4.19.12. Classification Support

(1) Purpose: To provide processing guidelines for the case building of cases involving Requests for Prompt Assessment under IRC 6501(d) (Form 4810) and Requests for Discharge from Personal Liability under IRC 2204 or IRC 6905 (Form 5495).

(2) Audience: The primary users of this IRM are IRS employees in SB/SE Exam Classification Support who process Form 4810, Request for Prompt Assessment, and Form 5495, Request for Discharge from Personal Liability under Internal Revenue Code Section 2204 or 6905.

(1) Form 4810, Request for Prompt Assessment, and Form 5495, Request for Discharge from Personal Liability under Internal Revenue Code Section 2204 or 6905, are routed at intake per IRM 3.10.72-1, Routing Guide/Local Maildex. If Classification Support receives a Form 4810 or Form 5495 that does not align with the routing guide, Classification Support will treat as a misroute and send to an appropriate campus.

(2) Complete the initial review of the Form 4810 and/or Form 5495. Use the chart below if you determine the form is a duplicate request.

(3) Review the boxes on the Form 4810 and Form 5495 that indicate if the requestor attached related documents. Review case contents for applicable forms, copies of the returns, letters of administration, letters of testamentary, or other related documents.

(4) The request must specify the period(s) and type of tax covered. Verify the type of tax and tax periods involved, ensure the form is filed for an acceptable return. If the return is not an acceptable return, refer to IRM 4.19.12.10.1.7, Rejecting the Case.

1. Form 4810 acceptable returns include: Form 709, Form 1040, Form 1041, and Form 1120 (all series, excluding 1120S). Forms 94X (Form 940, Form 941, Form 943, Form 944, and Form 945) are acceptable returns if they are required returns filed in relation to a corporation (Form 1120) contemplating dissolution, in the process of dissolving, or has already been dissolved.

   Note: Email Form 990-T to *Manager EO Classification with “Please Expedite – Form 990-T Prompt Assessment Request” in the subject line.

   Note: If a Form 706 is attached to a Form 1041, process the Form 1041 portion of the request. Send a Letter 86C and route the case with a Form 3210 to CSC (7940 Kentucky Dr., Florence, KY 41042)

2. Form 5495 acceptable returns include: Form 1040 and Form 1041.

3. Refer to IRM 3.10.72-1, Routing Guide/Local Maildex, when addressing mis-routed forms.

(5) Confirm the following information is present:

1. The request must be in writing and clearly show that it is a request for prompt assessment under IRC 6501(d).

2. The name and social security number (SSN) or employer identification number (EIN) are shown on the return.

3. The date and location of the IRS office where the returns are filed.

4. The Dissolution check box is required if corporate income tax returns are included.

5. Date of Death (Form 5495 only)

6. A valid Letter of Administration (LOA), Letter of Testamentary, etc.

(6) A valid Letter of Administration, Letter of Testamentary, etc. is required to verify authority to act on behalf of the taxpayer. Authorization may be granted by a court document signed by a court official with a state or county seal. Consider the following information when deciding if an authorization is valid:

1. The request is made by an executor, administrator, or other fiduciary representing the estate of the decedent or a fiduciary representing a dissolved corporation or one contemplating dissolution.

2. DO NOT accept Form 2848 or Form 8821 as valid Letters of Administration/Testamentary.

3. A Form 56 is acceptable for a Trust/Estate (Form 1041).

4. A Schedule K-1 is acceptable for a Corporation.

5. Form 5495 request MUST list a Decedent and SSN. The name of the Trust or Estate can’t be listed in place of the Decedent.

(7) Thoroughly review all other case documents.

(8) Reject the request if it is made by a corporation, a dissolving corporation, or a corporation contemplating dissolution currently in a bankruptcy status. Bankruptcy status may be identified by a -V freeze code, a TC 520 with a bankruptcy closing code, for example 83/85/88, or it may be stated in the Letters of Testamentary or other court documents sent by the taxpayer. Under the US Bankruptcy IRC 505b, prompt assessment is not available for chapter 13, chapter 7, or chapter 11. Refer to IRM 4.19.12.10.1.7, Rejecting the Case.

