. 40.6011(a)-1(a) provides that filing a return under part 40 applies separately to each tax listed by IRS No. on Form 720. Except as provided in paragraph (1) of Treas. Reg. 40.6011(a)-1(a), an entry must be made on the line for the IRS No. to file a return of the tax corresponding to that number.

(4) The Excise Tax Program is governed by policy statements and other internal guidance that apply to all IRS personnel regardless of the operating division. The policy statements found in IRM 1.2.1, Servicewide Policy Statements, apply to all excise tax issues and applications. Examiners should review these policy statements to properly perform their examination duties.

(5) IRS.gov summarizes data contained in IRM 1.2.2, Servicewide Delegations of Authority, in a single, electronic source. Refer to the Delegation Orders and Policy Statements by Process.

(6) IRM 4.24, Excise Tax, provides Servicewide instructions for all operating divisions with employees involved with the correct filing, reporting, and payment of excise taxes. IRM 4.24 serves as the foundation for consistent administration of excise taxes by various IRS operating divisions. By providing one source of authority for all operating divisions, philosophical, and procedural inconsistencies are greatly reduced.

(1) Director, Examination - Specialty Policy, is responsible for providing policy and guidance for Excise Tax Examination employees and ensuring consistent application of policy, procedures, and tax law to effect tax administration while protecting taxpayer rights.

(2) Director, Examination - Specialty Tax, is responsible for the delivery of policy and guidance that impacts the field and campus examination processes.

(3) Chief, Estate & Gift/Excise Tax Exam, is responsible for ensuring general information, such as the administration, procedures, and updates related to the technical guidance and information processing steps and methods specific to examination reports, is communicated to and executed by examiners.

(4) Excise Tax Program managers and examiners should thoroughly acquaint themselves with examination report writing procedures and information contained in this IRM, as well as other resources, such as those listed in IRM 4.24.20.1.6.

(1) Program Goals - The information explained in this IRM describes report writing that examiners must understand and apply in the performance of their job duties to prepare and submit accurate examination reports, thereby increasing compliance.

(2) Program Reports - Information regarding the reporting of program objectives are included in, but not limited to Examination Headquarters Monthly Briefings, Program Manager Monthly Briefings, SBSE Examination Operational Reviews, and Business Performance Reviews. These reports provide reliable and timely information. Periodic program reviews are conducted to:

• Determine if procedures are being followed.

• Validate the policies and procedures.

• Identify and share best practices.

(3) Program Effectiveness - Program effectiveness is measured by the Exam Quality Review staff that monitors whether quality attributes are applied uniformly and consistently. National, area, and territory trend analyses on the quality attributes establish baselines to assess program performance, identify opportunities to improve work processes, analyze causes for failure, assess the feasibility of possible solutions, and measure the success of quality improvement efforts.

(4) Annual Review - Program Manager, Excise Tax Policy, is responsible for reviewing the information in this IRM annually to ensure accuracy and promote consistent tax administration.

(1) The following table contains terms and their definitions used throughout this IRM:

(2) Refer to Exhibit 4.24.20-2 for acronyms used throughout this IRM.

(1) Refer to IRM 4.10.1, Overview of Examiner Responsibilities, for guidance about the basic responsibilities related to taxpayer rights, employee contact information, oral and written communication, and the authority for conducting examinations that examiners should understand and apply in the performance of their duties.

(2) Refer to IRM 4.10.2, Pre-Contact Responsibilities, for guidance about required responsibilities and analyses that must be completed before an examination is initiated, actions that are necessary for pre-contact planning of the examination, procedural instructions for contacting the taxpayer, and scheduling the initial appointment.

(3) Refer to IRM 4.10.8, Report Writing, for guidance about the preparation of examination reports, details regarding the preparation of corrected examination reports, and discussion about issues that require special reports and forms.

(4) Refer to IRM 4.24.2, Form 637 Excise Tax Registrations, for an overview of Form 637 guidance.

(5) Refer to IRM 4.24.8, Examination Guidance for Excise Claims for Refund or Abatement, for general guidelines and report writing procedures for examiners and campus personnel who process claims for refund or credit. Examiners located in field offices examine claims.

