Administrative Investigations and General Investigative Procedures

9.5.1.1 OVERVIEW
9.5.1.2 INITIATION OF ADMINISTRATIVE INVESTIGATIONS

9.5.1.3 ADMINISTRATIVE PROCEDURES

9.5.1.4 POWERS OF ATTORNEY

Exhibit 9.5.1-1 STATE MAPPING FOR POA/CAF PROGRAM

Exhibit 9.5.1-2 STATE MAPPING FOR POA/CAF PROGRAM

9.5.1.1 (07-15-2002)
OVERVIEW

1. Administrative investigations are those investigations worked outside of the grand jury process.
Most administrative investigations involve only Title 26 violations, although it is possible to
investigate Title 31 violations and some Title 18 violations administratively. Administrative
investigations may be worked whenever the special agent anticipates working without the
cooperation of other agencies.
2. Discussed in this section are general investigative procedures and rules of evidence applicable to
all types of investigations, including grand jury investigations.
9.5.1.2 (07-15-2002)
INITIATION OF ADMINISTRATIVE INVESTIGATIONS
1. Administrative investigations may be initiated whenever information indicating possible violations
of tax, money laundering, or bank secrecy laws is received or developed by the Lead
Development Center (LDC) or special agent.
2. Investigations are initiated (numbered) as general, primary, subject criminal, or subject seizure
investigations. A complete description of these four types of investigations is contained in IRM
9.9, Criminal Investigation Management Information System (CIMIS).
9.5.1.2.1 (07-15-2002)
Procedures in Financial Investigations
1. Financial investigations, especially tax investigations, differ from most other types of criminal
investigations in that the investigator generally begins with a known person, and then attempts to
determine whether or not that person has committed a crime. In other types of criminal
investigations, the investigator generally begins with a known crime, and then attempts to
determine who committed it.
2. The purpose of a special agent's investigation is to obtain facts and evidence to determine
whether the person under investigation has committed a criminal violation.

3. The special agent should first determine what evidence must be obtained to establish the
elements of the crime and the probable sources of the evidence. A workplan may then be
developed. Form 6085, Investigative Workplan, is an excellent tool for preparing the workplan
and can be found in Document Manager.
4. Investigations should be started quickly, and once begun, should be completed as quickly as
possible.
5. Investigations should be conducted impartially and thoroughly to obtain all pertinent information
and evidence, including any evidence that may tend to exonerate the subject.
9.5.1.2.2 (07-15-2002)
Burden of Proof
1. In criminal cases, the Government bears the burden of proof to prove the commission of all of the
elements of the crime ''beyond a reasonable doubt. This burden remains on the Government
throughout the trial, although the burden of going forward with evidence may shift from one side
to the other.
9.5.1.2.3 (07-15-2002)
Types of Evidence
1. Direct evidence is that which, if believed, proves the existence of the principal or ultimate fact
without any inference or presumption. Evidence is direct when the very facts in dispute are sworn
to by those who have actual knowledge of them by means of their senses. It may take the form of
admissions or confessions made in or out of court.
2. Circumstantial evidence is that which tends to prove the existence of the principal fact by
inference. It is the only type of evidence generally available to show such elements of a crime
including malice, intent, or motive, which exist only in the mind of the perpetrator of the deed.
Proof of "willfulness" in most Internal Revenue violations, therefore, is based on circumstantial
evidence. Circumstantial evidence is also frequently used to prove unreported income through
indirect methods, as shown by increases in net worth, expenditures, or bank deposits.

9.5.1.2.4 (12-14-1998)
Relevancy
1. Evidence is relevant when it has a tendency to make a consequential fact even the least bit more
probable or less probable than it would be without the evidence. For example, the fact that an
individual concealed large brokerage accounts from his business partners would most likely be
relevant to prove intent, while the fact that he played golf every Thursday would most likely not be
relevant to prove any of the elements of a tax case.
2. All relevant evidence may not be admissible, however, since the rules of evidence may preclude
the admission of evidence on other grounds.
9.5.1.2.5 (07-15-2002)
Competency or Admissibility
1. Evidence must be legally obtained and properly authenticated to be admissible.
2. For example, evidence obtained by the special agent during an illegal search will generally not be
admissible. Likewise, photocopies of financial records are normally not admissible without some
explanation of the inability to produce the original documents.
3. To save time and expense, a trial judge may accept certain facts without requiring proof, if they
are commonly and generally known, or can be easily discovered. This is known as "judicial
notice."
9.5.1.2.5.1 (07-15-2002)
Hearsay
1. Hearsay is a statement offered in evidence to prove the truth of the matter asserted. Hearsay is
evidence that does not come from the personal knowledge of the declarant but from the repetition
of what the declarant has heard others say. Under Federal Rule of Evidence 802, hearsay
statements are inadmissible at trial unless an exception to the rule is applicable. Lack of
opportunity for cross-examination and unreliability are the principal reasons for excluding hearsay
testimony.
2. Prior statements by a witness testifying under oath and subject to cross examination and certain
admissions listed in Federal Rule of Evidence 801(d)(2) are not hearsay.
9.5.1.2.5.1.1 (07-15-2002)
Exceptions to the Hearsay Rule
1. Federal Rules of Evidence 803 and 804 list a number of exceptions to the hearsay rule, including
some used often in tax investigations, such as the business records exception and the public
records exception. Special agents should become familiar with the exceptions enumerated in
Rules 803 and 804.
9.5.1.2.6 (12-14-1998)
Presumptions

