4.70.6. Classification and Case Assignment (C&CA) Procedures

(1) On May 1, 2017, TE/GE underwent a reorganization that resulted in the creation of the CP&C functional subdivision under the Government Entities and Shared Services functional division. This reorganization created three areas within the subdivision:

• Classification and Case Assignment

• Issue ID and Special Review

• Planning and Monitoring

(2) Within the C&CA area, the reorganization created the following groups:

• Classification Group 1 (CL1)

• Classification Group 2 (CL2)

• Classification Group 3 (CL3)

• Classification Group 4 (CL4)

• Case Assignment (CA)

(1) United States Code Title 26 and Title 31 confer the authority to resolve federal tax issues to the Internal Revenue Service. Policy Statement 4-119 outlines the purpose and objectives of the Tax Exempt and Government Entities examination program.

(1) The Director, CP&C is the executive responsible for the classification and case assignment, issue identification and special review, and planning and monitoring programs.

(2) The Manager, C&CA is the Program Manager for the classification and case assignment program.

(3) Management officials are responsible for

• Providing internal controls relating to their group's processes.

• Communicating the instructions to the employees.

• Ensuring the employees carry out the instructions.

(4) Employees who work in the C&CA groups are responsible for creating, assigning, and/or resolving cases as outlined per the procedures in this manual.

(1) C&CA manages the program through regular reports generated from the Reporting Compliance Case Management System (RCCMS) and other systems connected to RCCMS.

(2) The program is also subject to operational reviews performed by executives and their support staff within Government Entities and Shared Services.

(1) Any interactions with the public, if they occur, will be done in accordance with the Taxpayer Bill of Rights as listed in IRC 7803(a)(3).

(1) The following acronyms and abbreviations appear throughout this IRM:

(2) The following table provides definitions for the terms identified below:

(1) For related resources on case classification, selection, and development, please see the following manual sections and documents:

• IRM 4.5, TE/GE AIMS Manual

• IRM 4.23, Employment Tax

• IRM 4.71, Employee Plans

• IRM 4.75, Exempt Organizations

• IRM 4.81, Tax Exempt Bonds

• IRM 4.86, Indian Tribal Governments

• IRM 21.7, Business Tax Returns and Non-Master File Accounts

• IRM 25.2, Information and Whistleblower Awards

• IRM 25.6, Statute of Limitations

• Document 6379, Information Systems Codes - Quick Reference for EO Employees

• Document 6476, Information Systems Codes - Quick Reference for EP Agents/Specialists

• Document 11308, Information Systems Codes - Quick Reference for Exempt Organizations-Government Entities Examinations

(2) Desk guides provide specific procedures and guidance to C&CA employees to manage referrals, classify work, and assign cases to the virtual shelf. The following four desk guides are available:

• Affordable Care Act (ACA) Desk Guide – contains detailed information on handling ACA referrals. Classification Groups 1 and 2 (CL1 and CL2) manage ACA cases.

• Classification Group 3 (CL3) Desk Guide – contains detailed information on processing all incoming TE/GE referrals, as well as information on classifying EO referrals.

• Classification Group 4 (CL4) and Case Assignment Desk Guide – contains detailed information on classifying casework (e.g., filling stocking reports, classifying claims and other casework), and classifying Employee Plans (EP); Federal, State, and Local Government / Employment Tax (FSL/ET); Indian Tribal Governments (ITG); and Tax Exempt Bonds (TEB) referrals and delivering casework to the field (by way of Case Assignment (CA)).

• Whistleblower (WB) Desk Guide – contains detailed information on handling both Whistleblower A (WB-A) and Whistleblower B (WB-B) claims. Classification Group 1 (CL1) manages WB cases.

(1) The IRS has some main objectives surrounding workload selection:

1. Selecting cases or compliance strategies that will have the highest positive impact on voluntary compliance and tax administration.

2. Selecting work in an unbiased manner without retaliating against or harassing a taxpayer (see IRM 1.2.1.2.36, IRM 1.2.1.5.10, and Section 1203(b)(6) of the IRS Restructuring and Reform Act of 1998 (RRA 98)).

