20.2.8  Restricted Interest

20.2.8.1  (12-04-2009)
Restricted Interest Overview

  1. Interest may be limited to specific time periods or rates, or it may be statutorily prohibited; this gives rise to the term "restricted interest" . Restricted interest is subject to the same variables (time, rate, amount) as "normal" interest calculated by the Service. The primary difference between normal and restricted interest is that the computer may not be able to identify all conditions involved in a restricted interest situation.

  2. The posting of certain freeze codes and transaction codes prevent the computer from calculating normal interest. As a result, interest must be manually computed and updated. Document 6209, IRS Processing Codes and Information, provides information on the following freeze codes and transaction codes:

    Freeze Codes:

    1. — I Freeze - Debit interest restriction

    2. I — Freeze - Credit interest restriction

    3. — C Freeze - IMF - Combat Zone Indicator

    4. — O Freeze - Disaster freeze


    Transaction Codes:

    1. TC 340, TC 341

    2. TC 500, TC 534

    3. TC 770, TC 772

    4. TC 780

  3. Personnel with the expertise to accurately verify interest computations should review all manual debit or credit interest adjustments in excess of $50,000.

20.2.8.2  (12-04-2009)
Provisions Restricting and Prohibiting Interest

  1. The IRC contains provisions by which interest is either restricted or prohibited. See Exhibit 20.2.8-1, Provisions Restricting and Prohibiting Interest on Income Taxes, Estate Taxes and Excise Taxes. This exhibit lists the section of the Code and certain provisions having the effect of law, which govern adjustments resulting in deficiencies or overpayments on which interest is restricted. It also lists an identifying title and the related provision which governs the computation of interest.

20.2.8.3  (12-04-2009)
Manual Computations

  1. Do not unnecessarily restrict accounts. Use a non-restricting TC 340 whenever possible (see IRM 20.2.8.12 , Non-Restricting TC 340). Ensure that TC 340/341 and TC 770/772 are used appropriately. Management is required to perform random reviews of cases to verify that they are being restricted/computed correctly.

    1. When manually computing interest, always attach the computation and the reason for the action taken to the adjustment source document.

    2. When abating interest or inputting a TC 340 for zero amount, provide the reason on the adjustment source document.

    3. It is not necessary to input manual debit interest restriction transaction codes (TC 34X) in ADJ54 or ADJ47 with a blocking series that will create a refile DLN if sufficient documentation is attached to the adjustment source document.

      Reminder:

      Electronically document the reason for the action taken when AMS (Accounts Management Services) is available to the function inputting the adjustment.

      Example:

      If the case is located on AMS, notate the following in the case history:
      • Reason interest has been restricted.
      • Relevant interest computation dates/amounts for that adjustment.
      • Any specific information helpful in reconstructing the posted restricted interest adjustment.

    4. All manual debit interest transactions input through ADJ54 or ADJ47 must have an interest-to-date in the "DB-INT-TO-DT" field (MMDDYYYY format). Interest is computed to the full paid date, 30 days from the agreement date, or the 23C date, whichever is the earliest.

    5. Manual credit interest transactions input through ADJ54 or ADJ47, using TC 770 with a dollar amount, must have an interest-to-date in the " CR-INT-TO-DT" field (MMDDYYYY format).

    6. Manually compute credit interest if there is a prior TC 770 on the module, when applicable.

    7. Use the non-restricting TC 190 for quick and prompt assessments when Master File can compute the interest.

    8. When possible, input a non-restricting TC 340 after a quick or prompt assessment has posted with a restricting TC 340 to allow Master File to update interest.

    Reminder:

    Any time interest is manually computed using TC 34X/77X, it is necessary to recompute the entire tax module to ensure an accurate computation is made. In addition, previous restricted interest transactions must be verified before recomputing a module. If you are unable to verify the TC 34X/77X amount, secure the adjustment document or case file.

    Note:

    A reversal of a Gas Tax Credit(s) will require a manual computation and restriction of interest if the taxpayer signed a Form 870,Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment.

  2. Transaction Code (TC) 342 removes the interest restriction previously set by either a TC 340 or TC 341. TC 342 - 0.00 with a Priority Code 5 should be input to allow Master File to post accrued interest when applicable. Master File considers all posted TC 19X, 34X, and 33X amounts when assessing or abating additional interest as a result of a recomputation.