(6) Refer to IRM 4.24.10, Appeals Referral Procedures, for information explaining the referral process for excise cases to Appeals.

(7) Refer to IRM 4.24.17, Excise Summary Terminal Activity Reporting System (ExSTARS) Compliance Examination Procedures, for information pertaining to ExSTARS compliance examination and procedures.

(8) Refer to IRM 4.24.21, Case Closings, for information about closing excise tax cases.

(9) Refer to IRM 4.24.25, Issue Management System (IMS), Notebook and Workpapers, for guidance about the preparation of workpapers that support accurate examination reports.

(10) The Taxpayer Advocate Service (TAS) may be of assistance to taxpayers experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal procedures or who believe that an IRS system or procedure is not working as designed. Publication 1546, The Taxpayer Advocate Service is Your Voice at the IRS, provides contact and additional information. For guidance, refer to the Taxpayer Advocate - Contact Us.

(11) The Taxpayer Bill of Rights (TBOR) lists rights that already exist in the tax code, putting them in simple language, and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. For additional information, refer to IRC 7803(a)(3) or to the Taxpayer Bill of Rights.

(1) The examiner will:

1. Prepare the examination report.

2. Solicit the taxpayer’s signature when the examination resulted in a tax deficiency or reduction of a claim amount.

3. Solicit payment if a deficiency is due.

4. Provide one signed copy of the examination report to the taxpayer and, if appropriate, to the taxpayer’s representative.

5. Retain the signed original examination report for the administrative file.

(2) When other forms or pages are included with an examination report, they should follow the examination report in a consecutive page numbering system. If necessary, a Form 886-A, Explanation of Items, or an Excise Issue Summary Lead Sheet, is to be attached to the examination report when provided to the taxpayer.

(3) Regardless of the number of tax periods examined, one set of explanations, if needed, will be prepared. When reasons for an adjustment vary from tax period to tax period, they should be detailed in one explanation.

(4) When the size of the examination report warrants a Table of Contents, it should be prepared and inserted immediately behind the examination report. Each item in the Table of Contents should be cross-referenced to its page number in the examination report.

(5) The examiner’s contact information will be provided to the taxpayer for a second time when an examination report is issued. Refer to IRM 4.10.1.2.2.2, Employee Contact Information, for guidance.

(6) Except as otherwise provided in IRM 4.24.20.4.5(2), the examiner must provide to the taxpayer Publication 3498, The Examination Process, with the first examination report and with the appropriate 30-day letter. Refer to IRM 4.24.20.1.5(1) for the definition of 30-day letter.

(7) Refer to Exhibit 4.24.20-1 for guidance about completing Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, and Form 5385, Excise Tax Examination Changes.

(8) Refer to IRM 4.10.8.13, Corrected Reports, for guidance about procedures that must be followed for corrected examination reports.

(9) Form 9984 must thoroughly document actions related to examination report delivery. When an examination report is issued, the examiner must document the following:

• Date of delivery

• Method of delivery (i.e., personal delivery, regular mail, certified mail)

• Person(s) or entities to whom the examination report was delivered

• Items included in delivery (i.e., letter, examination report, publications, etc.)

(10) When (or shortly thereafter) an examination report is issued, the examiner must solicit payment if there is a deficiency. The Form 9984 must document that solicitation occurred.

(1) In an agreed case, the taxpayer agrees to the adjustments proposed by the examiner. An agreed examination report is prepared.

(2) Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, is prepared for agreed cases when the taxpayer indicated agreement. The taxpayer signs Form 5384 to establish agreement. Form 5384 must include a statement that examination findings are subject to approval by the Chief, Estate & Gift/Excise Tax Exam.

(3) If a written explanation is needed for clarification of the examiner’s findings or requested by the taxpayer, Form 886-A, Explanation of Items, or an Excise Issue Summary Lead Sheet, must be issued, including schedules or exhibits, if applicable.

