{"id":1514,"date":"2016-11-23T16:32:54","date_gmt":"2016-11-23T16:32:54","guid":{"rendered":"http:\/\/www.patellawoffices.com\/blog\/?p=1514"},"modified":"2016-11-23T16:32:54","modified_gmt":"2016-11-23T16:32:54","slug":"new-irs-irm-with-updated-streamlined-filing-compliance-procedures","status":"publish","type":"post","link":"https:\/\/patellawoffices.com\/blog\/planning-for-tax-minimization\/new-irs-irm-with-updated-streamlined-filing-compliance-procedures\/","title":{"rendered":"New IRS IRM with Updated Streamlined Filing Compliance procedures"},"content":{"rendered":"

The Internal Revenue Manual (IRM) is essentially the IRS employee handbook on how to carry out all administrative and procedural matters, such as how to audit specific tax returns, collect taxes, process returns, or assess penalties. The IRM may be the most important tool provided to IRS employees as it contains vital information to help them do their jobs. The IRM itself is not the law, and the procedures set forth in it are not mandatory or binding on the IRS. <\/em><\/p>\n

Understanding how IRS personnel are instructed to perform certain procedures can be valuable to taxpayers. For example, gaining insight into how the IRS will audit a specific area on a return (such as the techniques they use or the items they request) can help a CPA prepare for an audit, address IRS inquiries, or prepare tax returns. Additionally, and perhaps most importantly, certain items in the IRM are not available anywhere else. <\/em><\/p>\n

Knowledge of the IRS\u2019 own guidelines can make all the difference in resolving your IRS problem.\u00a0 The IRM is broken down into multiple chapters, including sections on IRS audits, IRS collections, IRS appeals and criminal investigations. <\/em><\/p>\n

The IRS recently internally changed the IRM for the IRS\u2019 revised “streamlined” procedures for individuals who unintentionally fail to report foreign-source income or foreign assets, generally, foreign bank accounts.\u00a0In part, the revised procedures address concerns of taxpayers and their professional advisers that the traditional offshore voluntary disclosure programs (OVDPs) often resulted in unduly harsh penalties for inadvertent conduct.\u00a0Under the revised procedures, in addition to avoiding criminal prosecution, qualifying taxpayers enjoy significantly reduced penalties, and in the case of certain nonresidents, penalties may be excused entirely. <\/em><\/p>\n

However, to take advantage of these new procedures, individuals must demonstrate to the satisfaction of the IRS that their conduct was not “willful.” At the heart of the streamlined procedures, taxpayers must certify that their failure to report foreign financial assets and pay all tax due was not the result of willful conduct (click\u00a0here<\/a>\u00a0for further details). A taxpayer must complete and execute a certification form,\u00a0Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures<\/a>.<\/em><\/p>\n

\u00a0<\/em><\/p>\n

The new IRM appears below, which describes the internal processing of the certification form and amended returns. The IRM may assist a taxpayer to avoid possible audit flags in the processing of streamline filings.<\/em><\/p>\n

\u00a0<\/em><\/p>\n

Any line marked with a # is for Official Use Only <\/em>1
\nIRM PROCEDURAL UPDATE
\n<\/strong>DATE: 05\/09\/2016
\nNUMBER: WI-21-0516-0879
\nSUBJECT: BMF International Accounts Management
\nAFFECTED IRM(s)\/SUBSECTION(s): 21.8.2
\nCHANGE(s):<\/p>\n