1. A presumption is a rule of law that permits the drawing of a particular inference as to the
existence of one fact not certainly known from the existence of other particular facts. Although it is
not evidence, it may be considered as a substitute for evidence. Presumptions may be conclusive
or rebuttable.
9.5.1.2.6.1 (07-15-2002)
Conclusive Presumptions
1. A conclusive presumption is binding upon the court and jury and rebuttal evidence is not
permitted. For example, there is a conclusive presumption that an infant under the age of seven
(7) is incapable of committing a felony.
9.5.1.2.6.2 (12-14-1998)
Rebuttable Presumptions
1. A rebuttable presumption is one that prevails until it is overcome by evidence to the contrary. For
example, there is a rebuttable presumption that a criminal defendant is innocent.
9.5.1.2.7 (07-15-2002)
Privileged Communications

1. There are certain special types of relationships in which information communicated by one person
to the other is held confidential and privileged between them. The one to whom the information
has been imparted cannot be compelled to divulge it without the consent of the other. There are
four fundamental conditions:
A. The communications must originate in confidence, with the belief they will not be
disclosed.
B. The element of confidentiality must be essential to the full and satisfactory maintenance
of the relationship between the parties.

C. The relationship must be one which in the opinion of the community ought to be diligently
fostered.
D. The injury to the relationship by the disclosure of the communication must be greater
than the benefit gained by the correct disposal of litigation.

2. There are four generally recognized privileges in Federal judicial proceedings: attorney/client,
husband/wife, clergy/penitent, and government/informant. There are also a number of other
relationships where it is sometimes difficult to compel testimony. For example, there is no
recognized privilege for communications between parent/child, physician/patient, or
journalist/confidential source.
9.5.1.2.7.1 (07-15-2002)
Attorney-Client Privilege
1. Black's Law Dictionary defines the attorney-client privilege as the "client's privilege to refuse to
disclose and to prevent any other person from disclosing confidential communications between
he and his attorney. "
2. The attorney-client privilege must be strictly construed. The mere existence of the attorney-client
relationship does not make every communication by the client to the attorney confidential. The
communication must have been made to an attorney in confidence for the purpose of enabling
the attorney to render legal services to the client. When it does apply, the privilege covers
corporate as well as individual clients. The attorney-client privilege does not include a right to
withhold the name of a client nor the dates and amounts of legal fees paid by a client.
3. An accountant employed by an attorney or retained by a taxpayer at the attorney's request to
perform services essential to the attorney-client relationship may be covered by the attorneyclient privilege.
9.5.1.2.7.2 (12-14-1998)
Husband Wife Privileges
1. There are two spousal privileges: marital communications privilege and adverse testimony
privilege.
9.5.1.2.7.2.1 (07-15-2002)
Marital Communications Privilege

1. Communications between husband and wife, privately made, are generally assumed to have
been intended to be of a confidential nature, and are therefore held to be privileged. It is
essential, however, that communications must be, from their nature, fairly intended to be of a
confidential nature. Communications made in the presence of a third party are not privileged.
2. Privilege is not extended to communications made outside the marriage relations, either before
marriage or after divorce. Further, the privilege applies only to communications, and not to acts.