(9) If any of the required information is missing or incomplete, refer to IRM 4.19.12.10.1.6, Missing or Incomplete Information.

(1) Research IDRS CCs: SUMRY, ENMOD, INOLES, BMFOL/IMFOL, TXMOD, and any other applicable CCs.

(2) Confirm the IDRS control was opened correctly when assigned. For example, the activity code accurately reflects the form(s) received, the received date indicates the oldest IRS received date, etc. Make corrections as needed.

(3) Research entity information on CC ENMOD/ INOLES.

1. If the taxpayer’s entity information has been modified, update case documentation to reflect the new information. Leave notes in the case documentation outlining the change(s) made.

2. DO NOT update entity information in IDRS.

3. If the entity information does not match at all, refer to IRM 4.19.12.10.1.7, Rejecting the Case.

(4) Verify all returns referenced have been filed and the TC 150 (original return) is posted.

1. If the TC 150 is not present, research ENMOD and/or TXMOD to determine if an extension was filed (TC 460) and the new due date of the return. Refer to IRM 4.19.12.10.1.5, Missing TC 150, if it is past the applicable due date.

2. If the TC 150 unposted, research Document 6209 Code Retriever for the unpostable code. This will explain why the return unposted and the appropriate actions to take.

   Note: The UP Histories IAT Tool can be used to update.

3. If the TC 150 posted but is missing from the case file, refer to IRM 4.19.12.10.1.4, TC 150 Posted, Return Missing from Case.

(5) Determine if a TC 976/977 (duplicate return) is present on TXMOD.

1. Research to determine if an unresolved TC 976/977 (duplicate return) has posted to any tax forms/periods. The TC 976/ 977 may be the original return posted to an incorrect form/period. A duplicate return condition will often occur when a return is filed on the wrong years tax form or filed late. If TXMOD shows a TC 976/ 977, research CC BMFOLI/ IMFOLI for missing returns and use the information on the Form 4810 /Form 5495 to determine where the TC 976/977 should have posted.

2. If it is determined the TC 976/977 belongs to the tax period in question, see lead or manager for further instructions.

   Note: If the TC 976/977 belongs to the tax period in question and has unposted, correct the unpostable situation (the UP Histories IAT Tool may be used).

(6) Identify balance due accounts.

1. Form 4810: If there is a balance due on the account, continue processing the case as usual. When issuing taxpayer correspondence, ensure the balance is included in the letter. Use CC INSTA (with a 30-day payoff) to obtain the accurate balance.

2. Form 5495: If there is a balance due on the account, research CC ENMOD/ INOLES for the most recent balance due notice date. If the most recent balance due notice was issued within the last 30 days, allow additional time for the taxpayer to respond. Suspend the case for 45 days from the date the last balance due notice was issued. Notate “balance due” in the case documentation and update the IDRS control base activity to SUSPNDMMDD. Hold case in designated location. If the most recent balance due notice was issued more than 30 days ago, notate "balance due" on the Form 5495, and reject the case back to the taxpayer. Refer to IRM 4.19.12.10.1.7, Rejecting the Case.

(7) Review the ASED.

1. If the ASED on CC TXMOD has expired or will expire within 9 months (Form 5495) or 18 months (Form 4810) refer to IRM 4.19.12.10.1.9.1, Accept.

(8) Research Freeze Codes.

1. Refer to IRM 21.5.6.4, Freeze Code Procedures, to research freeze code conditions that may need to be resolved prior to referral.

   Note: If there is a -L or a -Z freeze on the account, do not disclose to the taxpayer they may be under investigation or have an open audit.

(9) Research other Transaction Codes (TC’s).

1. Research the Document 6209 Code Retriever to identify unknown TCs and determine if additional research is necessary.

   Note: The CSI IAT Tool can be used.

