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Part 21. Customer Account Services

Chapter 5. Account Resolution

Section 3. General Claims Procedures

21.5.3  General Claims Procedures

All Official Use Only content has been replaced with ≡.

21.5.3.1  (10-01-2007)
General Claims Overview

  1. Claims are usually filed on Form 1040X, Amended U.S. Individual Income Tax Return, Form 1120X, Amended U.S. Corporation Income Tax Return, Form 843, Claim for Refund and Request for Abatement, or Form 8849, Claim for Refund of Excise Taxes, but may be made in an informal written inquiry. Claims include:

    • Claims for Credit

    • Claims for Refund

    • Requests for Abatement

  2. This section contains the identity of claims and the processing steps necessary to complete the case, along with the required taxpayer notification.

    Note:

    Taxpayer Advocate Service (TAS) employees using the Operations Assistance Request (OAR) process to evaluate and process claims should follow the procedures found in IRM 13, Taxpayer Advocate Service.

  3. Accounts Management will expedite the resolution of all disaster claims.

21.5.3.2  (07-18-2007)
What Are Claims for Credit, Refund, and Abatement?

  1. A claim is a request for refund or a request for an adjustment of tax paid or credit not previously reported or allowed. This includes protective claims and requests for abatement of interest.

  2. Claims do not include:

    • Requests for adjustments that increase the balance on an account, such as tax increases or credit decreases. See IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for additional information.

    • Requests to correct math errors. Refer to IRM 21.5.4.4.3, Processing Responses to Math Error Notices, for information on resolving math error replies.

  3. Form 8379, Injured Spouse Allocation, is not a separate claim, but instead is the avenue used by the non-debtor spouse to provide additional information regarding his or her share of the overpayment shown on a jointly filed original tax return, Form 1040, or amended return, Form 1040X, that claims a credit or refund.

21.5.3.3  (10-01-2007)
General Claims Research

  1. There is no independent section on research. Research steps are provided in the specific processing procedures. Also, refer to IRM 21.5.3.4, General Claims Procedures, for additional research information.

  2. During a taxpayer contact, when:

    • it appears there may be a hardship situation, or

    • the taxpayer asks to be referred to the Taxpayer Advocate Service (TAS), or

    • the contact meets TAS criteria,

      Refer the case to the Local Taxpayer Advocate (see IRM Part 13, Taxpayer Advocate Service) using Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or Form e—911.

      Exception:

      If you are able to resolve and close the TAS issue on the same day as the taxpayer contact, do notrefer the inquiry to TAS. Same day is defined as taking the steps within 24 hours to resolve the taxpayer's issue. Do not refer these cases unless the taxpayer asks to be transferred to TAS. For additional information, refer to IRM 13.1.7.2.2, Same Day Resolution by Operations

      , and IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines.

21.5.3.4  (10-01-2007)
General Claims Procedures

  1. This section discusses procedures. Always begin by following the procedures for disclosure in IRM 21.1.3, Operational Guidelines Overview.

  2. The general sequence you will follow is:

    1. Apply rules for disclosure

    2. Determine if special handling or referral to another function is required. Information regarding referrals to other areas can be located in the appropriate issue specific IRMs.

    3. Determine if the claim is complete

    4. Determine if the claim is processable

    5. Determine if the claim is allowable

  3. When a claim is submitted by a taxpayer, determine if it is complete and processable. All of the following requirements must be met before a claim or amended return is considered processable:

    1. Filed on a permitted form or in an informal written inquiry and includes everything necessary to input a correct adjustment.

    2. Contains sufficient required information to permit the mathematical verification of the amount shown on the claim.

    3. Contains the name, address, and Taxpayer Identification Number (TIN) of the taxpayer and is signed by the taxpayer (if a joint return, both taxpayers) or authorized representative under penalties of perjury (also known as the jurat).


    Reminder:

    Do not attempt to secure the return or request additional information from the taxpayer if enough information is available with the claimor with the various IDRS command codes.

