25.25.10. Frivolous Return Program

(1) This activity supports IRS strategy to protect revenue and stop fraud and abuse through frivolous return filing. This program provides for assessment of penalties to encourage compliance.

(2) IRC 6702 was put into law to address the filing of purported returns which do not allow the IRS to judge the correctness of the self-assessment made by the taxpayer. The purported returns are filed based on a frivolous position and/or reflect a desire to delay or impede the administration of the tax law.

(3) Notice 2010-33 provides a list of frivolous arguments the penalty was put into place to address. These positions are patently frivolous, and the Courts have ruled numerous times in favor of the IRS on these issues.

(4) The penalty applies when the information on the face of the return shows a patently frivolous position.

(1) Refer to the following:

• IRM 1.2.1.5.10, Policy Statement 4-21, Selection of returns for examination

• IRM 1.1.13, Organization and Staffing, Wage and Investment Division

• Various Internal Revenue Code (IRC) sections including but not limited to:

• IRC 6702(a), Frivolous Tax Returns

• IRC 6702(b), Specified Frivolous Submissions

• IRC 6702(c), Listing of Frivolous Positions

• IRC 6702(d), Frivolous Tax Submissions Penalty Reduction

• IRC 6404, Abatements of tax

• IRC 6402(a), Authority to make credits or refunds

• IRC 6401, Amounts treated as overpayments

• IRC 6213, Restrictions on assessments and math error authority

• IRM 5.1.9.3.15, Hearing Requests with Frivolous, Delaying or Impeding Issues

(1) The Wage and Investment (WI) Return Integrity Verification Operations (RIVO) is responsible for the Frivolous Return Program (FRP) due to the October 2014 Small Business/Self Employed (SB/SE) realignment.

(2) A FRP Coordinator assigned at each campus will assist with a review of potentially frivolous documents referred by employees within their campus and will consult with the FRP on new developments or concerns related to frivolous filings. Program receipts will be reviewed for frivolous criteria and either selected or cleared as follows:

1. If not frivolous, stamp the upper left corner, "FRP cleared" and include the last five digits of IDRS number and return to processing.

2. If frivolous, initiate audit code R procedures for IMF returns, initiate X code procedures for BMF returns and route for processing.

(3) The Commissioner is charged with ensuring that IRS employees are familiar with and act in accordance with the taxpayer rights as accorded by the Code. See IRC 7803(a)(3), which refers to taxpayer rights afforded by other provisions of the IRC. Under these Code provisions, in general, taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS. They are to be spoken to in a way that is easily understood and any correspondence from the IRS must be clear and understandable. They have the right to speak with a supervisor whenever quality service is not received. For additional information, refer to IRM 1.2.1.2.36, Policy Statement 1-236, Fairness and Integrity in Enforcement Selection; and the Taxpayer Bill of Rights at www.irs.gov/taxpayer-bill-of-rights; and Pub 1, Your Rights as a Taxpayer. Review Pub 5170, Taxpayer Bill of Rights at https://irssource.web.irs.gov/Lists/General%20News/DispItemForm.aspx?ID=126

(1) Outreach training is available in Integrated Talent Management (ITM) for functions that need information and/or guidance to identify and refer frivolous conditions.

(2) RIVO provides FRP outreach education for applicable external stakeholders and coordinates systemic identification of frivolous filings and guidance to make referrals to FRP, as applicable, with affected stakeholders.

(3) Each frontline manager ensures timely completion of the work performed in that unit, addresses issues that come up and notifies the Department Manager of ongoing problems.

(4) Local problems are resolved at the local level. Problems of a more serious nature that cannot be resolved at the first line are reported to the Planning and Analysis (P&A) Staff. If the work problem or stoppage is determined to be something that will affect policy or cross functional processing, P&A will report the issue to the Headquarters analyst for resolution assistance.

(1) The Frivolous Return Program (FRP) is responsible for:

1. Reviewing, asserting, and monitoring all frivolous penalties, and penalty reduction procedures

2. Controlling inventory related to frivolous returns, frivolous submissions, and correspondence

3. Referring preparer penalty related to frivolous filings

(1) The acronyms below are utilized in the Frivolous Return Program:

(1) The related resources listed below are to be utilized for account research and issue resolution. These related resources are accessed through the IRS Intranet-Servicewide Electronic Research Program (SERP) site.

• IRM 25.25, Revenue Protection

• IRM 25.23, Identity Protection and Victim Assistance

• IRM 25.24, Return Preparer Misconduct Program

• IRM 21, Customer Account Services

• IRM 20.1, Penalty Handbook

• IRM 20.2, Interest

• IRM 3, Submission Processing

• IRM 4, Examining Process

• IRM 5, Collecting Process

• Interactive Tax Law Assistant (ITLA)

• Revenue Rulings

• Internal Revenue Code (IRC)

(2) IDRS restricted access accounts are accounts where a user must request special permissions to access the account through IDRS. Follow IRM 21.2.1.3.2, Authorized IDRS Access.

(1) Frivolous returns or documents purporting to be returns identified by Submission Processing employees will be forwarded to a central location for screening. See IRM 3.11, Returns and Document Analysis, and IRM 3.12, Error Resolution, for guidance on identifying and forwarding.

(2) All returns or documents purporting to be returns received by FRP are screened to determine if the statute for limitation period must be set. Identified returns must be expedited to ensure precautions are taken to prevent barred assessments. See IRM 25.6.1.6.14, Criteria for Establishing a Statute of Limitations Period. Frivolous returns that require processing must be edited following IRM 25.25.10.8.7, Editing Return Instructions.

(3) Frivolous returns can be valid or invalid. A valid return meets the requirements to start the limitations period for assessment under IRC 6501. Frivolous returns are normally considered "valid or processable", under IRC 6611(g)(2) (although there are some exceptions) if they meet the following four-point criteria from Beard v Commissioner, 82 T.C. 766, 777(1984), aff’d per curiam, 793 F.2d 139 (6th Cir. 1986):

(4) A frivolous processable return meets the four-point criteria below:

• the return must contain sufficient data to calculate a tax liability

• it must purport to be a return

• it must include an honest and reasonable attempt to satisfy the requirements of the tax law

• it must be signed under penalties of perjury

(5) Do not process a frivolous return that does not meet the above four criteria. Processable returns must comply with the Beard Standard. Invalid unprocessable returns lack sufficient data and cannot be input to the computer. See IRM 25.6.1.6.16, Processable – Unprocessable Returns, for additional information.

(6) Valid returns that require processing are a priority and must be routed to Submission Processing as soon as possible to prevent barred assessments. Ensure all editing is complete and precautions are taken to prevent erroneous refunds.

(7) The Ogden campus will follow IRM 3.10.72, Receiving, Extracting, and Sorting, and any local procedures for using designated Private Delivery Service to transship.

(8) If a Campus FRP Coordinator refers a submission to FRP that is not frivolous, designated employees must provide feedback to the respective FRP Coordinator to explain the reasoning of the determination.

(9) Valid, frivolous returns on international forms or that have international impact will be routed to the appropriate Campus for processing international forms.

(10) Any non-frivolous IMF returns that require processing (such as misroutes) will be directed to Kansas City Submission Processing Campus as outlined in national transshipment procedures.

(11) FRP Cleared returns will be tracked using Category Code "FRP3" for inventory reporting purposes.

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(1) Process priority receipts using the table below:

(1) Correspondence indicating unwillingness to file or pay taxes based on frivolous arguments will be worked under this category. Frivolous correspondence is not subject to the frivolous return penalty except as noted below.

(2) Research IDRS for case controls, freezes and histories that can affect processing the frivolous correspondence. (e.g., TC 971 Action Code (AC) 281 on CC ENMOD indicates a Fraud case is in development or a disaster freeze (O) is present that can require suspended account activity. Coordinate as appropriate.)

(3) All program receipts in manual screening will be controlled within five days of receipts including frivolous correspondence. If you identify an existing control base for the receipt in question, update category and/or action codes to indicate the current status or treatment if warranted.

(4) Process frivolous correspondence that will not be destroyed using the table below. All frivolous correspondence must be input to FRP Master by automation spreadsheet or manual input. Update correspondence using the appropriate closing action code and input time charged to 91853. Ensure to input all promoter information in the promoter section.

(5) Use the following category code criteria for frivolous correspondence screening unless otherwise noted:

• FRP3 is to be used for general screening of receipts prior to input to database.

• FRP1 is to be used to identify inventory receipts when they are added to FRP database for treatment.

(6) Unless additional official guidance is provided, all other (not listed in the table above) frivolous correspondence will be destroyed and will require input to FRP Master or spreadsheet, under correspondence using action code 91853. Ensure to input all promoter information in the promoter section.

(7) When the IRS receives frivolous correspondence, Letter 3175C, "Frivolous Correspondence Response" is sent to inform taxpayers that their positions are frivolous and that further correspondence regarding frivolous issues will not receive responses. This letter constitutes outreach education for frivolous filers.

(1) All program correspondence in manual screening must be controlled within five days of receipt. Research non frivolous correspondence on IDRS for additional case considerations including account indicators, freezes, and histories that may affect treatment determinations (e.g., an open control in another area). If you identify an existing control base for the receipt in question, update category and/or action codes to indicate the current status or treatment if warranted.

(2) Open IDRS control to IDRS number "1486x00000" (where x represents the team to be assigned the inventory), using standardized category code and activity code following local procedures. Include IRS received date of the correspondence. Use the following category code criteria for general correspondence screening unless otherwise noted:

• FRP3 is to be used for general screening of receipts prior to input to database.

• FRP1 is to be used to identify inventory receipts when they are added to FRP database for treatment.

(3) Route any non-frivolous forms that have been detached from frivolous correspondence as appropriate (i.e., Form 2848, FOIA, Form 911, etc.)

(4) Process Non-Frivolous correspondence using the table below:

(1) Clerks prepare bundles of correspondence from the cart using the following criteria:

1. By PSL or Destroy

2. Notate Cart and Bundles with FRP CRD. Work from the oldest date

3. In no more than bundles of 50 pieces of correspondence

(2) Update the Correspondence Automation Spreadsheet on SharePoint and notate tick sheet with batched count for Misroutes, Not Friv, Classified Waste, PSL, and Destroy. Email/Print the Correspondence Tick Sheet and forward to Manager.

(3) When updating the spreadsheet, clerks should include a unique identifier of clerks Initials and Batch Count.

(4) Store completed work bundles on the designated automation area. Ensure Batch Sheets match Automation Run dates.

(1) Undeliverable FRP letters or notices for existing FRP Master records are worked per the table below.

(1) If no issues were identified in prior subsection, process PS 70 inventory as follows:

• Log into the Workload Management System (WMS)

• Analyze the returns controlled as INCOM/PS70 on AAL listing

(2) If frivolous return criteria are detected, take the following actions:

1. Determine Argument

2. Update Case Notes as "FRP Selected, Argument NN determined in scheming"

3. Update IDRS case control to “PS70INPUT” and update category code to "FRP1"

4. Input to FRP Master Database as a return issue using Action of “Assign”

5. Refer to team clerk to reassign FRP Issue and IDRS Case Control to clerical team for issuance of Letter 3176

(3) If frivolous criteria is not identified, disposition the return as follows:

1. Input in the EFDS Return note: "FRP Cleared, return is not frivolous".

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3. Refile all remaining returns considered verified good.

4. Close IDRS case control as “FRPCleared” and release -E freeze with a TC 811 Jurisdiction Code "4". Review for any other case clean up actions necessary.