    Note:

    Master File will not post accrued interest unless Priority Code 5 is posted with the input of a TC 342 - $ 0.00. See IRM 20.2.6.3, Assessment of Interest Accruals, for additional information.

    1. TC 342 may NOT be input without first securing the source document for the TC 340/341 that created the interest freeze. See IRM 20.2.8.3(2)(e) below for exception.

    2. The TC 342 may be input if the TC 340/341 restriction was unnecessary or if a TC 340 - $ 0.00 was systemically generated on an original filed return because of the Combat Zone Indicator.

    3. A TC 340 - $0.00 may indicate net rate interest netting. DO NOT INPUT TC 342 in this instance. See IRM 20.2.14, Netting of Overpayment and Underpayment Interest.

      Note:

      Listed below are additional reasons why a TC 340 - $ 0.00 may be input. This list is not all inclusive.
      • Combat Zone Indicator
      • Prevent the posting of de minimus interest accruals
      • Innocent Spouse Adjustments
      • Interest Abatement under IRC 6404(e)

    4. When inputting TC 342, it is not necessary to use a blocking series that will create a refile DLN if sufficient documentation is attached to the adjustment source document.

    5. Attach a copy of the source document for the TC 340/341 to the TC 342 adjustment document. If the source document is not available, notate on the TC 342 adjustment document why the TC 340 - $ 0.00 was originally input.

      Example:

      Combat Zone Indicator

      TC 150 - $ 1,000.00
      TC 806 - $ 500.00
      TC 270 - $ 0.00
      TC 340 - $ 0.00



      A source document would not be available for the TC 340 - $ 0.00 adjustment. Notate on the TC 342 adjustment document "Source document not available - Combat Zone indicator - TC 340 - $0.00 systemically generated on original filed return."

    Caution:

    TC 342 will reverse ALL restricted interest transactions on the module.

  3. IRC 6631 requires that an explanation of interest computation be sent to an individual (IMF) taxpayer with each notice; which includes an amount of interest required to be paid. The requirements of IRC 6631 also applies to employment and excise tax liabilities of sole proprietors. Master File (MF) programming will systemically include an explanation of the interest calculation with notices sent to taxpayers when interest has been systemically generated.

  4. If interest is manually computed, or restricted, send a copy of the interest computation report. Users of Command Code (CC) COMPA may only send COMPAD prints to taxpayers as an explanation of the manual interest computation.

  5. Use Letter 3447, Cover Letter for Manual Interest Computations with COMPAD, or Letter 3535, Interest Computation Cover Letter, as a cover letter when providing an interest computation report to the taxpayer as required by IRC 6631. Use Letter 3447 as a cover letter for CC COMPAD printouts, and Letter 3535 to accompany interest computations generated by the ACT/DMI interest software.

    Reminder:

    OMB Memorandum M-07-16 provides for use of only the last four digits of the taxpayer's SSN on the documents mailed to the taxpayer.

  6. IRC 6631does not apply to statutory notices of deficiency (e.g., 90-day letter) or refunds in which interest is not required to be paid. IRC 6631 applies to notices that "include an amount of interest required to be paid."

    Note:

    While there is no requirement under IRC 6631 to provide an explanation on business (BMF) modules, it is recommended that an explanation be provided to the taxpayer when interest on a BMF module is manually computed.

20.2.8.4  (12-04-2009)
Credit Availability Date for Debit Interest Computation

  1. To determine the credit "interest start date" on an overpayment, consider the credit availability date.

  2. As applied to debit interest computations, a credit is generally available as follows:

    1. Prepaid credits (e.g., withholding) are available on the due date of the return.

    2. Subsequent payments are available on the received date/transaction date shown on the transcript.

    3. Credits transferred from another module are available as of the applicable credit availability date.

    Refer to IRM 20.2.4, Overpayment Interest, for additional information regarding credit availability dates.

20.2.8.5  (12-04-2009)
Interest Computation Software

  1. The Service currently approves and supports use of the Automated Computation Tool (ACT) InterestNet by Decision Modeling, Inc. (commonly referred to as ACT/DMI or InterestNet) and IDRS (e.g., CC COMPA) to perform manual interest computations.