  4. Once the claim is determined to be processable, determine if:

    1. Statute date is still open.

      Exception:

      Taxpayers may file claims for abatement/refund after the normal RSED. In some instances, taxpayers may be entitled to a refund. Refer to IRM 25.6.6.4.7, Offsetting the Amount of a Refund With a Time-barred Adjustment, for examples and procedures.

    2. There are any freezes on the tax account.

      Note:

      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Examination involvement is evident, such as Transaction Codes 420/424 ("L" Freeze), etc.

    4. Taxpayer claims full or partial disallowance.

    5. It is a disaster claim. (Accounts Management will expedite resolution of all claims marked as disaster.)

    6. It is a protective claim.

    7. It is a Competent Authority Claim.

    8. Bankruptcy is involved.

    9. A Tax Treaty is involved.

    10. The return was prepared under IRC § 6020 (b).


  5. Do not input for Distributive Input System (DIS) processing, an amended return received with a first read case. Work these cases, except Injured Spouse cases, without creating a duplicate filing condition.

  6. Refer to Exhibit 21.5.3-1., Claim Processing, and Exhibit 21.5.3-2, Examination Criteria — CAT-A.

  7. Route Third-Party Claims to the appropriate insolvency function. The Third-Party Refund Claim elements are:

    1. The taxpayer alleges payment of another's taxes because the Service improperly maintained a lien against the third party's property.

    2. The taxpayer alleges the taxes were paid under protest, or under compulsion of law, or with notice that the third party intends to sue to test the validity of the collection.

    3. Any reference to Williams or Williams vs. United States.

  8. Exempt Organization (EO) claims resulting in a refund must be routed to the Ogden Campus Examination function for Audit Information Management System (AIMS) input. See IRM 21.7.7, Exempt Organizations and Tax Exempt Bonds, for instructions.

  9. When a return was prepared under IRC § 6020 (b), work the case if it involves a BMF account. If the case involves an IMF account, route the claim to Examination or Compliance Services Collection Operations (CSCO), whichever is appropriate.

  10. A Form 8379, Injured Spouse Allocation, is filed by the non-debtor spouse to claim his or her portion of a tax refund. The refund was (or is expected to be) applied to offset a past-due obligation of the other spouse, such as a premarital Federal tax debt, non-tax child support, Federal agency or State tax debt. Refer to IRM 21.4.6.5.3, Injured Spouse Inquiries, for complete information concerning Injured Spouse procedures.

  11. Suspend numbered returns while awaiting the taxpayer's reply to a request for additional information when the return is not complete or processable. If the information was previously requested, and the taxpayer did not reply, DO NOT request the information again.

    Example:

    Missing information can include forms, schedules, signatures, etc.

  12. Master File (MF) uses the amended claims date field (AMD-CLMS-DT) to apply the OBRA 1993 45-Day Rule. See IRM 21.5.1.4.2.4, Received Date — Determination, to determine the received date of an amended return or claim.

  13. Input the Amended Claims Date on the ADJ54 screen if working the claim within 45 days of the received date of the claim or amended return. See IRM 20.2.4.7.2.4, 45-Day Rule and Master File (Amended Returns and Claims), for additional information on the amended claims date.

  14. When an overpayment results from a claim or amended return and the refund is issued within 45 days of the received date of the processable claim or amended return, no interest is allowed from the received date of the claim or amended return to the refund schedule date. Credit interest is allowed from the credit availability date to the received date of the processable claim or amended return.

    Example:

    A claim for a refund of timely filed prepaid credits for a 200012 Form 1040 is received on August 14, 2001. The refund is issued on September 20, 2001, within the 45 days. Credit interest is allowed from April 15, 2001, the return due date, to August 14, 2001, the claim received date.

  15. When an overpayment results from a claim or amended return and the refund is not issued within 45 days of the received date, credit interest is allowed from the availability date to the refund schedule date (less a 9 or13 day back off period). Refer to IRM 20.2.4.7.2.4, 45-Day Rule and Master File (Amended Returns and Claims), for additional information.

    Example:

    A claim for a refund of timely filed prepaid credits for a 200012 Form 1040 is received on August 14, 2001. The refund is issued on October 20, 2001, after the 45 days. Credit interest is allowed from April 15, 2001, the return due date, to October 20, 2001, the refund schedule date (less a 9 or 13 day back off period).


