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Part 21. Customer Account Services

Chapter 2. Systems and Research Programs

Section 4. Master File Accounts Maintenance (Cont. 1)

21.2.4  Master File Accounts Maintenance (Cont. 1)

21.2.4.4 
Procedures for Accounts Maintenance

21.2.4.4.32 
Individual Retirement Account File (IRAF) Freezes

21.2.4.4.32.1  (10-01-2007)
Old Credit Balance (02–K)

  1. To resolve 02–K (Freeze without TC 150), use the following instructions:

    1. If a prior year debit balance will be satisfied by posting the credit, use CC ADD24 to transfer the credit.

    2. If the credit was caused by an offset (TC 896 on IMF and TC 796 on IRAF) and is available for refund, use CC ADD24 to reverse the offset. Use TC 792 to debit the IRAF and TC 892 to credit the IMF. Refunds cannot be issued directly from the IRAF if there is no TC 150.

      Note:

      Enter the appropriate spousal indicator 1 or 2 (1= primary taxpayer; 2 = secondary taxpayer) on the credit portion of the transfer. This indicator is necessary only with TC 896/796.

    3. Request the payment document and IMF returns if needed. If the credits are duplicate payment of Tax on Early Distribution (Form 5329), use CC ADD24 to transfer the credit.

    4. If the payment is received with a 1040X or Form 5329 and belongs on IRAF where there is no TC 150, establish the module. To establish the module and assess excise tax at the same time, input Form 5329 with a dummy Form 1040. The IMF control DLN is the IRAF control DLN. Attach the original Form 5329 to the original Form 1040. If Form 5329 is input with a dummy Form 1040, include the following information: Tax Period, Name Control, Filing Status, SSN of primary taxpayer on Form 1040, Received Date.

  2. To resolve the 02–K (freeze with TC 150): If there is a refundable overpayment on the IRAF, prepare Form 5792 and use CC RFUNDR to refund to the taxpayer.

21.2.4.4.32.2  (10-01-2007)
Duplicate Return (04–A)/IRAF

  1. To resolve 04–A (TC 150 and TC 976 posted) freeze conditions:

    1. Request original and amended returns to verify that the IRAF taxes (from the Form 5329) were assessed correctly.

    2. If the IRAF tax was assessed correctly on the IMF (no IRAF taxes due), use CC REQ54 with TC 290 for zero amount to release the freeze. Use Blocking Series 00 (IRAF non-refile DLN).

  2. If the IRAF taxes were not originally assessed, but are due (per the Form 5329), assess the tax using the appropriate credit reference number. Credit reference numbers are found in IRM 21.6.5.4.11.2.

21.2.4.4.33  (10-01-2007)
Types of Transcripts and Resolution

  1. The following subsections define various AM transcripts and outline procedures used to resolve freezes and/or unsettled conditions.

21.2.4.4.34  (10-01-2007)
Debit Balance, No Return (01–X)

  1. Caused by a debit module with no return posted. Usually results from posting a credit reversal or a dishonored check when no credit is present.

  2. If the balance is due to a dishonored check penalty only, abate the penalty (Reason Code 65–IMF only). For BMF, see LEM 20.1.10.5.5, 20.1.10.5.6 and 20.1.10.5.7. Do not attempt to secure the related tax return from the taxpayer or transfer the case to CSCO.

  3. If the balance is the result of posting a dishonored check, TC 611 or TC 671, with no corresponding credit in the module:

    1. Request the document that created the freeze (87 doc code).

    2. Research other modules for the credit posting.

    3. Request the original payment document (the DLN is on the document that created the freeze).

    4. Determine to which module the dishonored check or credit reversal belongs; transfer debit. Refer to IRM 3.17.10.

    5. A valid and invalid account may require a merge; see IRM 3.13.2 for BMF and IRM 3.13.5 for IMF.

  4. If the case is still not resolved, request a copy of the front and back of the check from the taxpayer.

    1. If a copy of the check is received, resolve the freeze conditions.

    2. If no response is received, input a dummy return to release the freeze condition and generate a balance due notice.

  5. If the freeze resulted from posting a manual refund (TC 840) with no corresponding credit in the module:

    1. Request the document that created the debit balance.

    2. Determine to which module the refund should have posted.

    3. Transfer the refund to the correct account; refer to IRM 21.4.

    4. If the return or credit document was processed under an incorrect period, reinput the return; refer to IRM 3.17.30.0.

  6. If the transcripts contain a TC 360 and the module balance:

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Indicate closed to appropriate Advisory Unit on IDRS control base.

