Decoding and Understanding the Entity Section April 5, 2014 9 p.m. Eastern Agenda Announcements Learning Process Goal Introduction Tools Needed Overview of the Entity Section Announcements Class is sponsored by the Tax Relief Team www.taxreliefteam.org Contact TRT www.taxreliefteam.org/home/consult Location of Recordings Calendar www.taxreliefteam.org/calendar Recordings Radio programs www.taxreliefteam.org/free/talkshoe/ Webinars www.taxreliefteam.org/free/anymeeting Class Schedule o 5-April-2014, Entity Section tonight o 3-May-2014, The Individual Tax Module MFT 30 o 10-May-2014, The Penalty Module MFT 55 o 17-May-2014, IRS Procedural Errors, o 31-May-2014, IRS Procedural Errors (cont'd), o 2-Aug-2014, Amend the IMF o 9-Aug-2014, Amend the IMF (cont'd) Learning Is a Process Information is gathered or provided. You can gain Knowledge from this information. You must develop Understanding from the knowledge Competency or Wisdom is developed from the understanding. Information + Knowledge + Understanding = Wisdom GOAL To help move you along the learning process. By providing you with tools to use and apply Teaching you how to use those tools to turn the Information to Knowledge Explain on how to find and use the tools So you can apply this to the information Information is gathered or provided. You can gain Knowledge from this information Introduction My name is Mike.. I have been “decoding” IMF files since 2005 Decoding the IMF is different from understanding the IMF. Decoding is taking every code entry and explaining what the code means in words. Introduction continued Understanding how to read your IMF will give you insight to error, mistakes, violations by the IRS. TRT does Audit Reconsideration (A/R) using data found in your IMF file. We look for patterns of error of violations in your IMF file. Every A/R I have done so far has stopped all collections on the Civil Penalties and Levies if in process. Introduction continued There are a few TRT members who did audit reconsiderations in which the levy was not stopped. In each case the levy was placed there by a Revenue Officer (RO) and not Automatic Collection Services (ACS)... Mistakes or making the wrong claim will make the A/R invalid or “Frivolous” in the eyes of the IRS It takes nearly 20 hours of my time to do a A/R for a 3 or 4 year period. Tonight’s Schedule 9 – 9:10 p.m., Announcements 9:10 – 9:50 p.m., Introductions & Training 9:50 – 10 p.m., Break 10 – 10:50 p.m. Training Q&A Close The IMF Individual Master File (IMF) Official name is IRS 24.030— CADE Individual Master File (IMF) A transaction log of all IRS actions by the IRS Records assessments, liens, levies, payments, tax agreements, letters sent The IMF The IMF functions as the Master Records for you for any given tax year. It is maintained at the Enterprise Computing Center, Martinsburg, WV Regional Offices input data into a Transactional File which is sent to Martinsburg and uploaded to your IMF after compliance testing. The Importance of the IMF Every IRS agent, revenue officer, appeals official, and taxpayer (taxtaker) advocate service (TAS) relies on it. IRS letters are generated based on the information in it. IRS letter types and dates are also documented in the IMF. The Importance of the IMF IRS collections are based on data in the IMF. IRS Form 4340 Certificate of Assessments is created from the data in the IMF or NMF IRS Form 4340 Certificate of Assessments is used as evidence in court trials What does it Contain? It contains evidence of procedural abuses by the IRS. References documents the IRS claims they used to support the data entry and determination by them for every entry. It contains forensic evidence of computer fraud. The Importance of Understanding the IMF To point out procedural errors made by the IRS. Point out inaccuracies of the IRS records maintained on you. Is the basis for reconsiderations: Audit (failure to file and SFRs) Assessment (AUR, SFR, ASFR, and other) Other Uses It is the basis for PROVING the IRS did not follow its procedures when it created assessments. Can be used to challenge the presumptions of IRS Form 4340 Certificate of Assessments Why you should