  16. Guidance in figuring the 45 day interest free period can be found in Exhibit 21.5.9–3, NOL 45– DAY INTEREST FREE CHART IMF, and Exhibit 21.5.9–4, NOL 45- DAY INTEREST FREE CHART BMF.

21.5.3.4.1  (10-01-2007)
Tax Increase or Credit Decrease Processing

  1. Forward claims or amended returns showing a tax increase or credit decrease to the Statute function if it is within 90 days of the ASED expiration date. For additional information, see IRM 25.6.1.5, Basic Guide for Processing Cases With Statute of Limitation Issues.

  2. If more than 90 days remain on the ASED, input tax increases or credit decreases upon receipt of an amended return or written inquiry requesting a tax increase or credit decrease even without all required elements (forms, schedules, signature, etc.). Input net zero changes (TC 290 for .00) even without all required elements.

  3. Rev. Rul. 2005-4, applicable to additional liability on amended returns received before December 21, 2005, provides guidance on the application of IRC § 6404 (g) regarding the suspension of interest with respect to all of these elements:

    • An increased tax liability

    • Reported on an individual amended return or written inquiry

    • Requesting a tax increase or credit decrease


    See (4) below to determine if IRC § 6404 (g) applies before inputting the adjustment for TY 2003 and prior.

  4. IRC § 6404 (g) does not apply if:

    • The net result is not an assessment; OR

    • The original return was not timely filed, including extensions; OR

    • The module contains an unreversed TC 320 or TC 240 with reference code 686; OR

    • The adjustment pertains to an amended return for which the received date of the amended return/written inquiry requesting the tax increase or credit decrease is within 18 months (or 36 months, for amended returns/written inquiries received after November 25, 2007) of the date the original return was filed


    Follow normal procedures if any of the conditions above are present. If none of the conditions are present, follow procedures in IRM 20.2.7.6.2, 18–Month Period (Notification Period).

  5. For claims or amended returns received on or after December 21, 2005, an increased tax liability would receive interest suspension if the liability posted 18 months after the received date of the claim or amended return. See IRM 20.2.7.6.2, 18–Month Period (Notification Period), for more information.

  6. Call or write the taxpayer requesting any missing information using the appropriate letter, such as the Letter 0178C or the Letter 0324C.

  7. When the taxpayer responds, associate the information with the adjustment document.

21.5.3.4.1.1  (04-17-2006)
Tax Increase and Credit Increase Processing

  1. If a tax increase and credit increase are present, and the supporting documentation to allow the credit increase is missing:

    1. Correspond with the taxpayer for the missing information.

    2. Suspend the case pending a response from the taxpayer. See IRM 21.3.3.5.1, Clearance of Suspense Files, for details on suspense periods.

    3. If the statute imminent, follow procedures in IRM 25.6.1.5, Basic Guide for Processing Cases With Statute of Limitation Issues.

  2. If no response from taxpayer, input the tax increase.

21.5.3.4.2  (10-01-2007)
Tax Decrease or Credit Increase Processing

  1. Reject all incomplete (unprocessable) claims or amended returns requesting tax decreases or credit increases. See the exception for certain Forms 941C below.

    Note:

    See IRM 21.5.3.4.3, Tax Decrease and Statute Consideration, for tax decreases or credit increases on statute year claims.


  2. Unnumbered claims or amended returns can be returned to the taxpayer with the request for missing information. Do not return numbered claims or amended returns. See additional information regarding Form 941C below.

    Note:

    If using a copy of a numbered return to respond to a taxpayer inquiry, or sending a copy back for any reason, make sure the Document Locator Number (DLN) is not visible.


  3. When rejecting a claim or amended return:

    • Use the appropriate "C" letter or Form 8009, Request for Missing Information, to request the missing forms, schedules, signatures, or other information. See the table below for additional information regarding missing signatures.

    • Request all information necessary to complete the claim.

    • Circle out the received date on the claim prior to returning to the taxpayer.