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. If the freeze resulted from more than one credit reversal, check IMFOL or BMFOL for information.

    1. If it is a duplicate transfer, transfer back the erroneous amount to zero out debit balance account.

    2. If a refund was issued despite the freeze, send appropriate IDRS letter to the taxpayer requesting repayment. Refer to IRM 21.4.5, Erroneous Refunds.

    3. If no cross reference information is displayed on the transcript, check Accounts 6800 and 4620. If credit is located, transfer back to zero out debit account.

21.2.4.4.35  (10-01-2007)
Erroneous Credit Hold (02–K)

  1. This freeze condition is caused when the module net balance credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is not entirely refundable cash credits.

  2. To resolve this freeze, reverse the TC 606 on Doc Code 24 with a TC 672 and TC 670 for the write-off date and amount. To prevent an unpostable condition, use a posting delay code (1 cycle) on the credit portion of the transfer document.

  3. See IRM 21.6.3, Credits, to resolve non-refundable credits caused by a Doc Code 54 adjustment. If the non-refundable credit refers to TC 241 with reference code 699 and a previous TC 240 with reference code 618, route the transcript to CSCO.

21.2.4.4.36  (10-01-2007)
Amended Return — No Original (03–E)

  1. Caused when an amended return (TC 976 /TC 977 ) posts to a module without a TC 150. CP 29 (IMF), CP 190 (BMF–4 cycles after posting), CP 293 (if open 420/424), and initially identify this condition.

  2. To resolve this condition, research as necessary.

  3. For a quick closure, analyze research and close the case if:

    1. The return was reinput as an original with the original DLN and posted in a later cycle; or

    2. A valid and invalid account merged, bringing a TC 150 to the module.

21.2.4.4.36.1  (10-01-2007)
AM03 Resolution

  1. Consider case resolved after taking the following actions. See IRM 21.5.1 for additional information.

  2. If a valid and invalid account need to be merged, send the case with documentation to the Entity Control function to merge the accounts.

  3. If no original return was filed, but the taxpayer filed an amended return:

    If Then
    Processing error (i.e., taxpayer actually filed an original return) Reinput as original.
    Other than processing error Request copy of original return from the taxpayer.
    No reply Prepare return from information on the amended return; input as original; retain the original DLN if valid.

  4. If an amended return (TC 976/977) posts to an incorrect TIN/tax period and the account for which it was intended does not contain a TC 150:

    1. Transfer any misapplied credits to the correct module.

    2. Reprocess the amended return to the correct module; use a new DLN.

    3. Circle out "G" code and any other "amended" indications written on the return.

    4. Circle out remittance amount, if applicable.

    5. Input TC 971 with Action Code 002 to release the "E" freeze; identify Xref TIN/tax period on CP 190/29 module.

  5. If an amended return (TC 976/977) posts to an incorrect TIN/tax period and the account for which it was intended has a TC 150:

    1. Transfer any misapplied credits and adjust the tax to correct the module based on the amended return.

    2. Input TC 971 with Action Code 002 to release the "E" freeze and identify XREF TIN/tax period on CP 190/29 module.

      Note:

      If TC 971 Action Code 010 with Doc Code 77 caused the amended return, reinput the return with a new DLN. Input TC 971, Action Code 002, to release the freeze.

    3. If a return is input to the Master File, no further action is required.

21.2.4.4.36.2  (10-01-2007)
AM03 Resolution for Other Cases

  1. If the case is not resolved after all possible research (including correspondence) and no return is available for reinput, follow these instructions.

  2. On zero balance modules, except Form 11, prepare a dummy return; input with the same DLN as the amended. Mark dummy return "To Release Freeze Only."

  3. On a debit or credit balance module:

    1. Request a copy of the return from the taxpayer. Reinput as original, using same DLN as the amended return.

    2. If unable to secure a copy from the taxpayer, reinput the amended return as an original delinquent return.

  4. If unable to secure a copy of the return and TC 976/977 DLN was not located through Files research, and the module balance is a Debit, prepare a Dummy return with the original DLN. Mark Dummy return "To Release Freeze Only."