3. Communications remain privileged after termination of the marriage.

4. The marital communications privilege belongs to, and therefore may be invoked by, the
defendant-spouse.
9.5.1.2.7.2.2 (07-15-2002)
Adverse Testimony Privilege

1. There exists an independent privilege of one spouse to refuse to testify adversely against
another. With respect to this privilege, the testifying spouse alone has the choice of whether or
not to refuse to testify adversely on any act observed or on any non-confidential communications
either before or during the marriage. The spouse may not be compelled to testify, or prevented
from testifying.
9.5.1.2.7.3 (07-15-2002)
Clergyman and Penitent Privilege

1. While the privilege between clergyman and penitent has been recognized in the Federal courts,
this privilege has not been extended to such financial transactions as contributions made through
a clergyman.
9.5.1.2.7.4 (07-15-2002)
Informant and Government Privilege
1. This privilege allows enforcement agencies to withhold from disclosure the identity of persons
who furnish information on violations of law to officers charged with enforcement of that law.
2. The purpose of the privilege is the furtherance and protection of the public interest in effective law
enforcement. The privilege recognizes the obligation of citizens to communicate their knowledge
of the commission of crimes to law enforcement officials and, by preserving their anonymity,

encourages them to fulfil that obligation. The contents of a communication are not privileged
unless they tend to reveal the informant's identity.
3. This privilege differs from all the others in that it is waivable only by the Government, whereas the
others are for the benefit of, and waivable by, the individual.

4. Where disclosure of an informant's identity or the content of the communication is relevant and
helpful to the defense of an accused or is essential to a fair determination, the trial court may
order disclosure. If the Government then withholds the information, the court may dismiss the
indictment.
9.5.1.3 (07-15-2002)
ADMINISTRATIVE PROCEDURES
1. This section contains a number of administrative procedures to be employed in most
administrative investigative situations.
9.5.1.3.1 (07-15-2002)
Opening Investigations
1. The Special Agent in Charge (SAC) or Assistant Special Agent in Charge (ASAC) will select for
investigation all information items which, upon evaluation and screening, are deemed to warrant
inquiries beyond those authorized for evaluating information items.
2. A brief summary of the basis for opening the investigation will be prepared and retained in the
administrative file. At the discretion of the SAC, it may be a separate document, such as a
memorandum prepared by the evaluating special agent, or it may be incorporated in an existing
document used in the field office's investigation initiation process.
3. All assigned investigations will be subject to sufficient investigative inquiry to support the
disposition recommended in the report, except when surveyed.
9.5.1.3.1.1 (07-15-2002)
Additional Inspection of Taxpayer's Records
1. Internal Revenue Code (IRC) 7605(b) provides that no taxpayer shall be subjected to
unnecessary examinations or investigations, and only one inspection of a taxpayer's books of
account shall be made for each taxable year, unless the taxpayer requests otherwise or, after
investigation, he/she is notified in writing that an additional inspection is necessary.
2. Authority has been delegated to the respective Operating Division Territory Manager for cases
within their jurisdiction to sign the notice to a taxpayer that an additional inspection of such
taxpayer's books of account is necessary.
3. In general, the provisions of IRC 7605(b) should be invoked only where, subsequent to closing a
case, information is developed which indicates fraud, malfeasance, collusion, concealment, or
misrepresentation of a material fact. (See Policy Statement P-43.) Any such notice, after
signature by the appropriate Operating Division Territory Manager, will be delivered to the
taxpayer by the special agent or the cooperating revenue agent or revenue officer at the time the
inspection is begun. Letter 939 (DO/IO) will be utilized to notify the taxpayer that an additional
inspection is necessary.

4. Requests for issuance of notices under IRC 7605(b) will be supported by statements detailing
the grounds upon which the requests are based.
5. Form 4505, Reopening Memorandum, will be used when requesting authority to issue a notice to
taxpayers that an additional examination of their records is required. Form 4505, is usually
prepared by the examiner however, situations may arise in which a special agent may be a coinitiator. The SAC may be listed in the routing block entitled "Other" on Form 4505. The special
agent and the cooperating officer will jointly prepare one Form 886A, Explanation of Items,
containing narrative justification for the request.
6. IRC 4423 specifically excludes wagering tax cases from the provisions of IRC 7605(b). It
provides that the books of account of any person liable for taxes on wagering may be examined
and inspected as frequently as may be necessary.
9.5.1.3.2 (07-15-2002)
Initiation of Investigative Activity

1. The initial investigative activity should involve such inspection of the taxpayer's books and
records or other related inquiries as is necessary to initially determine whether the case
possesses criminal potential. These inquiries should include a check of the Small Business/Self
Employed Division (SB/SE), Wage and Investment Division (W&I), Tax Exempt & Government
Entities Division (TE/GE), and Criminal Investigation (CI) to determine whether there is a pending
or previous examination or investigation relating to the principal. Other pertinent government
agency inquiries are also important, e.g., Treasury Enforcement Computer System (TECS), El
Paso Intelligence Center (EPIC), Detroit Computing Center, most of which can initially be done by
the Lead Development Center.