3. Protecting the confidentiality of the criteria used to select work so taxpayers cannot easily avoid detection.

4. Ensuring fairness and integrity in the enforcement selection process (see IRS Policy Statement 1-236 (IRM 1.2.1.2.36 )).

(2) CP&C was created to address concerns regarding the separation of classification, workload selection, and examination activities.

(3) Classification is the process of determining whether a return should be selected for compliance activities, what issues should be the primary focus of the compliance activity, and the type of compliance activity that should be conducted.

(4) C&CA should classify all cases to ensure that adequate internal controls are maintained; the classification procedures that follow provide checks and balances to minimize the potential personal influence of any one employee over the initiation of compliance activities.

(5) C&CA will provide various services to the Examination Managers. These include

1. Filling orders for cases

2. Reviewing and classifying returns

3. Establishing cases on AIMS

4. Establishing cases on the TE/GE RCCMS

5. Processing claims

(6) C&CA reviews and classifies the following types of work:

• Stocking Plan Classification

• Training Case Order Classification

• Referrals

• Examination Reconsiderations

• Bankruptcy

• Claims/Requests for Abatements

• Offer In Compromise - Doubt as to Liability

• Requests for Abatement Under IRC 4962

• Taxpayer Advocate Service Operational Assistance Requests

• Whistleblower Claims

(7) C&CA is responsible for housing and maintaining the Classification Settlement Program (CSP) Agreements for the following TE/GE Examination Functions: EO, FSL/ET and ITG. CSP Agreements are worker reclassification agreements secured in examination or compliance activities. The TE/GE Examination Function Coordinators send the CSP Agreements via email to Manager EO Classification. C&CA will keep the agreements indefinitely until Records Control Schedule (RCS) 23 Item 42(c) is approved with a definitive retention period.

(1) When CL3 receives

• an EP referral from the public, or

• an EO referral from the public or another governmental entity,

(2) Upon creation of a Referral activity in RCCMS, CL3 employees will:

1. Extract the Letter 4426 from the RCCMS documents repository.

2. Address the letter to the submitter's address that is included on the referral.

3. Use the following referrals mailing address when preparing the letter:

Tax Exempt and Government Entities
Room 855, Mail Stop 4910 DAL
1100 Commerce Street
Dallas, TX 75242-1100

(3) If the referral is from a member of Congress, CL3 addresses a separate acknowledgment letter with a personalized greeting to each Congress person who signed the referral.

(1) P&M provides a stocking plan to the CL3 Group Manager when additional cases need to be placed on the virtual shelf to fulfill work plan requirements.

(2) The CL3 Group Manager identifies referrals to fulfill the stocking plan.

(3) Classifiers, and/or others designated by the CL3 Group Manager,

1. Convert the referrals to compliance activities within RCCMS.

2. Upload the case build sheets to the compliance activities.

3. Set the RCCMS status code to "Selected, Not Assigned" for BMF or "Classification Control" for NMF.

   Note: AIMS/RCCMS status codes are found in the Information Systems Codes - Quick Reference documents, see IRM 4.70.6.1.7 (1), Related Resources.

4. Establish AIMS controls on the BMF compliance activities.

   Note: CA will perform the AIMS establishments for the NMF compliance activities that are in status code "Classification Control." See IRM 4.70.6.7.

5. Notify the CA Group Manager when these actions are complete.

(4) Upon full AIMS establishment of the BMF compliance activities, the classifier transfers the compliance activities (BMF and NMF) to the appropriate case assignment functional virtual shelf for selection by a FAC. For the correct functional codes to use, see Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves.

(1) The CL3 Group Manager oversees the assignment of referrals to classifiers for evaluation.

