Computer Audit Specialist for analyzing, stratifying and sampling large volumes of computerized records. See IRM 4.47, Computer Audit Specialists.

Economist for the determination of the economic substance and viability of transactions. See IRM 4.3.17, Economists.

Engineers for valuation and quantitative assistance. See 4.48, Engineers.

Employee Plan Specialist for the determination of employee pension and profit sharing plan qualifications and tax consequences of extraordinary deductions for payments to employee pension and profit sharing plans to the entity under examination.

Employment Tax Specialist for the determination of compensation, subject to the Federal Insurance Contribution Act (FICA), Health Insurance Tax (HIT) , Federal Unemployment Tax Act (FUTA) and employer liability for withholding, paying, and remitting taxes.

Excise Tax Specialist for the determination of manufactured products, natural resources, and floor stocks, subject to Federal Excise Tax and the applicable excise tax rate.

Financial Products and Transactions Specialist for analysis of financial products and financial transactions, and their tax effect, including market to market securities valuation for dealers.

International Examiners for analysis of transactions involving international features, such as foreign tax credit, tax treaty impact on transactions, and allocation of income. Domestic allocation of income under Section 482 may be referred to International Examiners. See IRM 4.60, International Procedures.

Other — referrals can be made to Counsel, Estate and Gift Tax Attorneys, Industry Specialist, or other specialist through the Area Technical Coordinator.

For individual income tax returns, Form 1040, the taxpayer(s) who signed the return.

For corporate returns, Form 1120, the officer who signed the return; for Form 1120S, either the officer who signed the return or the tax matters person listed on the return.

For partnership returns, Form 1065, the partner who signed the return or the tax matters partner listed on the return.

For other returns, the person who signed the return.

Check the local telephone directory for a current telephone number.

Check the address on the tax return.

Check IDRS or other internal data for the last known address.

Consult the Taxpayer Locator Handbook for other methods of locating the taxpayer.

It allows examiners to schedule the initial appointment at an appropriate time, which is agreeable to the taxpayer and reduce the number of rescheduled appointments.

It allows the examiner to explain to the taxpayer what records should be available for the examination. Under no circumstances should the telephone conversation be used to verify items appearing on an income tax return; inspection of records or other data cannot be made by telephone.

The pre-contact analysis (if required) should always be conducted by the examiner prior to contacting the taxpayer. This will ensure that the examiner is knowledgeable enough about the return to answer any questions the taxpayer may have when attempting to schedule the appointment. See 2.3, above.

When the initial appointment is made by telephone, a follow-up letter will be mailed to the taxpayer confirming the time/place of the examination and the records which are to be available. See 2.9 below for additional instructions.

See 2.7.4 below, Scheduling the Appointment: Overview, for additional guidance.

L–2201, Initial Contact Letter: To set the initial appointment of an Office Audit interview examination.

L–2203, Initial Contact Letter: To ask taxpayer(s) to call us to set the initial appointment of an Office Audit interview examination.

L–2205, Initial Contact Letter: To set the initial appointment for a Field examination of a business return.

L–2206, Initial Contact Letter: To set initial appointment of an Office Audit interview examination of a business return.

L–2207, Initial Contact Letter: To ask taxpayer(s) to call the IRS to set the initial appointment of an Office Audit interview examination of a business return.

The IRS can request the taxpayer’s presence at the initial interview. However, IRC section 7521(c) states that when a taxpayer has executed a written power of attorney to represent the taxpayer in any interview, the IRS cannot require the taxpayer’s presence without issuance of a summons. Therefore, group managers must ensure that any initial appointment letters developed by examiners do not require (or imply a requirement) for the taxpayer to appear at the initial interview prior to approving the letter.

Any letter, other than the form letters listed in paragraph (2), must be checked for spelling and grammatical accuracy prior to approval by the group manager.

If the taxpayer requests representation, proper authorization is required. Use of Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, is preferred. If any other form is submitted, written approval by the group manager is required before relying on the authorization.

If at any time during the examination, the taxpayer requests representation, the taxpayer has the right to postpone examination activity until, he/she has an opportunity to secure representation. Examiners must ensure that they take no actions that would violate or give the perception of violating the taxpayer’s right to representation.

The person authorized to represent the taxpayer must be sufficiently knowledgeable to engage in dialogue concerning the taxpayer’s business and personal affairs.

Examiners will use their judgment to determine whether an authorized representative is sufficiently knowledgeable, however examiners should take all reasonable steps to work effectively with authorized representatives.

Procedures for handling assertions of accountant/client privilege can be found in IRM 4.10.1.6.2 of this handbook.