    • Input a TC 971, AC 270, if the claim is being returned to the taxpayer. Input the current date for the transaction date (TRANS-DT). It is not necessary to input TC 290 .00 on an IMF account. Input of the TC 971, AC 270, will release the "-A" freeze on an IMF account. BMF accounts still require the input of a TC 290 to release the "-A" freeze.

      Note:

      If the original return has not posted, do not return the claim to the taxpayer. Follow the procedures as outlined in IRM 21.6.7.4.2, Amended Return — No Original — CP 29 (Amended Return Posts to an Account With No Original Return Present).

    • If not returning the claim to the taxpayer, a TC 290 .00 must be input on an IMF or BMF account to release the "-A" freeze.


  4. Form 941C, Supporting Statement to Correct Information, should not be rejected or returned to the taxpayer in some instances. Refer to IRM 21.7.2.4.18.6.4.6, Form 941C Attached but Adjustment Not Taken on Form 941, for additional information on incomplete Forms 941C.

  5. Specific information for missing signatures is shown in the table below:

    If And Then
    The signature is missing from a tax return You are in telephonic communication with the taxpayer or the taxpayer's authorized representative A faxed signature is acceptable.
    Offer the taxpayer the option of providing a faxed jurat.
    The taxpayer is willing to provide a faxed signature   1. Validate that you are speaking to the taxpayer or the taxpayer's authorized representative. Follow the normal disclosure procedures as discussed in IRM 21.1.3.2, General Disclosure Guidelines, and in IRM 21.1.3.3, Third Party (POA/TIA/F706) Authentication.
    2. Specifically advise the taxpayer "the faxed signature will be treated as the taxpayer's signature, and will become a permanent part of the tax return."
    3. Fax a print of the IDRS Letter 0012C, selective paragraph 8 (jurat) to the number provided by the taxpayer.
    Note on the print above paragraph 8, the form number, tax period, taxpayer's name from the return or claim, and the TIN.
    Refer to IRM 11.3.1.10, Facsimile Transmission of Tax Information.
    4. Give the taxpayer your fax number.
    The taxpayer signs and returns the jurat   Attach/associate the faxed jurat statement to the return.



21.5.3.4.3  (10-01-2007)
Tax Decrease and Statute Consideration

  1. If additional information is necessary to process a tax decrease/no tax change claim or amended return received within 180 days of the Refund Statute Expiration Date (RSED):

    1. Call or correspond with the taxpayer and enclose a blank copy of the missing form or schedule.

    2. Suspend the case for 40 days.

  2. If the taxpayer submits the information after the RSED but within 45 days of the IRS request, then allow the claim, refer to IRM 25.6.6.4, Claims for Credit or Refund - Processing Directions. Refer to IRM 25.6.6.4.1, Functions Processing Returns Reflecting Decrease in Tax, for claims or amended returns received after the RSED has expired. Refer to IRM 21.4.6.5.3, Injured Spouse Inquiries, for information concerning Injured Spouse Claim procedures.

  3. If there is no reply or the request for additional information is not received by the requested response date and the RSED has expired, disallow the claim.

    1. Send certified Letter 105C, include appeal rights.

    2. Input TC 290 for .00, blocking series 98 or 99, as appropriate.

      Note:

      Use blocking series 99 with TRPRT or IMFOLR/BMFOLR print attached if the original return was filed electronically. Do not use blocking series 98. Refer to IRM 21.4.6.5.16, Form 8379 Disallowance, for disallowance of Injured Spouse Claims.

21.5.3.4.4  (10-01-2007)
Signature Requirements for Claims

  1. The taxpayer must sign the claim or amended return requesting an adjustment; or include a valid Power of Attorney (POA) pursuant to Treas. Reg. § 1.6012–1(a)(5). Both spouses must sign if the adjustment relates to a joint return. See IRM 21.5.3.4.4.1, Special Handling of Signature Requests, for exceptions. Refer to the table in IRM 21.5.3.4.2, Tax Decrease or Credit Increase Processing, for acceptance of faxed signatures.

  2. Signature requirements for penalty abatements are in IRM 20.1, Penalty Handbook.

  3. Attempt to obtain the signature when an amended return or inquiry requesting a tax increase or a net zero change is received without one. These are not treated as claims. Refer to IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing.