  2. All current users of commercial off-the-shelf (COTS) software products, should contact MITS to install the latest version of ACT/DMI interest software and start using this tool for all interest computations regardless of complexity. The ACT/DMI interest software is available to all employees performing all interest computations.

    Caution:

    Only software approved by the Service is to be used to calculate interest.

20.2.8.6  (12-04-2009)
Reasons for Restriction

  1. Some of the reasons for restricting interest on a tax module are as follows:

    1. Form 2285, Concurrent Determinations of Deficiencies (Increases in Tax) and Overassessments (Decreases in Tax) in Cases Involving Restricted Interest Provisions of the Internal Revenue Code. See IRM 20.2.9, Interest on Carryback of Net Operating Loss.

    2. Tax Motivated Transactions. See IRM 20.2.5, Interest on Underpayments.

    3. Net Rate Interest Netting. See IRM 20.2.14, Netting of Overpayment and Underpayment Interest.

    4. Rev. Rul. 99-40. See IRM 20.2.5, Interest on Underpayments .

    5. Multiple waiver dates. See IRM 20.2.8, Restricted Interest.

    6. Error or delay in ministerial or managerial acts. See IRM 20.2.7, Abatement and Suspension of Interest - IRC 6404 and IRC 7508.

    7. Ascertained date under IRC 6502. See IRM 20.2.12, Employment Taxes .

    8. Non-Master File assessments. See IRM 20.2.8, Restricted Interest.

    9. Estate Tax Returns. See IRM 20.2.10, Interest on Estate Tax, Foreign Tax, and Excise Tax.

    10. Combat Zone with multiple in/out tours within a 6-month period. See IRM 20.2.7, Abatement and Suspension of Interest - IRC 6404 and IRC 7508.

    11. Offers in Compromise. See IRM 20.2.8, Restricted Interest.

    12. Large Corporate Underpayment. See IRM 20.2.5, Interest on Underpayments.

    13. Certain Disaster areas. See IRM 20.2.7, Abatement and Suspension of Interest - IRC 6404 and IRC 7508.

    14. Tax module reinstated from retention. See IRM 20.2.8 , Restricted Interest.

    15. Reversals of Gas Tax Credits. See IRM 20.2.8, Restricted Interest.

    16. "Multiple" IRC 6404(g) Notice dates. See IRM 20.2.7.6.5, Multiple Section 6404(g) Notices.

    17. Previously posted TC 29X/30X adjustments including TC 29X/30X $ 0.00 when TC 971 AC 064 is pending or posted and the input adjustment results in an increase in liability (tax, penalties, or decrease in refundable credits).

    18. Section 3082(a), Public Law 110-289 of the Housing and Economic Recovery Act of 2008. See IRM 21.6.6.4.43, IRC Section 3082(a) of the Housing and Economic Recovery Act of 2008 - Disaster Primary Housing Grant Relief.

    Due to the complex and changing nature of interest, this list is not all inclusive.

    Note:

    See IRM 4.10.8.13.3.4 , Restricted Interest for routing/notation procedures for Examination cases requiring restricted interest.

20.2.8.7  (12-04-2009)
870 Waiver Interest Suspension Periods

  1. There are multiple interest suspension forms used by the Service for purposes of applying IRC 6601(c). This section will use Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, as the example for purposes of explaining IRC 6601(c). See IRM 20.2.5, Interest on Underpayments, for additional waiver form information.

  2. Pursuant to IRC 6601(c), if an assessment is not made and a bill (notice and demand for payment) is not issued within 30 days after a Form 870 Waiver is received, interest will not be computed on the deficiency (or on the interest on the deficiency) for the period beginning on the 31st day after the waiver date and ending on the assessment date (23C Date). Because Master File programming will suspend underpayment interest during this period, it is not necessary to restrict the tax module for this reason alone. However, Master File programming cannot accurately compute interest involving more than one Form 870 Waiver. Therefore, interest on those tax modules must be manually computed and assessed with TC 340.

    Reminder:

    Automated Underreporter Program (AUR) agreed assessments are also entitled to the interest suspension provision under IRC 6601(c). A Credit Interest Date posting with an AUR adjustment is considered the agreement date. Refer to IRM 4.19.3.20.10.1(8) , The Assessment Window, for additional information.