In extenuating circumstances, the tax auditor may meet with the taxpayer at the taxpayer’s home or place of business. This situation could occur due to the nature of the taxpayer’s business or due to the incapacity of the taxpayer.

The location of a taxpayer’s representative will generally not be a consideration in determining the place of the examination.

In the office of the IRS closest to the taxpayer’ s business.

At the representative’s office.

If the initial appointment can be rescheduled within 45 days after the first action on the case, the examiner may treat the case as any other case and reschedule the appointment. The contact sheet will be documented regarding the reason for the rescheduling.

If rescheduling the initial appointment would result in the appointment being more than 45 days after the first action on the case, then examiners should discourage the rescheduling of the appointment. If the taxpayer or representative persists, examiners should discuss the situation with their group manager. Group manager approval is required to reschedule the appointment beyond 45 days after the first action on the case. The examiner will document the contact sheet with the facts and the group manager’s decision.

No less than thirteen months will remain on the statute of limitations for assessment when the return is transferred from one area to another.

Service center transfers to area offices will not be initiated with less than seven months remaining on the statute of limitations.

Office Audit: Taxpayers will be able to attend an audit interview at a service office closest to their residence in the assigned area providing that office has appropriate personnel.

Field Examination: The audit will be conducted at the location where the original books, records, and source documents are maintained, unless, in the case of a small business, doing so would significantly disrupt the taxpayer’s operation and require the business to close; this does not preclude on-site visits by the examiner.

Location of the taxpayer’s residence,

Location of the taxpayer’s business,

Where the taxpayer’s books and records are maintained,

Character and extent of inconvenience at origin of taxpayer’s request.

Form 3185, Transfer of Returns—Transfer of Administrative File, will be used as the transmittal notice.

All cases will be routed to the Planning and Special Programs staff for review prior to transfer. This requirement will ensure that only those cases meeting appropriate criteria are being transferred.

The transferring area will close out the return using Disposal Code 30.

Ask the taxpayer for information which may help to determine if repetitive examination procedures apply, such as the prior year(s) audit reports, where the return(s) were filed and where the examination(s) were completed.

Advise the taxpayer that the appointment is postponed pending a review of our files to determine if the examination should be continued.

Secure transcripts of the taxpayer’s accounts for the two preceding years.

If the issues are the same as in the current year examination, and the transcripts indicate either no change or a small change to the taxpayer’s liability, then the current examination can be closed.

If a substantive tax change is shown for either year, the taxpayer will be informed that repetitive audit procedures do not apply and the examination will be continued. Letter 2684, Repetitive Examination Letter, will be used to notify the taxpayer and reschedule the appointment.

If the transcripts indicate a no-change or small tax change for both years, or for one of the years and no examination activity for the other year and the no change issue codes on the return charge out do not provide adequate information, then the return(s) and related files for the year(s) examined should be requisitioned. The requisitioned files should be reviewed to determine if the issues currently under examination are similar enough to the issues in the prior no change/small liability year(s) to warrant concluding the current examination.

If a substantive tax change is shown for either year, the taxpayer will be informed that repetitive audit procedures do not apply and the examination will be continued. Letter 2684 will be used to notify the taxpayer and reschedule the appointment.

If the taxpayer’s records were not examined, even though contact was made, the case may be closed using the "survey after assignment" procedures as outlined in 2.5 above.

If the taxpayer’s records were examined, the case will be closed using regular no-change procedures as outlined in section 8. Also indicate under the survey stamp that Letter 2684 should be sent to the taxpayer.

Check any correspondence in the case file for a change of address noted by the U.S. Postal Service.

Check all possible sources in the case file.

Check the telephone and/or city directory.

The AIMS Weekly Update Report should be reviewed for address changes. Codes 18 and 19 show new addresses updated to Master File.

CFOL research should be initiated to request an INOLE on SSNs (both for joint returns) for the current Master File address. INOLE will also provide a cross reference TIN. Request IROLE on SSNs (both for joint returns) for a new address of the taxpayer or an employer/payer address from an IRP document.

Request IDRS research of the taxpayer’s phone number using command code TELER.

Contact the taxpayer’s employer, return preparer, or third party, if known. If contact is made by mail, the following forms should be used: Form 3242, Request for Information from Employer (To Locate Person), when writing to the taxpayer’s employer, Form 2223, Request for Information From Military, when requesting information from military service, and Form 3241, Request for Information To Locate Person, when writing to a third party.

Locator services should be used wherever possible. This will be required in cases meeting the criteria of LEM IV.

The IDR may be discussed with the taxpayer during the initial telephone call.

During the discussion, the examiner will explain to the taxpayer that the examination will be facilitated by having the information and documentation organized before the initial interview.