4.50.2. Other Workload Selection and Research – Non-Campaign Compliance Programs

(1) LB&I work processes are evolving to meet the needs of a rapidly changing taxpayer environment. This section describes the current state of workload identification and selection from non-campaign-generated sources.

(1) This IRM provides the authority to conduct research. The research extends to all LB&I returns, including related forms and schedules.

(1) Compliance Planning and Analytics (CP&A), is the responsible function in LB&I for all campaign (see IRM 4.50.1) and non-campaign workload selection methods in LB&I. CP&A is responsible for establishing return coverage across LB&I practice areas. This business unit is in the Assistant Deputy Commissioner Compliance Integration (ADCCI) organization.

(2) CP&A also manages research requests (as described in IRM 4.50.2.1.5) from the practice areas in LB&I.

(3) The non-campaign workload selection programs are described in IRM 4.50.2.2.

(1) Program Reports: Research studies include:

• Conducting environmental scans on filing information

• Examining compliance of specific taxpayer segments

• Developing mathematical models and expert systems to support audit selection

(2) Business Performance Reports contain metrics used to gauge the effectiveness of current workload selection methods and processes.

(3) Program Effectiveness: The business objective for conducting research studies is to make informed decisions, drive compliance efforts and improve voluntary compliance by identifying and delivering the highest risk returns to audit or by sending soft notices to ensure the methodology applied is aligned to the IRS mission. The business objective for producing performance reports is to provide LB&I management with statistics and trends to evaluate the various workload selection activities.

(1) Separation of duties: See IRM 4.50.1.2.2

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

(3) Risk Identification Control Board (RICB): The mission of RICB is to ensure the enforcement selection process is an equitable and fair process to all taxpayers under Policy Statement 1-236. RICB Part I and II approval is required before filters, models, and/or other workload selection criteria are used for workload selection. RICB approval is required for Part I to develop and test the selection model. RICB and the respective Practice Area Director’s approval are required on Part II to implement the model into a compliance program. See IRM 4.50.1, LB&I Compliance Integration, Campaign Development Process, for more information on RICB.

(4) RICB will only approve workload selection criteria based on tax laws and treasury regulations and not on organization names or their policy positions. The goal of RICB is to ensure that the criteria used for workload selection promotes public confidence that tax laws are being applied impartially.

(5) Research requests from the practice areas must be approved by the CP&A Director. CP&A is responsible for establishing workload selection across LB&I practice areas and in supporting research studies based on voluntary compliance objectives. Research studies include conducting environmental scans on filing information, examining compliance of a specific segment of the population and developing mathematical models and expert systems to support audit selection. The business objective for conducting research studies is to drive compliance efforts and to improve voluntary compliance by identifying and delivering noncompliant returns to audit to ensure the methodology applied is aligned to the IRS mission. This IRM also provides the authority to conduct research. The research extends to all databases that include LB&I returns, related forms and schedules. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) The table below provides common terms and definitions. See Exhibit 4.50.2-3, Acronyms, for a table of acronyms and their definitions.Defined Terms

(1) See IRM 4.50.1, LB&I Compliance Integration, Campaign Development Process, for information about campaign-sourced workload selection. Resources for campaign work are the Campaign Quick Start Guide, the Campaign Process chart, and the LB&I Campaign Guide.

(2) The ADCCI website provides more information about their programs and services.

(1) The Large Corporate Compliance Program (LCC) is the successor program to the Coordinated Industry Case (CIC) program. LCC employs a risk based selection process to address selected compliance risks in the large corporate taxpayer population using a finite amount of resources, through the application of one or more treatment streams to achieve the intended compliance outcomes.

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(3) The data analytics method must be approved by the Risk Identification Control Board (RICB). See IRM 4.50.2.1.5, Program Controls.

(4) See IRM 4.50.3, Large Corporate Compliance Program, for more information about LCC.

(1) CP&A has primary responsibility for overall coordination of the compliance plan and workload identification.

(2) CP&A uses mathematical models for workload selection. Similar to the Campaign and LCC Programs, GHW models must be approved by the RICB. See IRM 4.50.2.1.5, Program Controls.

(3) The Pass-Through Entities Practice Area has the primary responsibility over the GHW/HII/PTE Compliance Program, which includes the processes and oversight required to identify, prioritize and allocate resources towards pass-through returns.

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(5) The LB&I pass-through population includes partnerships and subchapter S corporations with assets greater than or equal to $10 million.

(6) The GHW/HII/PTE program was formed to take a holistic approach in addressing the high-income, high-wealth population, including consideration of items associated with pass-through returns. This program leverages data, applied analytics, algorithms and institutional experience to assess the compliance risk that these enterprises pose with their increasingly sophisticated tax strategies.

