Compliance Initiative Projects (CIP) are authorized activities outside of the planned strategies involving taxpayer contact for the purpose of correcting noncompliance that meet the mission, standards, resources of the IRS.

By Law, the IRS has the authority to conduct examinations under the Title 26, Internal Revenue Service, Subtitle F - Procedure and Administration, Chapter 78, Discovery of Liability and Enforcement of Title, Subchapter A, Examination and Inspection, which includes, but not limited to the following IRC sections: IRC 7206, Examination of Books and Witnesses.

The Director, Examination Headquarters, is the executive responsible for providing policy and guidance for field employees and ensuring consistent application of policies, procedures, and tax law to effect tax administration while protecting taxpayer rights. See IRM 1.1.16.5.5, Examination Headquarters, for additional information.

The Director, Examination Case Selection, reports to the Director, Examination Headquarters, and is responsible for providing guidance on selection of cases and delivery of inventory, input of the work plan, and setting direct assignment criteria for routing of examination work. See IRM 1.1.16.5.5.3, Exam Case Selection, for additional information.

Field Case Selection (FCS), under the Director, Examination Case Selection, is the group responsible for providing policy guidance on the selection of cases and delivery of the inventory to field examination. See IRM 1.1.16.5.5.3.1, Field Case Selection, for additional information.

The following are systems or reports that may be used to monitor the classification and delivery of inventory:

The National CIP Database will be utilized to track open and terminated CIPs.

At the conclusion of the CIP, the Program Analyst reviews audit results to make decisions to improve program quality and selection methods.

The following table list acronyms commonly used throughout this IRM and their definitions:

The following table list commonly used terms and associated definitions referenced throughout the IRM:

The following table lists related resources:

There are four types of CIP requests.

Part 1 CIP - A Part 1 CIP authorization is requested when fewer than 50 taxpayer contacts are anticipated for a field office compliance initiative. Form 13502, Compliance Initiative Project Authorization - Part One, is used to request a Part One CIP Authorization. See IRM 4.17.4.4, Part One Authorization Request, for additional information.

Part 2 CIP- A Part 2 CIP authorization is requested to expand a Part 1, when the Part 1 reveals documented non-compliance, or when there is an otherwise established compliance risk. Form 13498, Compliance Initiative Project Authorization - Part Two, is used to request a Part Two CIP Authorization. See IRM 4.17.4.5, Part Two Authorization Request, for additional information.

National Office CIP - A National Office CIP authorization is one requested by a headquarters function. Form 13502 or Form 13498 is used based on the descriptions in paragraph 2 and 3 above. See IRM 4.17.4.10, National CIP for additional information.

Cross-functional CIP A Cross-functional CIP authorization is one jointly requested by two or more business operating divisions. Form 13502 or Form 13498 is used based on the descriptions in paragraph 2 and 3 above. See IRM 4.17.4.11, Cross Operating Division CIP Approval Process, for additional information.

Provide information to explain the basis for selecting the proposed project. If the authorization request is for Part One CIP only, identify the circumstance outlined in IRM 4.17.4.4, Part One CIP Authorization Request, that permits the use of Part One CIP. Explain the issue(s) and additional information such as;

A market segment is generally a group containing similar characteristics. Examples of market segments include, but are not limited to, the following:

The market segment section should also include:

Describe the data needed, or to be used, including the source and whether it is internal or external. If the request is to secure data, include the expected delivery date, delivery medium, amount of time needed to use the data, and ultimate disposition. If applicable, provide an assessment of the accuracy of the data if it is external, and a description of the procedures to be used for securing and storing it.

The CIP Authorization should have a specific project completion date.

List the tasks necessary to complete the project, the estimated time to accomplish them, and the projected task completion dates. Ensure sufficient time is allowed for each task, and the overall project completion date is reasonable. Coordinate with other impacted functions/units to provide reasonable time allocations. Action plan dates should coincide with the final project completion date.

If the authorization request covers more than 2 tax years, justification must be included.

Generally, SB/SE CIPs will be National CIPs initiated, monitored, and terminated by the Field Case Selection CIP Analyst.

The review and approval procedures for Part Once CIPs are based on the originator. Generally, Part One CIP’s require concurrence from analysts, and senior managers. Approval is generally the first level executive with authority to commit exam resources and direct case selection.

Concurrence represents the agreement of impacted parties. Approval is the final authorization to proceed with case selection.

Concurrence and approval should be as follows:

Disclosure - Disclosure must sign for concurrence on any CIP authorization that involves the external release of taxpayer information to gather third party data.

SB/SE HQ CIP Analyst will maintain the National CIP Database. All completed authorizations must be forwarded to the SB/SE HQ CIP Analyst for updating the National CIP Database.

Documented consideration should be given to identify alternative non-enforcement ways to improve voluntary compliance as enforcement is generally very labor intensive. Examples are:

Describe the measure(s) that will be used to evaluate noncompliance. Examples of measures include, but are not limited to:

Describe the estimated resources needed to execute the project. Include hours/FTE’s to be expended by type of employee (RO, RA, TCO, TE, and so on). Also include costs over and above those that would normally be incurred. Examples include, but are not limited to:

Generally, SB/SE CIPs will be National CIPs initiated, monitored, and terminated by the Field Case Selection CIP Analyst.

The review and approval procedures for Part Two CIPs are based on the originator. Generally, Part Two CIPs require concurrence from analysts, C&L, front line managers, senior managers and executives. Approval is generally the second level executive with authority to commit exam resources and direct case selection, and/or the Director Examination Case Selection.

Concurrence represents the agreement of impacted parties. Approval is the final authorization to proceed with case selection.

Concurrence and approval should be as follows:

Disclosure - Disclosure must sign for concurrence on any CIP authorization that involves the external release of taxpayer information to gather third party data.

SB/SE HQ CIP Analyst will maintain the National CIP Database. All completed authorizations must be forwarded to the SB/SE HQ CIP Analyst for updating the National CIP Database.