    Note:

    Reversals of Gas Tax Credit(s) covered by a Form 870 Waiver will also require a manual computation and restriction of interest with TC 340. A manual computation and restriction is required because there is no systemic means for Master File or IDRS to distinguish a Gas Tax Credit reversal (TC 767) from any other type of credit reversal that uses TC 767 and allow the waiver period against the Gas Tax Credit reversal.

  3. The suspended interest period applies only to the tax, penalties, and interest related to the TC 300 assessment. See Exhibit 20.2.8-2, Interest Suspension Period—870 Waiver, which shows the effect of a period of suspended interest on a debit interest computation for the following example:

    A subsequent examination resulted in a tax increase of $5,875.00 for a 200512 tax period. The Service received a signed agreement to the tax increase on July 28, 2008. Interest on the tax accrued from the return due date to 30 days past the waiver date (August 27, 2008) is $800.52. Interest is then suspended on the additional tax ($5,875.00) and related interest ($800.52) from the 31st day after the waiver date until the 23C assessment date; September 8, 2008 for this example.

  4. To allow the suspension period, CC FTPIN will post a TC 9990 with a credit amount equal to the amount on which interest must stop. In this example, tax and interest total $6,675.52. Note that the TC 9990 date is August 27, 2008. To resume computing interest, CC FTPIN will post a debit TC 3330 with the same amount, using the 23C Date of the assessment, which is September 8, 2008 in this example. See Exhibit 20.2.8-2 , for the 2nd page of CC FTPIN (DINCOMP).

    Note:

    Interest accruals continue on all other liabilities to which the interest suspension period does not apply.

  5. While Master File programming can accurately compute interest if there is one waiver date (870-DT>) or AUR Credit Interest Date on the tax module, it cannot if there are multiple adjustments with different 870-Dates or AUR Credit Interest Dates. Interest on these modules must be manually computed and restricted.

    Reminder:

    Do not unnecessarily restrict accounts. Use a non-restricting TC 340 whenever possible. See IRM 20.2.8.13, Non-Restricting TC 340 .

  6. To update interest on a module with a waiver date:

    1. Using a current TXMOD or Master File information, compute interest on the accompanying TC 30X, 29X (including additions to tax and penalties) to the 870-DT> or AUR Credit Interest Date + 30 days.

    2. Suspend interest on the tax, penalties and interest for that TC 30X, 29X until the 23C Date of the assessment.

    3. Resume normal interest computations as of the assessment date.

    4. With multiple 870 or AUR-Credit Interest Dates, it is necessary to do multiple interest suspensions.

20.2.8.8  (12-04-2009)
Documentation

  1. It is imperative that all manual adjustment source documents include sufficient information/documentation to determine how and why the interest was manually computed and restricted. This applies not only to the original manual/restricting document, but also to any adjustment document for any subsequent interest updates. As it is no longer necessary to use a blocking series that will generate a refile DLN, it is even more important that documentation be attached to every interest adjustment.

  2. At a minimum, adjustment source documents should contain the following:

    1. A print of the interest computation (e.g., ACT/DMI , CC COMPAD)

    2. Relevant Forms (e.g., Form 2285, or Form 2322, Statement of Interest or Estimated Tax Penalty Charges).

    3. Any other relevant information (e.g., Combat Zone/Disaster dates, Multiple IRC 6404(g) Notice Dates/Amounts, Large Corporate Underpayment start date).

    4. It is not necessary to attach Master File or IDRS transcripts.

  3. You must attach documentation of your interest computation to the adjustment source document, even if a copy of such documentation is retained in your area. All manual interest computations must include documentation supporting the interest computations. See IRM 20.2.8.3, Manual Computations .

20.2.8.9  (12-04-2009)
Overpayment of Original Tax When Liability Exists for Interest

  1. Sometimes additional tax and interest are assessed for a taxable year and later an overpayment is determined for the same year. In such cases, the interest assessed on the deficiency is not always refunded in full. For example, the overpayment attributable to a net operating loss carryback that is less than the underlying deficiency. See IRM 20.2.9, Interest on Carryback of Net Operating Loss.

  2. Determine the dates of overpayment. If the payment was specifically designated to pay interest (TC 680), the interest liability on the module is considered paid on the actual date of the payment. The same is true with a designated penalty payment (TC 690) in that the penalty liability is considered paid on the actual date of the payment.