Understand the IMF? So that you can explain the errors and keep IRS these computerized system of records from being entered as evidence at a trial or hearing. Establishes that the IRS’ computerized system of records is not accurate, reliable, or trustworthy. Contents of the IMF The IMF is a mainframe front-end application to a database It implements the tax laws constitutionally to ensure that all data entered into your tax logs meets the tax laws of the government The reports are all based on 80column punch cards Contents of the IMF The data is entered in brief codes Two types of IMF Specific One entity section per year year-by-year breakdown Complete – One overall entity section Year-by-year breakdown Your FOIA request should get you these documents Tax module section (MFT 30) Complete (includes the Entity) Specific Penalty module (MFT 55) All civil and criminal penalties How IRS Disclosure Office Requested your IMF IRM 220.127.116.11 Introduction to IDRS Command Code MFTRA, explains something very important. IDRS Command Code MFTRA is used to request taxpayer information in the form of hardcopy transcripts. These requests are forwarded to the MF at the Enterprise Computing Center Martinsburg (ECC-MTB). After the information is extracted from the MF it is passed to the Service Campuses where the Transcript Research System (TRS) processes the data and formats the transcripts. These transcripts are then printed at the Service Campus or the Remote Office of the requestor. How to Read a Page You need a overlay showing field locations. You will need a description of the fields. You will need to match these fields with real data in an actual report. See the following example of a request for IMF records. Example of a Typical Record from the IRS System Show Request Report (1 – 1) Show Overlay PDF ( 1 – 2) Show Field Names ( 1 – 3) Tool Locations http://www.irs.gov/irm/part2/irm_02003-032r.html#d0e1979 Go to this URL above to get the two documents (tools) you will need. Field Names and Descriptions Overlay Click on the link that says; Please click the link to view the image. This will provide you with the Overlay • Print these out and keep it handy IMF Record Show IMF Report (2 – 1) Show IMF Overlay PDF ( 2 – 2) Show IMF Field Names ( 2 – 3) Entity Redacted Entity Record Overlay Field Names 4 - 13 4 TC 148 HOLD INDICATOR See IRM 5600–22 Collection Field Function Techniques and other assignments, for meanings of values. 5 NAME LINE YEAR 6 FILING STATUS CODE 7 PRIMARY NAME LINE 8 SECOND NAME LINE (if present may be CONTINUED NAME LINE or FOREIGN ADDRESS LINE, or CARE OF NAME LINE) 9 ADDRESS CHANGE CYCLE—Cycle the latest address change posted 10 STREET ADDRESS 11 CITY/STATE 12 ZIP CODE 13 SPOUSES SSN Field Names 14 - 20 14 PRIOR NAME CONTROL 15 LEFT HAND FREEZE CODES— See IRM 2.24.1, ADP Systems Code 16 RIGHT HAND FREEZE CODES— See IRM 2.24.1, ADP Systems Code 17 PRIMARY LOCATION CODES 18 COLLECTION LOCATION CODES 19 MAIL FILE REQUIREMENTS 20 INVALID SSN FREEZE INDICATOR Zero—Invalid SSN Freeze in effect Blank—Invalid SSN Freeze in effect. 1—Invalid SSN Freeze has been released by TC 290 or 300 or Scrambled SSN Indicator of "2" . This release is effective during the current calendar year only. 2—Invalid SSN Freeze has been released by TC 150 Document Code 72 or 73 posting to this Temporary SSN. This release is effective during the current calendar year only. Field Names 21 - 24 21 IRA FILING HISTORY CODES—Carries the history of IRA Accounts from 1980 (left most position), through 1994. Indicator will appear for those years an IRA Account is present. 22 CAF INDICATOR—If other than zero there is data present on the Centralized Authorization File for an entity authorized to perform certain functions for the taxpayer. Use CC CFINQ as described in IRM 2.3.31 to display CAF data. 23 YEAR REMOVED—will be significant only for accounts which have aged off from the Regular IMF to the Dropped Master File, which has only a minimum amount of data. Refer to the Microfilm Retention Register for more information, if desired. (Master File Transcripts only) 24 ENTITY EXTRACTION CYCLE—According to Master File processing, this is the cycle that the account was last extracted to the IDRS Taxpayer Information File. If no record of the last extraction, this field is blank. Field Names 25 FISCAL YEAR MONTH—from a most current First Name Line on the Master File entity. 