This section provides the guidelines on employment tax refunds or abatement claims.

Centralized classification of all employment tax claims and amended returns is conducted at Campuses.

In accord with Policy Statement P–4–103, after employment taxes have been assessed as a result of an examination action, the taxpayer will generally be required to pay the assessment and file a claim for refund before receiving any further consideration of the case. (See IRM 4.23.13.9, Appeals to Tax Court.) However, a claim for abatement of such an assessment will be considered on its merits if:

Taxpayers whose claims for abatement are not considered by Examination will receive a "no consideration" letter, Letter 924 (DO).

When it is determined that a claim for abatement should be considered on its merits, the taxpayer will be afforded consideration by the Appeals Office.

See IRM 4.23.8.4.2 regarding employers' requests under IRC section 3402(d) for relief from payment of income tax withholding. These requests constitute abatement claims and are usually handled at Campuses as adjustments. However, examiners do have the discretion to accept the Forms 4669/4670 before the examination is closed to reduce or abate the appropriate portion of the assessment.

If a protective claim Form 843 is received, and was filed by an employee to protect his claim for overpayment of SECA due to a reclassification issue, the form should be returned to the taxpayer with the instructions to file a Form 1040X.

The examiner should not get involved in securing the original Forms 1040 for association.

No consideration will be given to a claim for refund of employment tax which:

If a claim for refund is within types (1)(a) through (e) above, Letter 905(DO) or Letter 906(DO) or Letter 916 (C/DO) (with applicable box checked) will be issued to the taxpayer advising that no consideration can be given to the claim. There are certain exceptions to those claims described in (1)(e), based on statutory exceptions to finality of closing agreements, and claims based on issues not included in prior specific matter closing agreements.

If a claim is within types (1)(f) and (g) above, a certified notice of claim disallowance will be issued and no other action needs to be taken.

If a claim is identified as type (1)(h) above and was filed solely as a protective claim on invitation of the Service, it will be associated with the case file without further audit action. A no-consideration letter will not be issued to the claimant, but a memorandum for the file will be attached to the claim explaining why no action was taken. A type (1)(h) claim filed under any other circumstances requires issuance of Letter 916 (C/DO). A copy will be placed in the case file as a record of the action taken.

Claims involving years previously closed by Appeals Office will be handled as provided in IRM 4.23.13.7.

Claims for refund of employment taxes may be "Surveyed After Assignment" if the examiner concludes after a review of the case file that the claim is clearly allowable in full and that the case does not otherwise warrant examination. Consideration should be given to the circumstances of selection and assignment (whether the case was selected and assigned only because of the filing of the claim) in determining whether it should be surveyed. Claims allowed in full on survey, after review and approval of the "Survey After Assignment" report, will be transmitted to a Campus for allowance of the overassessment.

In a survey after assignment of a claim, a survey report need not be prepared if the facts are such that it is clearly unnecessary for the examiner to record reasons for recommending the allowance of the claimed overassessment. In such cases, Form 5344,Examination Closing Record (or Form 5599, EO Examined Closing Record, for TE/GE), will serve as the administrative file record of the action taken.

Claims allowed in full on survey, after review and approval of Form 2503, Survey After Assignment — Excise or Employment Tax, will be processed and closed in the same manner as no-changed or agreed cases.

The general procedures for examining returns, issuing preliminary letters, and referring cases to Appeals apply in disposing of employment tax refund claims requiring examination. Exhibit 4.23.13–1 gives general guidance for closing employment tax claims .

Begin examination or other action on claims for refund within 30 days after receipt. If the taxpayer is in balance due status, the revenue officer or Automated Collections Service (ACS) should be advised of the claim process and that a TC470 CC90 should be input. The assigned officer will be advised of the resolution of the case.

If a claim is received on a case already under examination, it should be considered during such examination. If the claim pertains to an active case forwarded to Appeals, it should be referred to that Office for consideration in the disposition of the case. See IRM 4.23.13.7 for claims on cases previously closed by Appeals.