  3. Always consider the impact of a carryback allowance on previously assessed interest. Using a current TXMOD or Master File transcript, compute a running module balance on the entire tax module to determine if the underpayment interest needs to be adjusted based on the carryback.

20.2.8.10  (12-04-2009)
Assessments Against Treasury Department Embezzlers (NMF)

  1. IRC 7804(c) provides for assessments against any Revenue Officer or employee of the Treasury Department who fails to account for and pay any money or property collected under Internal Revenue laws.

    1. Notice and demand must be issued for the amount owed before the assessment can be made. See IRM 3.17.46, Automated Non-Master File Accounting.

    2. Upon failure to pay the amount demanded, an assessment is made as specified in IRM 3.17.46, Automated Non-Master File Accounting.

  2. Interest is charged at the underpayment rate from the date of embezzlement to the date of full payment.

    • The first notice includes interest computed from the date of embezzlement to the 23C Date of the notice.

    • If the date of embezzlement is unknown, interest accrues from the date of the first notice.

20.2.8.11  (12-04-2009)
Non-Restricting TC 340

  1. The non-restricting TC 340 is an enhancement to Master File programming to allow a systemic interest update on a tax module after it has been restricted, and should be used whenever possible. This is especially useful for, but not limited to, the following situations:

    1. Multiple waiver dates, IRC 7804(c)

    2. Combination adjustments ( Form 2285)

    3. Disaster area adjustments

    4. Abatements due to a delay or error in a ministerial or managerial act

    5. Combat zone participants

    6. Multiple IRC 6404(g) notice dates

  2. Entering the module balance in the "COMP-INT-AMT" field causes Master File to resume normal interest computation on that amount from the date entered in the "INT-TO-DATE" field. See Exhibit 20.2.8-3, Input Screen of Non-Restricting TC 340.

    1. The module balance includes any tax, penalty and/or interest unpaid as of the INT-TO-DATE, except accrued Failure to Pay Penalty (TC 270). Refer to the If/Then Table below which provides the rules for handling TC 270 when determining the "COMP-INT-AMT " for the non-restricting TC 340.

      If the 23C Date of the TC 270 Then the TC 270 amount
      is the same as the INT-TO-DATE should be included in the COMP-INT-AMT
      is after the INT-TO-DATE should not be included in the COMP-INT-AMT

    2. The INT-TO-DATE is the date normal interest accruals should resume.

      Example:

      For Exam/Appeals tax assessments with an 870-DT> waiver, the INT-TO-DATE is the 23C Date of the assessment, not 30 days past the agreement date. For interest updates, the INT-TO-DATE is generally the 23C Date of the adjustment.

      Reminder:


      Use a non-restricting TC 340 whenever possible.
      When feasible, input a non-restricting TC 340 after a prompt or quick assessment has posted with a restricting TC 340 to allow Master File to update interest.

  3. The non-restricting TC 340 should not be used in situations where normal programming cannot correctly update the interest. Some examples are, but not limited to:

    1. Tax Motivated Transaction Interest (TMT), 120%

    2. Large Corporate Underpayment (LCU) interest, 2%

    3. Modules reactivated from retention (TC 370 with Doc Code 52 sets a permanent debit interest restriction, unless the TC 370 contains a Julian Date of 999, in which case the module is not restricted)

    4. Net rate cases

20.2.8.11.1  (12-04-2009)
Subsequent Manual Interest Accrual Processing

  1. After the posting of a non-restricting TC 340, certain conditions on a module will prevent Master File from correctly updating subsequent interest accruals. These conditions include:

    1. Any subsequent adjustment to tax

    2. Any other subsequent adjustment with a transaction date prior to the INT-TO-DATE

    3. A subsequent credit transfer with an availability date that is earlier than the last posted INT-TO-DATE

      Caution:

      The –I Freeze will not be present on the module. The adjustment transaction will unpost unless the TC 340 is identified and addressed with the adjustment. A manual interest update is required.

20.2.8.12  (12-04-2009)
Offers in Compromise (OIC)

  1. An Offer In Compromise (OIC) is an agreement between the taxpayer and the government that settles a tax liability (tax, penalties, and interest) for payment of less than the full amount owed.