  4. Refer to IRM 21.4.6.5.3, Injured Spouse Inquiries, for signature requirements on Form 8379, Injured Spouse Allocation.

21.5.3.4.4.1  (10-01-2002)
Special Handling of Signature Requests

  1. The following table illustrates procedures to follow when a signature is missing due to extenuating circumstances:

    If Then
    One spouse is a Prisoner of War (POW) or Missing in Action (MIA) One spouse can sign if a statement attesting to those facts is attached.
    One spouse is deceased 1. Surviving spouse may sign and indicate the date of death.
    2. The court appointed representative signing the return must attach a court certificate showing they represent the deceased and have the right to sign.
    3. A POA may sign for a deceased taxpayer if they have a court certificate from the municipal government or Register of Wills attesting that the POA may continue to represent taxpayer after death.
    Taxpayer is divorced or separated and filing a claim or amended return requesting a tax decrease for their portion of a refund on a previously filed joint return Only the spouse who owns or has interest in the refund must sign. Refer to IRM 21.6.1.4.8, Allocating Jointly Filed Cases Procedures.
    A claim or amended return is filed to request a refund or credit of tax other than income tax is filed Only the spouse who owns or has an interest in the refund must sign, unless credit is used as a credit against income tax.

    Note:

    This includes claims for overpayments of Excise Tax, Employment Tax, etc.
    A dependent child cannot sign The parent or guardian may sign as "parent or guardian of minor child."
    A corporate claim is filed Any of these officers may sign the claim:
    – President
    – Vice President
    – Treasurer
    – Assistant Treasurer
    – Chief Accounting Officer
    – Other corporate officer with authority to sign.

    Note:

    The signature on the claim is evidence that the individual is authorized to sign.
    Taxpayer files a partnership claim Any one partner may sign
    Taxpayer files a sole-proprietor claim The owner may sign
    An exempt organization files a claim Any of these officers may sign:
    – Executive Director
    – Director - President
    – Vice President
    – Treasurer
    – Assistant Treasurer
    – Chief Accounting Officer
    – Any other officer with authority to sign.

    Note:

    The signature on the claim is evidence that the individual is authorized to sign.

21.5.3.4.5  (04-19-2005)
Math and Master File Verification of Claims and Amended Returns

  1. Check claims and amended returns against Master File by checking Column A with TXMOD or IMFOL/BMFOL. Be sure to consider all adjustments made on the account. Work the duplicate or amended return without requesting the original return, if possible.

  2. Refer to IRM 21.5.1.4.12, ≡ ≡ ≡ ≡ ≡ ≡ ≡ , to determine if math verification is required. Math verification is:

    1. Verifying the math on the entire Form 1040X, Amended U.S. Individual Income Tax Return, including any forms, schedules, and worksheets related to the change.

    2. Verifying Column B and Column C entries using the forms attached to the claim, schedules, worksheets, and taxpayer remarks or IDRS research.

    3. Verifying the tax computation in Column C.

    4. Checking all additional taxes to determine the correct increase or decrease in tax.

  3. Verify all income based items (e.g., earned income tax credit, additional child tax credit, taxable social security benefits, Schedule A deductions, etc.) on claims involving an income change. Recalculate the items when the income changes, even if the taxpayer does not address them. Advise the taxpayer of any resulting change. This is not Master File check or math verification. This must be done even if the tax or credit adjustment is less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  4. Request technical assistance from the Examination Classifiers if a claim cites reliance on a court case, the Internal Revenue Code, Internal Revenue Regulation, Revenue Ruling, Revenue Procedure, or other legal issue. See IRM 21.5.3.4.7, Processing Claims and Amended Returns With Examination Involvement, and IRM 21.5.10, Examination Issues, for additional information.

  5. If discrepancies exist between taxpayer’s reported liabilities on overpaid/amended Forms 8697,Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, and the related accounts, the case is automatically eligible for Examination. Route your recontrolled case to Examination using local procedures. Close your control base on IDRS.

