Trust Fund Handbook page1
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Tax Fraud
Willfulness - knowledge of non-payment
Statute of Limitations
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GCM 33653

5.7.6.1.5  (04-01-2005)
Formal Written Protest

1.       The potentially responsible party should submit a Formal Written Protest in duplicate and should include:

·         The responsible party's name, address, and Social Security number

·         A copy of the Letter 1153(DO) or date and number of the letter

·         A statement that the responsible party wants a conference

·         The tax periods involved (from Form 2751)

·         A list of issues the responsible party disagrees with and an explanation of why he or she disagrees

Note:

The following statement must be added to declare that the information submitted in this item is true: "Under penalties of perjury, I declare that I have examined the facts presented in this statement and any accompanying information, and, to the best of my knowledge and belief, they are true, correct, and complete."

·         If applicable, the law or other authority the responsible party is relying on to support his or her arguments along with an explanation of what the law is and how it applies

2.       If an authorized representative (Form 2848, Power of Attorney and Declaration of Representative, or a properly written power of attorney or authorization is acceptable) prepares and signs the protest for the responsible party, he or she must substitute a declaration stating:

·         That he or she submitted the protest and accompanying documents

·         Whether he or she knows personally that the facts stated in the protest and accompanying documents are true and correct

5.7.6.1.6  (04-01-2005)
Receipt of Protest

1.       If the responsible party responds to Letter 1153(DO) within the appropriate time frames (see IRM 5.7.6.1(1)), review the request within 10 days of receipt to determine if the information is complete as discussed in IRM 5.7.6.1.4 (Small Case Request) or 5.7.6.1.5 (Formal Written Protest).

Note:

A protest received within the appropriate timeframes is considered timely even if it is incomplete. Retain the protest mailing envelope (or original faxed document) so the timeliness of the protest can be determined. Protests that are received timely on cases where the Letter 1153(DO) was delivered properly extend the ASED until 30 days after Appeals' "final administrative determination" ( IRM 5.7.3.6.2).

2.       If the information in the protest is incomplete, retain the original and within 10 days of the initial review return a copy of the incomplete protest to the responsible party along with a letter that:

·         Clearly identifies the protest

·         Lists the actions the taxpayer must take and the additional information that is needed in order to perfect the appeal

·         Gives the responsible party 45 calendar days to perfect the protest

3.       Even if the responsible party does not perfect the protest at the end of the 45 day time period, the revenue officer should still follow the procedures in IRM 5.7.6.1.8 to send the case to Technical Services where it will be forwarded to Appeals.

4.       Protests that are received after the allowable time frames should also be forwarded to Appeals for their consideration if the revenue officer does not change his or her determination on the case based on the information provided in the protest.

Exception:

If the protest is not timely, do not transmit cases with less than one year remaining on the ASED to Appeals unless a waiver extending the statutory period has been secured (see IRM 5.7.3.6.1 for the actions required when securing a waiver). Protests that are not received within the allowable time frames do not extend the ASED under TBOR 2 (see IRM 5.7.3.6.2 for the impact a timely filed protest has on the ASED). If a responsible party submits a protest that is not timely and refuses to sign the Form 2750 waiver, advise the responsible party that the TFRP assessment will be made and inform the responsible party of his or her right to file a claim for refund and abatement ( IRM 5.7.7.6).

5.7.6.1.7  (04-01-2005)
Revenue Officer Agrees With Protest

1.       If the information that the responsible party submits changes the revenue officer's determination on the case, the revenue officer may concede the case in whole or in part. See IRM 5.7.6.1.8 for the procedures to follow if the revenue officer does not change his or her determination based on the information that was submitted with the protest.

2.       To make the appropriate change on Form 4183, Recommendation Re: Trust Fund Recovery Penalty Assessment, input the protest received date on the ATFR system and change the responsibility to partial or none for each period. The TFRP should then be re-calculated and the applicable forms updated.