  2. An OIC is identified by the following:

    1. TC 480 (pending) or TC 780 (accepted) in the module

    2. – Y Freeze on the module

    3. Status Code 71

      Note:

      While both TC 480 and TC 780 freeze the module from offsetting or refunding and suspends the assessment and collection statute of limitations, only the TC 780 restricts computer generation of interest and penalties.

  3. Per Treasury Reg. 301.7122-1, interest and penalties are suspended on the date the OIC is accepted (TC 780 posting date).

  4. Instructions for processing and monitoring OIC cases are found in IRM 5.19.7.3, Monitoring Offers in Compromise .

Exhibit 20.2.8-1  (12-04-2009)
Provisions Restricting and Prohibiting Interest

Code Section Subject Interest Restricted on Underpayments Interest Restricted on Overpayments
IRC 172(b)
IRM 20.2.9
Net Operating Loss Carryback IRC 6601(d) IRC 6611(f)
IRC 39
IRM 20.2.9
Unused Credit Carryback IRC 6601(d) IRC 6611(f)
IRC 6411(b)
IRM 20.2.9
Tentative Carryback Allowance IRC 6601(d) IRC 6611(f)
IRC 904 as amended by P.L. 94–455 Sec. 1031(a)
IRM 20.2.9
Carryback of Foreign Tax Credit   IRC 6611(g)
IRC 905(b) as amended by P.L. 94–455 Sec. 1901(a)(114) Foreign Tax Credit For United Kingdom Income Tax on Royalties, etc.   Sec. 103(c) of P.L. 85–866
IRC 901 Foreign Tax Credit IRC 905(c) not restricted
IRC 547(a) Deficiency Dividend Deduction Personal Holding Co. Tax IRC 547(f)(2) IRC 547(b)(2)
IRC 1481(a) (Repealed)
IRM 20.2.11
Renegotiation of Government Contracts   IRC 1481(b)(3) and IRC 1481(c)
IRC 7405
IRM 20.2.4
Erroneous Refunds   IRC 6404(e)(2)
IRC 1341(b)(2) as amended by P.L. 94–455 Sec. 1901(a)(146) Renegotiation of Certain Subcontracts   Sec. 60(e) of P.L. 85–866
IRC 1341(a) Computation of Tax Where Taxpayer Restores Substantial Amount Held Under Claim of Right   IRC 1341(b)
IRC 7508
IRM 20.2.7
Time for Performing Certain Acts Postponed by Reason of War IRC 7508(a) IRC 7508(a) and IRC 7508(b)
IRC 1402(e) Self-Employment Income Social Security Coverage by Ministers, etc. Sec. 101(d) of P.L. 86-778 (9-13-1960) Sec. 101(d) of P.L. 86-778 (9-13-1960)
IRC 1383(a) Tax Treatment of Cooperatives and Patrons   IRC 1383(b)
Section 3082(a) of PL 110-289
IRM 21.6.6.4.43
Housing and Economic Recovery Act of 2008 Section 3082(a)(3) of P.L. 110-289  

Provisions Restricting and Prohibiting Interest on Estate Taxes

Code Section Subject Interest Restricted on Underpayments Interest Restricted on Overpayments
IRC 2011(a) Credit for State Death Taxes   IRC 2011(c)
IRC 2014(a) Credit for Foreign Death Taxes   IRC 2014(e)
IRC 2016 Recovery of Taxes Claimed as Credit IRC 2016  
IRC 2038(c) as amended by P.L. 86-141 (Repealed) Revocable Transfers-Effect of Disability in Certain Cases   Sec. 2 of P.L. 86-141 (8-7-1959)
IRC 2055(e) as amended by P.L. 93-483 Sec. 3 Interest Restricted for 180 Days on a Credit or Refund for Certain Deductions on Estate Tax Returns   IRC 2055(e)
IRC 7405
IRM 20.2.4
Erroneous Refunds   IRC 6404(e)(2)

