A report of re-examination will be submitted when a taxpayer's books and records are re-examined.

A supplemental report is submitted as a supplement to an original report when adjustments are made from information on hand or obtained without re-examining the taxpayer's books and records.

An information report is a complete report that does not set up tax liability but merely furnishes information concerning a taxpayer to other persons who have a need for such information. Information reports will usually be submitted in connection with offers in compromise and requests for information from the Headquarters Office and other area offices.

Generally, the type of report or method of disposing of the case will be indicated in capital letters on the transmittal letter of the report in the following form:

If Form SS–8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding) is submitted for status determination, the examination of any records regarding this determination does not constitute an examination of any Federal tax return; and if the periods concerned have been examined, it will not constitute a re-examination under the reopening procedures.

The report writing instructions for FICA examinations apply generally to RRTA (Railroad Retirement Tax Act) examinations. However, references on report forms to FICA should be changed to RRTA. If RRTA and income tax withholding are both being adjusted by the examination, a separate Form 4668 will be prepared for each type of tax.

When using Form 4668 for an RRTA examination, the following additional modifications are necessary:

Any additional modifications may be made to adapt existing report forms to RRTA examinations. The case file will include a memorandum to the Railroad Retirement Board (RRB) stating the employee's name and SSN, the name of the railroad employer and the increase or decrease in the amount of income subject to railroad retirement tax.

In RRTA examinations involving the conversion of an employee from FICA coverage to RRTA coverage, the examiner will advise the taxpayer to file a protective claim under IRC section 3503 and regulations thereunder. No action should be taken on these claims until all judicial proceedings have been resolved.

Examiners will prepare reports for cases in which claims are allowed in full or in part under the same procedures prescribed for other cases. Include a statement regarding the disposition of the claim in the " Other Information" section of Form 4666 and attach Forms 4667 and/or 4668 to point out the tax adjustments.

Form 4666 is used for cases in which claims are disallowed in full. Include the statement regarding the disallowance of the claim in the "Other Information" section. Do not prepare Forms 4667 or 4668.

Solicit Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, when a claim should be disallowed in full and no adjustments to the tax liability are necessary. Form 2297, Waiver of Statutory Notification of Claim Disallowance, is solicited in a partial or full claim disallowance case when a signed agreement is secured at the conclusion of the examination.

Refer to IRM 4.23.13, Employment Tax Refund or Abatement Claims, for additional instructions.

If all employment tax returns examined result in no change, a no-change stamp impression will be placed on the reverse side of the Form 4318–A (Continuation of Examination Workpapers). In TE/GE examinations, the examiner will enter the no-change disposal code on Form 5772 (TE/GE Workpaper Summary).

The no-change stamp should be approximately 4” X 1 1/4” in size and be procured locally. The stamp should be similar to the following (space is provided for two "Return Form Number" so that the stamp can be used for both Forms 940 and 941 cases):

Examiners should enter the return form number(s) and period(s) examined, and initial the stamped impression. Reviewers should indicate their approval by initialing.

When a Form 941 examination for a calendar year results in a no-change, only the fourth quarter return for each calendar year examined should be closed as a no-change case.

The other quarterly returns for each calendar year examined should be closed "survey after assignment" . When a Form 941 examination for less than a calendar year results in a no-change, no-change only the quarters examined. Explain in the workpapers the reason for not examining the other quarters in the calendar year.

The taxpayer will be issued a no-change report on Form 4666 indicating the year(s) and return form(s) examined and closed as no-change. The Service will also send a Letter 590 indicating a no-change examination.

Guidelines for sending a no-change notice, Letter 590, to the taxpayer or the taxpayer's representatives contained in IRM 4.23.10.6 will be followed.

The above procedures will not be used for an examination if there are both change and no-change results for the various returns examined in a calendar year examination or multiple year examination. Rather, the no-change will be included with the change results in a single examination report.

When a taxpayer's returns for employment taxes and income tax or TE/GE returns are examined concurrently, and the employment tax examination results in a no-change, a statement to that effect will be included in the income tax or TE/GE examination workpapers, identifying the employment tax returns examined and indicating briefly the extent of the examination.

IRC section 7436 created the requirement for a separate agreement form for issues relating to worker classification and section 530. Form 2504-WC is used for that purpose. Form 2504 is the agreement form for other employment tax issues not related to worker classification and section 530. Separate reports (Forms 4666, 4667, 4668) and agreement forms (Forms 2504 & 2504-WC) MUST BE prepared if both section 7436 and non-section 7436 issues are present. Examiners may encounter situations in which there are a combination of agreed and unagreed adjustments involving section 7436 and non-section 7436 issues.

When agreement is reached with the taxpayer, the examiner will prepare and furnish an examination report (Forms 4666, 4667, 4668, 2504 and/or 2504–WC) to the taxpayer at the closing conference. A copy will also be given to the taxpayer's representative, if provided for by a power of attorney. The taxpayer and representative will be notified on Letter 1002 (DO) (Notification Letter-Agreed Audit Changes) after the case has cleared technical review.

Since the reasons for adjustments are explained at the conclusion of the examination, written explanation is not required unless it is deemed necessary by the examiner. Written explanation will be furnished if specifically requested by the taxpayer or his/her representative.