  5. If unable to secure a copy of the return and TC 976/977 DLN was not located through Files research, and the module balance is a Credit, prepare a Dummy return with a tax liability equal to the credit(s) (use the TC 976 document DLN) to post as original and release the E freeze. Mark the Dummy return to "To Release Freeze and Assess Credit—No Reply From Taxpayer."

    Note:

    When preparing dummy returns on cases where TC 971 created TC 977, input TC 971, AC 002 to avoid creating -A freeze. See IRM 21.6.7.4.2.6.

21.2.4.4.37  (10-01-2007)
Duplicate Return (04–A)

  1. Caused when a duplicate return (TC 976) or amended return (TC 976 BMF/TC 977 IMF, IRAF) posts to a module with an original return (TC 150) posted. CP 36/26A (IMF), CP 93 (BMF), and CP 336/336A (IRAF) identify this condition. If an unreversed TC 420/424 is posted, a CP 93/293 generates.

  2. Use the following instructions to resolve this freeze condition.

    1. If the TC 976/977 return was returned to the taxpayer (e.g. 178C letter or Form 8009 sent for year in question by TE handling CATG CODE "XRET" base; TC 971 AC270) and there is not a credit balance on the account, release the freeze without contacting the taxpayer for a copy of the amended return.

    2. If an adjustment was input and requires no further action, close the case.

    3. Request the adjustment document to verify whether or not the adjustment to correct the freeze condition posted to another module. If it posted incorrectly, correct accordingly.

    4. When an original, amended or duplicate return is posted to an incorrect TIN or tax period and is to be reprocessed or backed out, use TC 971 per IRM 21.5.1.4.8.

      Note:

      Use IMFOL research to find adjustments on other modules with corresponding dates.

    5. Make necessary adjustment if incorrect CP (Computer Paragraph) resolution occurred.

    6. If an adjustment is not required, release the freeze condition.

  3. If the case is still not resolved, and the returns cannot be secured, request a signed copy of the return and all schedules and attachments from the taxpayer. (Follow procedures in IRM 21.5.1.5.3(3), Viewing or Requesting Documents on CIS Cases, before requesting the return from the taxpayer.). When reply is received, take corrective action based on response. If no reply received, resolve as follows:

    1. If a payment was submitted with the amended return, assess tax in the amount of the payment. If the account is in credit balance for more than the payment amount, resolve any misapplied payments or credits before making the assessment related to the duplicate return. If there is Earned Income Tax Credit (EITC) on the module, follow EITC back out procedures per IRM 21.6.3.

    2. If a payment was not submitted with the duplicate return, input a TC 290 for zero amount to release the freeze.

    If the case was returned to Files and the transaction indicates no change, but has not posted to the Master File, determine whether the no-change action is correct. If it is, post the no-change document. If it is not correct, adjust as necessary.

    Note:

    If the taxpayer submitted Form 1040X with Form 8862, Information To Claim Earned Income Credit After Disallowance, route the EIC recertification case to Adjustments for consideration. See IRM 21.26.3.4.2.7.15, EIC Recertification.

21.2.4.4.38  (10-01-2007)
Examination DP Tax Hold Codes (05–K)

  1. Caused by an unreleased Hold Code 1, 2, 4 on data processing-exam adjustment action (TC 29X/3OX) and a credit balance exists after posting. On BMF, it may be caused when condition code "N" (Joint Committee Case sent to Examination) posts to a Form 1120 module.

    Note:

    If the account shows a TC 420/424, TC 421/425, and/or a TC 595, and SFR created the TC 150, send the case to Exam.

21.2.4.4.38.1  (10-01-2007)
AM05 Resolution

  1. Release the freeze if the transcript indicates refund was held in error (credit balance equals reversed penalty and interest amounts), request the document that caused the freeze, look for outstanding liabilities on the appropriate Master File, and correspond with the taxpayer if necessary.

    1. If the credit was held because documentary evidence required for decedent account refund was not received, contact the taxpayer's estate. If documentary evidence cannot be secured, transfer the credit per the instructions in IRM 21.2.4.4.15.

    2. If the credit posted to the wrong module, transfer to the correct module before releasing freeze.

    3. If the freeze was set because of a Scrambled SSN, (an open base with control category "SCRM" or "SSA2" , or Scrambled SSN Indicator 01, 10, 12, 13, or 20) refer the transcript. If there is an open base, refer the transcript to the employee who has control. If there is no open base, refer the transcript to the paper function at the site that scrambled the account. No additional research or taxpayer contact is necessary.

