Controlled Pilot Project on Investigation and Assessment

May 5, 1966 REVENUE MEMORANDUM ORDER NO. 34-66 SUBJECT : Controlled Pilot Project on Investigation and Assessment TO : The Regional Director of Regional Office No. 6 and Others Concerned In accordance with the measures suggested by the Joint Legislative-Executive Tax Commission in its 7th Annual Report, and at the instance of Tax Adviser Jack Schaeffer, a Controlled Audit Program will be undertaken in Regional Office No. 6 to test procedures intended for long-range implementation in the areas of investigation and assessment. A unit to be known as the "Special Investigation and Assessment Unit" (hereinafter to be referred to as the Unit) shall be organized in Inspection District No. 25 under the supervision of the Chief Revenue Officer and shall conduct examinations on the basis of complete decentralization from the National Office. The supervisory and examiner personnel of the Unit shall be selected by the Regional Director, Regional Office No. 6 (hereinafter to be referred to as the Regional Director), who shall have complete authority to assign personnel to and out of the Unit. Selection of personnel assigned to the Unit shall not be limited to personnel in the region. The scope of the authority of the Regional Director in respect to the operation of the Unit shall be broad enough to insure complete control at the regional level of all cases assigned to the Unit at each and every stage of examination up to the conclusion of such cases, without regard to the amount of the proposed assessments. Conferences, whether formal or informal, and appellate hearings with taxpayers and their duly authorized representatives in respect to the findings of the Unit, shall be conducted by personnel assigned by the Regional Director. Review of all cases submitted by the Unit shall be performed by personnel assigned by the Regional Director. The role of the National Office shall continue in the areas of post review of cases and internal audit. aisadc The authority of the Regional Director in respect to the operations of the Unit shall include but shall not be limited to the following: 1. Selection of cases for examination including cases of failure to file and cases previously examined. 2. Conduct of examination by members of the Unit under his supervision or the supervision of his delegate without review by the National Office. 3. Determination of the Tax liability in respect to each case assigned to the Unit, securing agreements to 4. Assignment of examiners of the Investigations Branch of the Region to the Unit to work on cases where fraud is suspected, without regard to the amount of potential tax deficiency. Such examiners shall work only towards the end of recommending for or against prosecution for fraud and shall not recommend any assessments. The conclusions of such examiners shall be reviewed by personnel assigned by the Regional Director. Where the original assignment of a suspected fraud case was to an examiner who is not a member of the Investigation Branch, the examiner of the Investigation Branch shall work in coordination with the examiner to whom the case was originally assigned. Whether or not prosecution for fraud is recommended, the required assessment shall be made by an examiner who is not a member of the Investigation Branch. 5. Issuance of procedures to be followed by the Unit and the revision thereof at his discretion, necessary for successful prosecution of the program. Nothing in this Revenue Memorandum Order shall be interpreted in such a manner as to limit the authority of the Regional Director or his delegate over the operations of the Unit. Personnel assigned to the unit shall be transferred only at the discretion of the Regional Director in furthering the audit program. Cases completed by the Unit shall, after review by the Regional Director or his delegate, have the status of final determinations by the Commissioner of Internal Revenue. The provisions of this Revenue Memorandum Order shall become effective immediately. cd (SGD.) MISAEL P. VERA Commissioner of Internal Revenue APPROVED: (SGD.) EDUARDO Z. ROMUALDEZ Secretary of Finance