(4) Letter 4121-X, Letter to Transmit Expected Agreed Examination Report, must be issued on an agreed case when the taxpayer indicated probable agreement with the proposed examination report. The last date to respond to Letter 4121-X is determined by the examiner based on the facts and circumstances of the case. When a taxpayer does not respond to Letter 4121-X within the requested time frame, the examiner must follow up with the taxpayer to determine if unagreed case procedures should be initiated.

(5) If the taxpayer does not agree, or if the examiner is uncertain if the taxpayer will agree, or if the taxpayer does not respond within a reasonable amount of time after issuance of Form 5384, the examiner with the manager’s concurrence is to initiate unagreed case closing procedures under IRM 4.24.20.3.5.

(6) Refer to IRM 4.24.21.5.2, Closing Procedures for Agreed Cases, and/or the Excise Tax Knowledge Base Homepage, Excise Examination shelf, Closing an Examination book, Type of Closure chapter, at Agreed and Partially Agreed/Excepted Agreed Examinations for guidance about closing forms, letters, and procedures for agreed cases where the taxpayer fully agreed to all proposed adjustments.

(1) In an excepted agreed case, the taxpayer agrees to the proposed adjustments, but the examination results are subject to review, additional processing, or some other condition communicated to the taxpayer.

(2) A partially agreed case is an excepted agreed case that contains at least one agreed issue and one unagreed issue.

(3) In a partially agreed case, the examiner must prepare two sets of examination reports to issue to the taxpayer by following the procedures in (4) and (5) below.

(4) The first set must contain a Form 5385, Excise Tax Examination Changes, and Form 2504-E, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, that reflects all unagreed issues.

(5) The second set must contain a Form 5385 and Form 2504-E that reflects all issues that the taxpayer has indicated agreement.

• The top of each examination report must be labeled as "Partial Agreement."

• Form 5385 must include the following statement in the "Other Information" section: "This partial examination report includes only adjustments with which you indicated agreement and is not the total proposed adjustment."

• Secure the taxpayer’s signature on Form 2504-E.

(6) Letter 950-E, 30-Day Letter - Straight Deficiency or Over-Assessment for Excise Tax Examination Cases, or Letter 5153-E, Examination Report Transmittal – Statute, is used to transmit the partially agreed examination report to the taxpayer. Refer to IRM 4.24.10.2(3), Prerequisites for an Appeals Referral, for guidance on the appropriate 30-day letter that should be issued.

(7) The 30-day letter package for partially agreed cases must include the following:

• Form 5385 and Form 2504-E reflecting all unagreed issues

• Form 5385 and Form 2504-E reflecting all agreed issues

• Form 886-A, Explanation of Items

• Form 13683, Statement of Disputed Issues

• Publication 3498, The Examination Process

(8) If a partial agreement is not secured, continue with unagreed procedures for all proposed adjustments. Refer to IRM 4.24.20.3.5.

(9) In a partially agreed case, the agreed examination report must be processed first by following partial assessment procedures in IRM 4.24.21.5.7, Partial Assessments and Quick Assessments. The unagreed issues may then be closed by following the closing procedures for unagreed cases in IRM 4.24.21.5.6, Closing Procedures for Unagreed Cases.

(10) Refer to IRM 4.24.21.5.3, Closing Procedures for Excepted Agreed and Partially Agreed Cases. IRM 4.10.8.5, Excepted Agreed Cases, IRM 4.10.8.6, Partially Agreed Cases, and/or the Closing Procedures for Agreed Excise Examinations, and/or the Excise Tax Knowledge Base Homepage, Excise Examination shelf, Closing an Examination book, Type of Closure chapter at Agreed and Partially Agreed Examinations for guidance about closing forms, letters, and procedures for partially agreed and excepted agreed cases.

(1) If an examination of the books and records for a filed return results in the examiner determining that no adjustment exists for the IRS No. examined, a no change examination report must be issued.

(2) Form 5384, which is issued to the taxpayer, serves as the no change examination report. A signed agreement is not required for a no change examination report.

(3) The IRS No. of a filed return may be substantiated by reviewing BMFOLR.

