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IRS Audits

Chapter 4. AIMS Processing

Section 12. Examined Closings, Surveyed Claims, and Partial Assessments (Cont. 5)

4.4.12  Examined Closings, Surveyed Claims, and Partial Assessments (Cont. 5)

4.4.12.4 
Examined Closings/Surveyed Claims

4.4.12.4.57 
Item 45: NOL Indicator

4.4.12.4.57.2  (06-01-2002)
Carryback and/or Carry-Forward Tax Periods Related To the NOL

  1. Enter a "2" in Item 45 for all carryback and/or carryforward tax periods related to the case in which you entered a "1" in Item 45 even if the NOLD was examined and the final result was a no change.

4.4.12.4.57.3  (06-01-2002)
Non-NOL Years Offset by Carryover

  1. Enter a "3" in Item 45 for tax periods in which adjustments on the return were offset either in part or full by a carryover if the carryforward year return is not picked-up.

4.4.12.4.58  (06-01-2002)
Item 46: Credit C/F Amount

  1. This item is used if you made adjustments to a credit that was carried forward but did not pick-up the carryforward year return. Enter the amount that was disaIlowed.

  2. Example: you examined the 199712 return and disallowed the foreign tax credit for $5,000, $2,000 of which was carried forward to 199812. You did not pick up 199812 since it had not been filed.
     199712 Form 5344, Item 46 = $2,000
     199712 Form 5344, Item 12 = $3,000

4.4.12.4.59  (06-01-2002)
Item 47: Credit Type

  1. Enter the type of credit that was disallowed in Item 46. If more than one type of credit was disallowed enter " M" for multiple.
     A = Reserved
     B = Business Energy Credit
     C = Reserved
     E = Experimental Credit; Research and
     F = Foreign Tax Credit
     G = Reserved
     H = Historical Restoration Credit
     I = Investment Tax Credit
     J = Reserved
     K = Reserved
     L = Low Income Housing Credit
     M = Multiple
     N = Reserved
     O = Other
     P = Reserved
     Q = Reserved
     R = Reserved
     S = Reserved
     T = Tight Formation Gas Credit
     U = Reserved
     V = Vehicle Credit; Qualified Electric
     W = Reserved
     X = Reserved
     Y = Reserved
     Z = Reserved

4.4.12.4.60  (06-01-2002)
Item 49: Secondary Business Code

  1. The 5 digit secondary business code should be input if the AIMS data base does not contain the correct SBC.

4.4.12.4.61  (06-01-2002)
Item 50: Employee Group Code

  1. The examiner’s four-digit employee group code is a required entry for all examined returns. No entry is necessary for surveyed claims.

    1. 1XXX is used for revenue agent groups

    2. 2XXX is used for tax auditor/tax resolution representative groups

    3. 5000 through 5999 is used for all Examination Branch programs at campus

     

  2. Employee Group Codes 1000, 1998, 2000, 2072, 2998 or 2999 are not valid entries for closings.

4.4.12.4.62  (06-01-2002)
Item K: Tax Examiner

  1. The name of the tax examiner that prepared the Form 5344 should be entered in the space provided.

4.4.12.4.63  (08-01-2003)
Item 400: CIC Case

  1. If the case is a Coordinated Industry Case, an "L" should be entered in this field by the industry having primary responsibility for the CIC examination.

  2. If the AIMS data base currently contains Aging Reason Code 04, the computer will automatically generate an " L" even if it is not input.

4.4.12.4.64  (06-01-2002)
Item 401: Whipsaw Indicator

  1. Where the Government’s interest is being protected by making the same adjustment against the same taxpayer for different tax periods, or against two or more taxpayers, an alpha indicator (K=Key case, R=Related case) must be entered to identify the case as a Whipsaw case.

  2. The input of this indicator will prevent the duplication of statistics.
    "K" AIMS Tables will reflect results
    "R" AIMS Tables will reflect return but no results

  3. If there are additional issues on the return that have been adjusted, the indicator should be used only if the majority of the adjustments were due to the whipsaw.