      Note:

      Do no refer cases with Scrambled Indicator 21, 22 or 24 (the Scrambled SSN issue has been resolved on these accounts).

  2. Consider case resolved after taking action indicated:

    1. If a liability exists in another module, release the freeze and let the credit offset. For debit balances, do not transfer a credit to a module containing a freeze or restricted condition that would prevent the computer from offsetting in, unless the credit belongs on the debit module (ex. "—E" freeze, Master File Status 14, etc.).

    2. If a liability will be established on another module, follow the above instructions.

    3. If all liabilities are posted and satisfied, release the freeze.

    4. Forward —K freezes on carryback cases to Adjustments.

    5. Forward —K freezes from TC 30X adjustments, other than disposal codes 07 or 11, to Examination.

  3. In certain cases a TC 150 may incorrectly post to a module and a subsequent tax liability decrease results in a credit balance. Send correspondence to the taxpayer requesting the correct return for that period. If a reply is not received, transfer the credit per the instructions in IRM 21.2.4.4.15.

21.2.4.4.39  (10-01-2007)
Claim Pending (06–W)

  1. Transcript is issued when the taxpayer makes a claim (unreversed TC 470) and an adjustment in process delays the Tax Delinquent Account (TDA) (other than Collection Closing Codes 94 or 99).

  2. CSCO works all Claim Pending cases (originals and follow-ups) except 06—W cases with TC 470 CC 97; the area that handles Large Dollar cases works these. Transfer these transcripts to CSCO; do not include in AM Inventory.

21.2.4.4.40  (10-01-2007)
ADP Credit to Non-Master File Liability (07–V)

  1. (IMF only) caused on credit balance accounts when a TC 130 (Account Refund Freeze) is input to a Master File account because the taxpayer owes a tax liability on an account that cannot be reached by offset. CP 44 (IMF) generates when credits are available for refund. When a second credit posts, a new CP 44 will not generate if a prior CP 44 is unresolved. Certain other freezes, such as "R" , "P" , and "A," suppress the CP 44.

  2. CSCO works all of these cases (originals and follow-ups). Transfer any transcripts received in AM to CSCO; do not include in AM inventory.

21.2.4.4.41  (10-01-2007)
Manual Refund (08–X)

  1. Transcript is issued when one or more of the following conditions are present:

    1. TC 840 (Manual Refund) posted with no TC 150 posted.

    2. TC 150 posted with CCC "O" (pertains to pre-settlement refunds with(out) hardship–IMF, BMF), and no TC 840 posted.

    3. TC 840 and posted TC 150 is not coded with CCC "O" , and module balance is equal to or less than TC 840 amount with no TC 29X or 30X posted.

    4. On IMF, a manual refund for a claimed overpayment of excess Estimated Tax (ES) credits is pending. Transcripts issued for this situation show a module frozen by both "J" and "X" conditions.

    5. On IMF, a manual refund is pending on a module with Computer Condition Code (CCC) L (refund for first or second name line) or "W" (refund to second name line or to a person who is a stateside spouse of an Armed Forces member) and there is not a second name line for the refund period, or a later tax module exists.

21.2.4.4.41.1  (10-01-2007)
AM08 Resolution

  1. If both a TC 846 and a TC 840 post to the same module, determine if an erroneous refund was issued. See IRM 21.2.4.4.16, Erroneous Refunds.

    Exception:

    A TC 840 with Blocking Series 6XX indicates that Refund Inquiry is waiting for notification to post a TC 841 credit. Send the case to the Refund Inquiry function.

    Note:

    When the erroneous refund involves a hardship manual refund (processed at Austin campus), ship these cases to the Erroneous Refund Team of the campus where the latest dated TC 84X was issued.

  2. On remaining cases, request the document that created the freeze and any necessary account data. Close the case if:

    1. A return coded "O" (IMF or BMF) posted to the module with TC 840.

    2. A valid and invalid account merged on a TIN other than that of the AM transcript, resulting in a freeze release.

    3. A valid and invalid account merged on the TIN of the AM transcript, resulting in a freeze release.

  3. Consider case resolved after taking action indicated if:

    1. A valid and invalid account merged on the TIN of the AM transcript, the module balance is a debit, and an erroneous refund is present. See above instructions for erroneous refunds.