(4) To complete a no change examination, follow the guidance listed below:

1. Prepare a no change examination report using Form 5384. Enter the amounts under columns 1 through 6 and column 8 using the instructions in Exhibit 4.24.20-1.

2. Enter "0" under columns 6 and 8 for the appropriate period.

3. Make the statement under "Other Information" that the no change examination report is subject to approval by the Chief, Estate & Gift/Excise Tax Exam.

4. Prepare two copies of Letter 3401-E, Excise No Change Report Transmittal, which will be signed by the examiner. Provide one copy with Form 5384 to the taxpayer or collector and the taxpayer's or collector's representative, if Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, authorizes the representative to receive notices and communications. Letter 3401-E advises the taxpayer a no change examination report is issued, which is subject to managerial review and approval.

(5) Refer to IRM 4.24.21.5.4, Closing Procedures for No Change Cases, and IRM 4.24.21.5.5, Closing Procedures for No Liability Cases, and/or to the Excise Tax Knowledge Base Homepage, Excise Examination shelf, Closing an Examination book, Type of Closure chapter at No Change Reports for guidance about closing forms, letters, and procedures for no change excise examinations.

(1) If a taxpayer or collector files a Form 720 but does not make an entry next to an IRS No. on the face of the document, then that is considered a "non-filed" return. These returns must be worked as No Liability Closures whenever the examiner determines no adjustment exists for the IRS No. examined.

(2) If a substitute for return examination concludes that the taxpayer is not liable for an excise tax for a non-filed return for the period examined, no examination report is required. Refer to IRM 4.24.21.5.5, Closing Procedures for No Liability Cases.

(1) When it is determined the taxpayer will not or most likely will not agree to the adjustments proposed by the examiner, unagreed examination reports are prepared.

(2) The examiner must notify the manager when there is reason to believe a case will be unagreed because the manager’s involvement is mandatory. All managerial actions must be documented in the case file. Form 9984, or the Case Level Activities at the Team Web Site, may be used for this purpose.

(3) In an unagreed case, the examiner will issue to the taxpayer a 30-day letter package that includes the appropriate 30-day letter, Form 5385, Form 2504-E, Form 13683, and Publication 3498. The following additional instructions apply to the 30-day letter package:

• Form 886-A or the Excise Issue Summary Lead Sheet with a written explanation of adjustments, which includes schedules or exhibits if applicable, is attached to Form 5385.

• Form 2504-E is used in conjunction with Form 5385. This form is signed by the taxpayer upon agreement of an unagreed case after the 30-day letter package is issued.

• The 30-day letter is prepared by the examiner and includes the examiner’s information in the contact section. The response date should be at least 30 days from the date issued. The manager must sign the letter.

(4) Refer to IRM 4.24.10.2(3), Prerequisites for an Appeals Referral, for guidance on the appropriate 30-day letter that should be issued.

(5) The examiner will update the status code to "13" using Form 5348, AIMS/ERCS Update (Examination Update), which is submitted for managerial approval when the 30-day letter is issued to the taxpayer.

(6) Refer to IRM 4.10.8.12(2), Unagreed Case Procedures, for additional guidance on unagreed case procedures including procedures fast track settlement.

(7) Refer to IRM 4.24.10.2 for the required timeframes that must remain on the statute of limitations (SOL) period for the assessment of tax before an unagreed excise examination may be forwarded to Appeals.

(8) Refer to IRM 4.24.21.5.6(4), Closing Procedures for Unagreed Cases, and/or the Excise Tax Knowledge Base Homepage, Excise Examination shelf, Closing an Examination book, Type of Closure chapter at Unagreed Reports for guidance about closing forms, letters, and procedures for unagreed excise examinations.

(1) When the taxpayer requests an audit reconsideration, report writing procedures found in IRM 4.10.11, Claims for Refund and Requests for Abatement, apply.

(2) If the excise return has been reopened, then a regular examination report will be prepared. Refer to IRM 4.4.26, Reopening/ Reclosing/ Reinputting Records, for procedural guidance on how to reopen and reclose cases that were previously closed.

(1) The examiner is required to utilize the Notebook Job Aid (Notebook). Notebook generates excise examination reports, which must then be imported into the Issue Management System (IMS).