4.4.12.4.64.1  (06-01-2002)
Related Returns

  1. The primary case information should be entered on the Form 5344, Item 405–408, of the related case.

4.4.12.4.65  (06-01-2002)
Item 402: International Examiner’s Time

  1. Enter the percentage of the total time (Item 28) that represents the International Examiner’s time.

4.4.12.4.65.1  (06-01-2002)
Example

  1. The total time spent on the case (including the international examiner’s time) is 125 hours. The international examiner spent 15 hours on the case, therefore the entry in this field should be 12 (15/125=12).

4.4.12.4.65.2  (06-01-2002)
Revenue Base Protection

  1. Do not include the international examiner’s time spent on Revenue Base Protection issues in this calculation.

4.4.12.4.66  (06-01-2002)
Item 403: International Exam Results

  1. Enter the percentage of the exam results (agreed and unagreed) that is due to the international examiner’s involvement.

4.4.12.4.66.1  (06-01-2002)
Example

  1. Exam results is $10,000. The portion attributable to the international examiner is $1,500, therefore the entry in this field should be 15 (1,500/10,000=15).

4.4.12.4.66.2  (06-01-2002)
Revenue Base Protection

  1. Do not include Revenue Base Protection results due to the international examiner.

4.4.12.4.67  (06-01-2002)
Item 404: Form 720

  1. When a Form 720 is established on AIMS, the data base contains only one abstract code which is located in the activity code field. All activity codes that were examined must be entered in Item 404.

  2. Entries for the total time spent on the case and all assessments are made on the front of the Form 5344.

  3. Entries for AIMS statistical reporting purposes are made in Item 404a – 404d on the back of the form.

4.4.12.4.67.1  (08-01-2003)
Item 404a: Abstract Code

  1. Enter the abstract code for each abstract that was examined.

  2. If more than one abstract code was examined, do not enter an abstract code that was no-changed on the first line of 404a, unless the disposal code that was entered on the front of the Form 5344 is also a no-change disposal code. Enter the abstract code that resulted in a change on the first line if the disposal code on the front of the Form 5344 is a changed disposal code. If the disposal code for the first abstract code is not consistent with the disposal code entered in Item 13, the case will appear on the Accomplishment Error Register and the results of the audit will not be reflected on the AIMS tables until the correction is input.

4.4.12.4.67.2  (08-01-2003)
Item 404b: Disposal Code

  1. Enter the appropriate disposal code for each abstract code examined.

  2. See IRM 4.4.12.4.67.1.

4.4.12.4.67.3  (08-01-2003)
Item 404c: Time

  1. Enter the time charged to the examination for each abstract code examined.

  2. The total of all Item 404c entries must total the amount entered in Item 28.

  3. Effective 1/1/2004, time can be reported in 15 minute intervals. Enter the following number in the fraction section of Item 28.

    • Enter a "3" for 15 minutes

    • Enter a "5" for 30 minutes

    • Enter a "7" for 45 minutes

     

4.4.12.4.67.4  (06-01-2002)
Item 404d: Exam Results

  1. Enter the tax adjustment amount for each abstract code examined.

  2. The total of all Item 404d entries must equal the total of the computer generated Examination results.

4.4.12.4.67.5  (06-01-2002)
Flip/Flop Issue

  1. When a taxpayer has reported an excise tax under an incorrect abstract number, Examination will adjust the excise tax to report it under the proper abstract. In such cases, there will be no additional tax that is assessed. These offsetting adjustments are closed with Disposal Code 01. Item 15 will reflect the decrease (-) to the incorrect abstract number and the corresponding increase (+) to the correct abstract, Item 404 a–c will reflect the abstract codes, disposal code and abstract time for each abstract reflected in Item 15. However, the exam results entered in Item 404d is zero. Zero abstract results are entered because the Item 404 results must equal the Exam Results which in flip-flop cases are zero.