(1) Designated employees will timely review all program receipts to determine appropriate handling including referrals to the SB/SE Lead Development Center (LDC). The nature of frivolous filings requires careful consideration of the inventory as a whole; therefore, screening will be conducted on documents prior to their assignment out to program employees. Review the entire population of new receipts to identify:

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  Note: Ensure authentication requirements are met per IRM 11.3.2.3.2, Requirements for Verbal or Electronic Requests and IRM 21.1.3.2.3, Required Taxpayer Authentication

  .

(2) Filings will also be screened for International implications and subsequent coordination with International Exam. Processable frivolous International filings require processing at the appropriate Campus handling International returns. International filings include:

• Form 2555

• Form 1040NR

• Tax Treaties

• Foreign Income

• Foreign address including APO/FPO such as for military personnel

(3) When new frivolous arguments are identified:

• Coordination will occur between FRP Technical Coordinator, and RIVPM P&A to obtain a Counsel Opinion that outlines the non-compliant behavior, IRC 6702 criteria and compliance issues that need to be addressed to correct the filing.

• RIVPM P&A and Management will determine the treatment of new filing patterns and, a new argument code will be assigned.

• Issue FRP Alert describing new argument to educate FRP employees.

• Apprise FRP Coordinators, CI, TEC, SB/SE LDC of new information.

• Issue SERP Alert/Hot Topic if impact on IRS is significant.

• Update training materials and Internal Revenue Manuals.

(4) When new preparers or promoters are identified, enter the name and promotion on FRP Master Project Status Listing (PSL).

(5) Coordinate civil investigations with SBSE Lead Develop Center (LDC). See IRM 4.32, Abusive Transactions, for additional information.

(6) See IRM 20.1.6, Preparer, Promoter, Material Advisor Penalties and IRM 20.1.10.12, IRC 6702 -Frivolous Tax Submissions, for additional information.

(7) Refer cases to technician for Handling of Returns and Claims.

(1) Screen returns/claims to determine if FRP criteria has been met. Ensure FRP Technical Coordinator determinations are input to FRP Master on notated frivolous return/claims. Refer to IRM 25.25.10.2, Identification of Frivolous Submissions for criteria.

(2) When submissions are received that contain potentially new frivolous position(s): coordinate with FRP Technical Coordinator and HQ Analyst to obtain Chief Counsel opinion that determines whether they are frivolous.

(3) Research IDRS for case controls, freezes and histories that may affect processing the frivolous return/claim.

(4) On IMF inventory, input a TC 810 using jurisdiction code "4" on any year with an open RSED, unless a -E freeze specific to FRP is posted.

(5) Review the module and address any held credits prior to closing the case. If applicable, input a TC 811 with jurisdiction code "4" with ‘Freeze-Release-Amt’ for ".00" to remove the -E freeze. and input a TC 571 to release -R freeze

(6) Review tax module for Erroneous Refunds, Offsets, and transfers. Update FRP Master Error Filing Tab and coordinate any recovery actions needed.

(7) Review sorted returns/claims based on the categories below:

1. Frivolous non-processable - a non-processable Frivolous return is a return that does not have enough information to be processable (i.e., altered jurats, altered forms or unsigned returns.)

2. Frivolous processable - a processable Frivolous return is a return that contains enough information to be processed.

   Note: See IRM 25.25.10.2.1, Submission Processing Identification and Processing of Frivolous Filings,for further guidance.

3. Frivolous Amended Return or Claim - A Frivolous Claim is a request for refund or a request for an adjustment of tax paid or credit not previously reported or allowed based upon a frivolous position. This treatment includes protective claims and requests for abatement of interest/penalty. See IRM 21.5.3.2, What Are Claims for Credit, Refund, and Abatement?, for additional information.

   Note: Refer to IRM 25.25.10.8.8 for guidance on processing a Form 1040X, Informal Claim, or Invalid Form that would constitute a taxpayer’s initial filing.

4. Non-Frivolous.

(8) Route Non-Frivolous with no FRP actions per the Mail Routing Guide.

(9) Review the Argument selected by the FRP Technical Coordinator; if research finds the argument to be incorrect follow procedures in IRM 25.25.10.8.3.1, Technical Assistance Request (TAR).

(10) Research account for the specific tax period to ensure all receipts are considered in the determination.

(11) All returns/claims not routed must be controlled within five days of receipt. Review the existing control base for the receipt in question, and if applicable update category code to FRP1 and make necessary changes to action codes to indicate the current status or treatment. Treat according to the table below:

(12) Ensure any returns input to the FRP Master have the most current known address and that the CC ENMOD address matches.

• If the return address does not match, ensure both systems are updated to the most current address.

  Note: If an address change is required on FRP Master, move the former address to the “Alt Address” tab and input the correct address on the record.

Exception: For BMF returns/claims DO NOT update addresses on CC ENMOD, add the new address to FRP Master as "ALT address."

Note: If altered jurat is an issue, make sure that taxpayer was afforded the opportunity to properly sign the return (using Letter 12C).

Note: In June 2017, the 3176C letter was modified to include specific criteria for three letter iterations including altered jurat. Each iteration has specific language to notify the filer of actions required to comply with law and prevent 6702 penalty assessments. Updates include a description of behavior that resulted in frivolous return determination.

(1) Frivolous filings received from IRS employees may be identified through FRP employee research, outside referrals such as CI, Customer Service, TAS, Field Agent reports, computer database matching, etc.

(2) Under the guidelines for working RRA 98 Section 1203 allegations, frivolous filings received from IRS employees will be reported promptly and directly to TIGTA, with clear annotation that the audit needs to be referred to their local PSP per IRM 4.1.1.6.7, Employee Audits. When referring to TIGTA, annotate that the IRC 6702 penalty will need to be addressed at the conclusion of the field audit, if the employee maintains their frivolous position. Take no actions until the field office provides the request for penalty assessment.

(3) Any frivolous return meeting these criteria must be processed, regardless of its validity before referral. Refer to IRM 25.25.10.8.7, Editing Return Instructions for processing. Once processing is completed, original returns will be forwarded to TIGTA. Forward a copy of the return to Field Function for Audit.

(1) C-Filings (generally considered confused filings) are broken down into the four categories listed below.

1. Those that make claims for various types of deductions, credits or overpayments/refunds that have no relation to reality.

2. Those that have entity information, but lack sufficient information to determine the tax liability.

3. Those that present nonsensical or rambling statements that do not reflect a good faith attempt to comply with the federal tax laws.

4. Those that have no identifying information for the taxpayer that would allow the IRS to correspond. Treat as having no legal value and destroy.

(2) C-filings that meet the criteria listed in a, b, or c will follow normal frivolous return procedures on at least one frivolous return filing per tax period. Any subsequent C-filing will be scanned into FRP Master, but the IRC 6702 Penalty will not be proposed at this time.

• C-Filed Returns that are not subject to the IRC 6702(a) Penalty based upon a Counsel opinion or a subsequent filing within the same tax period will close with "subsequent C-File"

• Initial C-Filed Return subject to IRC 6702(a) will close with "C-File"

Note: Verify at least one penalty assessment is applied for the return tax period prior to selecting subsequent C-file as your action code if applicable.

(3) Ensure all FRP activities are updated/closed (i.e., FRP Master, AIMS, IDRS etc.)

(1) The following subsection contains procedures for screening Identity Theft (IDT) on IMF Returns.

(2) IDT is a crime that occurs when someone uses another individual's personal information such as name, Social Security Number (SSN), or other identifying information, to commit fraud or deception.

(3) Cases that have frivolous account indicators are referred to the FRP for any tax period that may have had the Frivolous Return Penalty Assessed. These civil penalty assessments can only be abated by the Frivolous Return Program and prior to abatement, case specific account research must be completed to support the determination that the IDT claim is valid.

(4) Referrals are generally received as one of the following:

1. Form 4442

2. Operations Assistance Requests (OAR)

3. Form 14039

4. Form 14103

5. Form 14027-B

6. Correspondence that states the filer did not file the return and is a victim of IDT

(5) IDVA referrals to FRP that need to be addressed by multiple functions will be coordinated with RIVPM P&A to streamline case resolution. These referrals will be forwarded to FRP using the following process:

• An IDRS Control will be assigned to 0586911111 with Category Code FRPI

• The referral will be routed to ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

As outlined in IRM 25.23.2.2.2, Priority Handling of Identity Theft Cases, cases involving IDT will receive priority treatment. If a referral cannot be resolved within 30 days or less, a summary that addresses the case specifics and the estimated completion date will need to be forwarded to RIVPM P&A on a weekly basis. Once all actions have been completed on a referral, close the CC TXMOD control with "IDTRSLVED".

(6) Review IDRS to consider all account information that impacts case resolution. Check the tax module for prior indication that the taxpayer is a victim of ID Theft. If the taxpayer states they are a victim of Id theft or if they state they did not file the tax return, then check CC ENMOD for any prior or current ID theft indicators and follow the procedures in IRM 25.23.2, Identity Protection & Victim Assistance - General Case Processing, for any account corrections. If there are no prior or current ID theft indicators on CC ENMOD, advise the taxpayer to send a completed Form 14039, Identity Theft Affidavit and input a TC 971 AC 522 PNDCLM on CC ENMOD per IRM 25.23.2-10, IMF Only TC 971 AC 522 Tax-Related Identity Theft, Case Status (Initial Claim/Suspicion).

(7) Review the table below for guidance as it relates to IDT statuses found while performing research. Referrals that do not meet FRP criteria will be worked as a misroute.

(1) Current year IMF returns requiring processing will be edited as follows:

• Notate received date in red on the return. Circle out any other dates. See IRM 3.11.3.8.2.1, Types of Received Dates, when editing a received date.

• Verify withholding. (Taxpayers may include amounts withheld for social security, Medicare, or state tax as Federal Withholding. Do not allow.) Edit correct withholding amount on Form 4227.

• Notate return "FRP cleared", include last 5 digits of IDRS number on top left corner of the return.

• Notate return with Computer Condition Code (CCC) "3" in red below the entity portion in the center of the return.

  Note: This code freezes refunds.

• Notate blank returns with Return Processing Code (RPC) "L" in the right-hand margin next to Total Income (Line 22 on Form 1040).

  Note: This code indicates the return is blank or contains all zeros or insignificant entries other than entity information.

• Notate returns that reflect withholding with RPC "G" in right-hand margin next to Total Income.

  Note: This code forces the return to post and bypass certain error checks.

• Notate return with Action Code "331" edit in red in the bottom left margin of the return.

  Note: This code causes the return to reject for further handling.

• Complete Form 4227, Intra SC Reject or Routing Slip, and staple to return in the center left side.

• Name-Unit – enter your TE number and "FRP"

• Date – enter current date

• Route to – check "Reject Correction"

• Other activity – write "Attention Rejects"

• Other (explain) – enter the argument code used, "CCC-3 and 331"

(1) The Form 1040X or other informal claim constitutes the taxpayer’s (TP's) original filing:

1. Use Form 6114, Prior Year and Conversion Form 1040 Edit Sheet for Tax Year 2013 to convert the information from the amended return to Form 1040 for the appropriate year.

   Reminder: Do Not verify. Enter all data as listed (except the false Form 2439 amount).

2. Edit an "X" in red next to the Form 2439 amount on each line that it was included. Write "0" to the left of the X.

3. Attach Form 6114 to the front of the Form 1040X just below the entity portion.

4. Attach Form 4227, Intra-SC Reject or Routing Slip. In the "Other" box on Form 4227, write "Do not allow credit of $XXX." Disallowed in FRP. In the "Other Activity" notate "Frivolous F2439".

(1) The clerk(s) assigned to Letter 3176C Purge will review the purge listing and divide the work for assignment according to local procedures.

(2) Update IDRS CC and FRP Master to the designated team following normal update and assign procedures. The Action Text input will be "Assign3176".

(1) See IRM 25.1.6, Civil Fraud and IRM 4.19.16.2.3, Criminal Investigations (CI) Referral Non-EITC 1040X for processing cases with potential civil fraud.