<\/strong><\/p>\n

IRM 21.8.2.18.2.1 Updated Streamlined Filing Compliance procedures per
\nLB&I.
\n<\/strong>1. Filers from within the United States will submit a package to a specific
\nmailbox in Submission Processing in Austin. The filing package will contain
\ncomplete and accurate amended returns for each of the most recent 3 years
\nfor which the U.S. tax return due date (or properly applied for extended due
\ndate) has passed together with any required information returns (e.g., Forms
\n3520, 3520-A, 5471, 5472, 8938, 926, and 8621) even if these information
\nreturns would normally not be submitted had the taxpayer filed a complete
\nand accurate original return. Taxpayers may NOT file delinquent original
\nreturns under these procedures.
\nNOTE: <\/strong>Filers are instructed to write, “Streamlined Domestic Offshore” in red
\nat the top of the first page of each amended return.
\n2. In addition to the amended returns, domestic streamline filers must also
\nsubmit a statement on the Certification by U.S. Person Residing in the United
\nStates for Streamlined Domestic Offshore Procedures <\/em>attesting:
\no The taxpayer or taxpayers are eligible for the SDO procedures
\no The tax years and amounts owed for each year including interest.
\no All required FBARs have now been filed
\no The failure to report all income, pay all tax, and submit all required
\ninformation returns, including FBARs, resulted from non-willful conduct
\no The miscellaneous offshore penalty amount is accurate.
\n3. LB&I will review the submissions for statute considerations. LB&I will
\ncomplete the “AM Streamline Coversheet” and attach it to the package
\nnotating their statute recommendations regarding open statutes and statute
\nextensions.
\nAny line marked with a # is for Official Use Only <\/em>13
\n4. Amended returns will be scanned into CIS for Accounts Management
\nprocessing and assigned to a designated IDRS number for subsequent
\nassignment to CSR’s.
\n5. One CSR must work all related cases.
\n6. Accounts Management will be responsible for reviewing the packages to
\nensure the necessary certifications are attached and complete. If they are
\nincomplete AM will correspond with the taxpayer to perfect the submissions.
\n7. Use the table below to determine if the required certification is complete:
\nNOTE: <\/strong>If the taxpayer completes the certification for only one or two tax
\nyears, and submits the same number of amended returns, do not question
\nwhether additional years should have been submitted. As long as the tax
\nyears listed on the certification are filed, accept that the number is correct.<\/p>\n\n\n\n\n
If <\/strong><\/td>\nThen<\/strong><\/td>\n<\/tr>\n
The certification is attached,
\nand:
\n1. The amounts owed for
\neach tax year, including
\ninterest, are calculated,
\nand
\n2. The miscellaneous
\noffshore penalty is
\ncalculated and
\n3. The taxpayer(s) have
\nsigned the certification
\nunder penalties of
\nperjury
\nNOTE: <\/strong>If the amended
\nreturn is a no tax change
\nor a tax increase and the
\nonly item missing on the
\ncertification is the
\nsignature of one of the
\ntaxpayers, follow the
\ninstructions in Paragraph
\n8 below. Follow the
\n“Then” box below for tax
\ndecreases.<\/td>\n		The certification is complete.
\nFollow the instructions in
\nParagraph 8 below.<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Any line marked with a # is for Official Use Only <\/em>14<\/p>\n\n\n\n
There is no certification attached
\nor, the certification is attached
\nbut:
\n1. The amounts owed for
\neach tax year, including
\ninterest, are not
\ncalculated, or
\n2. The taxpayer does not
\ncalculate the
\nmiscellaneous offshore
\npenalty, or
\n3. The taxpayer does not
\nsign the certification
\nunder penalties of perjury
\nNOTE: <\/strong>If the amended
\nreturn is a no tax change
\nor a tax increase and the
\nonly item missing on the
\ncertification is the
\nsignature of one of the
\ntaxpayers, follow the
\ninstructions in Paragraph
\n8 below. Follow the
\n“Then” box below for tax
\ndecreases.<\/td>\n		Call or correspond with the
\ntaxpayer. If corresponding, issue
\n178C, using the appropriate
\nparagraph(s) to address the specific
\nitems missing from the certification.
\nSuspend the case for 40 days.
\no If the taxpayer responds with
\nthe necessary information,
\nsecurely e-mail the TIN to a
\ndesignated mailbox:
\nwith an
\nexplanation the case is being
\nsent post assessment and is
\na Certification Reply. Enter
\nCIS case notes saying
\nreferred to LB&I as a
\n“Certification Reply”. Then
\nfollow paragraph 8 below.
\no If the taxpayer does not
\nrespond, treat the case like a
\nnormal amended return. Do
\nnot restrict the failure to file
\nor failure to pay penalties
\nand do not input TC 971 with
\nAction Code (AC) 178.
\nNOTE: <\/strong>The 178C letter
\nincludes language advising
\nthe taxpayer if they do not
\nrespond, the case(s) will be
\nclosed using normal
\nprocedures, so no closing
\nletter is necessary for “No
\nReply” cases.
\no After making the assessment
\non no response cases,
\nsecurely e-mail the TIN to a
\ndesignated mailbox:
\nwith an
\nexplanation the case is being
\nsent post assessment and is
\na “No Reply.” Enter CIS
\nnotes indicating the case was
\nreferred to<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Any line marked with a # is for Official Use Only <\/em>15<\/p>\n\n\n\n
.
\nIf <\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
    \n
  1. \nAccounts Management will perform the following actions prior to adjusting
    \naccounts under the SDO:
    \no Review the account for a -Z freeze. If there is a -Z freeze on the
    \naccount, contact CI to determine whether an amended return filed
    \nusing the Streamlined Foreign Domestic Compliance Procedures can
    \nbe processed. Follow CI’s direction. See -Z freeze instructions at IRM
    \n21.5.6.4.52 -Z Freeze<\/em>.
    \no Review each tax year for statute consideration. Refer to Statutes for
    \nclearance or assessment when necessary. See IRM 25.6 Statute of
    \nLimitations<\/em>.
    \no Review Command Code AMDIS for examination involvement. Follow
    \nthe table below if any <\/strong>of the affected accounts are found on Command
    \nCode AMDIS.<\/li>\n<\/ol>\n\n\n\n
    Then<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