9.5.1.3.2.1 (07-15-2002)
Interview with Subjects of Investigation
1. The special agent must obtain the original return or returns involved, if any were filed for the
pertinent period, prior to independently interviewing a taxpayer, his/her representative, or one of
his/her present employees or inspecting the taxpayer's books and records.
2. Exceptions may be made in cases where an examination is extended to include taxable periods
for which the original return is not available and the examination is based on the taxpayer's
retained copy, or where such action is approved in writing by the SAC.
3. The special agent should interview the taxpayer or representative, and inspect the taxpayer's
books and records. When the services of a cooperating revenue agent are necessary, the SAC
will submit a request to the SB/SE.
9.5.1.3.2.2 (07-15-2002)
Joint Investigations with Small Business/Self Employed, Tax Exempt/Government Entities, or
Wage & Investment
1. A joint investigation is one conducted by CI together with SB/SE, TE/GE, or W&I. Investigations
involving alleged tax evasion, willful failure to file a return and willful failure to pay a tax are
usually investigated jointly with a civil function.
2. Use Form 6544, Request for Cooperating Examiner, to request a cooperating officer in joint
investigations initiated from a source other than a fraud referral.

3. In a joint investigation, the special agent is responsible for:

A. the timing and priority of investigative actions

B. developing evidence pertaining to the criminal features of the investigation

C. preparing and issuing summonses
D. obtaining original tax returns for all open periods and entities under investigation
E. making copies of the original returns, certifying they are correct, and providing them to
the cooperating revenue agent within 30 days after initiating a joint investigation or
receiving the original returns, whichever is later

F. choosing the method for computing tax for criminal purposes

Note:
Supervisory Special Agent (SSA) approval is required for all tax returns requested by CI field
office personnel.

4. In a joint investigation, the cooperating officer is responsible for the examination or collection
features of the investigation and taking any action necessary to protect the interests of the
Government with respect to the statutory period of assessment.
5. The SSA of the special agent and the manager of the cooperating revenue agent should exercise
sufficient control and follow-up to ensure the prompt completion of the investigation.
6. If CI learns of a case within the civil function which is related to an active investigation, CI will
inform the appropriate Operating Division Territory Manager of the other function so that the
related cases may be coordinated to prevent action which may prejudice the criminal
investigation.
7. If the special agent thinks the investigation should be extended to a return that was filed six or
more years ago, he/she will submit a brief statement of the reasons to the SAC. The SAC will
determine whether to extend the investigation.
8. Policy Statement P-4-84 requires balancing the civil and criminal aspects of investigations to
maximize civil enforcement without imperiling criminal prosecution.
9. IRC 7605(b) provides that no taxpayer shall be subjected to unnecessary examinations or
investigations, and only one inspection of a taxpayer's books of account shall be made for each
taxable year unless the taxpayer requests otherwise or unless, after investigation, he/she is
notified in writing that an additional inspection is necessary. See IRM 9.5.1.3.1.1.3, Additional
Inspection of Taxpayer's Records.
9.5.1.3.2.3 (07-15-2002)
Civil Action on Investigations Under Jurisdiction of the Tax Division
1. The SAC, in the transmittal memorandum forwarding a report to the Tax Division, should specify
what civil matters are pending. The transmittal should summarize outstanding liabilities of the

taxpayer and related entities and modules. The transmittal memorandum should state the civil
action taken, if any, on the outstanding liabilities and specify what further action, if any, the other
operating divisions with civil action responsibility plan to take on the accounts. This memorandum
can be updated at any time while the investigation is under the jurisdiction of the Tax Division.
2. The Criminal Tax (CT) Counsel will be responsible for reviewing the proposed civil actions. The
CT Counsel should consult with the other operating divisions' counsel on the proposed civil
action. The CT Counsel will notify the Territory Manager with civil action responsibility, of any
proposed civil actions they feel might imperil the criminal investigation. In the event the Territory
Manager disagrees with CT Counsel's advice, he/she may ask CT Counsel to reconsider the
advice. Upon reconsideration, should CT Counsel still stand by its earlier advice, the Territory
Manager may seek further review by the Area Director of the appropriate operating division and
the Director, Field Operations. Should the parties fail to reach agreement, the matter will be
referred by the SAC to the Chief, CI. The Chief, CI will consult with his/her counterpart in the
other operating division and make a recommendation as to the proposed civil action.
9.5.1.3.2.4 (07-15-2002)
Request to Suspend Civil Action on Non-Tax Criminal Cases
1. A non-tax criminal case is, for these purposes, defined as any case which is not being
investigated by or on behalf of the IRS.
2. The Operating Division Territory Manager will not suspend any examination or collection activity
at the request of the US Attorney, except in extreme emergency situations (such as an inability to
obtain approval of the Tax Division or court action if the criminal case is imminent). The Operating
Division Territory Manager may suspend action for 72 hours if such delay will not be detrimental
to the IRS. However, the Operating Division Territory Manager will temporarily suspend collection
or examination activity upon request from the Assistant Attorney General, Tax Division, or
representative of that office. Such request shall be coordinated with Chief Counsel.

