The Internal Revenue Service Needs to Simplify Filing
Requirements and Clarify Processing Procedures for Small Business Corporate
Returns
September
2002
Reference Number:
2002-30-186
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
September
23, 2002
MEMORANDUM FOR
COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED DIVISION
FROM: Pamela J. Gardiner /s/ Pamela J. Gardiner
Acting Inspector General
SUBJECT: Final Audit Report - The Internal Revenue
Service Needs to Simplify Filing Requirements and Clarify Processing Procedures
for Small Business Corporate Returns (Audit #200130037)
This
report presents the results of our review of the processing of small business
corporate returns. The overall
objective of this review was to evaluate
the effectiveness and efficiency of the Internal Revenue Service’s (IRS)
policies and procedures established for the filing and processing of small
business corporate returns. We
particularly focused on the ability of first-time filers to timely and easily
file their small business corporate returns.
In summary, the processing
of small business corporate returns needs to be simplified to better enable
small businesses to successfully file their U.S. Income Tax Return for an S
Corporation (Forms 1120S). Currently,
taxpayers and the IRS have to take many steps before the returns of first-time
filers can be processed to their accounts.
Each year an estimated 46,000 small businesses are not successful in
filing Forms 1120S because the IRS does not have valid elections on file to
allow their returns to be processed.
These taxpayers spend an estimated 3.2 million hours each year
preparing, copying, assembling, and sending these returns to the IRS, which
could then not successfully process them.
In addition, the IRS did not
consistently process Forms 1120S and determine the correct taxes due from small
business taxpayers. Each year, the IRS
does not process an estimated 9,000 returns as small business corporations,
even after the taxpayers verify that their election requests were granted. Instead, the IRS converts and processes
these Forms 1120S as regular corporate returns without considering the fact
that the taxpayers verified the elections were granted. Because these returns were not processed
correctly, there is the potential for the erroneous assessment of taxes on
$41.0 million of profits and the inability of taxpayers to claim $100.3 million
in losses. Furthermore, because of
unclear IRS procedures, approximately 3,700 taxpayers who file unprocessable
Forms 1120S may have their rights violated when the IRS assesses taxes on an
estimated $6.7 million in profits without sending a statutory notice of
deficiency. A statutory notice of
deficiency allows the taxpayer to respond to the proposed assessment before
taxes are actually assessed.
We recommended that the IRS
determine if there are alternatives, including possible modification of the
legal requirements, that could be implemented to make it easier for first-time
filers to be granted elections and file their Forms 1120S. We also recommended that procedures be developed
that would improve and simplify both the process for approving, recording, and
controlling elections and the related notification process. In addition, we recommended procedures be
clarified for preparing and assessing taxes on Forms 1120S and for issuing
statutory notices of deficiency.
Management’s response was
due September 16, 2002. As of September
18, 2002, management had not responded to the draft report.
Copies of this report are
also being sent to the IRS managers who are affected by the report
recommendations. Please contact me at
(202) 622-6510 if you have questions or Gordon C. Milbourn III, Assistant
Inspector General for Audit (Small Business and Corporate Programs), at (202)
622-3837.
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Outcome Measures
Entities that wish the Internal Revenue Service (IRS) to consider them small business corporations so they can file a U.S. Income Tax Return for an S Corporation (Form 1120S) must first file an Election by a Small Business Corporation (Form 2553). According to the IRS, S Corporations, also known as small business corporations, represent more than one-half of all corporate entities filing tax returns.
The major advantages of filing as a small business corporation are, generally, that the small business pays no corporate tax, and that profits or losses are passed through to the shareholders to be reported on their individual income tax returns. In contrast, a regular corporation that files a U.S. Corporation Income Tax Return (Form 1120) pays corporate tax on its profits, and its shareholders cannot claim corporate losses on their individual returns.
This audit was conducted from December 2001 through June 2002 at the Small Business/Self-Employed (SB/SE) Division’s Headquarters Office and the Brookhaven IRS Campus and included a review of transactions for all 10 IRS Campuses. The audit was conducted in accordance with Government Auditing Standards. Detailed information on our objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
First-time filers of Forms 1120S encounter an IRS processing system that is not as effective as it should be. The legal requirements to file an election in conjunction with the IRS’ burdensome practices for filing Forms 1120S have created a situation in which many first-time filers are unable to easily file their Forms 1120S because they do not have a valid election on file.