(2) A triage team within CL3 sorts the referrals:

1. Immediate Assignment (IA) (fully classified in RCCMS Group 7741).

2. No examination potential (created and then closed in RCCMS Group 7740).

3. Examination potential and/or evidence of possible PCI (fully classified in RCCMS Group 7741).

4. Whistleblower (see IRM 4.70.6.6, Whistleblower Procedures).

(1) Upon receipt of the transferred RCCMS files from the CL3 Group, the CL4 Group Manager assigns referral activities to classifiers for evaluation.

(2) CL4 classifiers evaluate referrals and close those without merit to "Final Close" status in RCCMS.

(1) For details on examination reconsideration requests, see IRM 4.75.37.11, Request for Abatement - Examination Reconsideration.

(2) CL4 assigns the case with the source code for "Referral from Taxpayer". If the case is on RCCMS, CL4 asks the AIMS Analyst to retrieve the file from the RCCMS Library.

(1) CL4 receives notice from Insolvency of all tax exempt (and government) entities that have filed for bankruptcy, including IRC 505(b) Prompt Determination Requests. See IRM 5.9.1.4, The Role of Insolvency, for a description of Insolvency responsibilities. Also, see IRM 5.9.4.9, Prompt Determination Requests from Trustee, for IRC 505(b) Prompt Determination Requests.

(2) When notified, the bar date is often near expiration. This gives little or no time to do an examination and submit a claim before the expiration of the bar date.

(3) CL4 may assign bankruptcy referrals for tax exempt (and government) issues after a bar date has passed or is about to pass. CL4 may hold a bankruptcy referral for the subsequent year filing to determine if any new violations may have occurred.

(1) The Ogden Service Center/Campus (OSC) receives and processes claims. If a claim is received by any other group in TE/GE, send it to OSC for processing. See IRM 21.7.7.6.16, EO Claim Procedures.

(2) OSC forwards all claims that can’t be processed by them to CL4. OSC establishes all such claims on AIMS in IDRS before sending to CL4. See IRM 21.7.7.6.16.

(3) If the claim is received in CL4 without an AIMS account, CL4 will establish the claim on IDRS.

(4) When an AIMS account is present on IDRS, CL4 establishes the claim on RCCMS.

(5) CL4 classifiers will ensure a copy of the claim and original return is included in the claims case. Examination Special Support (ESS) accepts Statistics of Income Exempt Organizations Return Image Net (SEIN) copies for closing purposes. BRTVU is also acceptable if SEIN is not available.

(6) CL4 classifiers will review the claim. Any claim for a refund that cannot be resolved by a CL4 classifier will be sent to Examination and will include a classification sheet detailing the issues that the examiner will need to resolve prior to closing.

(7) All claims that have an ongoing examination will be sent to the Examination Group to be worked concurrently. The CL4 classifier will provide a detailed chronology that will include the claim issue, dollar amount and any secondary issues present.

(8) For claims going to the Examination Group, the CL4 classifier will enter "IA-Clam" in the Comments field on the Codes/Checksheets Tab of the RCCMS compliance activity and on the RCCMS transfer request comment box.

(9) Abatement cases involving penalties and/or interest only, and abatement cases for which no taxes were paid, will be designated as high priority cases. CL4 classifiers close abatement cases if they meet the following:

• There was no prior examination.

• There is no need to contact the taxpayer.

• IRS is allowing the amount in full.

(10) For abatement cases that cannot be closed by CL4, the CL4 classifier will enter the necessary information for the FAC in the Comments field of the Codes/Checksheets Tab on RCCMS.

(11) The CL4 classifier will notify the FAC and the CA Manager by email when a claim is put on the virtual shelf.

(1) To process an Offer in Compromise - Doubt as to Liability that comes into Classification, see IRM 4.75.37.14, Offer in Compromise - Doubt as to Liability (OIC-DATL), for instructions.

(1) IRC 4962(a) provides discretionary authority to the Service not to assess, or to abate or refund, certain "qualified" Chapter 42 first-tier taxes if the organization establishes that a taxable event

• Was due to reasonable cause;

• Was not due to willful neglect; and,

• Has been corrected within the correction period for the taxable event.

  Note: Refer to IRC 4962(c) for substitute language regarding the IRC 4955 tax.