3. For instances in which the Operating Division Territory Manager temporarily suspended civil
action, he/she shall submit to the Deputy Commissioner of the operating division a narrative
report containing the following information:
A. the name(s) of the individual(s) or entity(ies) involved and the nature of the offense(s)
B. the type of civil action that has been suspended including the types of taxes involved and
number of audits being suspended

C. an estimate of the accrual of tax liabilities awaiting trial or other disposition of the non-tax
case
D. facts and circumstances which should be considered in determining the risk to
assessment and ultimate collection
E. the Operating Division Territory Manager's recommendation as to whether the temporary
suspension should be continued

9.5.1.3.2.5 (07-15-2002)
Requests for Statute Extensions and Statutory Notices of Deficiency

1. If it is determined by the special agent and approved by the SSA and SAC that an extension of
the statutory period is warranted, the special agent who has actual custody of the return shall
request the extension.
2. In joint investigations where the administrative file has not been forwarded in connection with the
referral of the special agent's report to CT Counsel and there is danger of an early expiration of
the statutory period for assessment, the cooperating revenue agent will timely advise CI of any
proposal to solicit consents to extend the statutory period for assessment. Normally, the
solicitation of such a consent does not prejudice an investigation and, unless CI requests
otherwise, within ten (10) workdays following the date the cooperating revenue agent submits
his/her notification of intention to solicit a consent, the cooperating revenue agent will endeavor to
obtain the consent. If the SAC and the Operating Division Territory Manager cannot reach an
agreement, the Director, Field Operations and Operating Division Area Director of the appropriate
operating division shall then decide if the consent will be solicited.

3. If it appears likely that criminal prosecution will be recommended, a statutory notice normally will
not be issued if issuance of the notice would imperil successful criminal investigation or
prosecution.
Note:
If a statutory notice is issued and the taxpayer appeals to the US Tax Court, the Government may
be required to reveal evidence to the taxpayer, either in the answer or at the trial of the civil case
ahead of the criminal investigation.

4. If the Operating Division Territory Manager or CT Counsel authorizes the other operating division
to issue a statutory notice in a pending criminal investigation, the authorization shall provide that
collection activity be suspended following the assessment of the deficiency and issuance of the
first notice. If the account is not paid after the first notice, the Taxpayer Delinquent Account (TDA)
will be issued, but will be held by the office branch in inactive status until the tax is paid or
Criminal Investigation notifies the other operating division to proceed with collection activity.
9.5.1.3.2.6 (07-15-2002)
Automated Data Processing Controls
1. Transaction Code (TC) 910 will prevent the removal of tax filing or payment data from the master
file to the retention register. Such data is routinely removed relative to taxpayers whose tax
module reflects no tax liability (zero balance) and no activity for a period of three years. The TC
910 will permit CI to retain on the master file all transactions on file at the time the TC 910 is
posted. At the time TC 910 posts, a complete transcript (entity and all tax modules) titled "INTEL910" is generated and forwarded by the IRS campus to the CI field office. In addition, a quarterly
inventory listing will be generated and forwarded to CI.
2. The TC 914 or TC 916 will provide all of the controls described above for TC 910. A TC 914 will
allow a refund to generate when the return is posted. A TC 916 and 918 creates a freeze on the
account. (See paragraph (4) d and f.) In addition, TC 914 and TC 916 will:

A. Prevent posting of all original input transactions addressed to the tax modules (a tax
module is a record of tax data for a taxpayer, covering only one type of tax for one tax
period.)

B. Permit posting of input transactions which have been reviewed.

C. Prevent a merge of master file tax modules if one or both modules are subject to TC 914
or TC 916.
D. Prevent the computerized issuance of Form 5546, Examination Return Charge-Out, and
prevents establishment of record on the Automated Information Management System
(AIMS) data base. This can be overridden through a manual process.
E. Prevent the issuance of Taxpayer Delinquency Investigations (TDI's) or the operation of
delinquency check procedures on the Business Master File (BMF) and control the
issuance of outputs under the operation of the Information Returns Processing (IRP)
program and the Individual Master File (IMF) Delinquency Check.
F. Terminate any further TDI investigation by generating a TDI recall for all tax modules in
TDI status.
G. Terminate any further collection action by preventing subsequent issuances of TDA's. If a
tax module is in TDA status, the TDA will be placed in Inactive status.