(10) Resolve Multiple IDRS Control Bases.

1. Identify if contact is required prior to referring the case. If placing a control into "B" status prior to inputting an adjustment, ensure the control is placed back into "A" status after actions have been taken.

2. If a multiple control contacts you, ensure a timely response to their inquiry is provided. Consult the lead or manager if unsure of what actions can be taken on the case.

(1) If the TC 150 posted to the account but the taxpayer did not include a copy of their return with their prompt assessment request, access the Employee User Portal (EUP) to locate the return using Modernized e-File (MeF).

(2) If the return is not available on EUP/ MeF research AMS/ CII to locate the return.

(3) If the return is not available electronically, request the TC 150 from files using CC ESTAB.

1. Update the IDRS control base activity to ESTABMMDD (MMDD is 60 days from the date ESTAB request was made).

   Note: The ACTON IAT Tool can be used.

2. Place the case on the suspense wall according to the month the case was received. If the original return is not received from files within 60 days, print CC BRTVU, include it with the case file and continue processing.

(4) Document all actions taken in the case documentation section of the database.

(1) If a TC 976/977 (duplicate return) is present on IDRS refer to IRM 4.19.12.10.1.3, IDRS Research.

(2) If a Form 4810 and/or Form 5495 is received and there is no TC 150 on IDRS, refer to the table below.

(3) Use a Letter 621C when corresponding for a Form 4810 and a Letter 738C when corresponding for a Form 5495.

(4) When the original return is secured:

1. If other missing or incomplete information was also requested and has not been received, refer to IRM 4.19.12.10.1.6, Missing or Incomplete Information.

2. If all required case contents are present, refer to IRM 4.19.12.10.1.8, Classification Referrals.

3. Leave case notes in the case documentation to indicate the return has been secured.

(5) Summarize actions taken and letters sent in the case documentation section of the database.

(1) If the request is incomplete or invalid for any reason and a determination could not be made through research, use the IAT Letters Tool, to send a Letter 621C, (Form 4810) or Letter 738C(Form 5495) to request the missing or incomplete information.

(2) Suspend the case for 60 days.

(3) Update the IDRS control base activity to SUSPNDMMDD.

(4) When all required contents are received, review for accuracy, notate in case documentation and continue processing. Refer to IRM 4.19.12.10.1.8, Classification Referrals.

(5) If the taxpayer does not respond reject the case. Refer to IRM 4.19.12.10.1.7, Rejecting the Case.

(6) If the taxpayer responds to the inquiry after the suspense has expired and the case has been closed, work the case as a new request. Refer to IRM 4.19.12.10.1.2, Initial Review of Incoming Requests.

(1) Send a Letter 621C(Form 4810) or Letter 738C (Form 5495) to reject the case back to the taxpayer. Provide an explanation of why the form is being rejected.

(2) Circle out the received date and any other IRS notations in red and attach a copy of the Form 4810 and/or Form 5495 to the letter.

(3) Detach copies of envelopes, duplicate IRS letters, copies of electronic returns and/or IDRS prints. Identify they can be destroyed by writing a large “X” on the top page of the prints and placing them in a classified waste bin.

(4) Update the IDRS control base activity to RJECT for each affected tax period.

(5) Enter case notes in the case documentation section of the database summarizing case actions, identify/mark which letter was sent, and press the close button for each tax form and period addressed.

(6) Ensure any original returns included with the request or previously requested from files are sent to processing or refiled.

(1) Ensure the case is completely built before sending to Classification to be classified as Accept/Reject/Select.

(2) Update the IDRS control base activity to FULLPKG.

(3) Follow local routing procedures to route to Classification.

(1) Classification will classify the case and return it to Classification Support with a determination.

(2) Classification Support will take the following actions based on the Classifier’s determination:

1. Accept: Accept the form as filed.

2. Reject: Reject the form back to the taxpayer.

3. Select: Open AIMS and build the case.

(1) Purpose: The instructions in this subsection are used to process Form 8282, Donee Information Return, as part of the Form 8282 /Form 8283 , Non-cash Charitable Contribution match program. The program screens for potential selection for audit. Cases are selected when non-cash contribution deductions do not meet the criteria established for substantiation. Cases may be selected for Area Office or Campus Exam.