4.4.12.4.67.6  (06-01-2002)
Multiple Abstracts Examined

  1. Below, are procedures for processing returns with multiple abstract codes.

4.4.12.4.67.6.1  (06-01-2002)
No Change Abstract

  1. If multiple abstract codes are examined and one is a no-change, do not list the no-change code first. If the disposal code entered in Item 13, is greater than 02, the case will appear on the accomplishment error register.

4.4.12.4.67.6.2  (06-01-2002)
More Than 9 Abstracts

  1. If more than 9 abstract codes are examined, check the box in the lower right portion of this item and attach additional Forms 5344 as necessary.

4.4.12.4.67.6.3  (08-01-2003)
Revenue Base Protection

  1. If the examination included RBP (claim for refund), the RBP time and dollars protected must be entered on the front of the Form 5344. This figure must represent the total RBP time and RBP dollars protected for all abstract codes. The results for the RBP will be reflected on the AIMS tables, under the primary Abstract Code on the AIMS data base. Change the abstract code to represent the abstract that the claim is filed against if it is not already the primary code. The Item 404 entries must NOT include RBP figures.

4.4.12.4.67.6.4  (06-01-2002)
Secured Delinquent Returns

  1. Effective January 1, 1999, Item 404 must not include the amount of the delinquent return. The entire amount of the delinquent return secured by Examination and forwarded to the campus for processing, must be entered in Item 414.

4.4.12.4.68  (06-01-2002)
Related Return Section

  1. Required entry for all examined returns worked by:

    1. Revenue Agents in a 1XXX Employee Group Codes,

    2. Tax Auditors/Tax Resolution Representative in 2XXX Employee Group Codes, and

    3. Correspondence Examination Examiners in 5XXX Employee Group Codes.

    4. Exempt from this requirement are TEFRA cases in 58XX Employee Group Codes.

     

  2. The information entered must be from the primary return which is the initial return that started the examination.

  3. If several returns were assigned initially, the Examining Officer will designate one return as primary.

  4. An audit label may be used but the name control must be lined out and Item 408 entered separately.

  5. Missing or conflicting information will cause a terminal reject.

4.4.12.4.68.1  (06-01-2002)
Primary Return Entries

  1. Only Item 408 needs to be completed.

  2. Enter "P" in Item 408. The computer will generate the primary return information from the front of the F5344.

4.4.12.4.68.2  (06-01-2002)
Related Return Entries

  1. Item 405 is for TIN of primary return.

  2. Item 406 is for MFT of primary return.

  3. Item 407 is for Tax Period of primary return.

  4. Item 408 is for Related Return Alpha Code of "S" .

4.4.12.4.69  (06-01-2002)
Item 410: Aging Reason Code

  1. Enter if applicable.

4.4.12.4.70  (06-01-2002)
Item 411: Payment Code

  1. Required on all cases (except employee group code 58XX)

  2. To determine whether the account is full paid or part paid, consider the tax, penalty and interest, adjusted by credits per the examiner’s report. Use the interest amount from the examiner’s report even if a payment is secured at a later date.

    Example:

    Examiner’s report dated June 1, 1997, shows a balance due of $5,000, interest is $100. A check is received on August 1, 1997 for the entire amount per the RAR. Consider this full paid even though there will be 2 more months of interest charged after the assessment is made.

     

  3. It is not a requirement to check Master File for payments.

  4. Select the code based on the payment status of the account at the time of closing from the group.

  5. No other codes may be used without Headquarters approval.

4.4.12.4.70.1  (08-01-2003)
Valid Codes

  1. Following are the valid payment codes.

    F = full paid Amount shows on RAR paid in full; may be unpaid accruals - Frozen refund or payment which covers the balance due in full.
    P = part paid Includes frozen refund or payment does not cover balance due (also used where there will be an offset from other tax periods that will not completely satisfy the liability).
    N = no payment Changed cases when refund was not frozen, no payment or agreement received, no change cases, overassessment cases, Appeals cases if no payment received.
    O = total offset Overassessments from other tax periods that will offset all of the tax.