When a claim is examined, the examiner should consider other potential issues.

If an examiner determines that a claim should be disallowed in full and no adjustments to the tax liability are necessary, Form 3363 (Acceptance of Proposed Disallowance of Claim for Refund or Credit) will be solicited. However, if the claim is disallowed in full and adjustments to the tax liability are also proposed, agreement should be solicited on Form 2504 (Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment—Excise or Employment Tax).

Form 2297 (Waiver of Statutory Notification of Claim Disallowance) will be solicited from a taxpayer in a partial or full claim disallowance case when a signed agreement is secured at the conclusion of the examination. Also, if at any time prior to the issuance of a statutory notice of claim disallowance, the taxpayer volunteers to file the waiver, the taxpayer will be permitted to do so.

If an agreement is not secured when a claim for refund is proposed for disallowance in whole or in part, or if the taxpayer signs an agreement but refuses to execute Form 2297, a certified notice of disallowance is issued after all other administrative action has been concluded. When a certified notice of disallowance is to be issued, the Campus will be notified by use of Form 3198 (Special Handling Notice) or Form 9231(Collection - Employment Tax Examination Handling/Routing Instructions). If claims for more than one period, or more than one claim for a single period, are involved, specific information for each claim should be furnished.

If a claim on a case previously closed by an Appeals Office clearly falls within the circumstances described in IRM 4.23.13.4(1)(a) through (f), the claim will be processed as provided in IRM 4.23.13.4(2) through (5). All other claims on cases previously closed by Appeals will be processed as provided in (2) and (3) below. If there is a question as to the action to be taken, the Appeals Office which previously considered the case should be consulted.

If the Appeals closing involved a Form 2504 agreement, and the claim does not relate to a matter involved in the Appeals closing, the claim may be processed as though Appeals had not previously acted on the case. If the claim relates to a matter previously considered by Appeals, the claim may be processed to a conclusion, subject to Appeals concurrence in any modification of any item previously considered by Appeals.

If the prior Appeals closing involved a Form 2504–AD (Excise or Employment Tax—Offer of Agreement to Assessment and Collection of Additional Tax and Offer of Acceptance of Overassessment) agreement, the claim and case file will generally be forwarded to Appeals without action. However, if the claim concerns only a matter outside the agreement, the claim may be processed to a conclusion without reference to Appeals. Claims involving returns on which additional tax may result will not be sent to Appeals if less than 120 days remain on the statute.

Technical advice may be requested from the Headquarters Office on issues in claim cases in which the examination may process to a conclusion without reference to Appeals, as described in (2) and (3) above. Appeals concurrence is required to request technical advice on issues which may be modified only with Appeals concurrence, as described in (2) above. Examination will not request technical advice on claim cases that are required to be forwarded to Appeals for action, as described in (3) above.

A claim that has been disallowed in whole or in part will be reconsidered upon submission of additional facts by the claimant, provided such facts are received prior to the expiration of the statute of limitations for bringing suit. If the additional facts submitted warrant reopening of the claim, the claim will be reopened and appropriate adjustments will be made.

The disposition of a request for reconsideration of a disallowed claim will generally require one of the following types of action:

There is no provision in the Internal Revenue Code or regulations requiring the issuance of a certified notice of denial or disallowance of a claimant’s request for reconsideration of a claim for refund that has previously been disallowed by a certified notice. Therefore, requests for reconsideration of disallowed claims made on Form 843, or made otherwise, such as in a letter, brief or affidavit, will not be treated by area directors as original claims. Examiners’ reports on requests for reconsideration of disallowed claims must not contain any language from which the claimant may infer that a certified notice of the denial or disallowance will be issued.

The taxpayer will be notified on Letter 917 (DO) (with applicable box checked) that no action can be taken on the request for reconsidering the claim if:

When Letter 917 (DO) is issued, a copy will be placed in the case file.