21.5.3.4.6  (07-18-2007)
No Consideration and Disallowance of Claims and Amended Returns

  1. Claims and amended returns that are processable must be reviewed to determine if the taxpayer's request is allowable. Unallowable claims and amended returns are disallowed, partially disallowed, or not considered, based upon the facts and circumstances of each case.

  2. When reviewing the claim or amended return:

    If Then
    Issue being considered is not allowable based on law or regulation 1. Disallow the claim.
    2. "How to" information is located in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures.
    Claim or amended return is not filed timely

    Note:

    Specific statute information can be found in IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues

    .     		1. Disallow the claim.
    2. "How to" information is located in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures.
    Amended return is filed to decrease the balance due (i.e., does not result in a refund) and meets CAT-A criteria

    Note:

    See the information on requests for abatement below this table.

    		 1. Do not forward to CAT-A.
    2. Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures.
    3. Include paragraph "K" of the Letter 916C.
    Amended return is filed for EITC to decrease the balance due See IRM 21.6.3.4.2.7.19, EITC Increases and Claims for Abatement.
    Examination Classification notifies the function to disallow an issue in full or in part on cases referred as CAT-A or for technical advice. 1. Disallow the claim.
    2. "How to" information is located in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures.
    Examination Classification notifies the function to not consider or reject a claim for additional information or documentation Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures. Also, see IRM 21.5.3.4.7.2, Examination " Disallows," "Accepts," or "Selects" the Claim.
    Taxpayer requests an immediate disallowance of a claim 1. Disallow the claim.
    2. Include a statement indicating the claim was disallowed per their request.
    3. "How to" information is located in IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures.
    Taxpayer did not respond to a request for missing information Treat claim as a no consideration and follow procedures in IRM 21.5.3.4.6.3, No Consideration Procedures.

    Note:

    If the statute of limitations is imminent or expired, refer to IRM 21.5.3.4.3, Tax Decrease and Statute Consideration.


    Caution:

    Only disallow claims after complete research and all contacts have been made for any missing information.

  3. A request for abatement is a request for reduction of tax, penalty, and interest that has not been paid. This includes penalty adjustment requests. These requests should not be denied consideration solely for nonpayment of tax. Process the claims using normal adjustment procedures. If Examination criteria apply, follow the no consideration procedures in IRM 21.5.3.4.6.3 .

21.5.3.4.6.1  (10-01-2007)
Disallowance and Partial Disallowance Procedures

  1. Send the taxpayer a disallowance letter for fully disallowed or partially disallowed claims:

    • Letter 105C is used for fully disallowed claims.

    • Letter 106C is used for partially disallowed claims.

    • Letters must be sent certified or registered mail.

    • Letters must contain the specific reason for the claim disallowance. An IRC section, if provided by Examination, should be cited.

      Note:

      This explanation is required under IRC § 6402 (k), formerly IRC § 6402 (j), which states, "In the case of a disallowance of a claim for refund, the secretary shall provide the taxpayer with an explanation for such disallowance."

    • Letters must include appeal rights and the right to file suit.

  2. Actions for inputting the adjustment on fully disallowed claims:

    • Input TC 290 for .00.

    • Use blocking series 98 if the original return is not with the claim.

    • Use blocking series 99 if the original return is with the claim.

      Note:

      If the original return was filed electronically, use blocking series 99 and attach an IMFOLR/BMFOLR print. Do not use blocking series 98.

    • File a copy of the disallowance letter with the original return. Refer to IRM 21.5.1.5.3, CIS Source Documentation, for information on attaching a copy of the disallowance letter to a CIS case.

      Reminder:

      Injured Spouse disallowance procedures are located in IRM 21.4.6.5.16, Form 8379 Disallowance.

  3. Actions for inputting the adjustment on partially disallowed claims:

    • Input TC 29X for appropriate tax change.

    • Use blocking series 00 if the original return is with the claim.

    • Use blocking series 18 if the original return is not with the claim.

      Note:

      If the original return was filed electronically, use blocking series 00 and attach an IMFOLR/BMFOLR print. Do not use blocking series 18.

