Note:

FSL/ET and ITG examiners would not issue Letter 1744 except when a comment would be applicable, decided on a case-by-case basis with managerial approval.

Letter 1744 should not be used when there are deficiencies that may affect future operations of the organization, entity, or plan. If there is no change to the return being examined, and no corrections made during the examination to correct the deficiencies, then use Letter 6049, Examined Closed – No Change, unless another letter is appropriate.

Describe the compliance issues resolved on a Form 886-A, for inclusion with Letter 1744. Describe the change due to correction of operations and/or separate reports issued for related returns in the Form 886-A. Use the sample paragraphs on the following Knowledge Management & Transfer sites. However, the examiner can write their own paragraphs with managers approval.

Employee Plans 1744 Closing Letter Paragraphs

Exempt Organizations Resources Knowledge Base

Tax Exempt Bonds Knowledge Base

When delinquent returns or related delinquent returns are secured, include the following on the Form 886-A:

Cite the law that requires the return filing

State the Form and year/period for the delinquent return(s) we secured.

State that we imposed or will impose delinquency penalties, or that the taxpayer established reasonable cause

Cite the law that authorizes the proposed penalty assessment.

If assessing a penalty, state, "Please be sure to file your return when due to avoid a penalty in the future."

If not assessing because the taxpayer established reasonable cause, state, "We may not waive late filing penalties on future returns if filed late due to the same circumstances."

Include the following, whichever applies, in each paragraph about refusals to file delinquent returns or related return adjustments:

The examiner prepared a substitute for return under IRC 6020(b) for the non-filed tax return, reflected in a separate report.

A separate report reflects an adjustment to tax reported on a related return (state the return).

A separate report reflects an adjustment to tax reported on a secured delinquent return.

The taxpayer agreed, partially agreed or did not agree, with or without protest, to the proposed tax.

Include the following in each paragraph for issues other than delinquent returns or a related return adjustment:

Identify the noncompliant issue.

Cite the law that requires compliance.

Identify how the taxpayer corrected the noncompliant issue.

List any penalties assessed or abated, and if the taxpayer established reasonable cause.

Cite the law that authorizes any listed penalties.

Use disposal code 52 (214 in RCCMS), Change due to Correction of Operations, unless a higher priority disposal code applies. Examiners can use Letter 1744 with other disposal codes, when applicable (for example: change to related return, delinquent related return secured, or closing agreement with additional changes due to correction of operations).