-14-
in violation of 2 Audit, Internal Revenue Manual sec. 4565.21(1),
at 14,382 (IRM section 4565.21(1)) and section 7605(b).4
4 IRM sec. 4565.21(1) states in relevant part:
If, during an examination, an examiner uncovers a
potentially fraudulent situation caused by the taxpayer
and or the preparer, the examiner shall discuss the
case at the earliest possible convenience with his/her
group manager. If the group manager concurs, he/she
will discuss the case with the District Fraud
Coordinator (DFC) who, together with the group manager,
will provide guidance to the examiner on how to
proceed. Once there is a firm indication of criminal
fraud all examination activity shall be suspended. If
the case meets the criminal criteria, found in the Law
Enforcement Manual (or locally developed criminal
criteria) a referral will be made to Criminal
Investigation (CI) via Form 2797. A firm indication of
fraud is more than mere suspicion or first indication
of fraud, it is a factual determination which must be
made on a case by case basis. This determination will
be made by the DFC and the group manager on each case.
Under no circumstances will an examiner or group
manager obtain advice and/or direction from CI for a
specific case under examination. * * *
Although this section on its face applies solely to “examiners”,
respondent concedes that its provisions also applied to Cox.
Sec. 7605 provides in relevant part:
SEC. 7605. TIME AND PLACE OF EXAMINATION.
(a) Time and Place.--The time and place of
examination pursuant to the provisions of section
6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 shall be
such time and place as may be fixed by the Secretary
and as are reasonable under the circumstances. In the
case of a summons under authority of paragraph (2) of
section 7602, or under the corresponding authority of
section 6420(e)(2), 6421(g)(2), or 6427(j)(2), the date
fixed for appearance before the Secretary shall not be
less than 10 days from the date of the summons.
(continued...)
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