Compliance Service Collection Operation (CSCO)

1. Compliance Service Collection Operation(CSCO) November 9, 2010

2. W&I CSCO Locations • Andover • Atlanta • Austin • Fresno • Kansas City

3. CSCO Centralization • All sites work pre-assessed Installment Agreements • Return Delinquency program and Automated Substitute for Return (ASFR) are worked by Austin and Fresno • Balance due cases are worked in Andover, Atlanta and Kansas City • Austin is the toll-free site for ASFR and ASFR Refund Hold calls • Andover is the toll-free site for Withholding Compliance • ASFR Audit Recons are worked in Fresno

4. Austin Major Programs • Pre-Assessed Installment Agreements • Return Delinquency • Automated Substitute for Return • Refund Hold • Toll-free phones

5. Pre-Assessed Installment Agreements Austin processes requests for pre-assessed installment agreements • In response to notices, • Submitted with filed returns, and • Submitted with agreements to proposed assessments from AUR, Exam or ASFR

6. Return Delinquency • A return delinquency (RD) occurs when there is no record of receiving a tax return from a taxpayer for a specific tax period. • RD notices request a return be filed immediately or the submission of information as to why the return is not due. • Each return delinquency notice informs the taxpayer that there is no record of a particular tax return having been filed.

7. Return Delinquency The taxpayer may be issued the following notices: • CP 59, Request for Your Tax Return • CP 516, Request for Your Tax Return (may be issued on certain types of income) • CP 518, Your Tax Return is Overdue (may be issued 8 weeks after the CP 59 if the return is not received or the open RD is not closed)

8. Automated Substitute for Return (ASFR) • The ASFR program is the key compliance program within the Service that enforces filing compliance on taxpayers who have not filed individual income tax returns, but owe a significant income tax liability. • The ASFR functions prepare Substitute for Returns under the authority of Internal Revenue Code (IRC) Section 6020(b) and issue Statutory Notices of Deficiency as authorized by IRC Section 6212.

9. Automated Substitute for Return (ASFR) • Research is conducted to determine income from various payers/sources (e.g. W-2 and 1099). The IRS uses this information to prepare a “substitute” return through the ASFR program. • Data is loaded onto the ASFR system where returns are prepared and notices of the proposed assessment are generated.

10. ASFR Process • The 2566SC/CG letter is the first letter issued. This is the proposal of individual tax assessment that will be assessed if the taxpayer does not respond with his/her tax return or an explanation of why a return is not due. • The 3219SC/CG letter is the second letter issued. This is the taxpayer’s Notice of Deficiency which is sent by certified mail. • The letters above provide the taxpayer our toll free number to call.

11. ASFR Assessments • Tax, penalties, and interest are assessed when the taxpayer fails to comply. • To calculate tax due the taxpayer is given ○ a filing status of single or married filing separate depending on the last return filed ○ the standard deduction with no additional exemptions applied.

12. ASFR Reconsiderations • When a taxpayer files a return after the default ASFR assessment has been made – this case is processed as an ASFR Reconsideration. • ASFR Reconsiderations require an adjustment to the taxpayer’s account to reflect fact of filing.

13. Refund Hold • The Refund Hold (RH) program delays issuing an income tax refund and credit elect when the taxpayer’s account has at least one unfiled tax return within the five years prior to the RH tax year. • The taxpayer will receive a Letter CP 63, Refund Hold which contains our toll-free number. • The Refund Hold Program now holds refunds for current, and prior year filed returns.

14. Telephones • Austin CSCO receives taxpayer calls on two programs on our toll free line. ○ ASFR 1-866-681-4271 ○ R/H 1-866-897-3315 • Our peak times for phones is from February until mid June. • Offer English and Spanish assistance.