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4.2.2.1
(10-01-2003)
Collateral Examinations
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A collateral examination is requested when an exchange of information
between areas is essential to resolve an issue of material consequence. Collateral
examinations are used only when the information cannot be obtained from the
taxpayer, the taxpayer's representative, or third parties. Every reasonable
effort must be made to secure the information rather than to routinely request
a collateral examination.
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Collateral activity is the performance of work of short duration, work
that does not require the examination of books and records, and work that
calls for little independent judgement or conclusions. For example, a collateral
examination would be justified where:
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An interview is required to get specific information for the examiner;
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A document is to be obtained;
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A transcript of an account or a listing of invoices is needed; or
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A summons needs to be served.
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All collateral requests must receive priority treatment. If the collateral
examination results in a finding of nationwide interest, the receiving area
will furnish the information to Headquarters. A Technical Coordination Report
would be used to furnish this information to Headquarters (See IRM 4.2.3).
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Collateral examination requests involving tax shelter cases will be
identified as such on the top of Form 6229, Collateral Examination. The receiving
area will acknowledge receipt of the collateral request and provide a status
report to the requesting office within 45 days and provide status reports
to the initiating area every 30 days.
4.2.2.1.1
(10-01-2003)
Collateral Examination Procedures: Initiating Area
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Form 6229, Collateral Examination, is used by all areas to request or
exchange information between areas to resolve an issue(s) of material consequence.
Form 6229 is prepared as early as possible in each examination when a collateral
examination is needed from another area.
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The examiner assigned the return will prepare the original Form 6229.
Part 2 of the form is retained in the case file. The original Form 6229 and
three copies are forwarded.
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The narrative section of Form 6229 must include sufficient background
information to clearly state the problem. Additional schedules and attachments
are included as needed. A copy of the out-of-area return is also included,
if available.
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Be specific on the exact information requested.
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The examiner's name and telephone number must be included so the receiving
area has the correct person to contact for clarification of the issue, if
needed.
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The completed Form 6229 is submitted to the group manager for review.
After approval, the group manager will forward Form 6229. If Campus action
is required (i.e., requesting the return), Form 6229 is forwarded to the Campus
servicing the receiving area. If no Campus action is required, the initiating
area will submit the request to the applicable Territory Manager of the receiving
area. The initiating area will photocopy the retained Part 2 and put an
"X"
next to the
"Follow-up"
line when furnishing
information to the receiving area.
4.2.2.1.2
(10-01-2003)
Collateral Examinations: Receiving Area
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The receiving area must acknowledge receipt of the request by completing
Part 3 of Form 6229 and returning it to the initiating area.
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The receiving examiner must include his/her name, address, telephone number
and date received. If the case is reassigned, the new examiner must notify
the initiating area of the change.
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Photocopies of Part 4 of Form 6229 are used for subsequent communication
with the initiating area.
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The receiving examiner must provide a clear, concise response to each
question raised.
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If the receiving area believes the results of the collateral examination
would not justify the time and cost involved, a memorandum explaining that
decision is attached to Form 6229 and forwarded to the initiating area. The
Territory Manager will approve any declination memorandum with a copy sent
to the respective Planning and Special Programs (PSP) sections. Territory
Managers should resolve disagreements between the initiating and receiving
areas concerning the need for a collateral examination. Area Directors will
resolve any disagreement between the respective Territory Managers.
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