H. At the time of posting TC 914, produce a complete Martinsburg Computing Center

transcript of the tax modules titled " INTEL-914" .

3. Controls on the Individual Retirement Account File (IRAF) may be input directly; however, a TC
914 or TC 916 Control on the IMF will automatically place a control for the same taxpayer on the
IRAF. The IRAF is a separate master file in which voluntary contributions from self-employed
persons to their own retirement accounts are recorded.
4. Other Automatic Data Processing (ADP) codes include:
A. TC 911 reverses TC 910
B. TC 912 reverses TC 914
C. TC 915 posts to the module identified by the Master File Transaction (MFT) and tax
period of the incoming transaction and reverses only the refund freeze portion of the TC
916 and 918; this is associated with the Questionable Refund Program

D. TC 916 posts to the tax module identified by the MFT Code and freezes the refund when
a refund return posts

E. TC 917 posts to the module identified by the MFT and tax period of the incoming
transaction and reverses the TC 916 on the tax module
F. TC 918 posts to the entity module and will establish a CI freeze on the entire account; it
prevents refunds, credit elects and offsets going on to BMF and IRAF
G. TC 919 posts to the entity module and reverses the TC 918

9.5.1.3.3 (07-15-2002)
Discontinued Investigations

1. Criminal Investigation shall terminate from an investigation when it is determined that there is no
prosecution potential.
2. Discontinued investigation reports will be reviewed by the SSA and, upon approval, will be
forwarded to the SAC or ASAC for review and approval.
3. In all investigations where a Form 211, Application and Public Voucher for Reward for Original
Information, has been filed and are determined to lack criminal potential, a copy of the closing
report will be forwarded to the area SB/SE, Attention: Informant Claims Examiner, regardless of
whether the allegation concerns a failure to file or a filed return.
9.5.1.3.3.1 (07-15-2002)
Notification to Taxpayers When an Investigation is Discontinued
1. When an administrative investigation, not a Questionable Refund Program case, is discontinued,
a letter will be prepared by the SAC and sent to the taxpayer and/or representative by mail. The
letter will state that CI is no longer investigating the taxpayer. If appropriate, it should also state
that the matter has been referred to the civil function.
2. If the SAC decides not to notify the taxpayer, a memorandum setting forth the reasons will be
prepared. Letters will not normally be sent in grand jury investigations, nor investigations involving
multiple filers or individuals related to other prosecution investigations.
3. In investigations declined by CT Counsel or the Tax Division, letters of notification will not be sent
by the IRS.
9.5.1.3.4 (07-15-2002)
Prosecution Recommendations
1. In prosecution reports, originals, photocopies, transcripts or all evidentiary matters relevant and
material to the determination of whether or not criminal proceedings should be recommended
shall be obtained for inclusion as exhibits to the special agent's report. Summaries may be
substituted in lieu of lengthy transcripts.
2. The special agent shall interview the cooperating officer to obtain all pertinent facts relating to
occurrences prior to its status as a joint investigation, such as statements made by the principal in
the presence of or to the examining officer.
3. If the investigation deals with an alleged false or fraudulent return or document, the special agent
shall obtain a statement under oath from the person who prepared the return or document.
4. When the net worth method of proof is used, the taxpayer's filing record and copies of available
income tax returns should be furnished for at least the preceding five years and all years
subsequent to the starting point to furnish additional support to the starting point. In the event that
any of the required returns are not available, and if the amount of income reported on such
returns cannot be determined from other sources, the Operating Division Area Director's office
should be requested to furnish a listing of the amounts of income tax paid (including payments
with estimates). A computation will then be made based on the tax paid to determine the
maximum net income that could have appeared on the return. Prior reports bearing upon the
matter should be examined for useful information.
9.5.1.3.5 (07-15-2002)
Requesting Returns
1. The Integrated Data Retrieval System (IDRS) or other automated system will be used, whenever
possible, to request returns or return information. If the original return is not required, return
information may be requested via command code Return View (RTVUE) through IDRS.
Electronically filed (ELF) return information can be obtained through the command code Tax
Return Data Base View (TRDBV). This provides all information on the ELF return starting with tax
year 1999 and forward. Tax Return Data Base (TRDB) is also the official system of record for
ELF returns. In other instances, Form 2275, Records Request, Charge and Recharge, should be
used to request tax returns and related documents or photocopies of them, transcripts of
information from tax documents, and miscellaneous Service records. The SSA approval is
required for all tax returns requested by CI field office personnel.
9.5.1.3.6 (07-15-2002)
Requesting Transcripts

