Note:

Mandatory Review will accept business decisions made over enforcement so long as they are properly supported and documented.

EO Enforcement is NOT required under any one of the following conditions:

The tax is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for the examined tax years in the aggregate.

The time remaining on the ASED based on the filing of Form 990 or 990-EZ is less than 12 months. See IRM 4.70.12.3.7.2, Examiner Responsibilities and Procedures.

There is an NOL available to offset taxable income for the year under consideration.

The organization is inactive, non-operational or abandoned.

The converted return tax is reportable on specialized tax returns, e.g., Form 1120-L, Form 1120-F, etc.

The converted return tax issues require specialized examiners trained to address the complex issues.

An income tax BOD is interested in working the converted return tax case.

Sufficient resources are unavailable, considering Policy Statement 4-119.

Additional factors to consider in enforcing converted return taxes include:

That failure to enforce converted return taxes could be a serious administrative omission or result in a serious criticism of the IRS’s administration of tax law with fairness and integrity.

The relative simplicity of the income tax issues and the conversion.

The need to quickly process a deficiency.

History, extent or frequency of repeated or continuous noncompliance.

Indicators of fraud, malfeasance, collusion, concealment, or misrepresentation.

Your familiarity with the case versus the time needed for another group to re-learn the case.

Setting a precedent that could seriously hamper the IRS’s subsequent attempts to take corrective action.

The effect on future noncompliance by like organizations in the same industry or profession.

The negative impact on EO Examinations programs, goals, work plans, implementing guidelines and strategic plan.

The technical complexity of the income tax issues and the excessive demands on time for issue resolution.

The availability of trained examiners and expertise in the specific income tax matter.

Sensitivity of the case that should be addressed by SB/SE.

Avoiding inconsistent treatment of similarly situated organizations in a market segment worked.

Collectibility.

If you can’t enforce the converted return taxes, prepare Form 5666 (or Form 5346) package. Indicate the reason for not pursuing income tax on the 3198-A Special Handling checksheet in RCCMS for the EO information return case file.