Also, there appears to be a significant difference between the number of taxpayers who are granted elections and the number of small businesses who actually have their small business corporate returns processed to their tax accounts. Over a 3-year period, the increase in filings of Forms 1120S (over 437,000) was not commensurate with the number of taxpayers who were informed that their elections were granted (about 1.2 million).
In May 2000, the IRS Commissioner testified to the Senate Committee on Small Business that one of the IRS’ most basic goals is to help, to the best of its ability, small businesses understand their tax obligations and reduce their burden. Further, the IRS has the authority and responsibility to improve the way the whole tax system works for small business taxpayers, including preventing problems before they occur and reducing administrative burden.
Factors
hampering first-time filers from filing Forms 1120S
The following factors have caused this problem for first-time filers of Forms 1120S.
Notification process - It appears from our analyses that the IRS did not always notify taxpayers that their elections were granted or denied. As previously mentioned, there is a legal requirement in the Internal Revenue Code that first-time filers of Forms 1120S must file an election to be treated as a small business corporation. During CYs 1998, 1999, and 2000, almost 1.5 million taxpayers filed elections, and about 1.2 million were granted. However, for the remaining 300,000 taxpayers, fewer than 4,700 were sent notices that their elections were denied. We found no evidence that the other 295,300 taxpayers received notification from the IRS that their elections were either accepted or denied.
Cumbersome verification process - The IRS has a cumbersome verification process for unprocessable Forms 1120S that requires it to request verification from taxpayers showing that their elections were granted, wait for their responses, and then resolve the unprocessable Forms 1120S (see Appendix V for details). Over the 3-year period, the IRS had a recurring problem with thousands of first-time filers who filed Forms 1120S, while the IRS did not have valid elections on file to allow their returns to be processed. Although the IRS attempted to contact these taxpayers to have them verify that their elections were granted or to have them file Forms 1120, many returns were not processed to the taxpayers’ accounts as Forms 1120S.
Our review of a statistically valid sample of 269 initially unprocessable Forms 1120S showed that the IRS was able to resolve and successfully process only 7.1 percent of the returns as Forms 1120S (see Figure 1). The remaining 92.9 percent were not successfully processed as Forms 1120S because elections were not granted, elections were granted only for subsequent tax periods, or the IRS subsequently verified that elections were granted to file the Form 1120S but still did not process the returns as Forms 1120S.
Figure 1 was removed due to its size. To see Figure 1, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Weak controls and unclear procedures - The IRS did not have good controls or procedures in place to ensure that Forms 1120S were processed even when taxpayers verified that they were granted elections.
The IRS has recognized that the unique requirements for submitting elections to become Form 1120S filers and the related approval process have caused a large number of returns to be filed but not processed as Forms 1120S. The IRS indicated that the major issue involves the taxpayers’ misunderstanding of the requirements for preparing and filing Forms 2553 and Forms 1120S. The IRS reviewed the related instructions for these forms and the acceptance letter and indicated that they were generally confusing and vague. The IRS’ ongoing efforts to reduce taxpayer burden include plans to revise instructions and make changes to the acceptance letter and the election form. Also, proposed recommendations regarding future enhancements to the electronic filing of corporate returns include adding a check to ensure that there are valid elections on file before accepting the Forms 1120S. Finally, the consolidation of the processing of small business corporate returns from 10 IRS campuses to 2 IRS campuses was fully completed in CY 2002.
However, the IRS has not yet reduced or simplified the current Form 1120S filing and processing requirements for these small business taxpayers.
Effects of the current Form 1120S filing and processing requirements
We estimate that, each year, over 46,000 small businesses are unsuccessful in filing their Forms 1120S because the IRS does not have valid elections on file to allow their returns to be processed. Although we were unable to quantify actual burden costs, we estimate that taxpayers spend 3.2 million hours each year to prepare, copy, assemble, and send these returns to the IRS, which could not successfully process them. Also, it costs the IRS an estimated $264,000 annually to handle the Forms 1120S that could not be processed.