(2) Frivolous filings will be carefully reviewed to determine if appropriate to refer for potential civil fraud.

(3) Route any cases meeting the established criteria for civil fraud referral through the RICS HQ FRP Analyst.

(1) All cases involving IDT will receive priority treatment. IRM 25.23.2, Identity Protection and Victim Assistance - General Case Processing provides service wide guidance on IMF IDT issues. Unless specific guidance is outlined within this subsection, refer to IRM 25.23.2.4.4, Initial Allegation or Suspicion of Tax-Related Identity Theft - IMF Identity Theft Indicators, for guidance on addressing IDT claims.

(2) Refer to IRM 4.19.13.28, Campus Exam Identity Theft, for functional guidance to address IDT issues for any return being worked as an audit within FRP.

(3) Account corrections to address all tax and penalty assessments that are related to a frivolous filer determination will be handled within FRP once the IDT claim is determined to be valid.

(4) If the IDT is confirmed, complete all closing actions to correct the account and protect it from future IDT.

• Update the account with the appropriate IDT indicators and corrections located in IRM 25.23.2.6, Closing Identity Theft Issues.

• Refer to IRM 4.19.13.28, Campus Exam Identity Theft, to address exam notices that are issued regarding IDT determinations.

• Abate any penalty assessments related to IDT filings.

• Remove all FRP Master issues tied to IDT filings.

  Reminder: Ensure all FRP activity is directly related to IDT before full FRP Master Record deletion is requested.

(5) If the taxpayer does not prove IDT or provides information appearing to be fraudulent, i.e., indications of the same signature on the IDT form and the tax return submitted, issue Letter 105C, Claim Disallowed, disallowing the claim and indicate it was a false claim. Continue processing the frivolous filing in a normal manner. Reverse any ID Theft indicator input for the tax year, follow procedures in IRM 25.23.2.6.4, Manually Reversing TC 971 AC 506, to reverse the indicator.

(1) Maintain current inventory information on FRP Master to ensure taxpayers receive accurate and consistent treatment. Individuals not in compliance for two consecutive years (filing and paying taxes) will be monitored for subsequent compliance.

1. Cases will be introduced to inventory using IDRS controls within five business days of the FRP received date. FRP Master issues will be added as new inventory receipts within 15 business days of FRP received date.

Note: During periods of high volume, adjustments to inventory control time frames will be coordinated and adjusted by management and HQ as needed.

2. To initially control cases on specific IDRS accounts, determine the following using Document 6209 (Section 14) and the IDRS Command Code Job Aid on SERP as needed; Status code - A, Control Category - FRP3, Activity Code - ASSIGN, Unit or employee IDRS number, Earliest IRS Received Date of frivolous document.

Note: Multiple FRP Acton Control Categories have been established to segment FRP treatment streams and any new or updated controls must contain all necessary field updates to ensure accurate inventory counts.

(2) Input TC 599-17 within 15 business days of FRP received date on non-processable frivolous returns. Input of the TC 599-17 indicates a return has been secured and prevents issuance of collection notices requesting a return be filed for the delinquent tax module.

(3) Input a TC 810, using jurisdiction code "4" on any year with an open RSED, if a FRP freeze condition is not posted. TC 810 will post as a -E freeze on IMF Modules and a Q- freeze on BMF Modules.

(4) When a return does not meet FRP criteria, FRP Clear the filing. Update the Category Code to "FRP3" for inventory reporting purposes and perform all clean up actions to prevent further misroutes.

(5) Review the module and address any held credits prior to closing the case. If applicable, input a TC 811 with ‘Freeze-Release-Amt’ for ".00" to remove the -E freeze.

(1) Cases will be researched to establish compliance with filing requirements based on income verification and appropriate return expenses and credits on filed processed returns to identify any potential frivolous returns that were processed in error. Ensure all related TINs and prior/subsequent years filing history are researched for compliance, as well as additional sources of income such as K-1s, income reported on related business TIN’s, income from erroneous refunds, etc.

(2) Compliance check is an analysis of all tax periods where IRP is currently available to identify any potential frivolous returns that were processed in error. Non-filed tax years are addressed through an automated process. Review Posted Return column on CC IMFOLI on primary and secondary TIN to determine which years will require additional research.

1. Some indicators for potentially processed frivolous returns are:

• TC 150 for .00

• TC 150 amount drops drastically from previous years, or

• TC 291 for the exact amount of the TC 150.

2. If any of the conditions above apply, additional research using CC RTVUE should be performed to determine if the TC 150 for .00 is frivolous. If there is indication that the return is frivolous and it’s a paper filing, input command code ESTAB to secure the return for assessment of the IRC 6702 penalty and tax.

Note: Do not ESTAB for returns if there is a subsequent TC 300 or TC 290 with the appropriate amount assessed or the statute for assessment has expired or will expire within one year, unless tax can be assessed using one of the exceptions by IRC 6501 (e.g., 25 percent omission) or with managerial approval for returns that appear to be an invalid, frivolous return. To determine the validity of the return, the technician should order the document. The technician must receive managerial approval to extend the statute.

(1) Reparations claims are subject to assertion of IRC 6702 penalties consistent with all other frivolous filings.

(2) When working a return or claim containing a fraudulent Form 1099-OID or 1099-MISC, DO NOT use either the income or the withholding as entered on the document for purposes of determining deficiency. In the event the false Form 1099(s) were processed and show on IRP, ignore it completely.

(3) Never update an address to a Federal office address. Do not update a name line to any Treasury executive or managerial official. In the event that the address or name line has been updated with either of these scenarios, take corrective action to reflect the taxpayer's correct information.

(4) Routine research will be performed when working the claims. CC TXMOD/ CC IMFOL should be used to determine if the filing is an original return, if there is a record of an original filing, and if there are any freeze codes present that may affect processing of the claim. Account research will be performed to ensure the taxpayer has not filed any additional frivolous returns. If there is an indication of Criminal Investigation (CI) involvement, route the cases to the FRP CI POC to coordinate with CI liaison via ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for further action. If there is an open examination route the case to the team lead for further action.

(5) To determine processing of the claim, refer to IRM 25.25.10.10.2, Processing Amended Returns and Claims.

(1) Returns and/or documentations will be reviewed for potential fraud penalty assertions. This subsection pertains to frivolous filing promotions approved to be worked as fraud penalty cases within FRP. Approval to work frivolous filing promotions as fraud penalty cases within the FRP must be secured by HQ before initiation.

(2) HQ will coordinate with FRP Technical Coordinator, local Campus Fraud Coordinator (CFC) and Area Counsel in the development of Form 886A language for specific promotions before fraud cases are assigned for development within FRP.

(3) Determine validity of filings and, if appropriate, correct accounts of processed returns. See IRM 25.25.10.12.1.1, Backing off Accounts.

(4) Determine whether the filing was received from a community property state. If so, coordinate with campus CFC for appropriate split.

(5) Prepare and send applicable pre-notification letters. Letter 3164 and any other letters or attachments as specified for the particular promotion.

(6) Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Frivolous Return Program General" when choosing an issue. Document AMS with suitable information (i.e., X-reference SSN, compliance history and statute date.) Initiate audit procedures as appropriate for specific promotion using AM424 to establish AIMS.

(7) Prepare and forward Form 12175, Third Party Contact Report, to campus coordinator.

(8) Prepare third party contact letter, if applicable to specific promotion. Suspend case for 45 days.

(9) If no response received from third party contact, initiate follow up communication telephonically if possible, by mail if not. Suspend case for 15 days.

(10) Upon confirmation of income or expiration of second suspense period, prepare Forms 13549 and Form 11660, updating AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Frivolous Return Program General" when choosing an issue. Forward case to FFC/CFC for approval.

(11) Upon approval for fraud development, update AIMS to project code 0076 and status 17 using applicable tracking codes.

(12) Prepare Form 4700 Examination Work papers, updating as appropriate.

(13) Prepare report to include assertion of applicable fraud penalties (i.e., IRC 6651(f) or IRC 6663 as appropriate), Form 886A (developed for specific promotion), Letter 1862 and Form 4549. (Include any other applicable penalties in alternate position as well.) Consider all applicable income. Suspend case for 30-day review by CFC and FTA.

(14) Once 30 day suspense period has expired, prepare 90-day Packet (Form 4549 with abbreviated Form 886A language pulled from FRP Master). Report will require hand-typing.

(15) Once Fraud Technical Advisor (FTA) approval has been given, forward case file to Area Counsel for review, updating work papers accordingly.

(16) Once Counsel has approved fraud penalty case, forward to appropriate function for 90 day suspense period. Once suspense period has expired, close case accordingly.

(1) If the compliance check reveals case meets criteria for deficiency potential for area office examination, process as follows:

1. Continue frivolous filing procedures, pre-notify and assess penalty using IRM 25.25.10.11.1, Penalty Case Creation.

2. If referral to classification and/or compliance check results in referral to area office exam, transship to area office PSP via Form 3210.

3. If case has an open AIMS in an area office – AMSOC to appropriate PBC, SBC, and EGC, then send case to area office.

(1) Every effort will be made to work returns within the normal three year statute of limitations for assessment under IRC 6501. See IRM 25.6, Statute of Limitations for additional information.

(2) Statute of limitation on original returns will be determined as follows:

1. Processable frivolous return filings may be valid returns and begin the assessment statute of limitations under IRC 6501.

2. Invalid frivolous return filings do not begin the assessment statute of limitations under IRC 6501. Although these returns do not begin the limitations period, every attempt will be made to work the cases within three years of the filing date. A non-processable return is likely invalid, but not necessarily so.

(3) Specific cases may fall under the extended statute of limitations provided in IRC 6501(c) (1). To rely on this extended statute of limitations, the IRS must have proof that the taxpayer has filed a false or fraudulent return. The government must prove fraud or that actions taken by the taxpayer show intent to evade or defeat the tax. The IRS has the burden of proof on this issue. Determinations under this code Section must be made on a case-by-case basis by Counsel.

(4) Statute of limitations on penalty assessments will be determined as follows:

1. Generally, the IRS should make every effort to assess the IRC 6702 penalty within three years of the processable return filing received date. If that period has expired, the IRS should consider whether any exception in IRC 6501 applies and contact Counsel for assistance as needed.

2. Frivolous amended returns and claims may be assessed an IRC 6702(a) penalty for three years after their filing date.

(1) Form 4442 Referrals and case controls are to be worked per the following table:

(2) Refer return to clerical team per the following criteria:

• Electronically filed return: print to .pdf a copy of the return from EUP.

• Paper filed return: print to .pdf all pages from TRDBV or RTVUE.

(3) Save the .pdf using the following naming convention: TIN, Name Control, Tax Period, and ARG code.

(4) Send an email, with the .pdf attached, to "*W&I EEF IVO T609" with subject line "4442 REFERRAL" and include Argument Code and the IDRS control number in the body of the email.

(1) Forms 1040X, Forms 843 that purport to be returns and subsequent filings to original Form 1040s will be worked per IRM 21.5.3.4, General Claims Procedures or IRM 21.5.3.4.5, Math and Master File Verification of Claims and Amended Returns, as applicable.

(2) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) Frivolous Form 2439 claims will be worked following IRM 25.25.10.12.1.3, Form 2439.

(4) Non-frivolous amended returns received after original FRP assessments will be treated as Audit Reconsideration.

(1) Frivolous returns/claims will have been screened and forwarded for penalty processing after one of the following scenarios:

1. Taxpayer responded to the Letter 3176C/CP 72, but the response was not received timely (late response).

   Note: Ensure an extension was not granted before processing response as untimely.