    • File a copy of the disallowance letter with the original return. Refer to IRM 21.5.1.5.3, CIS Source Documentation, for information on attaching a copy of the disallowance letter to a CIS case.

      Reminder:

      Injured Spouse disallowance procedures are located in IRM 21.4.6.5.16,Form 8379 Disallowance

21.5.3.4.6.1.1  (07-18-2007)
Disallowance Procedures When the Original Return Has Not Posted

  1. The following procedures apply when it is necessary to disallow a claim prior to the posting of the taxpayer's original return:

    If And Then
    Original return has not posted Normal processing time has elapsed Request a signed copy from taxpayer.
    Return does not post You cannot secure a copy from taxpayer IMF - Refer to IRM 21.6.7.4.2, Amended Return -- No Original -- CP 29
    BMF - IRM 21.7.9, BMF Duplicate Filing Conditions, for CP 190 procedures.
    Signed copy is received No TC 150 posted Verify the entity information and process the copy as an original return.
    Original return has not posted Normal processing time has not elapsed, 1. Input TC 930 to file the claim or amended return and the disallowance letter. Refer to IRM 21.5.1.4.4.1, TC 930 Push Codes, for additional information.

    2. When the return posts, the original return and the disallowed claim or amended return and letters are returned to the originator for input of the TC 290 for .00.
    Claim is not related to a specific tax return Claimant is not required to file an income tax return 1. Input TC 290 for .00.

    2. Use Blocking Series (BS) 44 (IMF is MFT 30, BMF is MFT 02) to file these claims. See IRM 21.7.8.4.5, Form 8849, Claim for Refund of Excise Taxes, for Form 8849 procedures.

21.5.3.4.6.2  (07-18-2007)
Appeals and Responses to Letters 105C/106C

  1. A response to Letter 105C and Letter 106C is to be treated as a new case using the guidelines in this section.

  2. If the taxpayer is confused and asking questions, attempt to resolve before continuing.

    If And Then
    Taxpayer resubmits the same claim or resubmits a claim without new or additional information Does not request an appeal Close the case as a "no consideration."

    Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures.
    Taxpayer sends additional information Determination can be made to allow the claim Follow normal adjustment procedures.
    Taxpayer sends additional information Determination cannot be made to allow the claim Do not send another disallowance letter.

    Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures
    Taxpayer resubmits the same claim or resubmits a claim without new or additional information Submits a statement requesting an appeal 1. Close the case.
    2. Transfer (with original claim, return, transcript and statement) to appropriate Appeals office.
    3. Managerial review is required before cases are forwarded to Appeals.
    4. Inform taxpayer when case is sent to an Appeals office.

  3. See IRM 20.1.1.4, Methods of Appealing Penalties, for penalty appeal procedures.

21.5.3.4.6.3  (07-18-2007)
No Consideration Procedures

  1. Send the taxpayer a no consideration letter. If no reply is received to a request for missing information, treat the case as a no consideration and issue a Letter 916C

    • Letter 916C is used for no consideration or rejected claims.

    • Letter must advise the taxpayer why the claim is not being considered.


  2. Input a TC 290 for .00 with the appropriate blocking series. Do not use blocking series 98 or 99.

    Note:

    Do not use a refile blocking series if the original return was filed electronically.

21.5.3.4.7  (07-18-2007)
Processing Claims and Amended Returns With Examination Involvement

  1. Review all claims and amended returns for Examination involvement, such as TC 420 or an open "L" freeze -- see (5) below. Also, see Exhibit 21.5.3-2, Examination Criteria (CAT-A), and IRM 3.15.129.1.11, Examination Criteria, to review the claim for CAT-A criteria. Refer all cases with CAT-A criteria to Examination Classification.

  2. If the claim or amended return contains CAT-A criteria and a TC 420 is not present, input all tax increases and credit decreases. Input TC 470 to hold balance due notices. Use the appropriate Blocking Series and Hold Code. Refer to Examination.

  3. Refer technical questions or assistance requests to Examination when an issue is questionable, but does not meet CAT-A criteria. Refer to IRM 21.5.3.4.7.2.1, Examination Technical Assistance Request, for additional information on requesting technical assistance.