Taxpayers and the IRS need to perform too many steps before Forms 1120S can be successfully processed for first-time filers. These steps are time consuming and burdensome for the IRS and especially for first-time filers who are not familiar with all of the necessary steps. If the IRS continues with its current policies for the filing and recording of elections, many first-time filers of Forms 1120S will continue to be unsuccessful in filing their returns.
1. The Director, Compliance, SB/SE Division, should simplify the process of filing election forms and Forms 1120S for new filers by determining if there are alternatives to make it easier for first-time filers to be granted elections and file their Forms 1120S, and by considering implementing alternatives and seeking modification of the legal requirements, as necessary.
2. The Directors of Customer Account Services and Compliance, SB/SE Division, should develop procedures that would improve and simplify both the process for approving, recording, and controlling elections and the related notification process to make it easier for taxpayers to file their Forms 1120S.
Management’s Response: Management’s response was due September 16, 2002. As of September 18, 2002, management had not
responded to the draft report.
The IRS did not consistently process Forms 1120S and determine the correct taxes due from small business corporate taxpayers. The IRS did not always process returns as Forms 1120S, even when taxpayers verified that their election requests were granted. The IRS also did not consistently assess taxes on or record losses from Forms 1120S that taxpayers filed without the required elections being on file.
The IRS has the authority and responsibility for providing procedures and consistently applying them to determine the correct and proper taxes that are due by corporate taxpayers. In addition, the General Accounting Office’s Standards for Internal Controls in the Federal Government state that internal controls should provide reasonable assurance that the effectiveness and efficiency of operations are achieved. The Standards also state that internal controls, all transactions, and other significant events need to be clearly documented and that application controls ensure completeness, accuracy, and validity of all transactions.
The primary cause for the inconsistent processing of Forms 1120S and the inconsistent determinations of taxes is the absence of clear and complete IRS guidelines. The unclear and incomplete guidelines relate to the handling of Forms 1120S that could not be processed because the IRS had no record that elections had been granted. Guidelines that are unclear and incomplete can lead to inconsistent actions.
The IRS did not
always process returns as small business corporate returns once it verified
that elections were granted to file these returns
When the IRS cannot process a Form 1120S because there is no record of the required election being granted, the Form 1120S is generally converted to a regular Form 1120 and recorded in the taxpayer’s account as such. If the IRS subsequently verifies that the taxpayer’s election was granted, the taxpayer’s account should be adjusted to accurately reflect the filing of a Form 1120S.
The IRS did not
process an estimated 9,000 returns as Forms 1120S in CY 2000, even though the
taxpayers verified that their election requests were granted. In general, once Forms 1120S were converted
to Forms 1120, they were not converted back to Forms 1120S in taxpayers’
accounts when the IRS received confirmation of the approved elections.
There were no indications that the IRS had established
procedures to ensure that their records accurately reflected the filing of
Forms 1120S once the IRS subsequently verified that elections were
granted. Also, the IRS had no
specific procedures for converting a Form 1120 back to the originally intended
Form 1120S.
In 47 (17.5 percent) of our 269 sample cases, the IRS
granted elections for the tax years filed after researching records and
contacting the taxpayers but did not process the returns as Forms 1120S. For
these 47 cases:
·
Profits totaling
approximately $220,000 were reported in 15 cases and taxes of $20,000 were
erroneously assessed because tax returns were not correctly processed as Forms
1120S.
·
Losses were
reported in 21 cases totaling approximately $538,000. Because these returns were not correctly processed as Forms
1120S, shareholders would not be entitled to claim these losses on their
individual income tax returns.
·
No taxes were
reported in 3 cases.
·
IRS records were
not available in 8 cases to indicate whether profits or losses were reported.
As a result, taxpayers were treated inconsistently and tax information
in the IRS’ files was incorrect and incomplete. In addition, based on the results of our sample, we estimate
that, each year, there is the potential for taxes on profits of $41.0 million
to be erroneously assessed to taxpayers who actually have valid elections on
file. There is also the potential for
losses of $100.3 million to be erroneously reflected on Forms 1120 and for
shareholders to not be allowed to claim these losses.
The IRS did not
consistently assess taxes on profits or record losses from small business
corporate returns filed without required elections
The problems of the IRS not determining correct taxes due and consistently recording related profits and losses in tax accounts also occurred when the IRS could not verify that there were elections on file. The IRS could not resolve or accept the filing of small business corporate returns as Forms 1120S in CY 2000 for approximately 36,000 taxpayers because elections were either granted for subsequent years or not granted at all.