1. Transcripts are accessed via IDRS command codes. This will allow a transcript to be viewed online or a hard copy to be printed. However, if a certified transcript is necessary, Form 4338,
Information or Certified Transcript Request (see Exhibit 9320-3), and Form 4338-A, IMF
Information or Certified Transcript Request, will be used by CI personnel to request certified
transcripts of account and will be forwarded to the Fraud Detection Center (FDC) that services
the requesting field office.
9.5.1.4 (07-15-2002)
POWERS OF ATTORNEY
1. The requirements for filing a power of attorney or tax information authorization by taxpayer
representatives are outlined in Subpart E, Conference and Practice Requirements (26 Code of
Federal Regulation (CFR), Part 601).

2. The taxpayer's representative may submit Form 2848 (Power of Attorney), Form 8821 (Tax
Information Authorization), or a substitute form which meets the specifications of 26 CFR
601.503(a). Forms 2848 and 8821 are available as a convenience. Their use is not mandatory.

3. The principal purpose of a power of attorney or tax information authorization is to authorize a

representative to perform certain acts or receive or inspect certain tax information. With certain
exceptions set forth in 26 CFR 601.504(b), a power of attorney is required in order for the
taxpayer's representative to perform any of the specific acts described in 26 CFR 601.504(a).
These specific acts can also be found on the front page of Form 2848. In all other instances
involving the receipt of confidential tax information, a Form 8821, or an appropriate substitute,
may be used in lieu of Form 2848. A document used in place of Form 2848 or Form 8821 should
contain the following information:
A. name, TIN, and address of the taxpayer(s)
B. name(s) and address(es) of representative(s) authorized by the taxpayer(s) and, if more
than one person, a designation of which representative is to receive notices or written
communications
C. specific act(s) the representative(s) is authorized to perform
D. type(s) of tax and federal tax form number(s)
E. tax year(s) or period(s)
F. name(s) and address(es) to which copies of notices or other written communications
required to be addressed to the taxpayer should be sent
G. taxpayer(s) signature(s) and the date

H. if a power of attorney or tax information authorization is granted to an attorney, Certified

Public Accountant (CPA), or an enrolled agent, the signature of each such person, along
with a declaration that he/she is not currently under suspension or disbarment from
practice before the IRS
I.

if a power of attorney is granted to an unenrolled preparer (one not specified in (h)

above), signatures of two disinterested witnesses or a notary's signature and seal is
required. It is not necessary that the signature on a tax information authorization be
acknowledged or witnessed

4. If a power of attorney is granted to a person other than an attorney, CPA, or enrolled agent,
Revenue Procedure 81-38, C.B. 1981-2, prohibits such person from the following acts:
A. executing claims for refund
B. receiving checks in payment of any refund of Internal Revenue taxes, penalties, or
interest

C. executing consents to extend the statutory period for assessment or collection of a tax
D. executing closing agreements with respect to a tax liability or specific matter under IRC
7121
E. executing waivers of restriction on assessment or collection of a deficiency in tax

5. Information concerning a taxpayer should not be released to a third party without written
authorization from the taxpayer. If questions arise as to the propriety of disclosing information to a
person representing the taxpayer, the Disclosure Officer should be contacted for guidance.
9.5.1.4.1 (07-15-2002)
Processing Power of Attorney Forms

1. Upon receipt, the original of any power of attorney will be associated with the investigative file.
2. A copy of the Power of Attorney (POA) will be forwarded to the Memphis or Ogden IRS Campus,
depending upon the state of residence of the taxpayer as shown in Exhibits 9.5.11 and 9.5.12,
State Mapping for POA/CAF Program, Attention: Power of Attorney Unit, for data entry into the
Centralized Authorization File (CAF). The copy forwarded should be legible and complete to
ensure data entry can be accomplished. Indicate on this copy the first initial and surname of the
investigating agent, the function receiving the power of attorney, and the field office where
received.
3. Requests for copies of power of attorney forms, including all subsequently filed instruments,
including revocations, substitutions, etc., should be by memorandum addressed to the
appropriate IRS campus. (See Exhibits 9.5.11 and 9.5.12.)

