Submission of Referral Report for Potential Fraud Cases

October 6, 1966 REVENUE MEMORANDUM ORDER NO. 61-66 SUBJECT : Submission of Referral Report for Potential Fraud Cases TO : All Regional Directors, Chiefs of Income and Business Tax Branches, Chief Revenue Officers and Others Concerned Pending the completion of a revised Internal Revenue Manual on Investigation Procedure of Fraud Cases and in order that there shall be a central repository of all information concerning fraud on revenues, all examiners in the Inspection Districts in all regional offices shall be required to accomplish a "Referral Report for Potential Fraud Cases", a sample copy enclosed, to render effective the provisions of Section 11, subparagraph 11.C of the Internal Revenue Manual on Audit and Investigation Procedure, dated December 10, 1954, a pertinent portion of which is hereunder quoted as follows: aisadc "Indication of Fraud" Investigation of fraud cases is not made by the fieldmen in the Field Inspection District ( now the Inspection Districts ). It is the function of the Intelligence Division ( now the Investigation Division and Investigation Branches ). If during the investigation by an agent or examiner he discovers what he believes to be indications of fraud, he will immediately suspend his investigation and report his findings in writing to the Provincial Revenue Agent, City Revenue Examiner or the City Revenue Agent ( now the Chief Revenue Officers in the Inspection Districts ). If the latter conclude that the findings of the agent indicate fraud, he will promptly advise the Chief, Intelligence Division of his conclusion (now the Chief, Investigation Division). Emphasis supplied . . . In order that all potential fraud cases may be processed and looked into by the National Tax Fraud Group, all those employees who submit or pass upon field audit reports on tax liabilities of taxpayers are hereby enjoined to screen thoroughly the said reports to determine whether there are indications of fraud; and upon discovery thereof, they should refer the same to the Investigation Division, National Office, for appropriate action thereon. In the event the referral is accepted, the investigation should be conducted jointly with the fieldmen of the Investigation Division whose main job will be the gathering of evidence and other matters for the purpose of criminally prosecuting the taxpayer. The examiners of the region who will be working jointly with the National Office special agent will be responsible for the determination of the tax liabilities of the taxpayer which will be credited to the referring examiner and the unit or office of the region concerned. The provisions of this Revenue Memorandum Order shall be effective immediately. MISAEL P. VERA Commissioner of Internal Revenue