If the request for reconsideration concerns a claim previously considered and disallowed in whole or in part by Appeals, the claim will be associated with the case file and forwarded promptly, without action thereon, to Appeals.

If it is determined that a request for reconsideration of a disallowed claim should be disallowed in whole or in part, the claimant will have the same right of appeal within the Service as he/she had on the disallowed claim. However, if the period of limitation for instituting suit on the disallowed claim will expire in less than 4 months, the case will not be referred to Appeals unless that office agrees to accept jurisdiction. The right of appeal will not be available to claimants whose requests for reconsideration are denied under (4) above.

If a request for reconsideration is based on a claim that was the subject of a no-consideration letter under one of the contentions in types (a) through (i) of section 13.4:(1), Letter 917(DO) (with applicable box checked) should be issued to the claimant denying the request and referring to the previous no-consideration letter. In this case, the claimant will not have the right of appeal referred to in (7) above.

If disposition of a request for reconsideration of a disallowed claim is contingent on a pending court decision, the taxpayer should be given the opportunity of submitting, in duplicate, a properly executed Form 907 (Agreement to Extend the Time to Bring Suit). Form 907 agreements under IRC section 6532(a)(2) may be entered into if there are satisfactory reasons for extending the period for filing suit. Examples of satisfactory reasons are:

In the interests of good public relations, area offices should take the initiative in inviting agreements on Form 907 when such action will prevent possible inequities to taxpayers. Form 907 may be signed by the Area Director. After the agreement is signed and the duplicate copy is sent to the taxpayer, the case will be sent to closed files awaiting further request by the taxpayer for reconsideration of the disallowed claim.

Except for IRC section 7406 cases, statutory notices of deficiency are not issued and the United States Tax Court does not have jurisdiction over employment tax cases. (See IRC section 7442.)

The taxpayer may litigate other types of employment tax case in either the United States District Court or the United States Court of Federal Claims. Before taxpayers can initiate suit in either of these courts, they will have to pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter, file a claim for refund of the tax and then have the claim for refund denied by the Service.

A taxpayer is entitled to file a refund suit 6 months after the filing of the refund claim, if no action is taken by the Service, or within two years after the statutory notice of disallowance of the refund claim. After such a suit is filed, Chief Counsel’s office requests the administrative file from the Campus.

When the examiner or group manager is notified that a taxpayer has filed suit for recovery of taxes paid in a case involving an open claim for refund of employment tax, the case file will be expeditiously sent to the Campus. A Form 3198 or Form 9231 will be attached to the file instructing the Campus to issue a statutory notice of claim disallowance before sending the case file to Area Counsel and/or the Chief Counsel’s Office.

IRC section 7623 provides for the payment of rewards for information that leads to the "detection and punishment of persons guilty of violating internal revenue laws, or conniving at the same." Section 301.7623–1 of the regulations provides that informants may file a claim for reward on Form 211, Application for Reward for Original Information.

Under no circumstances is any person authorized to make any offer or promise, or otherwise to bind an area or service/compliance center director with respect to the payment of any reward or the amount thereof. An Internal Revenue Service employee will never indicate to the informant in any manner the amount of the probable tax recovery, or whether such recovery is based upon the information submitted by him/her. If inquiry is made as to the amount which may be received, the inquirer should be furnished with a copy of IRC section 7623 and Reg. section 301.7623–1. (See Delegation Order Number 204, Rewards for Informant Information, for those authorized to approve rewards.)

Cases where a claim for reward has been filed should be afforded confidential treatment. In any instance where the identity of an informant is indicated, the case file and all communication should be handled in a manner that will ensure complete protection of the informant’s identity. The informant’s identity should not be entered in the history sheet or anywhere in the case file.

Administrative control of Informants' claims is the responsibility of the Informants' Claim Examiner located in the Compliance Division of each Campus. See IRM 25.2, Informants' Communications and Reward Claims, for detailed instructions on Informants' Claims.