26 SCRAMBLED SSN INDICATOR Blank—No scrambled SSN 1—Two taxpayers are using the same SSN 2—SSN has been verified—not a Scrambled SSN. Released Invalid SSN Freeze 4—Mixed Entity cases 27 ≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡ ≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡≡ ≡≡≡ 28 TC130 INDICATOR—Transaction Code 130 Freeze Indicator, displays code of Service Center which established the 130 freeze. In some cases this will be a stale abbreviation Field Names 29 POTENTIALLY DANGEROUS TAXPAYER LITERAL—OR KILLED IN TERRORIST ACTION LITERAL. Will have value *PDT* if PDT indicator is 1 or *CAU* if it is 2. Will have a value of KITA if this indicator is 1 and HSTG if it is 2. If neither indicator is set, field contains blanks. If both are significant, it will display KITA. 30 TAXPAYER REPEATER INDICATOR 1—Initial issuance of TDI/Notice for One Tax Module; 2—Multiple module issuance of TDI/Notice; 3—At least on module is in First Notice Status 19 or 21, and No Other Modules are in Status 23 or 60. (New for 2013 - A Field Names 31 - 35 31 PAYER MASTER FILE INDICATOR —When "1" , account is also on PMF. 32 TAX SHELTER INDICATOR 33 BANKRUPTCY CODE—A value of "1" means the taxpayer has filed for bankruptcy. 34 ACCRETION INDICATOR—blank—Not set1—Accretion Invalid SSN Release has been set for at least one TC 150. 35 MINISTER SELF-EMPLOYMENT TAX EXEMPT CODE If significant, means that a minister is claiming exemption from Self-Employment Tax. 1 = Form 4361 Approved 4 = Form 4029 Approved 2 = Form 4361 Denied 8 = Form 4029 Denied In addition, these character values are possible: B = Combination of 1 + 2 + 8 values above; C = Combination of 4 + 8 values above; D = Combination of 1 + 4 + 8 values above; E = Combination of 2 + 4 + 8 values above; F = Combination of 1 + 2 + 4 + 8 values above; Any combination of these values are possible. For example, the value "6" would mean Form 4361 Denied and Form 4029 Approved. The value "A" (2 + 8) would mean Both Forms Denied. Field Names 36 - 44 36 CURRENTLY NOT COLLECTIBLE INDICATOR —"CNC" will be displayed if any module. in account contains an unreversed TC 530. 37 BANKRUPTCY LITIGATION LOCATION CODE 38 MOP/UN LITERAL 39 Reserved 40 Reserved 41 Reserved 42 JUSTIFICATION CD 43 REDUCE UNNECESSARY FILING—If the RUF-IND= 1, display "RUF" . 44 IRS EMPLOYEE CODE 1—Primary 2—Secondary 3—Both IRS employees Field Names 45 - 54 45 FEDERAL EMPLOYEE INDICATOR 0 = Insignificant, edited as spaces 1 = Taxpayer is a Federal Employee or a Retiree, edited as "F" 46–49 RESERVED PRIOR YEAR NAME LINES 50 NAME LINE YEAR 51 PRIOR YEAR FILING STATUS CODE 52 PRIOR YEAR NAME LINE 53 PRIOR YEAR SPOUSE'S SSN and VALIDITY INDICATOR 54 CIVIL PENALTY NAME LINE or INNOCENT SPOUSE NAME. If present, both it and the preceding literal "PTNL" will be displayed. PTNL is Primary Taxpayer Name Line. Field Names 55 - 62 55 LAST RETURN FILED YEAR—Year of the most recent return 56 ES TAX DISCREPANCY CODE Blank = No discrepancy $ = Discrepancy 57 MATH ERROR CODE—Refer to IRM 2.24.1, ADP systems code for appropriate codes. 58 MULTIPLE MATH ERROR CODE INDICATOR Blank—None or one Math Error Code present. *—indicates more than one math error code is present. 59 FILING CONDITION CODE E—Even B—Balance Due C—Credit Elect R—Refund 60 FILE LOCATION CODE—The District Office in which the latest return was filed. 61 CYCLE LATEST RETURN POSTED—YYYYCC 62 OIC Generated literal NOTE: This literal is generated when OICACCEPTANCE-YR field is greater than zero. Field Names 63 - 73 63 ELECTRONIC DEPOSIT INDICATOR 64 Reserved 65 Business Operating Division Code 66 Business Operating Division Client Code 67 FMS Levy Code 68 Small Business Area Office Code 69 IMF Combat Literal SPACES - Insignificant. MOP/UN - Indicates that the taxpayer is a participant in a military operation or United Nations Peace Keeping Force. 70 15% SSA Levy 71 ERO Indicator 72 PDC ID CD 73 LOW INCOME IND Q and A Until 11:30 p.m. ?