2. Taxpayer responded to the Letter 3176C/CP 72 with frivolous return or correspondence.

3. Suspense period of Letter 3176C has expired and no response received.

(2) Create a new issue on FRP Master and select applicable action code, for each penalty being assessed from the list available on FRP Master.

(3) Research account for the specific tax period to ensure that all receipts are considered in the determination.

(4) Review any taxpayer replies to ensure that penalties are not assessed if any corrected, non-frivolous returns were filed in a timely manner.

(5) Review taxpayer account for pertinent freezes or controls and work accordingly.

(6) Prepare Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, indicating:

• Taxpayer's name

• Tax Period

• TIN

• Next to "6702 (a) Frivolous tax return" input the form that is frivolous and the received date

• Input ‘X’ (X=number of penalties being assessed) or "Number of Violations"

• Input "$X" for the "Amount Assessed",(X= $5,000 times the number of penalties being assessed)

• Provide at least one argument number as basis for the penalty in the remarks section

• signature date - the earliest date the return/claim was signed by the taxpayer. If no signature, write "N/A"

• "Originator": Technician’s name

• Date: today's date

• Organization Code: Employee IDRS number

• Phone: Technician or manager’s phone number

(7) Update activity on the CC TXMOD control to "2APPROV".

(8) Submit case for written approval on Form 8278, "Assessment and Abatement of Miscellaneous Civil Penalties".

(1) Upon verifying that written managerial approval for penalty assessment on Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, was completed, establish a CC TXMOD control on MFT 55 using CC ACTON with the activity "8278APPRVD". Scan the approved Form 8278 into FRP Master and attach to applicable penalty issues when selecting the appropriate closing code.

(2) Input the adjustment using the IAT CC REQ54 Tool. Use the following:

• Blocking Series 52 (Blocking series 53 if subsequent penalty assessment input the same day)

• Category - FRPP

• Activity - Civil Penalty Argument Number "CVPN/Arg#__" (# = Number that corresponds with the argument in Exhibit 25.25.10–1, Frivolous Arguments)

• CD – (Penalty Reference Code) 666 or 543 Collection Issues

• Amount - 5,000.00 (If assessing more than one penalty, input the total amount for all penalties)

• Remarks section notations:
  " IRC 6702 penalty, (specify Form) dtd MM-DD-YYYY"

  Note: If more than one penalty is being assessed, input all the received dates separated with a comma.

  Note: MFT 55 CC TXMOD control will close with activity "CVPN/Arg#__" when adjustment is input.

(1) Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Frivolous Return Program General" when choosing an issue, with comments, action taken.

(2) Stamp frivolous filing with "Frivolous Tax Penalty Assessed" in lower left margin of the front of the return.

(3) Notate return with "Considered in FRP" in lower left margin of the front of the return.

(4) Update activity on the MFT 30 CC TXMOD control to "FRVPNMFT55" to show the penalty has been assessed.

1. If no audit potential, update MFT 30 CC TXMOD control to closed "C". If there is a TC 599-17 (non-processable Return has been secured), it needs to be satisfied with a Collection Status Code.

2. If the case is going to be set up as an audit, update MFT 30 CC TXMOD control activity to "needsaudit" and update category code to "FRPA".

(5) Select appropriate closing action code on FRP Master, include penalty assessment amounts.

(6) If there is audit potential, refer to IRM 25.25.10.12.2, Audits.

(7) If no audit actions on paper cases, assemble the penalty case file in the following order:

• REQ54 adjustment completed print or Form 12775, ADJ54 Adjustment Format

• Original filing, only if a paper return

• Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties

(1) Responses to IRC 6702 penalty assessments commonly fall into one of three categories:

• Request for Abatement

• Requests for Appeals

• Requests for Management Intervention, see IRM 25.25.10.12.3.1, Managerial Referral for Penalty Abatement Requests

(2) Refer to the table below for instructions on handling requests for abatement. (Form 843).

(3) Requests for Appeals will be reviewed as follows:

(1) Categories:

1. Backing Off Accounts

2. Form 1099

3. Form 2439

4. Complete Back Outs

(2) There are two methods for performing on-line adjustments of accounts on frivolous filings: One is for accounts on which the refund is held. The other is for accounts on which the refund was issued in error.

(3) Accounts on which the refund is held: When a refund is held and the filing is not subject to deficiency procedures, simply reverse the erroneous information with the correct transaction codes (i. e., TC 807, TC 767, TC 291, etc.) by using CC REQ54 to input an adjustment to reverse the erroneous information reported on the tax return.
Input the following fields:

• TC 290 for $.00

• Item Reference Code 807 to reverse only the amount of overstated withholding

• Activity: "W/H-REVRSL"

• Blocking series 00 (18 or 05, as appropriate)

• Source Code 2

• Reason Code 051 (and any others that apply)

• Hold Code 0

• Priority Code 1 (If open TC 420 and L freeze)

• Remarks field: "reverse overstated withholding"

Caution: Only modify AGI, TXI, and/or tax amounts according to a compliant return that supports the corrections.

(4) Accounts on which the refund is issued: Input an assessment of tax for the amount of the overstated withholding. The input results in a legal assessment that allows the IRS to correct the overstated withholding using the provisions of I. R. C. Section 6201 (a)(3). The assessment should not include any amount of income tax withholding withheld from the taxpayer’s wages/earnings.
Using CC REQ54:

• Input TC 290 for the amount of the overstated withholding (posted as TC 806, minus any legitimate withholding posted on IRP, being careful not to include fraudulent Form 1099 information that may be posted therein)

• In the activity, use "W/H REVRSL"

• Blocking series 00 (18 or 05, as appropriate)

• Source Code 2

• Reason Code 051 (and any others that apply)

• Hold Code 0

• Priority Code 1 (If open TC 420 and L freeze)

• Do not use reverse or otherwise address the AGI, TXI, or tax until the taxpayer files a correct return requesting the correction

• In the Remarks field, input:" IRC 6201A3 assessment to reverse overstated withholding"

• Since the withholding credit (TC 806) is addressed with the input of the TC 290, do not input TC 807

(5) If a manual assessment has already posted (IDRS shows an adjustment starting with TC 370) or is pending (a closing action on FRP Master showing 2859/3552 is present), take the following actions:
If the TC 290 is equal to the TC 807:

• Take no further action.

• Input a separate adjustment to adjust income using CC REQ54

• Input an additional TC 290 for the amount of legitimate income, per any legitimate, attached Forms including W-2s and 1099s or IRP data

• Input TC 806 for any legitimate withholding from attached W-2 or from IRP

• In the Activity Field of CC ADJ54, input "CORRCTINC"

• Block in series 00 (18 or 05 as appropriate)

• Source Code 0

• Reason Code 99

• Hold Code 3

• Priority Code 1 (if open TC 420 and L freeze exists)

• Input applicable Reference Codes to adjust AGI (Reference Item 888), TXI (Reference Item 886), etc., with a minus sign following the amount

  Note: Ensure only the frivolous portion of the Form 1099 income is removed. When removing frivolous Form(s) 1099-DIV, 1099-INT or 1099-OID income, use Reason Code 008. When removing Form 1099-MISC income, reported as Other Income on the return, use Reason Code 021.

• Post delay one cycle

• In the remarks field of CC ADJ54, input the following: "Frivolous Return Processed in Error, account backed off"

(1) Categories:

1. Understated Income

2. Fuel Tax Credit

Note: IRC 6751(b)(1) requires supervisory approval. For Accuracy Related Penalties, written supervisory approval must be obtained at the time the penalty is being asserted. Ensure the manager approval is included in the case file prior to issuance of Form 4549. See IRM 20.1.1.2.3.1, Timing of Supervisory Approval.

(1) Penalty abatements fall into four separate categories:

• Reasonable cause

• Statutory Exceptions

• Administrative waivers

• Correction of IRS error

IRC 6702 penalties Do Not meet reasonable cause criteria and should only be abated if IRS error is identified. For additional information see IRM 20.1.1.3, Criteria for Relief From Penalties.

(1) If the overstated withholding was credited to another tax year or to an outstanding federal agency debt, child support debt, state income tax debt or unemployment compensation debt (TOP Offsets), the credit should be reversed by an entry that will post to the Summary Record of Assessment.

(2) If the offset did not result in a refund, use CC REQ54 to reverse the applicable amount of income, withholding, credits and exemptions:
- Input TC 290 for .00 if TC 150 amount is .00
- Input TC 291 for the exact amount of the TC 150 with a minus following the amount
- In the Activity field of CC ADJ54, input: "W/H-REVERSAL"
- Blocking series 00 (or 05 as appropriate)
- Source Code 0
- Reason Code 099
- Hold Code 4
- Priority Code 1 (If open TC 420 and L freeze)
- Input applicable reference codes as shown below with a minus following the amount
- In the remarks field of CC ADJ54, input: "frivolous return processed, account backed off"

(3) Since the IRS has not issued a refund, the verifiable amount of withholding credit will go on the Statutory Notice of Deficiency.

(1) A person must meet all of the requirements of Rev. Proc. 2012-43 to receive a reduction of unpaid IRC 6702 penalty liabilities. Deny any request for reduction that does not comply with all the requirements of Rev. Proc. 2012-43. See IRM 20.1.10.12.3, IRC 6702(d) Reduction of Frivolous Submission IRC 6702 Penalties for additional information.

(2) Form 14402 needs to be controlled within three days of receipt. The receive date is the date the request is received by FRP.

(3) The following table is a guide for eligibility requirements:

(4) The following table contains events that disqualify the taxpayer from receiving a reduction of the IRC 6702 penalty liabilities.

(5) A person must make a written request for reduction on Form 14402, IRC 6702(d) Frivolous Tax Submission Penalty Reduction.

(1) If the taxpayer meets the eligibility requirements discussed in IRM 25.25.10.13.1, Eligibility Requirements for Reduction under IRC 6702(d). The IRC 6702 penalty liabilities will be reduced to $500. The taxpayer must pay the reduced liability by either:

1. submitting at least $250 with the request for reduction or

2. paying the reduced penalty as part of a full payment installment agreement

3. by refund offset - per Revenue Procedure 2012-43

   Note: Research CC TXMOD or Remittance Transaction Research (RTR) for payment.

(2) Unless the taxpayer is making payments pursuant to a full payment installment agreement the taxpayer must submit at least $250 with the request for reduction, even if that person has already paid a portion of the penalty. A person who chooses to pay the $250 or more but less than $500 will remain liable for the balance of the reduced penalties.

(3) If a taxpayer submits a payment with a request for IRC 6702 penalty reduction, the partial payment will be applied to the taxpayer's assessed IRC 6702 penalty liabilities whether or not the IRS grants the reduction request.

(4) Issue Letter 4942, Acceptance of Penalty Reduction Request to the taxpayer.

(5) If a taxpayer is paying the reduced IRC 6702 penalty as part of a full pay installment agreement and the taxpayer meets all other requirements, forward the information for Collection CCP to manually monitor the installment agreement and provide Letter 4942, Acceptance of Penalty Reduction Request to the taxpayer.

(6) FRP will determine the new estimated Reduction Completion Date (RCD) based upon the reduced penalty.

1. Calculate the new estimated full pay date by dividing the amount of the pending penalty reduction by the current monthly amount on CC IADIS.

   Note: This represents the number of months to subtract from the CC IADIS completion date and provides the RCD.

2. Provide the RCD with the CC IADIS to give Collection CCP an estimated date of completion.

3. Send a copy of the signed and PENDING reduction request.

4. E-Fax both CC IADIS and the Form 14402 to Collection CCP at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

5. Input TC 971 AC 544 on MFT 30. This indicator alerts other IRS functions of IRC 6702(d) monitoring in FRP.

6. When the taxpayer has fulfilled the requirements of the installment agreement, except for the portion attributed to the rest of the penalty and accrued interest, Collection CCP will E-Fax confirmation to FRP at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

7. If the taxpayer does not complete the Manually Monitored Installment Agreement (MMIA) or fails to file a return or files additional frivolous return(s), send the taxpayer a Letter 4941, Rejection of Penalty Reduction Request advising him/her the reduction request is no longer valid and the reason why.