(2) Audience: CEFS Classification Support executes the Form 8282 / Form 8283 Match Program under direction from Exam Quality and Technical Support (EQTS). CEFS Policy HQ analyst has oversight for the program and coordinates technical issues with EQTS.

(3) Reporting: Process cases under Organization Function Program (OFP) 91717, Form 8282 Cases.

(1) Process new receipts of Form 8282, Donee Information Return, as follows:

1. Remove staple and envelopes from Form 8282 ensuring any correspondence remains with the form.

2. Stamp the bottom of the form with current date.

3. Scan the form and save it to an SBU folder.

4. Upload the form to the SharePoint database and create a case in the appropriate year’s folder.

5. Delete the form document(s) out of the folder on your computer after verifying they successfully saved to the database. See IRM 10.5.1, Privacy Policy, for privacy policies and practices.

(2) If a Form 8283 is received by itself, associate it with the original return.

(1) In accordance with IRC 6050L(a), if a charitable organization sells, exchanges, or otherwise disposes of charitable deduction property within 3 years after its receipt, the organization must file a Form 8282, Donee Information Return, containing the following information:

1. The name, address, and Employer Identification Number (EIN) of the donee filing the return

2. The name, address, and Taxpayer Identification Number (TIN) of the donor

3. A description of the property

4. The date of the contribution

5. The amount received on the disposition

6. The date of such disposition

7. A description of the donee’s use of the property

8. A statement indicating whether the use of the property was related to the purpose or function constituting the basis for the donee’s exemption under IRC 501

(1) If the TIN is missing or incomplete take the following actions:

1. Research IDRS command codes NAMES and NAMEI for IMF or NAMEE or NAMEB for BMF to locate missing TINs.

2. If you are unable to locate the missing TIN on IDRS, research online resources.

3. If you are unable to locate the missing TIN in IDRS, research the Form 8282 database. If the TIN is not found in the 8282 database, research using web-based public record tools.

(2) If the Form 8282 is incomplete or invalid for any reason and a determination could not be made through research, send a letter to request the missing or incomplete information.

1. Ensure the letter is reviewed and approved prior to sending.

2. To ensure timely and quality responses to taxpayer correspondence refer to IRM 4.19.12.3, Correspondence.

(3) Create an IDRS Control Base with an activity code of FORM8282.

(4) Suspend the case for 30 days by updating the IDRS control base activity code to SUSPNDMMDD (MMDD = 30 days from the date the letter was generated).

(5) If response to the letter is not received within 30 days, send a second letter requesting the information and update the IDRS control base activity code to SUSPNDMMDD (MMDD = 30 days from the date the letter was generated).

(6) If no response is received, close the IDRS control base with activity code NORESPONSE.

(7) If all required contents are received, review for accuracy and continue processing.

(1) Enter Forms 8282 that have been verified as accurate and complete into the Form 8282 database.

(2) Form 8282 database entry must include the following information:

1. TIN

2. Primary Name

3. Secondary Name

4. Charity TIN

5. Property Donated

6. Year Received

7. Date Disposed

8. Disposition Amount

(3) The Form 8282 database is a local database maintained by the Ogden Campus Exam. Access is approved through Ogden Campus Exam Planning and Analysis staff.

(1) Classification is completed in EQTS. If EQTS contacts Classification Support to build selected cases, take the actions outlined in this IRM.

(2) The EQTS classifier will provide Classification Support with a completed Form 6754, Examination Classification Checksheet.

(3) Research IDRS to identify if an AIMS base is open.