3.       If a responsible party protests the entire assessment and:

4.       If the taxpayer is only protesting part of the assessment and the revenue officer agrees with the information submitted, the revenue officer will make the changes on Form 4183 as indicated in 5.7.6.1.7(2), advise the taxpayer of the change, and attempt to secure the taxpayer's signature on the updated Form 2751.

5.7.6.1.8  (04-01-2005)
Revenue Officer Disagrees With Protest

1.       If the information that the responsible party submits does not change the revenue officer's determination on the case, or if the responsible party protests the entire assessment and the revenue officer only concedes the case in part, the revenue officer will:

A.      Prepare a rebuttal memorandum which individually and thoroughly addresses each issue raised in the responsible party's protest as well as the basis for the recommendation.

Note:

Include all information that supports the recommendation and reference the evidence secured, as well as any work papers reflecting the manner in which payments have been applied, specifically any payments directed by the taxpayer, court order, etc.

B.      Input to ATFR the date the protest letter was received.

C.      Send Letter 1154(DO) to the responsible party and enter the date onto ATFR.

D.      Generate and print Form 2749, Request for Trust Fund Recovery Penalty Assessment, and Form 3210, Document Transmittal.

E.      Input the "2749 to CPM" date onto ATFR and forward the case file in the appropriate case file tabs (Document 9708) to the appropriate unit in Technical Services. Do not send the case file directly to Appeals.

Note:

These actions should generally be taken within 45 days of receipt of a perfected protest, or within 45 days of the established deadline for perfecting an incomplete protest.

2.       Upon receipt of the TFRP package, Technical Services will review the case file and, if it is complete and acceptable will forward it to Appeals (see IRM 5.7.6.1.9).

5.7.6.1.9  (04-01-2005)
Transmittal of Case to Appeals

1.       After receipt of the TFRP file, Technical Services will review the case file and the information available on ATFR prior to transmitting the case to Appeals.

2.       When the case is sent to Appeals, Technical Services will:

A.      Enter onto ATFR the date sent to Appeals.

B.      Annotate Form 2749 in red "ASED extended by TBOR 2" for cases where a timely protest was received. This will alert Appeals to the statute situation and alert Technical Services of the need to quick assess ( IRM 5.7.6.4) if the proposed assessment is sustained by Appeals.

C.      Attach Form 3210 to the case file and show the date of expiration of the statutory assessment period on the transmittal for cases with less than six months on the ASED. Notate "Case under Taxpayer Bill of Rights 2" , if applicable.

Reminder:

The ASED is not extended under Taxpayer Bill of Rights 2 if the protest was not received timely.

D.      Control the case appropriately on ICS.

3.       Submit related cases (two or more responsible persons for the same corporation) together whenever possible.

Note:

For cases where one or more responsible parties agrees to the assessment and at least one other party is appealing the assessment, submit all files together to the unit in Technical Services for cases that are being appealed. Since the ASED is not protected for the cases that are not being appealed, Technical Services will complete the review and will submit the non-appealed cases for assessment and will forward the appealed cases to Appeals.

5.7.6.1.10  (04-01-2005)
Controlling and Monitoring Appeal Cases

1.       Each Territory should establish a system for reviewing decisions made by Appeals to determine whether quality issues exist that need to be addressed. The Territory should arrange periodic meetings with Appeals to discuss trends, workloads and other issues of interest. Technical Services may also establish a process to follow-up on overage Appeals cases.

2.       If Appeals sends a case back asking for further information, provide the information within 45 days. This date may be extended by mutual agreement. Appeals will retain jurisdiction on these cases if the ASED is held open only by the timely protest. This is to preserve the time in Appeals plus 30 days, under IRC 6672(b).

3.       Once a final determination has been made, Appeals will:

·         Notify Technical Services of their decision

·         Notate their memorandum "ASED expires 30 days from (the specific date Appeals has made their determination)" when applicable

4.       Technical Services will update the ATFR system with the date the case was returned from Appeals and the decision (No change, Partial Change, or Not Responsible) made by Appeals.

Note:

If a responsible person has been determined to be responsible for only part of a quarter, the amount of that quarter will have to be changed to reflect the amount specified in the decision by Appeals.