4. This procedure will be followed unless they are clearly intended for one-time use, such as those
submitted with Freedom of Information Act requests or Congressional inquiries. In these
instances, no copy should be forwarded to the IRS campus and the original should be associated
with the correspondence.
5. Regulations require submission of sufficient copies of authorizations from representatives for
each tax matter involved. Each return for a taxable period represents a separate tax matter. An
attorney or certified public accountant, however, is required to file only one declaration for a
particular party represented, regardless of the number of tax matters involved (5 USC 500 and 26
CFR 601.503(a)(5)). Therefore, it may be necessary to make copies of authorizations.
9.5.1.4.2 (07-15-2002)
Federal Officers and Employees
1. Treasury Department Circular No. 230 prohibits current federal officers and employees in the
executive, legislative, or judicial branches of the government, or in any agency of the United
States, including the District of Columbia, from practicing before the IRS, except that such officers
or employees may represent members of their families or any other persons or estates for which
they serve as guardians, executors, administrators, trustees or other personal fiduciaries.
2. Depending on the extent to which former government employees dealt with a matter while in
government service, they may be barred for one year, two years, or for life from representing any
party other than the government with respect to that matter.

3. Partners and associates of former government employees may also be affected by this
prohibition.

4. No Member of Congress or Resident Commissioner (elect or serving) may practice before the
IRS in connection with any matter for compensation of any kind.
5. Employees of any state, or subdivision thereof, whose duties require them to pass upon,
investigate, or deal with tax matters of such state or subdivision, may not practice before the IRS
if such state employment may disclose facts or information applicable to federal tax matters.
6. Federal or state officials or employees may discuss a case or appear with a taxpayer in the
capacity of a witness without violating these restrictions. However, if a federal or state official or
employee appears to be representing a taxpayer under circumstances indicating a possible
violation of the Circular's provisions, IRS employees should advise such individual concerning the
existence and content of Circular No. 230.
9.5.1.4.3 (07-15-2002)
Dealing with Powers of Attorney
1. When a taxpayer, or a representative who has a power of attorney on file with the IRS, requests
that contacts with the taxpayer by IRS personnel be made through the representative, such
request will be complied with. There exists an exemption for CI provided in IRC 7521(d);
however, it is CI's policy to honor the power of attorney. Exceptions to this policy can be made
with managerial approval as cited in paragraph (2), below.
2. If advance notification of or contact with the power of attorney would result in severe prejudice to
the taxpayer or the investigation, management may decide to bypass the representative.
Examples of severe prejudice would include:

A. if the power of attorney filed is designed to shield the representative from investigation
rather than to protect the interests of the taxpayer or witness
B. when repeated attempts to comply with a request that all contact be made through a
taxpayer's representative result in significant hindrances to the investigation

In these instances, the special agent may request permission from the SSA to contact the
taxpayer directly. If the SSA grants permission, the investigative file should contain
documentation reflecting the fact that permission was given and the facts that led to this
decision.
3. An authorization to bypass a representative in a particular situation does not nullify the power of
attorney. The IRS has the responsibility to continue to notify the representative of any proposed
future contacts with the taxpayer (absent a continued managerially approved exception),
providing the representative with copies of notices, etc., and/or recognizing the representative if
the representative makes an appearance.
4. Whenever correspondence is received from a taxpayer or representative in a tax investigation,
and the reply or a copy thereof cannot be directed to the representative as requested, because
the Conference and Practice Requirements have not been satisfied, the reply will be directed to
the taxpayer and the representative will be advised.

5. If the IRS has received a valid power of attorney or other appropriate authorization requesting
that taxpayer correspondence related to a particular CI matter be addressed or directed to a
designated attorney or CPA representing the taxpayer, the following guidelines will be followed:

10

A. Except as provided in (b) below, the correspondence will be addressed or directed to the
authorized representative. A copy of the correspondence will be furnished to the
taxpayer, unless the taxpayer has specifically requested in writing that no copy be
furnished.
B. However, if a particular notice or other document is required by statute or regulation to be
furnished directly to the taxpayer, the original shall be directed to the taxpayer and a copy
shall be furnished to the authorized representative.

9.5.1.4.4 (07-15-2002)
Disclosure to Powers of Attorney

1. Disclosure of returns and return information to the taxpayer's representative will be made only in
the following circumstances:
A. The taxpayer is present at the time of the disclosure.

B. The taxpayer has executed a written consent to the disclosure. (Form 2848-D,
Declaration and Authorization, may be used for this purpose.)
C. The taxpayer has provided the representative with a power of attorney. (Form 2848,
Power of Attorney, may be used for this purpose.)

11