     <\/p>\n\n\n\n\n\n\n
    All affected tax
    \nyears are in
    \nAMDIS Status less
    \nthan 12<\/td>\n    		Process all related amended returns as streamline.
    \nFollow paragraph 9 below
    \nNOTE: <\/strong>Forward the case to Exam, based on the
    \nAIMS data (after processing as Streamlined) when
    \nAMDIS status is 09 or greater and less than 90.<\/td>\n<\/tr>\n
    Any affected tax
    \nyear is in AMDIS
    \nstatus 12 or
    \ngreater<\/td>\n    		o Place your CIS case in suspense for 14
    \ndays.
    \no Securely e-mail the TIN and affected tax
    \nperiods to “*LB&I OVDP Compliance”, enter
    \nthe words ACTION: OPEN EXAM on SFO
    \nin the subject line of the e-mail message.<\/td>\n<\/tr>\n
    The response from
    \nLB&I is to process
    \nas streamline<\/td>\n    		Follow the procedures in paragraph 9 below.
    \nNOTE: <\/strong>After processing the amended return(s),
    \nfollow all LB&I provided guidance as to whether
    \nthe package needs to be forwarded to the group,
    \nbased on the AIMs data.<\/td>\n<\/tr>\n
    The response from
    \nLB&I is to NOT
    \nprocess as
    \nstreamline<\/td>\n    		o Treat the case like a normal amended
    \nreturn.
    \no Do not restrict the failure to file or failure to
    \npay penalties and do not input TC 971 with
    \nAction Code (AC) 178.
    \nNOTE: <\/strong>After processing the amended
    \nreturn(s), follow all LB&I provided guidance
    \nas to whether the package needs to be<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Any line marked with a # is for Official Use Only <\/em>16<\/p>\n\n\n\n
    forwarded to the group, based on the AIMs
    \ndata.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
      \n
    1. \nTo complete adjustments amended returns filed under the SDO:
      \n1. Input a Transaction Code (TC) 971 Action Code (AC) 178, using the
      \namended return received date as the transaction date, to each
      \naffected tax year. TC 971 AC 178 denotes Streamlined Filing
      \nCompliance. The xClaim tool has been programmed to allow AC
      \n178.
      \n2. Ensure the payments are allocated correctly among the affected tax
      \nyears (including the MFT 13 civil penalty module) according to the
      \ncalculations made on the taxpayer certification. If not, follow normal
      \ncredit transfer procedures using appropriate credit freeze codes to
      \nensure no erroneous refunds occur.
      \n3. Use all normal adjustment procedures, including the use of IAT tools,
      \nwhen making the tax assessment to each tax year, with the following
      \nexception: Restrict the failure to file and failure to pay penalties on
      \neach tax year by inputting TC 160 and TC 270 for zero dollars.
      \nNOTE: <\/strong>If any payments were transferred, use appropriate posting
      \ndelay codes on the adjustment(s) to ensure the adjustment does not
      \npost before the payments are posted correctly.
      \n4. Assess the 5 percent miscellaneous penalty on MFT 13 on the most
      \nrecent tax year for which an amended Form 1041 was submitted.
      \nAssess the penalty based on the taxpayer\u2019s calculation. Input TC
      \n240 with blocking series 52 and penalty reason code 708.
      \n5. Allow the adjustment notices to generate. Do not correspond with
      \nthe taxpayer(s) because they are advised on IRS.gov that they may
      \nreceive a balance due notice or a refund if the tax or interest is not
      \ncalculated correctly.
      \nEXCEPTION: <\/strong>If the miscellaneous penalty is more than $60,000 and
      \nfully paid, use hold code 3 on the MFT 13 adjustment.<\/li>\n<\/ol>\n

       <\/p>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

      The Internal Revenue Manual (IRM) is essentially the IRS employee handbook on how to carry out all administrative and procedural matters, such as how to audit specific tax returns, collect taxes, process returns, or assess penalties. The IRM may be the most important tool provided to IRS employees as it contains vital information to help […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[23,24,26,86,88,87,27],"class_list":["post-1514","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization","tag-fbar","tag-foreign-account","tag-sdop","tag-sfop","tag-streamlined-filing-compliance-procedures","tag-streamlined-filing-compliance-procedures-and-the-offshore-voluntary-disclosure-program","tag-voluntary-disclosure"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=1514"}],"version-history":[{"count":1,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1514\/revisions"}],"predecessor-version":[{"id":1515,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1514\/revisions\/1515"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=1514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=1514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=1514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}