4.4.12.4.71  (06-01-2002)
Item 412: Installment Agreement Code

  1. Required on all cases except EGC 58XX.

  2. Select the code base on whether an installment agreement was secured.

    1. I = Installment agreement received (This includes Estate Tax Return installment agreements under IRC Section 6166.)

    2. C = Coordinated with collection

    3. N = No installment agreement received

     

4.4.12.4.72  (06-01-2002)
Item 414: Delinquent Return Amount

  1. Effective January 1, 1999, this field will replace Item 34, Adjustment Amount field for delinquent returns secured by Examination and forwarded to the campus for the processing of the TC 150.

4.4.12.4.72.1  (06-01-2002)
Taxable Returns

  1. Enter the balance due or refund amount (excluding penalties) per the delinquent return.

4.4.12.4.72.2  (06-01-2002)
Non-taxable Returns

  1. Enter the amount of the ordinary net income/loss or special allocation items per the delinquent return.

4.4.12.4.72.3  (06-01-2002)
Excise Tax Returns

  1. Enter the total of all abstract codes in Item 414. DO NOT make an entry in Item 404 for the delinquent amount. The amount entered in Item 414 will be credited to the Activity/Abstract Code that appears on the AMDISA. You must change the Activity/Abstract Code if you want the delinquent return credited to a different code.

4.4.12.4.72.4  (06-01-2002)
AIMS Checks

  1. If Item 414 is entered, Item 37, Delinquent Return Code must also be entered and vice versa.

  2. If Item 414 is entered, Item 13 Disposal Code must be 01 or 03–13 (Not valid with DC 02 and 34).

4.4.12.4.73  (06-01-2002)
Item 415: Amended Return Amount

  1. In the past, if a taxpayer filed an amended return with the campus, even if it was due to an ongoing examination, we could not take "credit" for the adjustment. To accurately capture the examiners’ efforts, a new Item 415 is being initiated. This entry is only valid if Master File shows that the examination was started BEFORE the taxpayer filed the amended return or an original return if the TC 150 is a Substitute for Return (SFR). Enter the amount of the TC 29X that has posted to Master file if the return was filed, as a result of an ongoing examination. A current transcript must be included in the case file supporting the amount entered in Item 415. The TC 42X date must be prior to the TC 29X.

4.4.12.4.73.1  (06-01-2002)
Taxable Returns

  1. Enter the amount of the TC 29X less any credits posted. In most cases this is the balance/refund due.

4.4.12.4.73.2  (06-01-2002)
Non-taxable Returns

  1. Enter the adjustment amount to income/loss.

4.4.12.4.73.3  (06-01-2002)
Examples

  1. An examination is being conducted an business expenses are being disallowed resulting in a proposed deficiency of $20,000. Instead of signing an agreement, the taxpayer sends an amended return to the campus no longer claiming these expenses. The campus assesses additional tax in the amount of $20,000. If the TC 290 for $20,000 posts AFTER the TC 42X, enter $20,000 in Item 415.

  2. An examination is being conducted an business expenses are being disallowed resulting in a proposed deficiency of $20,000. Instead of signing an agreement, the taxpayer sends an amended return to the campus reporting additional income resulting in additional tax of $10,000. Since this was not an issue included in the examination, no entry is allowed in Item 415 EVEN if the TC 290 was posted after the TC 420. The $20,000 for the disallowance of the business expenses will be reflected in the TC 300 amount.

  3. An examination is being conducted on a non-filer. The TC 150 posted at Master File represents the SFR that Exam submitted. The taxpayer sends an original return to the campus and the center assesses $10,000 in tax and $3,000 in wi