5.       If Appeals does not sustain the original proposed assessment, a new Form 2749 must be printed to reflect the correct TFRP amount based on the decision by Appeals.

6.       Technical Services will be responsible for completing any necessary quick assessment action ( IRM 5.7.6.4) and ensuring the ASED is protected on these Appeals cases.

5.7.6.2  (04-01-2005)
Revenue Officer Assessment Actions

1.       The revenue officer will generate and print a Form 2749 for each responsible person. The revenue officer will check IDRS to make sure all periods are included on Form 2749.

Note:

Do not include any periods for which there is no outstanding trust fund balance.

2.       On Form 2749, the revenue officer should:

A.      Indicate in the comments if the corporation is out of business.

B.      Annotate "Bankruptcy" in red on top of form and provide basic bankruptcy information for cases where the responsible party or the employer has filed bankruptcy.

C.      Verify the correct entity name, address and TIN by using CC INOLE.

Note:

Prepare Form 2363, Master File Entity Change, when the information on CC INOLE is not current.

D.      Leave blank the blocks for "Amount of Penalty Assessed" , "Assessment Date" , and "Identifying Number" .

3.       The revenue officer should prepare Form 3210, enter the " 2749 to CPM" date onto ATFR, and forward the case file to the appropriate unit in Technical Services.

Note:

Include a copy of Form 2750 if a waiver was secured from the taxpayer.

4.       If levy information was secured for a responsible party, prepare Form 4844, Request for Terminal Action, so the levy information can be loaded to the IDRS levy file. The name, address, and TIN of the responsible party should be included on the Form 4844, and the Remarks section should contain:

·         Levy source name and address

·         Ending period of current tax year

·         Current IDRS cycle period

·         Wage Earner Code (P-Primary if taxpayer files Form 1040 individually or if the taxpayer files a joint Form 1040 and has the primary TIN ; S-Secondary if the taxpayer files a joint Form 1040 and has the secondary TIN )

·         Levy Literal = "RT"

5.7.6.3  (04-01-2005)
Technical Services (Control Point Monitoring — CPM) Actions for Assessment

1.       The ATFR-CPM system is used to track and monitor trust fund cases received from the field and the compliance center. CPM is responsible for setting the final disposition of the case from ATFR when it is released from the compliance center.

2.       Cases are systemically added to the CPM inventory after the revenue officer selects "2749 to CPM" to dispose of the responsible person's file. The CPM unit has the ability to record the following information:

·         Processing dates for Form 2749

·         Appeals case information

·         Date the TFRP package is sent to the Federal Records Center

·         Pertinent bankruptcy case information

·         TFRP assessment information

·         TFRP package requests from revenue officers

·         Form 843 claim information

3.       Technical Services will review the case files to determine if they are complete ( IRM 5.7.6.5). Incomplete files should be returned to the revenue officer for the required documentation. If the case file is complete, CPM will:

A.                  Verify the current Form 2749 balance on ATFR to ensure that the proper trust fund amount will be assessed by the compliance center.

Note:

If the balance has been reduced, generate a new Form 2749 and retain it in the case file.

B.                  Enter the date the Form 2749 was transmitted to the compliance center in the "2749 to SC" field.

Note:

It is no longer necessary to mail any documents to the compliance center for regular assessments . The ATFR-AO application will transmit the information systemically to the ATFR-CC part of the application. For quick and prompt assessment procedures, follow the instructions in 5.7.6.4, 5.7.6.4.1, and 5.7.6.4.2.

4.       For cases assessed as regular assessments, it is no longer necessary for CPM to enter the Document Locator Numbers (DLN), assessment date, and assessment amount onto ATFR since this information will be entered systemically as part of the ATFR-CC part of the application. The assessment information is normally available on IDRS within 11-17 days after the "2749 to SC" date. For accelerated (quick, prompt, or jeopardy) assessments, CPM will update ATFR with the following information:

·         2749 Assessed Date

·         Assessed Amounts (if different than the displayed amount)

·         DLN

Note:

This information must be input for quick, prompt, or jeopardy cases in order to avoid the potential for duplicate assessments.