On May 20, 1999, IRS District Counsel advised the Philadelphia IRS Campus that the IRS could prepare Forms 1120 from incorrectly filed Forms 1120S that could not be resolved through contacts with the taxpayer. Counsel indicated incorrect returns that provide sufficient data to calculate tax liabilities constitute returns but stipulated that the IRS must first issue statutory notices of deficiency before assessing taxes. A statutory notice of deficiency is a notice that allows the taxpayer to respond to the proposed assessment before taxes are actually assessed.
However, the IRS used inconsistent practices in the assessment of corporate taxes, as follows.
The IRS guidelines were unclear and incomplete. There were no specific instructions for
screening Forms 1120 that resulted from unprocessable Forms 1120S and no
instructions for the treatment of profits and losses. Primarily, the guidelines instructed the Classification function
to follow the procedures for identifying examination issues on Forms 1120. The IRS guidelines did not provide
instructions for computing the correct taxes on corporate profits, sending
required statutory notices of deficiency, or recording losses for Forms 1120S
that were converted to Forms 1120.
The inconsistent handling of the profits and losses from Forms 1120S leads to violations of taxpayer rights, creates the potential for lost revenue, hampers the IRS’ compliance efforts, and creates unnecessary taxpayer burden, as follows.
Potential taxpayer rights violated - About 3,700 taxpayers may have had their rights violated because the IRS assessed taxes on estimated profits of $6.7 million without providing taxpayers with statutory notices of deficiency.
In 20 (7.4 percent) of the 269 cases we reviewed, Forms
1120S were converted to Forms 1120 and were assessed approximately $36,000 in
taxes without indications of statutory notices of deficiency being sent to the
taxpayers. The IRS made assessments
without providing taxpayers with the opportunity to agree, disagree, and/or
appeal the decisions.
Potential lost revenue - Tax revenue may be lost because profits from unprocessable Forms 1120S were not always assessed. Also, losses from unprocessable Forms 1120S that were converted to Forms 1120 could result in lost revenue to the IRS. Losses from these Forms 1120 would not be allowed to the shareholders on their individual income tax returns. The fact that most of the Forms 1120 were accepted as filed by the Classification function, combined with the declining IRS examination rate, means that the IRS would likely lose revenue from losses improperly claimed on the shareholders’ individual returns.
As previously stated, 128 of the 269 cases in our statistical sample that were sent to Classification involved unprocessable Forms 1120S that were converted to Forms 1120. Of these 128 cases, 28 reported profits totaling approximately $687,000; 33 reported losses totaling approximately $1 million; 6 showed no tax; and tax information/tax returns were not available for the remaining 61 cases. Because of the limited information available, we could not project the amount of lost revenue.
IRS compliance efforts will be hampered - The ability of the IRS to match data on the Shareholder’s Share of Income, Credits, Deductions, etc. (Schedule K-1) from small business corporations to the individual returns, where the taxable income generated by such entities should appear, could be adversely affected. At a conference sponsored by the American Institute of Certified Public Accountants, the IRS Commissioner indicated that one of the significant areas of non-compliance with the tax code is pass-through entities, such as small business corporations.
Unnecessary taxpayer burden - The amount of IRS correspondence with both corporate taxpayers and
shareholders would increase in an effort to ensure that an accurate return is
on file. Responding to the IRS’
correspondence places an unnecessary burden on the taxpayers.
The Director,
Compliance, SB/SE Division, should:
3.
Establish procedures for ensuring that IRS records
accurately reflect the filing of Forms 1120S once the IRS subsequently verifies
that an election was granted. Specific
procedures should be developed for converting the Forms 1120 back to the originally
intended Forms 1120S.
4. Clarify Internal Revenue Manual procedures and assign responsibility for determining and assessing the correct taxes and issuing statutory notices of deficiency for small business corporate returns that could not be processed because the IRS could not verify that valid elections were filed.