   Note: Such taxpayers may request another reduction provided they submit another reduction request with the required partial payment.

8. If the taxpayer completes the IA and has filed returns as required while in the IA, complete the actions to reduce the penalty and abate appropriate interest. See IRM 25.25.10.13.4, Approval of Reduction Request Under IRC Section 6702(d).

9. Update IDRS history and FRP Master with the date and status of the reduction request.

(1) When the taxpayer has an approved installment agreement FRP will provide Collection CCP with a copy of CC IADIS. The CC IADIS installment agreement amount includes the tax balance, accruals and the total amount of the penalty.

(2) FRP will determine the new estimated Reduction Completion Date (RCD) based upon the reduced penalty.

1. Calculate the new estimated full pay date by dividing the amount of the pending penalty reduction by the current monthly amount on CC IADIS.

2. This represents the number of months to subtract from the CC IADIS completion date and provides the RCD.

3. Provide the RCD with the CC IADIS to give Collection CCP an estimated date of completion.

4. Send a copy of the signed and PENDING reduction request (i.e., Form 14402.)

5. E-Fax both CC IADIS and the Form 14402 to Collection CCP at ≡ ≡ ≡ ≡ ≡ ≡ ≡.

6. Input TC 971 AC 544 on MFT 30. This indicator alerts other IRS functions of IRC 6702(d) monitoring in FRP.

7. When the taxpayer has fulfilled the requirements of the installment agreement, except for the portion attributed to the rest of the penalty and accrued interest, Collection CCP will E-Fax confirmation to FRP at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

8. If the taxpayer does not complete the MMIA or fails to file or files additional frivolous return(s), send the taxpayer a Letter 4941, Rejection of Penalty Reduction Request advising him/her the reduction request is no longer valid and the reason why. Such taxpayers may request another reduction provided they submit another reduction request with the required partial payment.

9. If the taxpayer completes the IA and has filed returns as required while in the IA, complete the actions to reduce the penalty and abate appropriate interest. See IRM 25.25.10.13.4, Approval of Reduction Request Under IRC Section 6702(d).

10. Update IDRS history and FRP Master with the date and status of the reduction request.

(1) If the taxpayer meets the requirements detailed above, reduce any unpaid IRC 6702 penalty liabilities to $500.

(2) Update CC TXMOD control on MFT 55 using CC ACTON with the following activities: "6702(d)", "APPROVED", "ABATEPEN", "4942LTR".

(3) Use the IAT CC REQ54 Tool to abate the IRC 6702 penalties on each MFT 55 module included on Form 14402 with the exception of any remaining portion of the $500 liability.

• Blocking Series 53

• Reason code for MFT 55 place 65 in 1st position and 45 in the 4th position

• Category - FRPR

• Activity - "REDUCED"

• CD – (Penalty Reference Code) 666 or 543 Collection Issues

• Amount – (5,000.00) (If reducing more than one penalty, input the total amount of the penalty portion that is to be reduced)

• Remarks section notations: IRC 6702(d) Reduction Approved
  See IRM 25.25.10.11.2, Penalty Assessment, for association of documentation

(4) Issue Letter 4942, Acceptance of Penalty Reduction.

(5) Do not refund to the taxpayer any amount of the penalty paid, either by refund offset or voluntary payment prior to the date IRS received the request for reduction on Form 14402, IRC 6702(d) Frivolous Tax Submissions Penalty Reduction.

(1) If the taxpayer does not meet the qualifications, deny the request using Letter 4941, Rejection of Penalty Reduction Request. Indicate on Letter 4941 the reason(s) the taxpayer's request for reduction was denied.

(2) Letter 4941, Rejection of Penalty Reduction Request gives the taxpayer an opportunity to meet eligibility requirements. Denial of a reduction request does not preclude a taxpayer from submitting another request. With each request the taxpayer must pay at least $250 or have entered into a full payment installment agreement.

(3) Update IDRS history and FRP master database with the date of the rejection so the technician can determine the amount of the penalty.

(1) Once it has been determined that a case will be forwarded for Statutory Notice of Deficiency (SNOD) issuance, the tax technician will research all necessary IDRS command codes to verify and secure the taxpayer’s last known address and any POA information.

(2) Review the report to ensure all issues are included and correct tax/penalty computation amounts are indicated including any funds received resulting from a refund issued on a frivolous filing. Fraudulently claimed excessive credits received by the taxpayer constitute an increase of wealth over which the taxpayer exercised control; hence, it is income under IRC 61.

(3) An original statutory notice must be provided to both spouses on married filing joint filings, including their separate POAs, if applicable. See IRM 4.8.9.12.1, Separate Notices to Joint Filers and IRM 4.8.9.9.1, Taxpayer Name for additional information.

(4) Process as follows:

1. Assemble the 90-day package and update RGS, AIMS, FRP Master Daily, case folder, and IDRS control to "Send 90-Days," ensuring Form 5344, "Exam Closing Record" includes correct collectable codes and any other appropriate codes.

2. Forward case for statutory notice issuance.

3. Close case controls.

(1) All Examination case file folders will be assembled in the following order:

• Form 5344

• Form 1040 Labels (if any)

• Letters and enclosures waiting to be sent to the taxpayer

• No Change letter, when applicable

• Closing examination report

• Closing document with signature/agreement

• File copies of correspondence in most recent date order

• Workpapers

• For paper cases only original print, amended return, or CIS image

• Form 5546, "Examination Return Charge-out" or current CC AMDIS print

• Form 12616

(2) When applicable, Form 895, Notice of Statute Expiration, will be placed on the top of all other documents.

(3) Remove extraneous material such as routing slips, excess prints, etc.

(4) Indicate closing action code and time on outside of case folder.

(5) Ensure FRP Master Daily is updated appropriately for FRP cases.

(6) 90-day notices should never be destroyed. If the 90-day notice is no longer valid, attach a note to indicate "Void, Do Not Assess". If the 90-day notice is valid, but the report has been revised, attach a note to the 90-day notice to indicate "Do Not Assess."

(7) See Exhibit 4.4.1-2, Case Assembly.

(1) On a monthly basis, Designated employees will pull reports in AIMS Centralized Information System (ACIS) for PC 1505 defaults and unagreed case closures.

(2) Frivolous Fuel Tax Credit includes the following criteria:

• fuel tax credit so disproportionately excessive to the reported income that it is unallowable, and/or

• the claim reflects an impossible quantity of fuel given the business use for the occupation reported

(3) Frivolous Return Selections will be added to treatment stream in accordance with IRM 25.25.10.8, Screening Returns and Claims. Issue 3176C Letter with Rescind Paragraphs if the tax and penalty assessments were previously addressed in an Audit and no additional account corrections are required.

(1) It is critical that the following actions be taken during the appropriate cycle. The command code must be input by the time frames outlined in IRM 21.4.1.5.10, Refund Intercept CC NOREF with Definer “P”. Refer to IRM 2.4.37.2, Refund Delay Notice, for additional guidance.

(2) CC: NOREF/NOREFEP posts with all 5s in the DLN (blocking series, etc.). This input creates a P freeze and a TC 841 posts on the module. It does not post for up to four weeks after the input of the CC NOREF. TC 841 with all 9s in the DLN (blocking series, etc.) indicates the check was re-deposited.

(3) Input NOREF as follows:

1. For paper check, CC TXMODA must precede each NOREF input request
   NOREF 30 TXYRMM NAME
   C#,CYCLEP,M,RFDL – Example: 200924P ( current refund cycle followed by a P for paper)
   *,*
   * Space down two blank lines
   DO Code
   99

Note: For a complete list of reason codes, See IRM Exhibit 2.4.37-2, Error Reason Codes

2. For direct deposit refund, input TXMODA
   NOREFE30 TXYRMM NAME
   C#,CYCLEE,M,RFDL
   (current refund cycle followed by a E for Electronic Direct Deposit Filing)
   *,*
   * Space down two blank lines
   DO Code
   99
   Routing Transit Number

(1) Refer to IRM 21.3.8.3.5.1, IRM Refund Intercepts; IRM 3.17.20, Refund Intercept Program.

(2) There are options available to stop an erroneous refund. Payments can be intercepted at a financial institution (Bank Indemnification process for direct deposit), Bureau of Fiscal Services (BFS), post office (Recall of Mail for a paper check) or through intervention from Revenue Officer (RO) (Coordination with Collection for RO Assignment). If FRP has issued a Bank Indemnification letter to a bank that has failed to comply in the past, FRP should not wait to contact a RO. The RO should be told the letter was issued, but during past interactions with the Bank, they have failed to comply.

1. Bank Indemnification Process - An indemnification letter is appropriate only if a direct deposit refund is issued and CC NOREFE is unsuccessful, or CC IMFOL indicates Customer Account Data Engine (CADE) processing:

1. Determine the location of the bank to which the refund will be deposited by accessing CC TRDBV and/or CC IMFOBT to determine the routing transit and account number of the claimant’s corresponding bank account. Multiple deposits can be identified by the posting of Form 8888, "Allocation of Refund" on CC TRDBV.

2. Access the Internet at www.fedwiredirectory.frb.org/ to determine a phone number for the receiving bank using the RTN for identification.

3. Call bank and ask for Automated Clearing House (ACH) Department. IRS identity should be made, and an explanation of our intention should be given.

4. Request the bank’s fax number and name of direct contact (ATTN:).

5. Prepare letter of indemnification.

6. Fax letter requesting the amount of the refund to ACH Department at bank.

7. Monitor for refund to post back to taxpayer’s account.

8. Reverse credit and work case as if no refund were issued.

9. Case should be controlled as "BKINDEM" until TC 841 posts.

2. BFS- Checks are mailed on the refund date (located on IDRS). A special handling request from signed by a certifying officer of the Service Center who released the refund must be sent to BFS prior to the refund pay date. The request must be sent to Kansas City Special handling BFS or to Philadelphia depending on the issuing site.

3. Recall of Mail - If unable to stop erroneous refund using CC NOREF, and check has not actually reached the taxpayer, attempt to recover paper check refund by recall of mail. Per postal procedures, "Mail deposited in a collection box or at a post office may be recalled with proper identification by the sender or the sender’s representative. [Postal] Form 1509 must be submitted to the postmaster at the office of mailing". Therefore, after Notice Review and CC NOREF cycle cutoffs or during accelerated cycles, the U.S. Post Office can be contacted (usually on Friday) to stop delivery of an erroneous refund check.

Note: Postal Form 1509 can be found at www.usps.gov.

1. Follow-up daily with postmaster to inquire as to the status of the refund check

2. Request for assistance from an RO may be made

3. If the check is recovered, it should be voided and the following should be written in bold, "Fraudulent refund - do not reissue" and sent for redeposit in an envelope marked "Personal" ATTN: FRP Technical Coordinator at:

Ogden FRP

1973 N. Rulon White Blvd.

M/S 4450

Ogden, UT 84404

4. TC 844 should be input and coordinated with the Erroneous Refund Function

5. Control case as CKPULL@PO until TC 841 posts

4. Intervention from RO.

Follow the If and then tables below for intercept procedures:

If	And	Then
Refund under ≡ ≡ ≡ ≡ ≡ ≡	the refund was generated based on false withholding	Input TC 290 for overstated withholding amount.
Refund under ≡ ≡ ≡ ≡	the refund was generated based on a false Form 2439	Input TC 290 for the amount of the Form 2439 credit, minus the tax. Consider negligence penalty. Prepare and send letter 474C and suspend the case for 60 days to allow the TP to dispute the assessment. If no dispute is received, move case to next step in FRP process. If dispute is received, abate the assessment and issue SNOD.
Refund under≡ ≡ ≡ ≡ ≡ ≡	the refund was generated based on a credit that is subject to deficiency procedures (e. g., Fuel Tax Credit)	Prepare and issue SNOD, assessing tax in the amount of the overstated credit. Consider negligence penalty.
A copy of the return has been secured and a summary of the facts of the case has been prepared	Scanned image has been sent to FRP Technical Coordinator	Technical Coordinator or Revenue Agent will: Prepare memorandum to Counsel requesting authorization to initiate jeopardy assessment/jeopardy levy procedures. Include a summary of the facts of the case, pertinent account research and a scanned image of the return. Note: To determine whether a jeopardy condition exists, refer to IRM 4.15.1.5, Conditions.