    2. A valid and invalid account must be merged and a computer-generated refund was not issued; see IRMs 3.13.2–BMF and 3.13.5–IMF.

    3. A valid and invalid account must be merged and a TC 846 was issued.

      Note:

      Follow the above instructions for generated refunds.

    4. The TC 840 posted to the correct module and the TC 150 posted to an incorrect module. Reinput the return; make necessary adjustments.

  4. The TC 840 posted to the correct module; however, the taxpayer is not liable for a return. Use the following instructions

    • Input TC 590 (CC 20) to release the "X" freeze after the credit/debit is resolved and the account is in zero balance. If the taxpayer filed a consolidated return (the manual refund document references Form 4466), input TC 590 or TC 591 (CC 14) to release the "X" freeze after the balance is resolved.

    • Prepare and input a dummy return.

    Note:

    TC 59X is not valid for MFT 15 accounts. Therefore, close with no action and destroy transcript.

    1. The TC 840 posted to incorrect module and the TC 150 posted to correct module; see IRM 3.17.79 and IRM 21.4.5.

    2. Freeze was created by posted TC 150 coded "O" without a TC 840 issued. Input a TC 29X with Priority Code 8 or prepare a manual refund, F 5792 for the credit balance. Compute interest and check for any outstanding debit balances prior to releasing the freeze. (It is possible the "X" Freeze was released with a TC 590 the same cycle the TC 150 coded "O" posted, causing another "X" Freeze.) If the TC 150 or TC 590 posted at the same time, repeat this procedure.

    3. Both the TC 840 and the TC 150 without CCC "O" posted to the correct module and the case is not an erroneous refund, release the freeze. For both BMF and IMF, input TC 29X with Priority Code 8. If the module pertains to Form 1120S/1065 and there is an unreversed TC 055 in the entity, release the freeze and forward the case to Entity.

    If the freeze was created by Then
    A pending IMF manual refund for unclaimed overpayment of excess ES credits See IRM 21.2.4.4.55.
    A pending IMF manual refund on a module with CCC "L" or "W" and a second name line is not present for the refund period, or a later tax module exists See IRM 21.2.4.4.24.1.

  5. If unable to resolve the freeze, contact the taxpayer and request a copy of the return or ask about the non filing of a return. If the taxpayer does not reply, input a dummy return.

    Note:

    To prevent duplicate refunds when issuing a manual refund, enter activity code "MANREF" on IDRS.

21.2.4.4.42  (10-01-2007)
Additional Liability Pending (09–R)

  1. Caused by a credit balance module with an unreversed TC 570 with(out) a posted TC 150, other than Doc Code 33 (Form 1040C/F–W3). On IMF modules, a TC 570 will generate and set a freeze if computer condition code 3 is present.

  2. Based on specific postings (e.g., return with CCC "X" ; TC 291 with Priority Code 7; TC 670 with an unreversed TC 420/424; Form 1120F ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or Form 706 in Status 14 going to credit balance). Consider the case resolved after taking the following action:

    1. Release the freeze and close the case if the Credit module balance approximately equals accrued interest or the taxpayer paid twice.

    2. Request the document that created the freeze and any other documents needed. Cross reference account data and analyze research. Close the case if subsequent action released the freeze. If, after conducting Remittance Transmittal Research (RTR) system research, you are unable to determine credit disposition, contact the taxpayer. Take appropriate action when reply is received.

21.2.4.4.42.1  (10-01-2007)
Three (3) Coded Returns

  1. If the module is frozen because of TC 806 without supporting documentation:

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. If unable to secure Forms W–2 and/or F 1099, initiate adjustment according to the appropriate adjustment manual by disallowing the unsubstantiated credit amount.

      Note:

      Allow TC 806 withholding credit shown on IRPTR documents, regardless of money amount. Adjust the account as necessary. Use the date withholding information is found on IRPTRO for the RPD.

    4. If the taxpayer received Earned Income Tax Credit (EITC) and Forms W–2 and/or F 1099 or other substantiation of credit are not secured, transfer the EITC to Account 6800. (This credit could be considered unprocessable until the W–2 is received).

      Note:

      See IRM 21.6 for EITC eligibility.

  2. If the return is unsigned, contact the taxpayer and secure a signature on an authorized form. If a signature cannot be obtained and the module is in credit balance, leave credit on Master File and close case control, "NOREPLY."