(2) Notebook contains a library of standardized forms and letters. Based on selections and information input in Notebook made by the examiner, Notebook deploys the designated forms and letters.

(3) Notebook prepares the examination report, which is mandatory. Information imported from the examination report into IMS automatically populates a significant number of documents based on data previously entered resulting in improved accuracy.

(4) The examiner is responsible for selecting those forms and letters that apply to the taxpayer’s situation (i.e., agreed, no change, etc.) and for importing these forms and letters into IMS. The examiner must complete those forms and letters with information that is not populated automatically, as well as review them for accuracy.

(5) For guidance on Notebook, refer to IRM 4.24.25.3, Guide for Using Notebook, and the Excise Notebook Job Aid User Guide at the Excise Tax Knowledge Base Homepage, Excise Examination shelf, Initiating an Examination book, Pre-Audit chapter at Notebook, which provides operating instructions for the standard library of excise tax forms.

(1) Separate examination reports are prepared based on the filing type of an excise return. For example, adjustments made to Form 720, Quarterly Federal Excise Tax Return, and Form 2290, Heavy Highway Vehicle Use Tax Return, cannot be included on the same examination report.

(2) A single examination report covering all tax periods examined will be prepared when the same type of excise return was examined concurrently.

(3) When multiple IRS Nos. or Credit Reference Numbers (CRNs) are examined on the same excise return, each IRS No. or CRN must be listed separately on the examination report.

(1) If a valid Form 2848 , Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, is on file for a taxpayer, then granted authorities must be reviewed prior to the issuance of an examination report to determine who should receive a copy.

(2) The examiner must research information under Integrated Data Retrieval System (IDRS) using CFINK to determine if the Centralized Authorization File (CAF) accepted the Form 2848 or Form 8821 and posted it on IDRS. If posted, a Transaction Code (TC) 960 will also be posted on the BMFOLT for each tax period to which the authorization applies. It is possible that the Form 2848 or Form 8821 may have been superseded by a new Form 2848 or Form 8821 submission or rescinded through other channels. Refer to IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF), for more information regarding examiner duties and obligations.

(3) Treas. Reg. 601.506 provides that the examiner must forward any correspondence (or copies), discussions, examination reports, and/or other materials to the taxpayer at the same time they are sent to the representative. Refer to IRM 4.11.55, Power of Attorney Rights and Responsibilities, for information about mailing correspondence when an authorized third party is involved.

(1) Letters are sent to the taxpayer and authorized representative to transmit examination reports, explain available appeal rights, and inform the taxpayer of the status of the excise examination. A copy of the letter must be maintained in the case file.

(2) Examiners must follow the guidance in IRM 4.10.1.3.2, Written Communication, when preparing letters.

(3) Examiner contact information must be included on all correspondence sent to taxpayers. Refer toIRM 4.10.1.2.2.2, Employee Contact Information, for guidance.

(4) Examiners prepare most letters that are issued from the group or by Centralized Case Processing (CCP); the date and signature depend on the type of letter. For example, examiners prepare, but do not sign or date, letters sent by the group manager and closing letters sent by CCP on behalf of the Chief, Estate & Gift/Excise Tax Exam.

(5) Generally, letters issued at the group level can be signed digitally provided the procedures in IRM 4.10.1.4.4, Digital Signatures, are followed.

(1) Publications sent to the taxpayer must always agree with the enclosures listed on the letter to avoid confusion.

(2) Section 3504 of Pub. L. 105-206 (RRA ’98) requires the IRS to include an explanation of the examination and collection processes. To comply with the law, information about Taxpayer Advocate assistance must be included with any first examination report and with any formal 30-day package. Publication 3498, The Examination Process, is used for this purpose. Publication 3498 consolidates information from Publication 1, Your Rights as a Taxpayer, Publication 5, Your Appeal Rights and How to Prepare a Protest if You Don’t Agree, and Publication 594, The IRS Collection Process. The procedures below must be followed:

1. Publication 3498 must be provided with the first examination report that is given to the taxpayer and with all 30-day letters.