Appendix I
Detailed
Objective, Scope, and Methodology
The overall objective of this review was to evaluate the effectiveness and efficiency of the Internal Revenue Service’s (IRS) policies and procedures established for the filing and processing of small business corporate returns. We addressed, in particular, the ability of first-time filers to timely and easily file their small business corporate returns. To accomplish this objective, we:
I.
Identified
problems and trends related to the effectiveness of the filings of Election by
a Small Business Corporation (Forms 2553) and U.S. Income Tax Return for an S
Corporation (Forms 1120S). We analyzed
statistics for Calendar Years (CY) 1998, 1999, and 2000 regarding Forms 2553,
notices sent to taxpayers by the IRS regarding the acceptance or denial of
their elections, the volume of Forms 1120S filed, and Forms 1120S that could
not be processed to IRS tax accounts (unpostables). We determined whether the IRS had taken actions to simplify the
process of submitting, filing, and recording elections to facilitate the
filings of Forms 1120S for new filers.
II. Determined if policies and procedures were established to ensure that the IRS records the correct corporate return for small business taxpayers that may not have valid elections on file. We obtained and reviewed Internal Revenue Manual and other written instructions, met with national and local management officials to obtain information and discuss IRS policies and procedures, and reviewed the Memorandum for District Counsel, Pennsylvania District, from the Assistant Chief Counsel (Field Services) dated May 20, 1999, Subject: Significant Service Center Advice.
III.
Determined
if the IRS was efficiently and effectively resolving small business corporate
returns that could not be processed to IRS computerized records of tax
accounts. We concentrated primarily on
instances in which the IRS’ records indicated that taxpayers did not reply to
required letters used to resolve situations in which Forms 1120S could not be
processed.
A. Performed a computer extract for each of the 10 IRS Campuses for CY 2000 that represented all 100,773 Unpostable Codes 310. We identified 50,038 out of the 100,773 that were resolved with an Unpostable Resolution Code 8 and an Unpostable Reason Code 2, 4, 5, or 6 (which primarily relate to Forms 1120S). Selected a statistical sample of 269 cases from the above 50,038.
Appendix II
Major Contributors to This Report
Gordon C. Milbourn III, Assistant Inspector
General for Audit (Small Business and Corporate Programs)
Richard J. Dagliolo, Director
Robert K. Irish, Audit Manager
Bernard Kelly, Senior Auditor
Michael D. Luongo, Senior Auditor
Philip Peyser, Senior
Auditor
Stephen Wybaillie, Auditor
Appendix III
Commissioner N:C
Deputy Commissioner N:DC
Deputy Commissioner, Small Business/Self-Employed Division S
Director, Compliance, Small Business/Self-Employed Division S:C
Director, Customer Account Services, Small Business/Self-Employed Division S:CAS
Director, Internal/External Stakeholders, Small Business/Self-Employed Division S:C:CP:I
Assistant Director, Customer Account Services, Small Business/Self-Employed Division S:CAS
Chief Counsel CC
National Taxpayer Advocate
TA
Director, Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk
Analysis N:ADC:R:O
Office of Management Controls N:CFO:F:M
Audit Liaison:
Commissioner,
Small Business/Self-Employed Division S
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective actions will have on tax administration. These benefits will be incorporated into our Semiannual Report to the Congress.
Type and Value of Outcome Measure:
· Taxpayer Burden – Potential; 232,425 taxpayers’ accounts affected (see page 5).
Methodology Used to Measure the Reported Benefit:
Selection of Sample -
The Information Technology staff of the Treasury Inspector General for Tax Administration performed a nationwide extract from the Unpostable File (GUF 5702) for Calendar Year 2000 and identified 50,038 unpostable small business corporate returns. The criteria were an Unpostable Code 310 with an Unpostable Resolution Code 8 and Unpostable Reason Codes 2, 4, 5, or 6, which primarily relate to U.S. Income Tax Returns for an S Corporation (Form 1120S) that were resolved as “no reply” cases. We used attribute sampling with a 95 percent confidence level, an occurrence rate not over 10 percent, and a precision level of plus or minus 4 percent. We determined that the sample size was 215 cases; however, because it is common for information not to be available for all accounts, we increased our sample size by 25 percent, resulting in a sample of 269 cases.
Sample Results -
We estimate that 46,485 taxpayer accounts would be affected each year if the processing and filing requirements were not revised.