(2) CL4 follows the procedure for claims shown in IRM 4.5.3, TE/GE AIMS Special Processing Procedures. CL4 classifiers also follow the procedures in IRM 4.75.37.9, Requests for Abatement under IRC 4962.

(3) If exam controls are not already established upon receipt of the abatement, CL4 establishes the exam controls as follows:

• If the tax was assessed against a disqualified person or organization manager, establish on AIMS NMF (MFT 66, Form 4720-A).

• If the tax was assessed against a private foundation or exempt organization, establish on AIMS BMF (MFT 50, Form 4720).

(4) If Form 4720-A, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the IRC (MFT 66), reflects assessment of both first and second-tier tax:

1. Include a Manual Accounting Replacement System (MARS) transcript with the request for abatement showing the assessment of excise tax against a disqualified person or other related person. The EIN or SSN must be included. Process the second-tier abatement using Form 3870, Request for Adjustment.

   Note: The MARS transcript is for AIMS NMF accounts.

2. If the request for abatement has a second-tier tax assessment but does not have an Automated NMF transcript attached, send the request for abatement back to OSC for processing on Automated NMF. Upon receipt of the transcript, process the second-tier tax abatement.

(1) The TAS sends all TE/GE operational assistance requests (OAR) to Classification at *TEGE-CPC-Classification. The TE/GE TAS liaison identifies the proper recipients of the requests.

(2) Upon receipt of an OAR, the liaison checks IDRS and AIMS to see if it is opened in the field. If not, then the liaison checks RCCMS to see if there are prior examinations for the period or other periods. The liaison establishes contact with TAS before taking further actions.

(3) For cases open in the field, the liaison

1. Emails the Examination Group Manager to let them know that the case they currently have is now a TAS OAR case and needs priority attention.

2. Carbon copies their own manager on the email.

3. Forwards a copy of the OAR to the Examination Group Manager for review and to contact the TAS advocate.

4. Completes the following portions of Section V on Form 12412, Operations Assistance Request (OAR):
   Liaison Received Date
   Liaison Acknowledged Date
   Date Assigned (to the group)

(4) For cases under examination for another year, the liaison forwards the TAS OAR to the group so that they can work with TAS Advocate on the OAR request. The liaison performs the same procedures as listed above for cases open in the field.

(5) If the case is not under examination, the liaison reviews the case and sees if he/she can make correction. If not, the liaison establishes the case on AIMS/RCCMS and forwards to the shelf as Immediate Assignment (IA) to a field group upon full AIMS establishment. See Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves, for the correct functional codes to use.

(6) An OAR can be resolved without contacting the taxpayer if they provided all of the information needed.

(7) For penalty abatement requests unrelated to a prior examination where reasonable cause exists, classifiers

1. Complete Form 3870, Request for Adjustment.

2. Email it to the FAST Unit at *TEGE FAST.

3. Keep the RCCMS case file until notified of the processed Form 3870 and posted adjustment.

(8) If a classifier resolves the issue without taxpayer contact, he/she completes the rest of Section V and VI of Form 12412. He/she emails it to the TAS case advocate and copies the classifier’s manager and the liaison. This is now a completed and closed OAR.

(9) If CL4 cannot resolve the OAR, the classifier establishes it on AIMS and RCCMS and transfers it to the virtual shelf. The classifier prepares the field guide sheet and CCR for the case and loads it to RCCMS.

(10) When transferring OAR cases, cases with open examinations go to the field group working the examination.

(1) When a classifier determines that a WB claim may have examination potential, the WB claim is assigned to a designated functional SME. The SME follows the procedures in this section.

(2) Upon review of the WB claim, the SME may determine that a debriefing and taint review is needed. If so, see IRM 4.70.6.6.1.1, Debriefing/Interview/Taint Review.

(3) Add the following documents to the WB claim file in the group's WB folder on the share drive:

• Form TD F 15-05.11, Sensitive But Unclassified (SBU) Cover Sheet.

• Form 11369, Confidential Evaluation Report on Claim for Award.