  3. If the return is filed jointly and one signature cannot be obtained:

    1. If the response indicates that the second signature cannot be obtained due to divorce or the inability to locate the spouse, change the filing status using information provided.

    2. Allocate income, deductions and credits using the return and information provided by the taxpayer.

      Note:

      If the taxpayer fails to submit sufficient information, do not attempt to compute separate liability or allocate income, deductions or credits. Transfer the credit to Account 4620 or 6800, as appropriate.

    3. An additional assessment might not be needed for the signing spouse as that spouse is already responsible for the amount shown on the joint return, but if the allocation and application of the different tax rate table results in additional tax, treat these changes as examination adjustments (which triggers the deficiency procedures). Note: Withholding may not be credited or refunded regardless of the lack of assessment to the extent the taxpayer owes tax based on the computation using the proper filing status. Note: If a deficiency is to be proposed for the non-signing spouse, see IRM 21.2.4.4.26, IRS Prepared Returns.

  4. If there is any EITC in the module, notate the amount in remarks area of the transfer document. This overpayment may be unprocessable for refund until the signature is received. See IRM 21.2.4.4.6 for processable dates on returns.

  5. If the taxpayer is deceased, documentary evidence is required. If it is not attached to the return, contact the taxpayer's estate.

    1. Prepare and input a manual refund. The account must be controlled on IDRS and monitored until the TC 840 posts.

    2. If documentary evidence cannot be secured, leave credit on Master File and close case control, "NOREPLY." This overpayment is unprocessable until documentary evidence is received.

  6. If the taxpayer's return indicates the payment is for another liability, apply as the taxpayer intended.

  7. If the return does not have an address (e.g., campus address) or has an incomplete address, research IDRS for a current address. Also check schedules or documents attached for other addresses at which the taxpayer may be contacted. If there are other addresses, discuss the case with the Team Manager or Lead Tax Examiner; determine if correspondence should be reissued. If a better address is not available, leave credit on Master File and close case control,"NOADDRESS."

  8. If your correspondence is returned undeliverable, refer to IRM 21.2.4.4.11. If a better address is not found, leave the credit on Master File and close the case control, "UNDEL."

  9. If the "R" freeze was set because of a Scrambled SSN, (an open base with control category "SCRM" or"SSA2" , or Scrambled SSN Indicator 01, 10, 12, 13, or 20) refer the transcript. If there is an open base, refer the transcript to the employee who has control. If there is no open base, refer the transcript to the paper function at the site that scrambled the account. No additional research or taxpayer contact is necessary.

    Note:

    Do no refer cases with Scrambled Indicator 21, 22 or 24 (the Scrambled SSN issue has been resolved on these accounts).

21.2.4.4.42.2  (10-01-2007)
AM09 Resolution

  1. To resolve the above cases, analyze credits as follows:

    1. If the credit was paid for another tax period, transfer the credit, do not release it to offset.

    2. If the credit is an overpayment, release to credit or refund.

    3. If necessary, make an adjustment. Use the appropriate Adjustment and IDRS IRMs as a guide.

    4. If the credit is in MFT 01/941, determine if the taxpayer originally filed Form 941E or claimed gambling or backup withholding payments on prior year returns. If there are no other Employment tax OBLs, consider transferring the credits to MFT 16 for the current tax period. If Form 945 filing requirements are not in place, update filing requirements using BNCHG or, according to local procedures, request Entity to establish filing requirements before transferring payments.

    5. If the taxpayer requested a credit elect on the return, transfer the overpayment to the next year's tax; use TC 830 on the debit side and TC 710 on the credit side. The transaction date is either the payment received date or the return due date (plus one month for MFT 02, Form 1120 returns) if payment is received timely, whichever is later.

    6. If none of the above, contact the taxpayer. Correct as taxpayer intended. If no reply, transfer the credit per the instructions in IRM 21.2.4.4.15.

  2. Consider case resolved after taking action indicated if:

    1. An invalid and valid account merged on the TIN of AM transcript. Review data for possible freeze release and resolve accordingly.

    2. An invalid and valid account should be merged on either an AM transcript TIN or another TIN, resulting in a freeze release. Send the case with documentation to Entity.

    3. The merge will not result in the module balance becoming zero or debit, release the TC 570 freeze one cycle prior to the merge. Coordinate with Entity to determine who will reverse the freeze.