Note: If refund is over ≡ ≡ ≡ ≡ ≡ ≡ ≡ refer to designated employee for processing. Enter all manual/jeopardy assessments into FRP master database using program code 91859. Update the "Error Filing Tab"

If	And	Then
Refund claimed is more than ≡ ≡ ≡ ≡ ≡ and direct deposit Send indemnification letter	Bank returns money	Apply money to the appropriate module.
Refund claimed is more than ≡ ≡ ≡ ≡ ≡ ≡ ≡ and a paper check, follow postal recall procedures	Post Office returns check	Void check then send check to refund inquiry.
Refund claimed is more than ≡ ≡ ≡ ≡ ≡ ≡ ≡	Bank or Post Office does not return refund and refund was issued less than two months ago	Initiate jeopardy assessment/jeopardy levy procedures: Secure a copy of the return. Prepare a summary of the facts of the case (i.e., TP filed a frivolous Form XXXX return for tax period 200X claiming a refund of $XX,XXX from a Form 2439 credit. A refund was issued in error on XX-XX-XXXX). Forward a scanned image of the return and the facts of the case to the Sr. Technical Coordinator and the FRP-RA.
Refund over ≡ ≡ ≡ ≡ ≡ ≡		Coordinate with Abusive Tax Avoidance Transaction (ATAT) Collection for Revenue Officer (RO) Assignment.
Refund over ≡ ≡ ≡ ≡ ≡ ≡ ≡	the refund was generated based on false withholding	Input TC 971 AC 460. Request interest computation from designated function on tax and penalty. Prepare Form 2859, Request for Quick or Prompt Assessment, in the amount of the overstated withholding. Note: This allows for an immediate assessment. The 23C date will post that day. Provide Revenue Accounting the completed Form 2859, to request preparation and return of Form 3552. Provide the completed Form 2859 and Form 3552 to the RO.
Refund over ≡ ≡ ≡ ≡ ≡ ≡ ≡	the refund was generated based on a false Form 2439	Input TC 971 AC 460. Input TC 290 for the amount of the Form 2439 credit, minus the tax. Consider negligence penalty. Prepare and send letter 474C and suspend the case for 60 days to allow the TP to dispute the assessment. If no dispute is received, move case to next step in FRP process. If dispute is received, abate the assessment and issue SNOD. Once suspense period has expired, notify ATAT Collections for RO assignment.
Refund over ≡ ≡ ≡ ≡ ≡ ≡	the refund was generated based on a credit that is subject to deficiency procedures (e. g., Fuel Tax Credit)	Input TC 971 AC 460. Prepare and issue SNOD, assessing tax in the amount of the overstated credit. Consider negligence penalty. Reminder: DO NOT issue initial contact letter. Once suspense period has expired, notify ATAT Collections for RO assignment.

Note: For jeopardy assessments

If	And	Then
Refund over ≡ ≡ ≡ ≡ ≡ ≡ Note: These cases are considered on a case-by-case basis and the tolerances may be flexible.	issued within the last 12 months and the refund was based on a false credit that is subject to deficiency procedures	Initiate a jeopardy assessment: Secure a copy of the return that caused the refund. Secure asset information from ATAT Collections including name and contact information for assigned RO. Prepare a memo for Counsel, summarizing the facts of the case, Include the following in the memo: Taxpayer’s name. TIN and address The facts surrounding the issuance of the refund What prompted the refund What actions have been taken to determine the authenticity of the refund Secured Asset information received from ATAT Collections Why the collection is in jeopardy
Authorization is granted:		Request interest computation from designated function on tax and negligence penalty. Note: Ask that the calculation be computed for five business days from the date of the request. Prepare Form 2859, Request for Quick or Prompt Assessment, in the amount of the tax, penalty, and interest. Prepare Form 2644 and secure required signatures. Prepare Notice of Jeopardy Assessment of Income Tax Under IRC 6861 and secure Director’s signature. Provide the completed Form 2859, Form 2644 and Notice of Jeopardy Assessment of Income Tax Under IRC 6861 to RACS requesting jeopardy assessment. Immediately send Notice of Jeopardy Assessment of Income Tax Under IRC 6861 by certified mail. Forward entire case to POC for SNOD issuance. POC will Immediately prepare and issue SNOD, assessing tax in the amount of the overstated credit. Consider negligence penalty.

(3) Once check is intercepted and returned to FRP, take the following actions:

1. Prepare Form 3244, "Payment Posting Voucher", directing Payment Perfection Area to deposit check as TC 720, "Other Credit". In remarks section, add, "Recovery of refund issued in error as a result of frivolous filing".

2. Prepare Form 4287, "Record of Discovered Remittances" and forward check, Form 3244, "Payment Posting Voucher" and Form 4287, "Record of Discovered Remittances" to Payment Perfection Area.

3. Input TC 844 on account to indicate an erroneous refund was issued.

4. Monitor account for TC 844 to post and take necessary actions to prevent re-issuance of refund unless a freeze already exists on the module and work case as if no refund were issued.

5. Case will be controlled as "BKINDEM" until reversal and payment (TC 720) posts.

6. Once all transactions have posted, contact Erroneous Refund area and have them reverse the TC 844.

(1) When recovering refunds issued from a valid, frivolous return by statutory notice of deficiency, audit to determine deficiency which takes into account the rebate to the taxpayer.

(2) Issue statutory notice of deficiency.

(3) Include amount of refund as income to the taxpayer in the year of receipt of the money. If necessary, initiate tax audit for the year of the receipt of the erroneous refund. Input TC 971 AC 460 at the time the assessment is made.

(4) If taxpayer submits a subsequent claim after filing a previous claim, a frivolous return penalty should be assessed for each claim filed, including those referencing the same tax year.

(1) The IRS may ask the Department of Justice to bring legal action against the taxpayer to recover the erroneous refund issued from a valid, frivolous return or as directed by FRP management. See IRM 25.3.2, Litigations and Judgments, Suits by the United States, and IRM 21.4.5.15, Collection Methods for Category D Erroneous Refunds. An erroneous refund suit must be filed within two years of when the refund was made or five years if the taxpayer induced the issuance of the erroneous refund through fraud or misrepresentation of a material fact.

(2) When an erroneous refund suit to recover refunds is initiated, the case will be worked under Program Code 91859. Obtain the following information and forward it to the FRP Technical Coordinator: Secure and certify a copy of refund check by submitting a Pacer research request to the refund inquiry unit. Refer to IRM 21.4.2.4.15.2, Request for Administrative Photocopy.

• Secure and certify a copy of the return filed that generated the refund - use Form 2866.

• Certified transcripts of account - Requested using Form 4338 faxed to Revenue Accounting function after TC 844 and TC 520 have posted to the account.

(3) Input TC 844 via CC REQ77 to indicate an erroneous refund has been issued using date of erroneous refund in transaction date field.

(4) Input TC 520 via REQ77 with closing code 70 and ULC code 87 indicating refund litigation.

(5) FRP Technical Coordinator will prepare a referral memo and forward documents to Associate Area Counsel, authorizing the suit approved by Operations Manager.

(6) Make no adjustments to module to reverse credit that caused the refund.

(1) For BMF correspondence only:

1. Determine if mail is frivolous. See IRM 25.25.10.7, Screening Correspondence, and IRM 25.25.10.7.1, Frivolous Correspondence.

   Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) Screen new BMF returns and claims to determine if frivolous within two business days of FRP received date.

(2) Screen returns and claims per IRM 25.25.10.8, Screening Returns and Claims, and IRM 25.25.10.8.3, Handling of Returns and Claims.

(3) Review frivolous receipts for:

• potential promoter/preparer investigation referrals

• appearance of entity changes to that of an Abusive Tax Avoidance Transaction (ATAT) promoter/preparer

Note: Do not change entity. Add new address to FRP Master as an alternate address.

(4) Ensure all actions taken on each case are thoroughly documented on FRP Master and that all control bases are updated appropriately, including any cross-reference TINs.

(1) Conduct compliance check by researching IDRS command codes as follows:

1. Research CC BMFOLE to determine filing requirements.

2. Research CC BMFOLI to determine which tax periods have been satisfied.

3. Research CC BMFOLU – to determine the number of employees reported on the Forms 941, "Employer's QUARTERLY Federal Tax Return", for that year, the number of Forms W-2 filed by the taxpayer, as well as the detail of the wages paid by the taxpayer during that year (gross wages, taxable, etc.).

   Note: This will assist in determining if wages have decreased from prior years.

   Reminder: This can be pulled by calendar year. This is generally not available until approximately September following the calendar year end.

4. Research CC BMFOL (T) and (R) – to determine the wage amounts and the taxes paid each quarter.

   Note: These two command codes will be used for any quarter/year where the CC BMFOLU is not yet available.

5. Research CC BRTVU or CC RTVUE – to compare the wages shown on the Forms 941, "Employer's QUARTERLY Federal Tax Return" versus what is claimed on the income tax return (Form 1040-Schedule C, Form 1120, "U.S. Corporation Income Tax Return", Form 1120S, "U.S. Income Tax Return for an S Corporation", or Form 1065, "U.S. Return of Partnership Income ").

   Note: This may also identify other potential employment tax issues on the return, such as lack of corporate officer wages. Resulting in incorrect treatment of payments made as dividend or capital gain distributions.

6. Research CC PMFOL – to determine if the taxpayer has filed any Form(s) 1099.

   Note: This information can be used to determine if the taxpayer may not be espousing the IRC 861 argument, but rather shifting the amounts paid from wages to independent contractor payments.

7. Research CC IRPTR – to review the Forms W-2 to identify whether any of the payers have names similar to the return in question.

   Note: This may indicate a name change for the entity which might explain the difference in wages reported.

(2) The satisfaction of all filing requirements does not necessarily indicate a non-frivolous filing. Other criteria will be considered such as potential for stop-filer and appearance that business is an ongoing entity.

(1) Potentially frivolous filings or those that do not fall under existing processing guidance will be worked as follows:

1. Elevate through FRP Technical Coordinator or other designated employee to RICS HQ Analyst for coordination with HQ ATAT Program Analyst responsible for BMF filings for appropriate action. Determination will be made whether to treat filing as frivolous and/or any special processing requirements.

2. The FRP Technical Coordinator or other designated employee will ensure coordination is made with RICS HQ, ATAT Collection Policy Analysts and Chief Counsel to obtain counsel opinion or advice that filing type is frivolous.

3. Ensure appropriate areas are contacted to educate IRS employees of new argument. See IRM 25.25.10.19, Coordination with Program Stakeholders.

4. If unable to determine whether frivolous within two business days, return to Submission Processing for timely processing and refund issuance with instructions to refer case back to FRP for potential examination.

5. Ensure return is processed as filed. Refer to instructions for frivolous filing below with the exception that any refund should be issued to avoid paying additional interest. Do not include Computer Condition Code (CCC) "X" on Form 4227, "Intra–SC Reject or Routing Slip".