If a report, furnished during a closing conference is found to be in error, a corrected report will be made. If the taxpayer does not agree with the corrected report, prepare a report under procedures for unagreed cases. When there is a corrected report, agreed or unagreed, the examiner will enter in the remarks section of Form 4666 "This corrected report supersedes report dated _____" and annotate at the top of the report form "CORRECTED REPORT" in red ink.

If additional information is received that would change the original report, prepare a revised examination report. On the revised report, adjust the amounts as shown on the original tax return. It is not necessary to prepare a revised report showing the amount "as previously adjusted. " The tax report should be noted as "Revised Report" in red at the top of the form and the statement "This revised report supersedes report dated ____" in the remarks section. Receipt of Forms 4669/4670 or proof of payment of SUTA taxes are examples where revised reports are used

When an examination results in an agreement to the findings on one type of tax or issue and no agreement on another, separate reports will be prepared. See IRM 4.23.10.16, Partially Agreed Cases, for instructions.

When income tax withholding is computed under the supplemental wage rate, the examiner will advise the taxpayer of his rights under IRC section 3402(d) and furnish a supply of Forms 4669 and 4670.

Employers' requests under IRC section 3402(d) for relief from the payment of income tax withholding are generally handled at Campuses as ADP adjustments. However, the examiner does have the authority to accept the Forms 4669/4670 for income tax withholding adjustment under IRC section 3402(d). See IRM 4.23.8.4.2 for additional instructions on granting relief under IRC section 3402(d). If the examiner does not receive Forms 4669/4670 from the employer by the time the case is closed, the taxpayer should be informed to wait until they receive a notice of assessment before submitting Forms 4669/4670 to the processing center for abatement.

The "Substitute for Employment Tax Return" procedures (See IRM 4.23.12.10) will be used for delinquent employment tax returns. For agreed cases, a closing letter, Letter 1002(DO) should be sent to the taxpayer after the case has cleared technical review.

Special requirements apply to household employers with domestic employees. Section 2 of the Social Security Domestic Employment Reform Act of 1994 (the Act), Pub. L. 103–387, enacted IRC section 3510 and amended IRC section 3121. The Act made three major changes in the rules applicable to household employers for wages paid after December 31, 1994:

Household employers generally report FICA and FUTA taxes and any withheld income tax with respect to household employees on Schedule H (Household Employment Taxes), which is filed with the employer's individual income tax return.

Household employers who file Schedule H must pay FICA and FUTA taxes and any withheld income taxes by the due date for their individual income tax returns, not including any extensions, for the applicable year. The employer for purposes of Schedule H is whoever applied for the EIN on Form SS-4. If the return is a joint return, only one taxpayer can be the employer of record on Schedule H and this should be the same taxpayer who obtained the EIN. The employer is responsible for filing Forms W-2 and W-3 for the household employees.

Employers that have both household employees and other employees, who are not household employees may choose either of two options for reporting employment taxes, including any withheld income tax, with respect to the household employees. These employers may either:

For FICA, FUTA and income tax withholding purposes, an administrator or executor of an estate who maintains a private home for the decedent's family, or a trustee that maintains a home as a private home for a beneficiary of the trust, is a household employer of any employee that performs domestic services in the home.

Pursuant to section 3504 of the Code, state and local government health and welfare agencies assume responsibility for reporting and paying FICA and FUTA taxes and any withheld income tax with respect to individuals furnished by the agencies to provide household services for recipients of public assistance. See Rev. Proc. 80–4, 1980–1 C.B. 581. These state and local government health and welfare agencies must report FICA taxes and withheld income taxes with respect to these individuals quarterly on a Form 941 and report FUTA taxes for these individuals annually on a Form 940.

If the "cash wages" paid to any household employee by a household employer is more than the dollar threshold in a calendar year, all of the "cash wages" paid to that employee are subject to FICA taxes. The dollar threshold is adjusted annually for inflation. Refer to Schedule H and Publication 926, Household Employer's Tax Guide, for the yearly thresholds and additional information.

Although the Act changed the reporting and payment requirements for the FUTA tax, the threshold for FUTA "cash wages" remains the same and is not adjusted annually. Unlike the FICA threshold, the $1,000 per quarter FUTA threshold is based on total "cash wages" paid by the employer to all domestic employees. A household employer must file a FUTA tax return only if they paid cash wages of $1,000 or more in any calendar quarter for household work. Thus, if in a calendar quarter an employer pays $500 each to a baby sitter and a housekeeper, FUTA taxes are due for both. Because different criteria apply, it is possible to be liable for FUTA but not FICA tax for a domestic employee, or vice versa.

The Act did not transform the taxes withheld and paid by household employers from employment to income taxes, it changed the manner of reporting and collection. Therefore, any employment tax audit adjustments should not be reflected on report Form 4549, Income Tax Examination Changes. Examiners are to use report Forms 4668,4666, 2504 and/or 2504–WC for adjustments of employment taxes for household employees. Adjustments to Schedule H should be made to the 4th quarter on these forms, as applicable. Furthermore, if no Schedule H is included with the employer's filed income tax return, the statute of limitations has not started to run.

All schedule H examinations must be controlled on AIMS and ERCS using MFT 30. If the taxpayer did not file Form 1040 then a substitute for return must be filed in order to process the Schedule H adjustment. As employment tax changes, adjustments to Schedule H are not subject to statutory procedures and cannot be included in a statutory notice of deficiency.