5.       For cases when the Form 2749 was generated prior to August 17, 2001 , TFRP cases are assessed via the combined assessment method. For these cases, the assessments for all quarters are combined into one assessment under the assessment period for the last quarter of the liability. For cases when the Form 2749 is generated after August 17, 2001 , the assessment will be made under the separate assessment method with each quarter assessed separately. There are two specific exceptions to this:

 .        If there are related individuals who have already been assessed under the combined assessment method, and the assessment for another individual is delayed beyond August 17, 2001 (usually because of an appeal), this individual will also be assessed under the combined assessment method in order to maintain consistency of the assessment method within that case.

A.      If there is more than one trust fund being assessed for the same assessment period, for example, Forms 941 and 945 for the fourth quarter of 2000, these assessments will be combined as one assessment.

6.       The LEM criteria for assessment of each individual period is found in LEM 5.3.2 for MFT 55 cases.

7.       Retain TFRP case files in Technical Services until retirement to the Federal Records Center (see IRM Exhibit 1.15.28-1 for TFRP records retention information).

5.7.6.4  (04-01-2005)
Quick and Prompt Assessment Actions

1.       Quick assessment procedures are required when the assessment statute expires within 30 days.

2.       Prompt assessment procedures should be used when collection appears to be at risk and the intention is to proceed with collection action immediately following the period for notice and demand.

3.       Do not prompt assess the TFRP if:

·         The taxpayer will be granted or already has an existing undefaulted installment agreement

·         The assessment will be reported as currently not collectible

·         There are no distrainable assets or levy sources

·         No enforcement action is planned

4.       Quick or prompt assessment for a TFRP may be made only after the taxpayer takes one of the following actions:

·         Signs Form 2751

·         Fails to respond to the Letter 1153(DO) within the appropriate time period

·         Completes the appeal process

5.       Quick and prompt assessments may be requested under the following methods:

·         Telephone requests ( IRM 5.7.6.4.1)

·         Facsimile (FAX) requests ( IRM 5.7.6.4.2)

Note:

Ensure that the information is submitted to the appropriate SB/SE Compliance Center since only these centers are staffed to make these types of assessments.

6.       The initiating office will prepare a separate Form 2859, Request for Quick or Prompt Assessment, for each period that is to be assessed. If one period on Form 2749 must be quick assessed in order to protect the statute, all periods on the Form 2749 must be quick assessed. Complete Form 2859 with all necessary information, including the initiator's name and address. Also include information as to whether the assessment is "agreed " or "unagreed" . Managerial approval of Form 2859 is required.

Reminder:

Only use "agreed" if the taxpayer signed Form 2751.

7.       For both telephonic and fax assessments, Accounting Control/Services in the appropriate SB/SE Compliance Center will prepare Form 3552, Prompt Assessment Billing Assembly, and forward it to the initiator. The initiator will immediately deliver or mail certified Parts 3 and 4 of Form 3552, along with Publication 1, to the taxpayer. Notice 960 may also be included with Form 3552 to remind the taxpayer of the procedures to follow in order to file a claim for refund and request abatement of the liability. Multiple Forms 3552 for the same taxpayer may be mailed together. Accounting Control/Services will also forward copies of the Forms 2749 and 3552 to the TFRP unit in Compliance Services Collection Operations ( CSCO ) for input of the appropriate cross-referencing information and UNLCER information.

8.       Send the TFRP case file to Technical Services where it will be maintained until retired to the Federal Records Center (see IRM Exhibit 1.15.28-1 for TFRP records retention information).

5.7.6.4.1  (04-01-2005)
Telephone Requests for Quick or Prompt Assessments

1.       For telephone requests, the initiating office will contact the appropriate Accounting Control/Services unit in one of the SB/SE Compliance Centers and provide them with the requested information from Forms 2859 and 2749.

2.       Accounting Control/Services will:

A.