Provisions Restricting and Prohibiting Interest on Excise Taxes

Code Section Subject Interest Restricted on Underpayments Interest Restricted on Overpayments
IRC 6406(b) Certain Taxes on Sales and Services   IRC 6416(b)
IRC 6412(a)(1) Floor Stocks Refunds -- Tires and Taxable Fuel   IRC 6412(a)(2)
IRC 6420(a), IRC 6421(a), and IRC 6421(b)
IRM 20.2.10
Gasoline Used on Farms or For Non-Highway Purposes, or By Local Transit Systems   IRC 6420(a), IRC 6421(a), and IRC 6421(b)
IRC 6418(a)(Repealed) Manufactured Sugar Used as Livestock Feed or For Distillation Alcohol   Rebate (not an overpayment)
IRC 6418(a)(Repealed) Export of Manufactured Sugar or Articles Made There from   Rebate (not an overpayment)
IRC 6419(b)
IRM 20.2.10
Excise Tax on Wagers Laid-Off by Taxpayer   IRC 6419(b) Rebate
IRC 7405
IRM 20.2.4
Erroneous Refunds   IRC 6404(e)(2)

Exhibit 20.2.8-2  (12-04-2009)
Interest Free Period—870 Waiver

Identification of 870 Waiver Indicator on CC TXMODA Transcript

TXMODA 123-45-6789---- MFT>30---- TX-PRD>200512--------- NM-CTRL>JONE
16000-000-00000-6<DLN       BOD-CD>WI
SC-STS>48 MOD-BAL> 6,675.52      
MF-STS>12 MOD-BAL> 6,675.52 CYC>200835-------- TODAYS-DT>10-24-2008
ASED>04152009 FRZ> N-   AGREE-IND>2    
CSED>04152016 INTL>        
RSED>04152009   NAICS-CD>999999
-----------------------------POSTED RETURN INFORMATION----------------------------------
RET-RCVD-DT>04152006      
FS>4--- NUM-EXEMPT>02      
AGI> 18,930.00      
TXI> 10,730.00        
-------------------------------------RETURN TRANSACTION---------------------------------------
TC POSTED TRANS-AMOUNT CYC T DLN
150 02062006 0.00 200604 D 16000–000–00000–6
806 04152006 1,573.90 200604   WTHLDNG TAX CR POSTED W/RETURN
Employee # 0000000000--- Page 001 of 004----- Page 002  
   
TXMODA 123-45-6789---- MFT>30---- TX-PRD>200512--------- NM-CTRL>JONE  
----------------------------POSTED TRANSACTION SECTION---------------------------------  
TC POSTED TRANS-AMOUNT CYC T DLN
766 04152006 1,190.00 200604   16000-000-00000-6
768 04152006 3,441.00 200604   16000-000-00000-6
846 02132006 6,204.90 200605   16000-000-00000-6
424R 05162008 0.00 200821   19000-000-00000-8
420 05222008 0.00 200822   19000-000-00000-8
971 07292008 0.00 200833   28000-000-00000-8----971-CD>043
971 05292008 0.00 200834 -------------MEMO-MONEY-AMT>5,875.00 86000-000-00000-8----971-CD>064

Note:

IRC 6404(g) suspension identifier

767 04152006 1,190.00 200835   49000-000-00000-8----CR-ID-NUM>336
765 04152006 3,441.00 200835   49000-000-00000-8
Employee # 0000000000--- Page 001 of 004----- Page 002  
   
TXMODA 123-45-6789---- MFT>30---- TX-PRD>200512--------- NM-CTRL>JONE  
300 09082008 1,224.00 200835   49000-000-00000-8
      870–DT>07282008 DISP-CD>03   CSED>20180908
421 09082008 0.00 200835   49000-000-00000-8
336 09082008 800.52 200835   49000-000-00000-8
-------------------------------------NOTICE HISTORY SECTION-----------------------------------  
NOTICE   AMOUNT CYC S DO
CP022   6,675.52 200835 M SUPPRESS-CD>0
DAS   6,675.52 200835 M  
   
Employee # 0000000000--- Page 003 of 004----- Page 004  

CC TXMODA will show the 870 Waiver Date with respect to the Tax Adjustment when applicable.