1. If there is an open AIMS base, use the AIMS data to route the Form 8282 case file to the Area Office or Campus Exam.

2. If the case is NOT open on AIMS, use CC AM424 to open an AIMS base.

(4) Verify completeness of the Form 6754, Examination Classification Checksheet, by ensuring the following notations are present:

1. PC 0075 and SC 85 at top of the form

2. Cases selected for office audit (Campus Exam) should have Box 3 checked in Section B

3. Cases selected for field audit (Area Office) should have Box 4 checked in Section B

4. Check Box 18, Contributions

5. Remarks should state "See 8282 and stuffer"

(5) After verifying the completeness of the Form 6754, Examination Classification Checksheet, take the following actions:

1. Enclose Stuffer 0075, Non-Cash Contributions, with Form 8282 Filed by Donee, with the built case.

2. Prepare Form 3210, Document Transmittal

3. Route to the appropriate area

(6) When the retention period expires, complete Form 11671, Certificate of Records Disposal for Paper or Electronic Records, to obtain approval to destroy or delete the data, form, etc.

(1) State agencies file Form 8610, Annual Low-Income Housing Credit Agencies Report, to

1. transmit Form 8609, Low-Income Housing Credit Allocation and Certification, and Forms 8610, Schedule A,

2. report the dollar amount of credit allocated during the year under IRC 42(h)(1), or credit allowed under IRC 42(h)(4) for projects financed by tax-exempt bonds subject to the volume caps under IRC 146, (see IRC 142(d) also),

3. provide reconciliation of the state agency's credit ceiling and allocations, and

4. report compliance with compliance monitoring requirements under Treas. Reg. 1.42.5.

(2) Form 8610 Schedule A, Carryover Allocation of Low-Income Housing Credit, is used by state agencies to report carryover allocation of LIHC. It is reviewed for accuracy, completeness and timeliness.

(3) Form 8609, Low-Income Housing Credit Allocation and Certification, Part I, Allocation of Credit is completed by the state agency to document allocations of credit. It is reviewed for accuracy, completeness, and timeliness.

(4) Form 8610 is reviewed to:

1. ensure the summary in Part I reconciles with the attached Forms 8609 and 8610 Schedule A,

2. ensure the unused LIHC carryover from the prior year and credit allocated from the national pool is accurately reported, and

3. ensure the state agency has not allocated more credit than it is authorized to allocate during the year. Failure to comply with the compliance monitoring requirements is reported to the SB/SE program analyst assigned to the LIHC program.

(5) The state agency must file Form 8610 and attachments by February 28th of the year following the end of the calendar year for which the form is filed.

(6) Forms 8610 are to be made available to Statistics of Income and IRS Chief Counsel upon request.

(7) Information from Form 8610, 8610 Schedule A, and Form 8609 Part I is maintained in a database.

(1) Form 8609, Low-Income Housing Credit Allocation and Certification, Part II, First-Year Certification, is completed by taxpayers and filed with the LIHC Compliance Unit to comply with the one-time certification requirement under IRC 42(I).

(2) Form 8609 is reviewed to ensure:

1. Part I has been completed and signed by a state agency official,

2. All line items in Part II have been completed, and

3. The taxpayer signed the form and the signature date is annotated.

(3) If Part II is incomplete or otherwise flawed, the form should be returned to the taxpayer for correction.

(4) If the taxpayer has submitted a Form 8609 without Part I completed or signed by the state agency, the forms should be reviewed for audit potential.

(5) Information from Form 8609, Part II is maintained in a database.

(1) State agencies file Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition, to notify the IRS of noncompliance with IRC 42 or to report a low-income building disposition. The forms are analyzed upon receipt.

1. If the form was filed solely to report previously reported noncompliance has been corrected, no further action is required.

2. If the form reports noncompliance or a building disposition, the taxpayer receives notification Letter 3464, Taxpayer Correspondence for Low Income Housing Credit Program, or Letter 3467, Taxpayer Correspondence for Low Income Housing Credit Program - Disposition of Buildings, specific to the type of noncompliance (or building disposition) that explains noncompliance may result in the loss and/or recapture of the tax credit. The taxpayer is advised to contact the state agency to resolve the noncompliance issue.