  3. If another campus function is working the case, contact that area and request status and expedite action; determine if the case can be transferred.

  4. If the TC 570 freeze was applied as a result of an adjustment (Doc Code 54), review the reason for the adjustment and determine if it was completed correctly. If necessary, complete the adjustment and release the freeze. If no action is needed, release the freeze.

  5. If a payment in the related module is more than the computer-generated write-off (TC 606), use Doc Code 24 with TC 672 and TC 670 for the write-off amount prior to releasing the R freeze. This generates a TC 607, which reverses the TC 606. To prevent an unpostable, use a posting delay code (1 cycle) on the credit portion of the transfer document.

21.2.4.4.42.3  (10-01-2007)
Unreversed TC 570, No Return

  1. If the tax module has an unreversed TC 570 credit balance and no return posted, consider the case resolved after taking the following action.

  2. Close the case if:

    1. For IMF, TC 150 posted in a later cycle; for BMF, the module must also be in zero or debit balance.

    2. All credits were transferred to another module.

    3. In a later cycle, IDRS indicates it is in Delinquency status. Input TC 571 to release the —R freeze.

  3. Determine if the credit should be transferred to another period, TIN, or if a request for return delinquency should be issued.

    If the TDI notice stream Then
    Has been met Input TC 571.
    Has not been met 1. Input TC 571 to release the —R freeze; destroy the transcript.
    2. Use Exhibit 21.2.4–3, AM Freeze Table IMF/BMF, to determine 12–Y aging factor.

    Note:

    Obtain reference to the latest Notice Cycle in CSCO.

  4. If some of the credits were transferred to another module, determine if remaining credits should also be transferred. Transfer credit, if appropriate.

  5. If a return incorrectly posted to another module, initiate adjustment (see appropriate Adjustment manual).

  6. If a return was not input, process the return. Release the freeze only if the credits in the module are claimed on the return. If the credits are not claimed, resolve the remaining credits before releasing the freeze.

  7. If a credit transaction with Doc Code 24 or 34 is on the module, determine from which module the credit was transferred. Secure a transcript of the transaction from the module containing the Doc Code 24 or 34, if necessary.

    1. If the liability was abated, request the return and abatement document for the module where the liability was abated, if necessary. Reinput the return to the period where the credit posted, if appropriate.

    2. If liability remains, request the returns from which the credit was transferred and prepare for reinput, if appropriate. Research for an unpostable or rejected adjustment which abated the tax. If located, consider the case resolved. If not located, initiate adjustment action.

  8. If a different entity is found, research that account; transfer credit.

  9. If the type of tax is Form 1040C (TC 430 Doc Code 61), prepare Form 2859 to request a prompt assessment.

  10. If there is a payment in a related module (which must be transferred to the account with the —R freeze) with a money amount more than the computer-generated write-off (in the —R freeze account), input Doc Code 24 with TC 670/672 for the write-off amount and date. To prevent an unpostable condition, use posting delay code (1 cycle) on the credit portion of the transfer document (this generates a TC 607). Transfer the credit and release the R freeze.

  11. If, after all actions have been taken, the case is still unresolved, leave credit on Master File and close case control,"NOREPLY."

21.2.4.4.43  (10-01-2007)
VERFPYMT Transcripts

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The VERFPYMT Transcripts generate on a weekly basis. Modernization & Information Technology Services(MITS) forwards the transcripts to the Accounts Maintenance Research (AMRH) Team in each campus. Proper research and closure of these accounts should reduce Erroneous Refunds caused by misapplied credits. The purpose of the research is to determine if the payment(s) belong to the taxpayer, using the following steps.

  2. If there is another debit balance in the account, release the "R" freeze allowing the overpayment to offset to the debit balance module.

  3. If there is a multiple freeze condition (i.e. -W, -V, -L) on the module, follow the current procedures in IRM 21.2.4 for disposition of the case.

  4. If there is not another debit balance in the account, or multiple freeze condition, as above, determine type of credit (i.e. ISRP payment, Lockbox payment). Request check copies and/or payment documents for the payment that created the credit balance and each subsequent payment that is causing the credit balance on the module.

    Note:

    If credit resulted from levy payments (i.e., designated payment codes 04, 05, 15, 16, 17, 18, 20, or 21) and the source document indicates a levy payment, refer to CSCO for a levy release and credit disposition.