2. Publication 3498 is not required to be provided again to the same taxpayer with reports for the same issue after the first examination report (i.e., corrected and supplemental examination reports) unless they are issued with a 30-day letter.

3. Publication 3498 is not included with no-change examination reports, except for no-change with adjustments examination reports when the adjustments impact other periods.

(1) An examination report is considered "executed" when the taxpayer signs the report. The executed examination report must indicate the date the IRS received it. For this reason, the examination report must be date-stamped upon receipt. Alternatively, the examiner may on the face of the examination report write the date it was received and authenticate the document with their initials.

(2) A taxpayer, upon receipt of an examination report, may wish to immediately pay the proposed deficiency. If payment is received, then Form 3244-A, Payment Posting Voucher-Examination, must be completed and processed with the payment. A copy of the completed Form 3244-A must be attached to the face of the excise return or the current BMFOLT or TXMODA with a Substitute for Return.

(3) Refer to IRM 4.24.20.6 for instructions on Form 3244-A processing.

(1) Reports that assess additional tax and taxpayer closing agreements are accepted by fax signature regardless of the dollar amount. This applies to Form 5384and Form 2504-E.

(2) Documents, forms, letters, and returns related to post-filing inquiries and interactions can be allowed via fax unless there is a specific prohibition. For guidance regarding the use of faxes, refer to IRM 4.10.1.3.7, Policy for Use of Fax in Taxpayer Submissions.

(1) Appeals procedures impose strict requirements pertaining to the time remaining on an SOL before an examination case may be referred. Prior to granting an extension of time for a taxpayer to respond, the examiner must determine, if there is adequate time for forwarding a case to Appeals. If the examiner is uncertain about the application of the Appeals requirements to the taxpayer’s request, the examiner must consult the manager. Refer to IRM 4.24.10, Appeals Referral Procedures, for detailed information about the Appeals procedures.

(2) The steps and procedures described below apply only to situations where the examiner confirms there is sufficient time on the SOL, which are consistent with requirements established under Appeals guidelines. For guidance on SOLs, refer to the following IRC sections:

• IRC 6501, Limitations on assessment and collection

• IRC 6511, Limitations on credit or refund

• IRC 6206, Special rules applicable to excessive claims under certain sections

Caution: SOLs for paid fuel claims cannot generally be extended. Refer to IRM 4.24.8.5, Statute of Limitations for IRC 6416(a), IRC 6420, IRC 6421, IRC 6426, and IRC 6427 Claims, for guidance.

(3) As a matter of practice, under reasonable circumstances, requests for extensions to respond may be granted.

(4) Requests for extensions to respond must be in writing and should state the reason why additional time is needed. Since many requests are made by telephone, the extension may be granted verbally and confirmed in writing upon receipt of the written request.

(5) The examiner must issue Letter 923-E, Letter Extending Time to File Protest - Excise, after the expiration of the 30-day period to allow the taxpayer 15 more calendar days to respond. Letter 923-E is used only if the 30-day period expired, and the taxpayer stated an intention to protest the examination results.

(6) Extensions beyond the 15-day extension are granted by the manager or a designated management official. The taxpayer must be notified in writing of the approved extension and the specific extended response date. Letter 686, Extension of Time for Certain Actions, is used for this purpose. Extensions are normally granted for no more than 30 days unless supported by a specific reason.

(7) If the taxpayer lives outside of the United States, the 30-day letter can be modified to allow for a reasonable period to respond.

(8) If an examination report is changed after the 30-day letter response date is issued, the examiner will follow corrected report procedures found in IRM 4.10.8.13, Corrected Reports, and solicit the taxpayer’s agreement. If the taxpayer does not agree to the corrected report, the examiner will take the following steps, as appropriate:

1. If the corrected report changes the proposed adjustment in the taxpayer’s favor and no new issues are raised, the examination can be closed after the initial 30 days expired. A new 30-day letter is not needed.

2. If the corrected report raises new issue(s) or the proposed adjustment goes against the taxpayer (i.e., more tax due or less refund), a new 30-day letter must be issued, if sufficient time remains on the SOL.