Projection of Sample Results -
232,425 – Business Tax Accounts Affected – The number of business accounts affected was computed using 50,038 unpostable Forms 1120S (per our sample population), less 7.1 percent that were processed to the Internal Revenue Service’s (IRS) Master File, leaving a balance of 46,485. This number was projected over 5 years.
Type and Value of Outcome Measure:
· Taxpayer Rights – Potential; the IRS granted elections for the tax years filed after researching IRS records and contacting the taxpayers but did not process the returns as Forms 1120S. We are estimating that 13,965 taxpayers had profits, which were erroneously assessed (see page 7).
Methodology Used to Measure the Reported Benefit:
Selection of Sample -
The same sample referred to earlier was used to determine this outcome.
Sample Results -
In 17.5 percent (47/269) of our sample, the IRS verified
that elections were granted for the tax years filed but still did not process
the returns as Forms 1120S.
Projection of Sample Results -
13,965 – Business Tax Accounts Affected – Taxpayers with profits (31.9 percent of 8,757) total 2,793. This number was projected over 5 years.
Type and Value of Outcome Measure:
· Taxpayer Rights – Potential; the IRS granted elections for the tax years filed after researching IRS records and contacting the taxpayers but did not process the returns as Forms 1120S. We are estimating that 19,570 taxpayers had losses, which were erroneously reflected on Forms 1120 and shareholders were potentially not allowed to claim these losses (see page 7).
Methodology Used to Measure the Reported Benefit:
Selection of Sample -
The same sample referred to earlier was used to determine this outcome.
Sample Results -
In 17.5 percent (47/269) of our sample, the IRS verified that elections were granted for the tax years filed but did not process the returns as Forms 1120S.
Projection of Sample Results -
19,570 – Business Tax Accounts Affected –
Taxpayers with losses (44.7 percent times 8,757) total 3,914. This number was projected over 5 years.
Type and Value of Outcome Measure:
· Taxpayer Rights – Potential; Tax assessments for 18,515 taxpayers without issuing statutory notices of deficiency (see page 10).
Methodology Used to Measure the Reported Benefit:
Selection of Sample -
The same sample referred to earlier was used to determine this outcome.
Sample Results -
Our review showed that in 7.4 percent (20/269) of the cases
we reviewed, Forms 1120S were converted to Forms 1120 and were assessed,
without indications of statutory notices of deficiency being sent to the
taxpayers.
Projection of Sample Results -
18,515 – Business Tax Accounts Affected – The taxpayers with Forms 1120S that were converted to Forms 1120 and assessed without a statutory notice of deficiency total 3,703 (7.4 percent times 50,038). This number was projected over 5 years.
Type and Value of Outcome Measure:
·
Increased Revenue/Revenue Protection – Potential; taxes on profits were not
assessed on 28 unprocessable Forms 1120S (see page 8).
Methodology Used to Measure the Reported Benefit:
Selection of Sample -
The same sample referred to earlier was used to determine this outcome.
Sample Results -
In 28 cases, Forms 1120 were recorded on the IRS’ Master File of tax accounts, but taxable income and potential tax assessments on profits were not made for the corporations.
Projection of Sample Results -
No projections were made because of the limited information available. We are reporting the outcomes for only the 28 actual cases reviewed.
Type and Value of Outcome Measure:
· Increased Revenue/Revenue Protection – Potential; losses were reported by 33 taxpayers from unprocessable Forms 1120S that were converted to Forms 1120 (see page 8).
Methodology Used to Measure the Reported Benefit:
Selection of Sample -
The same sample referred to earlier was used to determine this outcome.
Sample Results -
In 33 cases, Forms 1120 involved losses. While losses from these Forms 1120 would not be allowed to the shareholders, since the Forms 1120 were accepted as filed by the Classification function in most cases, there is a strong likelihood that the shareholders’ returns would not be examined and the IRS would lose revenue from losses improperly claimed on the shareholders’ individual returns.
Projection of Sample Results -
No projections were made because of the limited information available. We are reporting the outcomes for only the 33 actual cases reviewed.
Appendix V
The process generally includes the following steps:
§ The IRS is then required to send the tax return to the Compliance Services/Classification function for screening.
§ The IRS would then have to determine the correct and proper taxes that are due by the corporate taxpayer.