(7) The GHW/HII/PTE program covers the entire business enterprise of entities controlled by high wealth individuals. These enterprises may include interests in partnerships, trusts, subchapter S corporations, private foundations and others.

(8) In addition, under the GHW/HII/PTE program, LB&I will develop, test, enhance, and monitor mathematical and machine learning models to identify partnership and S corporation returns with examination potential.

(9) GHW consists of two functions: Workload Services (WLS) and field examination groups. The GHW returns identified by the models are made available to the WLS for classification and risk assessment.

(10) Partnership or S corporation returns identified under these models will be classified and risk-assessed in Content Management and Collaboration (CMC). See IRM 4.50.2.3.1. In certain circumstances, Individual returns will also be classified and risk assessed in CMC.

(11) An "enterprise" is defined as a group of entities that are managed for the economic and tax benefit of a controlling interest. Enterprise Risk Assessment uses the evaluation of multi-entity and multi-year related return groupings to determine what constitutes a single economic "enterprise."

(12) Models to be developed include:

• Single return selection systems

• Enterprise selection systems

• Single year and/or multi-year models

(13) Models will be developed using internal and external data sources. The validation of models and data fields will be analyzed and gathered from examination feedback and operational databases to monitor the model’s effectiveness in identifying the next best case.

(14) See IRM 4.52.1, Global High Wealth Program Processes and Procedures, for more information.

(1) The Foreign Payments Practice (FPP) includes the processes and oversight required to identify, prioritize and allocate resources towards foreign withholding tax matters and foreign financial institution compliance under Chapters 3 and 4 of the Internal Revenue Code. See IRM 4.63.1.5, Foreign Payment Practice (FPP) Field Operations Overview.

(2) The FPP provides oversight of non-resident alien withholding tax matters with an emphasis on Service-wide coordination of technical issues, compliance, processing and other information relating to non-resident aliens. The FPP is also responsible for monitoring and enforcing compliance of foreign financial institutions participating in the Foreign Account Tax Compliance Act Program (FATCA).

(3) The FPP focuses resources through coordinated development of information and educational material, improved forms and publications, processing capabilities, examination strategies and other treatment streams to achieve intended compliance outcomes.

(4) FPP identifies compliance risks within the non-resident alien withholding population.

(1) The Mandatory Compliance Program includes the processes and oversight required to identify, prioritize and allocate resources towards defined forms of mandatory work that demand application of resources and can arise unexpectedly such as the enactment of new legislation, reactions to natural disasters, directives from the Department of Treasury or Internal Revenue Service, or assistance to other business operating divisions (BODs).

(2) Mandatory work includes, but is not limited to, Joint Committee.

(1) LB&I uses workload selection criteria (models, filters, Discriminant Analysis System (DAS), etc.) to identify and allocate resources towards the discretionary program. Similar to all the other programs, workload selection criteria used to identify discretionary work must be approved by the RICB.

(2) The Discretionary Program also includes Other Source Workload (see IRM 4.50.2.4).

(3) LB&I Planning and Special Programs (PSP) in LB&I’s practice areas have primary responsibility for ordering LB&I returns using the LB&I Workload Identification System (LWIS).

(1) The main functions, tools, and systems for classification are (not all-inclusive):

• Content Management and Collaboration (CMC)

• E-Classifier

(2) CMC is utilized for classifying and risking returns. CMC provides enhanced inventory management to CMC managers, leads and team members. CMC allows for cases to be assigned to a group, assigned to a specific team member and submitted for approval to the manager by the team member with system generated e-mail alerting the appropriate person when an action is needed. CMC allows for cases to be automatically updated on AIMS when the manager approves a case to be sent to the LWIS system for assignment to the field. Feedback is provided in the risk assessment form in CMC.

(3) The E-Classifier is a secured virtual and physical environment used for classifying case work from large volumes of international data that must be analyzed to identify compliance issues, to support the case processing mission. The E-Classifier tool enables classifiers access to a wide range of returns and works seamlessly within the classification process. The E-Classifier tool provides electronic feedback measurements from classifiers that identify non-compliant activity.

(1) Claims for refund - LB&I taxpayers generally file claims for refund on Form 1120-X, Amended U.S. Corporation Income Tax Return, or Form 1139, Corporation Application for Tentative Refund. Also see IRM 25.6.1.10, Claims, Abatements and Refunds. Claims related to returns already controlled by the field are not classified, but rather forwarded to the field for association with controlled return(s). All other claims, (i.e., without open AIMS) that meet Category A criteria (IRM Exhibit 21.5.3-2) are classified prior to processing. The classifier may review and request other relevant returns.

• Claims in excess of $5 million for corporations are to be reviewed by Joint Committee Review per IRM 4.36.1.1.2, Authority, and are subject to mandatory review per IRM 4.36.3.1. These claims are automatically selected for examination.