(2) Follow-up communication with state agencies or taxpayers (or their representatives) may occur.

(3) Forms 8823 are evaluated for audit potential. See IRM 4.19.11.2.19.5, Evaluations for Audit Potential.

(4) Form 8823 information is maintained in a database.

(1) For dispositions before July 31, 2008, taxpayers could file Form 8693, Low-Income Housing Credit Disposition Bond, to place surety bonds or Treasury Direct accounts upon disposition of a low-income building (or interest therein) to avoid the credit recapture provisions under IRC 42(j). The taxpayer qualified for a disposition bond if it was reasonably expected the building would continue to be operated as a qualified low income building for the remainder of the 15-year compliance period.

(2) For dispositions after July 30, 2008, taxpayers are not required to recapture the accelerated portion of the credit if it is reasonably expected that the building will continue to be operated as a qualified low-income building for the remaining compliance period and therefore, are not required to place a bond or pledge collateral at the time of the disposition.

(3) Form 8693 bonds or Treasury Direct Accounts timely posted for dispositions before July 31, 2008, are maintained until:

1. The bond period expires. The bond will then be cancelled and returned to the taxpayer or the funds in the Treasury Direct will be returned to the taxpayer, or

2. The taxpayer elects to be treated as if the disposition took place after July 30, 2008, which results in the cancellation of the bond or return of the funds held in a Treasury Direct Account. Instructions for making the election are included in Rev. Proc. 2008-60. The taxpayer can make the election at any time.

(1) The LIHC Unit supports the classification of returns for audit by evaluating the information submitted on forms and documents submitted to the unit by state agencies and taxpayers.

(2) The evaluation will include consideration of:

1. Large, unusual, or questionable items.

2. Predetermined criteria intended to identify specific noncompliance issues. Criteria may be established based on current trends or known noncompliance strategies. These criteria may be documented by internal memoranda.

3. Fact patterns requiring evaluation.

(3) Large, unusual and questionable items are defined as:

1. Comparative nature of the issue: two of a hundred of a building's rental units out-of-compliance for a month is not as important as a project failing the 40/60 minimum set-aside.

2. Absolute nature of the issue: violations of the physical conditions standards should be evaluated based on the severity of the noncompliance, as well as the number of units impacted. Consideration must also be given to the documentation provided by the state agency.

3. Inherent nature of the issue: a permanent decrease in the eligible basis of the property is more significant than two units that are not available for rent for two months.

4. Evidence of intent to mislead; which includes missing, misleading or incomplete documentation.

5. Extenuating circumstances: the issue cited is very temporary or quickly remedied once identified.

(4) The following instances always require evaluation of audit potential:

1. Form 8609, Low-Income Housing Credit Allocation and Certification, Part II, if Part I of the form is not completed and signed by a state agency.

2. Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition, if a state agency determines the building (or project) is no longer in compliance and is no longer participating in the program or reports a disposition of a building (or interest therein).

(5) Once it is determined further consideration of audit potential is needed, a classification package will be prepared. The file will include

1. Classification checksheet,

2. Master file research,

3. Copies of Form 8609, Parts I and II,

4. Copies of Form 8823, and

5. Other relevant information.

(6) The information in the classification package is reviewed for audit potential.

(7) IRS personnel may contact the LIHC Compliance Unit for database research by calling 215-941-4496, faxing request to 215-516-1293, or writing to:
Internal Revenue Service
Attn: LIHC Compliance Unit, Mail Stop 4-E08.142
2970 Market St.
Philadelphia, PA 19104

(8) Files selected for audit potential will be forwarded to SB/SE’s IRC 42 Program Analyst and Technical Advisor for classification.

(1) Information about the LIHC program is also available on the Examination Knowledge Management page for Low-Income Housing Credit.

(2) Technicians within the LIHC Compliance Unit are assigned specific states; the agencies are provided contact information.

(3) Taxpayers and other external customers are provided contact information on correspondence as needed.