• The appropriate whistleblower (A or B) case instructions.

(4) The SME establishes the WB claim on RCCMS as a "New Referral."

(5) Conduct IDRS research to determine if the entity is under examination for the same or different years.

(6) For selected WB claims not currently under examination, the SME takes the following actions on RCCMS:

(1) The classifier completes Form 11369, Confidential Evaluation Report on Claim for Award, and a check sheet explaining why the WB claim was not accepted and sends both documents to his/her CL Group Manager, or designee, for concurrence.

(2) For WB-A (EO) Claims, the CL1 Group Manager, or designee, either

• Returns the signed Form 11369 to the classifier, or

• Holds a further discussion with the classifier, directing a conversion of the referral to a compliance activity.

(3) For all other WB claims, the CL Group Manager, or designee, returns the signed Form 11369 to the classifier.

(4) With the CL Group Manager’s or designee’s concurrence, the classifier:

• Sends the completed Form 11369 and the check sheet to the WO

• Updates E-Trak

• Notifies WB Coordinator

• Sends an email to the WO requesting closure

(1) Starting February 1, 2021, C&CA is responsible for securing most Form W-2 and Form 1099 data for TE/GE examination cases. A CP2100 Notice advises payers that backup withholding could become necessary if a payee fails to certify or validate their TIN. See IRM 4.23.3.3.2, CP2100 Backup Withholding (BWH) Notice Report. A CP2100 Notice recreate will provide the list of missing or mismatched Form 1099 data.

1. CA will upload CP2100 Notice recreates into RCCMS case files during the initial case build when the request is included in the case build sheet or stocking report request provided by Issue Identification and/or Planning & Monitoring.

2. CA will provide IRPTR data for three tax years during the initial case build of all FSL/ET cases.

3. CA will provide IRPTR data for three tax years during the initial case build for other cases when the request is included in the case build sheet or stocking report request provided by Issue Identification and/or Planning & Monitoring.

(2) If an examiner determines during an examination that he/she needs CP2100 Notice recreates and/or IRPTR data that was not provided in the initial case build, the examiner can request this information from CA as described below:

1. Requesting CP2100 Data: After conducting IDRS research to ensure CP2100 Notices exist for the entity, an examiner will:
   - Send an encrypted email to *TE/GE CPC Case Assignment
   - Subject line: "Request for CP2100 recreates"
   - Include a PMFOLB print for each tax year requested

2. Requesting IRPTR Data: After conducting IDRS research to ensure that data exists for the entity and years requested, the examiner will:
   - Send an encrypted email to *TE/GE CPC Case Assignment
   - Subject line: "Request for IRPTR data"
   - Include the PMFOLS print for each tax year
   - Include the completed Form 15270, Information Returns Processing Transcript (IRPTR) Order

3. Once the IRPTR records are populated to the IRPTR table on RICS, the records are imported to Excel and sent to the examiner via Outlook or Skype/Teams, depending on the size of the file. In the event the file is too large for Skype/Teams, it can be saved and encrypted on a flash drive and then securely mailed to the examiner via overnight mail service.

(3) In securing CP2100 Notice recreates, CA will follow the steps outlined in the Job Aid "QMF QUERY FOR CP2100_2019" located on the CP&C shared drive in the C&CA Desk Guides and CL4 & CA folders.

(4) In securing IRPTR data, CA will follow the steps outlined in the Job Aid "Requesting IRAS DATA" located on the CP&C shared drive in the C&CA Desk Guides and CL4 & CA folders.

(1) Employees in the TE/GE examination functions can send requests for IRPTR data and requests for CP2100 Notice recreates to the centralized TE/GE Case Assignment mailbox at *TE/GE CPC Case Assignment.

(2) Account Management Services (Customer Service) also uses this mailbox to send electronic copies of EO and EP claims.

(3) This mailbox is monitored by Tax Examiners in CA. The Tax Examiner monitoring the mailbox will work with the CA Group Manager to ensure all items are correctly routed and processed.