  5. Use the check copies and payment documents to research each payment to allow you to determine whether the credit posted correctly

    1. Identify all misapplied payments.

    2. Review the account and determine if the payment posted to the correct taxpayer, MFT, calendar year, fiscal year, etc.

  6. If payment posted to the correct account, and the account does not contain a freeze or pending assessment, look for an open control.

    1. If account contains an open control, contact the controlling employee to determine if you should forward the case history and transcript to the controlling employee.

    2. If account does not contain an open control, release the "R" freeze allowing the overpayment to refund.

    3. Send a closing letter to the taxpayer explaining the refund.

  7. If the payment posted to the incorrect taxpayer or account, and you can identify the correct taxpayer and/or account;

    1. Transfer the credit to correct account.

    2. Follow procedures in IRM 21.5.8, Credit Transfers.

  8. If payment posted to the incorrect taxpayer or account and/or you cannot identify the correct taxpayer and/or account:

    1. Ensure TC 570 is posted to prevent payment from refunding.

    2. Send 1687C letter, Unidentified Payment/Credit, to taxpayer whose account has credit. (Request that taxpayer reply within 30 days; 45 days for overseas taxpayers.)

    3. When reply is received, apply credit as taxpayer requests.

    4. If taxpayer indicates payment is not his or hers, or if no reply is received, transfer credit to the Unidentified Remittance File (Account 4620) or Excess Collections (Account 6800) as appropriate. See IRM 21.2.4.4.15, Applying Unresolved Credits.

  9. If payment is scheduled for release, and this will cause an Erroneous Refund, notify Notice Review to stop the refund.

  10. If payment erroneously refunds, refer to IRM 21.4.5, Erroneous Refunds.

    Note:

    Advance payments, TC 640, ES payments, TC 660, and payments with amended returns, designated payment code 24, should not generate a "VERFPYMT" transcript. Accounts with other debit balance module(s) should not generate "VERPYMT" transcripts effective cycle 200015.

21.2.4.4.44  (10-01-2007)
Refund Repayment, Cancellation, or Deletion (10–P)

  1. This freeze is caused by a credit balance module with an unreversed TC 720 (Repayment), TC 841 (Cancellation) or TC 842 (Deletion–BMF only). The module is frozen from offset and refund. See IRM 21.4, Refund Inquiries, for instructions (e.g., returned refund checks or because the taxpayer is deceased). Refer to IRM 20.2 to determine if interest is due the taxpayer when releasing the "P" freeze.

  2. Consider these cases resolved if the transcript indicates:

    1. Duplicate refundable credits; initiate adjustment action.

    2. Refund is due; release freeze after evaluating research.

  3. On remaining cases, research as necessary. Check IDRS with BRTVU/RTVUE, examine both the entity at the time of the refund and the current entity; request data from cross-referenced accounts, payment vouchers involved with the credit balance, and the return, if necessary. Keep in mind that TCs 841 can be divided into three categories:

    1. Recertified: Regional Financial Center (RFC) recertifies refund for reissuance. TC 841 and duplicate TC 846 post the same cycle. Effective October 1986. Blocking series and serial number of TC 841 DLN is 88888 (no "P" freeze) or 88899 ("P" freeze).

    2. Intercepted: Campus intercepted refund check. Effective July 1987 for IMF and January 1988 for BMF. The blocking series and serial number of TC 841 DLN is 55555.

    3. Returned: Taxpayer returns check to RFC or the IRS (IRS returns check to RFC). Blocking series and serial number of TC 841 DLN is 99999 or 88888. Send 407C letter to the taxpayer, requesting the reason for the returned refund.

    4. Direct deposits: Returned to the RFC by financial institutions post as TC 841 with block and serial 77777. If the 77777 is erroneously missing, a "P-" freeze results. See IRM 21.4.1.4.8.1(3) for further information.

    Note:

    Checks returned to the RFC for reasons other than undeliverable post as TC 841 with block and serial number 99999 and set as "P" freeze. On transcripts with this transaction, check with the refund inquiry team for any open cases before contacting the taxpayer.

  4. Analyze the research and close the case if subsequent action releases the freeze. Consider case resolved after taking action, if indicated, if:

    1. Case is being worked by another campus function; contact that function for status and request expedite action.

    2. A recent TC 013 (Name Change) or TC 014 (Address Change) posted to the entity; conduct further research, request documents, contact taxpayer, as applicable, and release the freeze.