(2) Suspend case until determination is made by RICS HQ.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) Criteria used to establish area office referral are:

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) If filing does not meet criteria for area office referral, but has been determined to be frivolous, work as follows:

1. Select for examination returns citing recognized or potentially frivolous arguments

Note: New issues associated with BMF filings will be elevated through the FRP Technical Coordinator or other designated employee to RICS HQ for coordination with the appropriate HQ BMF form analyst and ATAT.

2. Consider for examination referral, accounts with unsatisfied filing requirements

(4) All BMF filings selected for examination will be routed via Form 3210 to the appropriate Classification group for processing.

(5) When routing, ensure all pertinent materials are included that support the filing is frivolous such as: Counsel Opinions, Issue Management Team guidance, etc.

(6) Returns will be processed, if possible. Form 4227, "Intra–SC Reject or Routing Slip", will be used to advise Rejects of appropriate return processing including: freezing refund with CCC "X" and returning filing to FRP. Action Code 331 will be used to cause the return to reject.

(7) Filings selected for examination will be processed as follows:

(8) When returns are returned from Rejects, input into FRP Master.

(1) If filings are not selected for examination as frivolous or any other Exam criteria, the taxpayer’s return will be accepted as filed.

(2) If return was processed, close all FRP controls and release all FRP freezes, then return to files.

(3) If return was not processed, return to Receipt and Control for regular processing. Stamp upper left corner of return, "FRP CLEARED", include last 5 digits of IDRS number.

(4) If the taxpayer received a Letter 3176C. Send an apology letter to advise the taxpayer’s return was reviewed for (fill-in) and the item is not frivolous.

(1) Returns claiming no wages paid and requesting a refund of Federal Tax Deposits (FTD) or credits previously paid are worked as follows:

1. Research for subsequent periods filed. If the taxpayer filed subsequent quarterly returns, then it is very likely that the case is NOT a "true" IRC 861 return since the taxpayer has not stopped filing and has not withdrawn from the system.

2. If CC BRTVU shows the employer filed and claimed a deduction for wages paid, the employer should be filing Form 94X to report any employment tax due on those wages. If the employer did not file Forms 94X for this time period or filed Forms 94X showing zero wages and the deposits were refunded to him, the employer may be involved in the IRC 861 scheme.

3. Research if the return is requesting a refund with a statement similar to "not liable for tax" written anywhere on the return or attachments.

4. Research any return with a copy of a notice to the taxpayer from IRS attached requesting the taxpayer file a zero tax return in order to claim refund of an FTD or credit that was previously posted to the account with no return filed.

5. Research for earlier quarters in an entity’s existence where the taxpayer states they paid no wages but where IDRS research of more recent quarters shows a consistent pattern of filing employment tax returns and paying tax.

6. Research Forms 94X if overpayment box "Applied to next return" is checked.

7. Research Forms marked “Final” and research indicates ongoing business activity.

(2) Returns not deemed frivolous will be routed to appropriate area for processing.

(3) Returns that are determined not to be frivolous but have examination potential. See IRM 25.25.10.9.8, Area Office Procedures.

(4) Returns selected for FRP processing will be worked as follows:

(5) If taxpayer responds or suspense period expires:

(1) Forms 1041, "U.S. Income Tax Return for Estates and Trusts", based on frivolous arguments will be worked under this category as claims. Input the document to FRP Master, regardless of whether the filing is an original or a subsequent filing on MFT 05.

(2) Any Form 1041 that is filed with an SSN, (no legitimate EIN available) must be edited to a Form 1040 and processed as an IMF form. Any Form 1041 with a legitimate EIN must be processed under that EIN and worked as BMF.

(1) Frivolous BMF filings (excluding Forms 1041 with Argument Code 33, 34 or 46) will be loaded and scanned into FRP Master ensuring the EIN and XREF SSN is included. Ensure the appropriate form number is selected ( e.g., 941, 1120, 1041, etc.). One of the following scenarios will apply:

(2) When asserting the IRC 6702 penalty on BMF, a corresponding action code on FRP Master will be input as "ASSESSPEN52/FRVBMF" or "ASSESSPEN53/FRVBMF".

(3) Accounts with returns processed must either be corrected with an online adjustment, a FRP audit or examined by a field office. If examination is warranted, complete and attach a checksheet indicating what research was conducted. Route case for specialized BMF Classification processing to M/S 4450 Attn: FRP BMF classifier.

(4) C-Filings will be worked the same as IMF, following guidance found in IRM 25.25.10.8.5, C-Filings. No C-filings will be forwarded to field offices for audit.

(1) The Lead Development Center (LDC) authorizes civil investigations on abusive promotions for referral to investigating offices.

(2) All frivolous filings will be considered for potential civil investigation when promotions, promoters, or preparers are associated with them. Initial screening of returns, claims, and correspondence may determine the need to consider further development of case referrals for civil investigations. When a filing is associated with a reasonable number of continuous frivolous filings that are potentially attributable to a specific promotion, promoter, or preparer, FRP shall forward Referral Memo to LDC for determination of further processing.

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

(4) On rare occasions, generally when there is not a signed return preparer, but finite promoter filing characteristics can be determined, it may be necessary to secure EFDS research. Requests for EFDS queries will be made through RICS research analyst staff assigned to FRP.

(5) When promoter/preparer identity is obtained without TIN, attempt to secure TIN via IDRS. If unable to secure TIN, provide comments in Referral Memo.

(6) When positive identification of a promoter/preparer is made, provide documentation if possible that indicates extent of activity and whether it is ongoing. This may include but is not limited to:

• Copies of tax returns (if the case will not be worked by FRP)

• Advertisements

• Attachments to returns

• Promotional materials

• Correspondence

• POAs

• Purchase agreements

• Informant items

(7) Research IDRS/RPVUE to determine if additional returns were submitted but not referred to FRP or otherwise not identified. If returns are identified that need to be ordered from CC RPVUE research, order them.

(8) If it appears that the preparers or promoters of frivolous arguments require income tax audits of their individual filings, refer the case the Area Office PSP. Order promoter/preparer’s personal returns to determine if they have participated in the scheme.

(1) When a reasonable number of continuous filings from one promoter/preparer are identified, prepare a three-section brown case file folder with label containing promoter/preparer identification; to be maintained by the Campus until the case is closed and include:

• A participant list compiled from all available sources including FRP Master containing:
  - TIN
  - TP Name
  - Tax year(s) for associated tax returns for which preparer may be enjoined or penalties may be assessed
  - Claim amount

• Copies of all returns associated to promotion, if investigation is being conducted in FRP

• LDC Referral Memo including the following
  - Subject: IRC 7402/7407/7408 Investigation(s)
  - Taxpayer name (including Doing Business As (DBAs)
  - TIN
  - Description of promotion
  - Chief Counsel position paper, if available
  - Preparer’s involvement in tax promotion; e.g., promoting the argument, conducting seminars, preparer’s employee’s involvement, website, etc.
  - Summary of preparer’s personal income tax filings; e.g., preparer’s returns reflect the tax promotion, non-filer, etc.
  - Summary of preparer’s tax return filings
  - Information on impact of promotion to IRS. Address violations subject to IRC 6695, if applicable.

(2) Forward, by e-mail the referral memo and participant list to LDC.

(3) All other information listed above will be kept to support an investigation as warranted.

(4) Suspend case file until response is received from LDC.

(5) Enter promotion/promoter/preparer information to FRP Master database Project Status Listing to ensure accurate identification of all similar filings and ensure periodic updates as actions are taken.

(6) LDC will consider all the factors involved in each case and determine if promoter/preparer will be investigated for injunctive action including a streamlined investigation conducted by FRP or returned to FRP to have penalties assessed only.

(1) LDC will forward all approved Civil Investigation Recommendation Memos related to frivolous filings to FRP and the appropriate IMT technical advisor for review.

(2) Ensure all related frivolous filer promoters/preparers (Including Anti-tax/Constitutional) are reflected on Project Status Listing.

(3) If determination is made that FRP will conduct the IRC 6700 investigation, the LDC will forward the case file to FRP via E-mail. Criteria used includes but is not limited to: promoter/preparer activity sufficiently developed to allow for streamlined referral, i.e., at least three filings signed by preparer or additional filings not signed by preparer but with identical characteristics, attachments or information from taxpayer indicating preparer involvement with return.

(4) If case is not selected for FRP streamlined IRC 6700 investigation, assistance will be provided to appropriate area office conducting investigation.

(1) FRP preparer promoter investigations are more efficient and cost effective. These investigations result in shutting down abusive tax avoidance promotions before they proliferate. FRP will conduct all case research, document preparation and Department of Justice (DOJ) referral processes.

(2) Cases will be processed as follows:

1. Compile evidence and secure certified copies of any returns, IRP data or Forms relevant to the injunction case. In the event that an original paper return cannot be secured for certifying, the following language will be used on the Form 2866 to certify a scanned image of previously-made copy in order to satisfy the rules of evidence: "As part of the normal business practice of the Internal Revenue Service Frivolous Return Program function, tax returns received are scanned and electronically stored or otherwise maintained.  I certify that the attached copy of a return filed on [February 15, 2015] by [Taxpayer Name], Social Security Number [XXX-XX-XXXX] for tax year ending [Month DD, YYYY] received on [Month DD, YYYY] is a true and correct copy of the return filed with the Internal Revenue Service as electronically stored or otherwise maintained in the Frivolous Return Program."

2. Prepare and send by certified mail promoter Letter 3828, "Opportunity to Present Position - Tax Shelter Promoter", indicating date, place and time of interview and enclosing Notice 609, "Privacy Act and Paperwork Reduction Act Notice", Letter 3164P, "Third Party Notification for IRC 6700 /6701 Investigation" and Form 4564, "Information Document Request".

   Note: Per IRC 7602(c)(1), effective August 15, 2019, do not make any contact with a third party until the 46th day following the date of Letter 3164. This increases the prior requirement of 15 days to 45 days.

3. FRP Sr. Technical Coordinator will conduct a promoter/preparer interview by phone. After interview takes place or scheduled date passes, FRP Sr. Technical Coordinator will prepare a memo of interview or pertinent results. If participant list is obtained, FRP will forward to CWSD Gatekeeper to ensure any appropriate audit actions are taken.

4. Prepare injunction referral memo and forward case to Counsel for referral to Department of Justice or for advice as to penalty only assessments. If analysis results in determination to seek no injunctive action or penalty assessment, close case advising promoter of no change via Letter 1866, "Discontinuance".

5. Ensure promoter/preparer income tax case is addressed.

   Note: Ensure any income derived from promotion is considered including erroneous refunds and income derived from promotional activities.

(3) Counsel will forward results of injunctive action including any rejected cases with appropriate penalty instructions.

(1) Cases that do not result in civil investigations under section 6700 or 6701 will be considered for IRC 6694/6695investigations if associated with a tax return preparer(s). To apply sanctions on non-compliant preparers, Penalty Policy Statement P-20-1 directs assertion of preparer penalties only after due deliberation on all facts and circumstances.

(2) Individuals who knowingly aid and abet in the understatement of the tax liability for another person may be subject to certain penalties. See IRM 20.1.6, Preparer and Promoter Penalties and IRM 20.1.6.12, Office of Professional Responsibility, for information on practitioners who file delinquent and/or frivolous returns.

(3) For purposes of imposing a penalty under IRC 6694 or IRC 6695, a tax return preparer is any person who prepares for compensation, or who employs one or more persons to prepare for compensation (other than for the person) all or a substantial portion of any return or any claim for refund of tax. The preparation of a substantial portion of a return or claim for refund shall be treated as if it were the preparation of such return or claim for refund.