Effect of 870 Waiver Plus 30 to 23C Date Interest Free Period on Deficiency Interest Computation as shown on CC FTPIN Transcript - 2nd page DINCOMP

DINCOMP -------------------------------------123–45–6789---30-----200512----200829
TOTAL LIABILITY AT RDD     5,875.00   COMPUTE TO DATE 10242008
CODE TRANS- AMOUNT FROM DT TO DT PRINCIPAL INT FACTOR INTEREST
7% 0.00 03312006   0.00   0.00
1500 0.00 04152006   0.00   0.00
3000 1,244.00 04152006   1,244.00   0.00
766B 1,190.00– 04152006   54.00   0.00
7670 1,190.00 04152006   1,244.00   0.00
7680 0.00 04152006   1,244.00   0.00
806B 1,573.90 04152006   329.90–   0.00
9460 6,204.90 04152006 06302006 5,875.00 .01468 86.25
8% 0.00 06302006 09302006 5,961.25 .02036 121.41
8% 0.00 09302006 12312006 6,082.66 .02036 123.88
8% 0.00 12312006 03312007 6,206.54 .01991 123.63
8% 0.00 03312007 06302007 6,330.17 .02014 127.51
8% 0.00 06302007 09302007 6,457.68 .02036 131.52
8% 0.00 09302007 10152007 6,589.20 .00329 21.70
971S 6,610.90– 10152007 0.00 0.00
7% 0.00 12312007   0.00   0.00
6% 0.00 03312008   0.00   0.00
972S 6,610.90 06192008 06302008 6,610.90 .00180 11.93
5% 0.00 06302008 08272008
6,622.83 .00795 52.69
9990 6,675.52- 08272008   0.00   0.00
3330 6,675.52 09082008   0.00   0.00
             
----------------------------------------------------------TOTAL INTEREST----------------- 800.52

Note:

TC 971S/972S on this module are indicators that interest is suspended then resumed for a period of time when interest is systemically computed. In the above instance, interest is suspended for purposes of IRC 6404(g).


As of 08272008- (Waiver Plus 30 Days) - Debit Interest does not accrue on the TC 300 amount plus accruals (9990 – $ 6,675.52–).


As of 09082008- (23C Date) - Debit Interest resumes (3330 - $ 6,675.52).

Exhibit 20.2.8-3  (12-04-2009)
Input Screen of Non-Restricting TC 340

-------------------------------------------------------------------------------Input Screen of Non-Restricting TC 340-------------------------------------------------------------------------------

ADJ54 xxx-xx-xxxxMFT>30PLAN>000TX-PRD>xxxx12NM-CTRL>NCNC
SEQ-NUM>001---------------------------BLK>15--------CORRESP-DT>--------------------------- INT-CMPTN-DT>
CASE-STS-CD>C-------IRS-RCVD-DT>----------------------CTRL-CAT>-------------2%-INT-DT>
ACTIVITY>COMBATZONE-------5330-PYE-DT>--------------------TCB-DT>----------------CR-INT-TO-DT
RET-PROC-DT>---------------------5330-RVRSN-DT>-----------------------OVERRIDE-CD>--------RFSCDT>
DB-INT-TO-DT>MMDDYYYY----------------------------- COMP-INT-AMT>------------------------------------------------OTN>
DATA-REF-1>------------REF-CHG-1>----------------------------DATA-REF-2>----------------REF-CHG-2>
N-PER>----------------N-AMT>-----------------------------------N-BEG>-----------------------N-END>---------------------------N-MFT>
***********************************************TRANSACTION CODES********************************************************
TC>-------AMT>---------------------------------TC>---------AMT>----------------------------------TC>-------AMT>
TC>------AMT>----------------------------------TC>---------AMT>
************************************************************************************************************************************
SRCE-CD>1---RSN-CDS>-----------------------------------------RCA-IND>--------MTH-ERR-CDS>---------------------FLC>
HOLD-CD>0---PRT-CD>-------PSTNG-DLAY-CD>----------CP-NTC-SUPP-IND>---------AMD-CLMS-DT>
ACK-LTR?>N----TRANS-REG-IND>--------DMF-AG>-----------SUB-AG>------XREF-TIN>
******************* ITEM-REF-CDS/ABST-CDS/CR-REF-CDS/FUTA-STATE-CD/DRI-CD *****************************
CD>-------AMT>------------------------------CD>------AMT>-----------------------------CD>-------AMT>
CD>-------AMT>------------------------------CD>------AMT>-----------------------------CD>-------AMT>
CD>-------AMT>------------------------------
***********************************************************************************************************************************
CIS-IND>---------SOURCE-DOC-ATTACHED?>Y REMARKS>SD ADJUST INT & PNLT>

Note:

Entering an amount in the COMP-INT-AMT field will allow interest to be systemically updated from the date entered in the DB-INT-TO-DT field.


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