  4. Accounts Management will retain an open control in background (B) status on all cases referred to Examination and update the activity code to "CAT-A" to identify the location of the claim and status. If the case has been sent and five (5) work days have passed:

    1. Contact Examination to check the status of the case.

    2. Request the case be returned and documented appropriately (allowed or disallowed).

    3. If Examination does not return the case, treat it as a selected claim. Advise Examination that the case is being recontrolled to them. Input TC 971, Action Code 013. Input the received date of the amended return for the transaction date.

    4. When the case is returned from Examination, either allow or disallow and send the appropriate letter.

      Note:

      If the case is being worked using the Correspondence Imaging System (CIS) it is automatically recontrolled to Examination and puts the CIS case in suspense for up to 180 days.

  5. If the case has been selected for audit, (this includes Form 8862,Information to Claim Earned Income Credit After Disallowance) input TC 971, Action Code 013. Input the received date of the amended return for the transaction date.

    Note:

    If the case was selected for audit through Command Code (CC) DDBCK, input all tax increases and credit decreases prior to referring to Examination. Input TC 470 to hold balance dues notices. Use the appropriate blocking series and hold codes. Route to Examination Classification on Form 5101, Examination Referral Slip. Indicate on the Form 5101 that the case was selected through CC DDBCK and an AIMS database has been opened. See IRM 21.6.3.4.2.7.18, EITC and Command Code DDBCK for additional research about the command code. If this case is being handled using the Correspondence Imaging System (CIS), refer to IRM 21.5.1.5.7.1, Examination Selected Inventory and Command Code DDBCK, for additional information.

  6. Research IDRS using CC AMDIS, TXMOD, IMFOLT, and BMFOLT, to determine whether a case is established on AIMS. If the case is under audit, an "L" freeze will be present. See Exhibit 21.5.3-1, Claims Processing, for processing instructions. Follow these procedures even if an open IDRS control base to a CI-FDC campus is present (Do not route to CI).

    Note:

    Refer to IRM 2.8, Audit Information Management Systems (AIMS), for IDRS information on AIMS research.

    Exception:

    Refer to IRM 21.4.6.5.9.9, Exam & CI Cases, to work injured spouse claims and IRM 21.7.5, Estate and Gift Tax Returns, for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, claim procedures.

  7. Refer to IRM 21.7.7, Exempt Organizations and Tax Exempt Bonds, for procedures.

21.5.3.4.7.1  (03-17-2003)
Claims Sent to Examination Campus Classification

  1. Sort all claims with examination criteria received by the Document Perfection Operation (Code & Edit) or the Accounts Management (AM) adjustment function into one of two categories, unless referred to a DO for association with an open audit:

    1. The criteria for categorizing such returns are specified in Section 144 of LEM IV.

    2. The examination criteria are divided into two groups, Category A and Category B (BMF only).

    3. Notify Examination when an "—E" freeze is on the module before inputting any adjustment.

  2. CAT-A criteria denotes high examination potential. Route CAT-A cases to Examination prior to resolution. Before routing the claim to Examination:

    1. Ensure pages one and two of the Form 1040X, Amended U.S. Individual Income Tax Return or Form 1120X, Amended U.S. Corporation Income Tax Return, are complete and contain the required signatures, and

    2. Attach all needed forms and schedules relating to the claim, and

    3. Attach IMFOL or BMFOL transcript(s) for the year(s) involved, if available.


    Note:

    On site classification is completed within five (5) days at Document Perfection Operation or at Accounts Management.

  3. Do not send cases to Examination that do not meet CAT-A classification criteria. See Exhibit 21.5.3-2, Examination Criteria (CAT-A) for the referral criteria. Category A criteria applies to net refunds only (except IRC § 3121 (v) cases).

  4. The dollar amount in the criteria cited refers to the amount of the tax decrease or credit increase.

21.5.3.4.7.2  (02-26-2007)
Examination "Disallows," "Accepts," or "Selects" the Claim

  1. If Examination disallows the claim, send a disallowance letter. Use the explanation and citation of the law provided by the Examination Classifier.

  2. When Examination accepts a claim in full, but the amount of the claim is not computed or