(4) IRC 6701(b), imposes a $1,000 penalty against any person for aiding or assisting in the understatement of tax or overstatement of credit. If the return, affidavit, claim, or other document involved relates to a corporation, the penalty is $10,000. Consider IRC 6701(b) as a potential alternative to the IRC 6694 penalty.

(5) All preparer penalty cases prepared by FRP will be coordinated with Associate Area Counsel to determine if the case will be considered for civil injunction, penalty assessment, or no action.

(6) Cases referred for IRC 6694 penalties are usually those with frivolous filings that are limited in number and in which the preparer has stopped preparing returns.

• Penalty under section 6694(a): Understatements due to an unreasonable position (as defined in IRC 6694(a)(2)) are subject to a penalty for each return or claim for refund equal to the greater of $1,000 or 50 percent of the income derived (or to be derived) by the return preparer.

• Penalty under section 6694(b): Understatements due to willful or reckless conduct (as defined in IRC 6694(b)(2)) are subject to a penalty, for each return or claim for refund, equal to the greater of $5,000 or 75 percent (or 50% for a return or claim prepared for a taxable year ending on or before December 18, 2015) of the income derived (or to be derived) by the return preparer.

• The penalty under IRC 6694(a) must be assessed within three years after the return at issue is assessed was filed. The penalty under IRC 6694(b) may be assessed at any time. Therefore, if there is six months or more time remaining in the period of assessment for any applicable tax period, refer the case for penalty assessment under both section 6694(a) and section 6694(b). Refer any case for penalty assessment under section 6694(b) only, if there is less than six months remaining in the period of assessment. See IRM 20.1.6.14.4, Coordination with Other Penalties.

(1) Input IDRS control to preparer TIN current CC TXMOD history, "Prep Inv" to ensure proper routing of subsequent correspondence or filings. Case file will contain:

• Injunction

• Client List for penalties

• Form 8278, "Computation and Assessment of Miscellaneous Penalties", indicating:
  - Preparer/Promoter Name
  - TIN -Tax year(s) of penalty assessment (may reflect "See Form 5816")
  - Tax Technician Number
  - Computation amount of penalty
  - IRC of penalty
  - Team Manager approval and signature date

• Copies of frivolous tax returns inserted in a separate folder

• IRC 7408/7407 Investigation Memo containing:
  - Subject: IRC 7407/6694 Investigation
  - Taxpayer Name (including DBAs)
  - TIN - Description of promotion
  - Preparer’s involvement in tax promotion, e.g., promoting the argument, conducting seminars, preparer’s employee’s involvement, website, etc.
  - Summary of preparer’s personal income tax filings, e.g., preparer’s returns reflect the tax promotion, non-filer, etc.
  - Summary of preparer’s tax filings per IDRS/RPVUE/FRP Master -Information on impact of promotion to IRS
  - Address violations of IRC 6695, if applicable
  - Discussion of rationale for proposing parallel investigation with CI. Include discussion of gravity of harm, extent of preparer’s participation and his degree of knowledge, likelihood of recurrence, preparer’s admission of responsibility and/or willingness to cooperate to correct filings.
  - A copy of closing letter from Counsel, if available
  - Copies of frivolous tax returns inserted in a separate folder

(2) Cases referred for IRC 6695 penalties are not as common but will be considered when appropriate. Associate Area Counsel will provide guidance on the determination of when IRC 6695 will be applied.

(3) If case is approved for IRC 6694 penalty assessment, forward to RICS Director for approval on Form 8278 and follow IRM 25.25.10.18.7, Proposing Preparer Penalties When There is no Injunction Referral but There is an Approved Investigation.

(1) Prepare Letter 1125, "Preparer Penalty 30-Day Letter", indicating:

• TIN

• Person to Contact

• Tax Examiner Name

• Employee IDRS number

(2) Prepare Form 5816, "Report of Tax Return Preparer Penalty Case", indicating:

• Name and address of preparer

• Self-employed preparer - checked, if applicable

• Preparer’s TIN

• Examining district: Area number

• Name and title of person with whom penalty was discussed

• Date of report

• In reply refer to: IDRS number

• Taxpayer’s name and address: See attached list (all taxpayers with the same tax period indicated on report)

• Tax period

• Master file tax code

• Total penalties

• Other information: "Explanation of Penalty" - Use information from court injunction or specific explanation from non-enjoined penalty case, e.g., "You filed tax returns claiming credits for reparations not allowable by law"

  Note: Multiple taxpayers for the same tax period can be included on one Form 5816 with taxpayer’s names attached.

• Employee's signature

(3) Prepare Form 5838, "Waiver of Restrictions on Assessment and Collection of Tax Return Preparer Penalty", indicating:

• Form number of return for which penalty is being charged - 1040, 1040X, etc. or "see attached list "

• Taxpayer’s name as shown on return or "see attached list"

• TIN or "see attached list"

• Tax period or "see attached list"

• Kind of penalty - (such as IRC 6694(a) and/or IRC 6694(b))

• Amount of penalty - (Total penalty amount being assessed for each kind of penalty)

• Name and address of preparer

(4) Prepare Form 6459, "Return Preparer’s Checksheet", checking all applicable boxes and including team manager’s approval.

(5) Mail Letter 1125, "Preparer Penalty 30-Day Letter", Forms 5816, "Report of Tax Return Preparer Penalty Case", Form 5838, "Waiver of Restrictions on Assessment and Collection of Tax Return Preparer Penalty", Letter 3164, "Third Party Notification", (if not previously sent) and Notice 609, "Privacy Act Notice and Paperwork Reduction Act Notice", to preparer and suspend case for 45 days.

(6) Annotate CC ENMOD with "LTR1125" to indicate letter has been sent.

(1) Requests for conference:

Contact preparer and attempt to resolve the issue.

(2) Requests for Appeals Consideration - IRM 8.1.1.3.1, No Appeals Conference or Concession on Certain Arguments. There are no administrative appeals provisions for requests based on frivolous positions.

(3) Requests for appeals that meet abatement criteria will be processed by FRP.

(4) Claims - See IRM 20.1.1.3, Criteria for Relief from Penalties and IRM 20.1.10.9.3, Penalty Relief. Review case for specific processing requirements per IRM 21.5.3, General Claims Procedures and IRM 4.19.16, Claims for additional processing information. Claims are usually filed on Form 843, "Claim for Refund and Request for Abatement", or Form 6118, "Claim for Income Tax Return Preparers", but may be made in an informal inquiry. Claims may be for abatement or refund and will be worked as follows:

(1) Complete Form 8278, "Computation and Assessment of Miscellaneous Penalties "See IRM 20.1.9.2.2, Penalty Assessment - Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties.

(2) If assessing under IRC 6694(a), input TC 290.00 with Penalty Reference Number (PRN) 645 for the amount of the penalties. Under IRC 6694(a), the penalty is $250 per return for returns prepared on or before May 25, 2007 and the greater of $1,000 or 50 percent of the income derived or to be derived by the tax return preparer for returns/claims prepared on or after May 26, 2007. For returns prepared for taxable years ending after 12/18/2015, the penalty was increased to 75 percent. For penalties assessed under IRC 6694(b), use PRN 650. For returns/claims prepared on or before May 25, 2007, the penalty is $1,000 per return/claim and for those prepared after May 26, 2007, the penalty is the greater of $5,000 of the income derived or to be derived by the tax return preparer.

(3) If assessing under IRC 6695 input TC 290 .00 with PRN 626 for total amount of penalties. The amount of penalty equals $50 per return/claim under IRC 6695 (a)-(e), $500 per return/claim under IRC 6695(f), and $500 per return/claim under IRC 6695(g).

(4) If assessing under IRC 6701 input TC 290 .00 with PRN 631 (IRC 6701) $1,000 per return/claim unless the return/claim is a corporation. Corporation return/claim is $10,000.

(5) Establish civil penalty name line, if necessary, per IRM 20.1.6.2.4, Civil Penalty Name Line.

(6) File case under TC 240 Document Locator Number (DLN) associated with Form 5147, "IDRS Transaction Record".

(7) Close IDRS control.

(8) Ensure Electronic Filing Coordinator is notified of all penalties asserted on return preparers per IRM 20.1.6.11.1, Standards for Tax Preparer.

(1) Closing Actions and monitoring follow-ups will be completed by:

• Send closing letter to Promoter/Preparer.

• Update Promoter Database via E-mail to LDC.

• LDC will notify Collections as appropriate, that penalties are being assessed by contacting the ATAT Coordinator for the area where the taxpayer resides. A list of Collection Coordinators can be found on the Abusive Shelter Web Site http://abusiveshelter.web.irs.gov.

• Consider referral to Office of Professional Responsibility per IRM 20.1.6, Preparer and Promoter Penalties and IRM 4.19.10.6.2, Office of Professional Responsibility.

• Consider referral to Communications Liaison.

• Submit case for quality review.

• Monitor new receipts for continued filings and/or injunction violations and refer findings to Associate Area Counsel for consideration.

(1) The Frivolous Return Program coordinates with Area Counsel to obtain legal and/or significant advice on:

• Whether an argument is frivolous

• Whether an argument is subject to the frivolous return penalty, and

• If there is a concern, whether a return constitutes a valid return

(2) All potential frivolous arguments must be coordinated with Counsel prior to processing under FRP guidelines. Requests for Counsel opinion will be coordinated with the Technical Coordinator to prevent duplicate requests. Requests will outline the specific frivolous argument involved and must have examples provided to assist Counsel in rendering opinions and must have Headquarters authorization.

(3) As new frivolous arguments are identified, the FRP will coordinate with Chief Counsel to update, "The Truth about Frivolous Arguments" https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-introduction and the "List of Frivolous Arguments" required by IRC 6702(c).

(4) All new Chief Counsel opinions will be reviewed for potential coordination on SERP/CAS alerts, updating existing training materials for employee identification and processing, coordination with TEC/CI and/or any affected processing areas.

(1) The FRP coordinates with Criminal Investigation in Headquarters for both Refund and Financial Crimes to:

• Provide information on specific cases and trends in possible criminal activity.

• Provide support for criminal investigations leading to prosecution of frivolous preparers, promoter, and filers.

• Coordinate case processing to promote productive use of resources.

(2) Information referrals to and from Criminal Investigation will be coordinated with the FRP CI Liaison. Requests can be routed to: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(1) SERP electronic alerts will be issued whenever new frivolous arguments are identified or when existing arguments resurface in significant numbers. The alert process will be used to apprise all employees to watch for filings in order to prevent processing and erroneous refunds.

(2) All alerts will be approved and published by the HQ analyst.

(3) Forward information for alerts to the LDC and include all pertinent information related to the nature of the filing.

(1) Outreach education for internal stakeholders on frivolous arguments is critical and will be given priority. This training will be provided annually to Submission Processing and also made available for all IRS offices. This endeavor is imperative to stop the proliferation of egregious promotions, ensure timely and accurate tax assessments, avoid erroneous refunds and provide fair and consistent treatment to all taxpayers.

(2) RICS will coordinate with HQ CAS and W&I Learning and Education to schedule training and provide instructors during annual pipeline processing Continuing Professional Education (CPE).

(3) RICS will provide updated training materials and IRM information to CAS HQ analysts.

(4) Coordination will be undertaken for all affected areas and will encompass IMF and BMF original returns, amended returns and claims processing.

(5) Training materials and supplemental support will be available on the FRP Web page listed below.

(1) The Campus FRP Coordinator contact information is now available at FRP Campus Contacts.

(2) All updates to the web page must be approved by RICS HQ.

(3) Updates from Ogden FRP will be routed through the FRP Technical Coordinator.

(4) The FRP Technical Coordinator will sanitize any updates prior to referral to RICS HQ.

(5) RICS HQ will secure any necessary Disclosure clearance and route to: Webmaster assigned to SE:S:CCS:CRC:EP.