• All claims selected for examination are sent to SB/SE Classification Control Unit (CCU). CCU updates the claim to Exam Organization Code 1086; status 08 and the appropriate activity and/or source code (Refer to IRM 4.4, AIMS Procedures and Processing Instructions, Exhibit 4.4.1-1). CCU will prepare and send selected claims to the field using the LB&I contact listing.

• All claims accepted as filed are sent to W&I Accounts Management for processing.

(2) Whistleblower Claims - LB&I receives whistleblower claims from the IRS Whistleblower Office and works these claims in accordance with established IRS policy. See IRM 25.2.1 , General Operating Division Guidance for Working Whistleblower Claims, for specific procedures on how to address whistleblower claims. CP&A reviews and determines if whistleblower claims merit an examination. If the whistleblower claim merits an examination, CP&A will assign the claim to the field.

(1) The Office of Tax Shelter Analysis (OTSA) receives and evaluates all Form 8886, Reportable Transaction Disclosure Statements and Form 8918, Material Advisor Disclosure Statements.

(2) OTSA analysts review each disclosure for completeness and determine which disclosures have large, unusual, questionable (LUQ) items, or Listed Transactions requiring further action or review.

(3) Disclosures requiring further action are distributed to the established point of contact (POC) within the appropriate business operating division (BOD).

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) If the Form 8918 disclosure requires further information or potential promoter examination:

1. OTSA will follow the procedures outlined in IRM 4.32.2.4.3.1.1 to refer an LB&I Material Advisor to the LB&I Technical Tax Shelter Promoter Committee (TTSPC).

2. For an SB/SE or other BOD Material Advisor, OTSA will refer the disclosure to the SB/SE Lead Development Center or TE/GE Abusive Transactions function as appropriate.

(6) OTSA will also use information received from the Form 8886, Form 8918, and other tax forms to determine taxpayer compliance with disclosure laws and identification of tax returns with potential tax shelter issues.

(1) SB/SE Insolvency Unit will notify/forward any bankruptcy notifications or requests that are related to LB&I taxpayers to the LB&I Bankruptcy coordinator. These can include, but are not limited to, proof of claims and prompt determinations. Refer to IRM 4.27, Bankruptcy, for detailed information on examination bankruptcy procedures.

(2) The LB&I Bankruptcy coordinator requests and controls all returns needed for determinations and presents them to the LB&I classifier for classification.

(3) All selected returns will be coordinated through the practice area PSPs for assignment to the field.

(4) All taxpayers are sent a notification of selection or acceptance of the return by the LB&I Bankruptcy coordinator for all LB&I prompt determination requests.

(1) LB&I information referrals and reports originate from several different sources including Form 5346, Examination Information Report, Form 3949-A, Information Referral, federal and state agencies referrals, foreign government referrals and public citizen referrals.

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(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(7) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(8) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) Program Action Cases (PACs) are preparer investigations where clients of preparers of interest are examined to determine whether preparer penalties and/or injunctive actions against the preparers are warranted. If a preparer’s misconduct appears to be pervasive and not isolated to a single taxpayer, consideration should be given to opening a PAC.

(2) Information on the PAC approval process and return identification and selection is found in IRM 4.1.10, Return Preparer Program Coordinator.

(3) Return preparer penalties are described in IRM 20.1.6 , Penalty Handbook, Preparer, Promoter, Material Advisor Penalties.

(4) Any inquiry regarding a return preparer penalty or PAC should be referred to the LB&I Return Preparer Coordinator (RPC), who is located in the Penalty Practice Network.

(1) Form 3115, Application for Change in Accounting Method (CAM), is filed with National Office and a copy attached to the taxpayer’s tax return in the year of change. National Office reviews the Form 3115 and issues determination letters to taxpayers authorizing or denying a change in accounting method.

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(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) The LB&I and SB/SE operating divisions established a Memorandum of Understanding that sets the procedures and responsibilities for pass-through entities and their related investors when the returns cross operating divisions.

(1) Emerging issues can come in many forms. An emerging issue may have one or more of the following characteristics:

1. It arises from a new or novel set of facts or through questions of the proper application of tax law.

2. It has not been addressed by published legal guidance or administrative pronouncements of the Service.

3. It is susceptible to inconsistent treatment by both the Service and LB&I taxpayers.

4. It may or may not involve a potential abusive tax avoidance transaction.

5. It is not necessarily limited to a specific industry and can impact across Service Divisions.

(2) Tax issues can be identified by examiners, managers, specialists, subject matter experts, and other IRS personnel. Sources for identifying issues include, but are not limited to, current examinations, news articles, the Tax Shelter Hotline, taxpayer inquiries and industry contacts. Issues identified should be brought to the attention of the applicable Issue Practice Network as early as possible.

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(4) ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