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Part 21. Customer Account Services

Chapter 6. Individual Tax Returns

Section 2. Adjusting TIN-Related Problems

21.6.2  Adjusting TIN-Related Problems

21.6.2.1  (10-01-2006)
Adjusting TIN-Related Problems Overview

  1. This section provides information on the following problems relating to taxpayer identification numbers (TIN):

    • Resequencing Accounts

    • Multiple Individuals Using the Same TIN

    • Mixed Entity

    • Scrambled Social Security Numbers (SSN)

    • No Merge (NOMRG)

    • Reversed Validity (REVAL) Transcripts

21.6.2.2  (10-01-2007)
What Are TIN-Related Problems?

  1. TIN-related problems involve the TIN used on a taxpayer's account. Actions may be required on the Entity and/or tax module to correct TIN-related problems.

21.6.2.3  (10-01-2005)
TIN-Related Problems Research

  1. In order to correct TIN-related problems, you must be familiar with the following research elements:

    • Entity module

    • Transaction codes

    • Retention register - Request a retention register transcript only if the account can not be reactivated by using command code IMFOL with definer "B."

    • Command codes, including NAMES, INOLE, MFTRA, IMFOL, RTVUE, FFINQ, REINF, and various definers

    • NUMIDENT

  2. The word "VOID" will appear on recently issued social security cards that have been photocopied. The appearance of the word "VOID" must not be used to determine the validity of the photocopied social security card.

21.6.2.4  (10-01-2005)
TIN-Related Problems Procedures

  1. To correct TIN-related problems, apply the following TIN-related procedures.

21.6.2.4.1  (10-01-2005)
Resequencing Accounts

  1. When an account moves from one TIN to another or from one segment of a TIN (valid or invalid) to the other segment, it is called resequencing or merging.

  2. The following entity transaction codes (TC) apply to resequencing accounts:

    TC Input to change
    011 TIN on a Master File (MF) account or to consolidate two accounts. This transaction is systemically compared against the DM-1 data file.
    013 Name on a MF account. This transaction is systemically compared against the DM-1 data file.
    040 TIN or name on an account which is on the valid segment of MF. It is not systemically compared against the DM-1 data file.
    041 TIN or name on an account which is on the invalid segment. It is not systemically compared against the DM-1 data file.

    Note:

    TC 040 is input only on the valid segment. Use this code when it is necessary to bypass DM-1 data tape validation. TC 041 is input only on the invalid segment. When resequencing the invalid segment of a TIN this code must be used; if not, the computer may erroneously move both the valid and invalid segment of the TIN.

21.6.2.4.1.1  (10-01-2005)
Resequencing Methods Procedures

  1. Resequencing on the Individual Master File (IMF) is often involved with the validity of a TIN.

    1. Each person may have only one TIN.

    2. Once a number is assigned, it cannot be assigned to someone else. A SSN is never "recycled" or reused.

    3. A transposition error in a TIN or name change, without notification to SSA, may cause a TIN mismatch with IRS records. This is referred to as an "invalid" condition.

    4. The computer cross references all TINs to the SSA data and identifies these invalid conditions.

  2. Resequencing accounts is accomplished by one of two methods:

    • Automatic resequencing

    • Input of an entity transaction

21.6.2.4.1.2  (10-01-2006)
Determining Validity

  1. If the primary TIN and name control (NC) do not match (invalid), they are identified by an asterisk after the TIN. On joint returns, the spouse's TIN is preceded by a "1" if the TIN is invalid.

  2. On IMF Retention Register Microfilm transcripts, the computer assigns a validity digit of "0" when TIN and NC match (valid). A validity digit of "1" is assigned when TIN and NC do not match.

  3. When the DM-1 data tape file is received, it is systemically compared to the invalid segment of MF.

    1. Any change in an account's validity causes a resequence under TC 001 and generates a DLN of 00200–000–00006–9.

    2. A residual record is maintained on the invalid segment after an account is resequenced.

    3. The TIN slot is reserved until released by a returning memo record (TC 026) or the account fails to merge.

  4. Resequencing created by entity transactions is accomplished by a name change (TC 013) or a TIN change (TC 011) to MF.

    Note:

    These accounts are compared to DM-1 data and matched on TIN and NC.

    1. A residual record is maintained on the "from" segment after the account is resequenced.

    2. The TIN slot is reserved until released by a returning memo record (TC 026) or account fails to merge.

  5. Resequenced accounts which fail to merge, return to their original validity slots.

    1. Memo transactions (TC 026), resequencing to release the hold on residual account slots, are directed to the valid segment of MF from which the originating account came without regard to a match with SSA data.

    2. When accounts do not merge, a transcript generates for both accounts involved and the TC 026 transaction does not post.

    Note:

    If the accounts fail to merge when DLN of 00200–000–00006–9 generates, the computer no longer recognizes the invalid segment. Adjustments made to the invalid TIN automatically post to the valid TIN. An Internal Revenue Service Number (IRSN) must be obtained and the valid or invalid TIN is moved to the IRSN. See IRM 21.4.6.5.25.3, UPC 134.

21.6.2.4.1.3  (10-01-2007)
Resequencing Action Required

  1. Action required:

    1. Research IMFOL for the valid and invalid accounts for both TINs (the "to" and "from" TINs) prior to resequencing an account. The resequencing action moves all tax periods present in the account. Specific tax periods cannot be moved independently.

    2. Reinstate all lower level modules using CC IMFOLB. Reinstate any vestigial module that could prevent a successful merge by preparing Form 5248,Transfer Request. Form 3774, Request for Research, or CC ESTABM are two of the options available if microfilm research is necessary. See IRM 21.5.2.4.13, Reinstating Retention Register Accounts and IRM 21.2.2.5.10, Requester Responsibilities.

    3. Use caution when moving accounts. Improper resequencing causes a no merge (NOMRG) condition.

    Note:

    See IRM 3.21.263.7.1.4, Merges Involving ITIN, if applicable.

  2. DO NOT MERGE accounts if:

    • Two taxpayers are involved (e.g., husband and wife, parent and child, sister and brother, etc.).

    • A TC 150 for the same year is posted on both accounts.

    • One or both accounts contain a vestigial record (removal of modules to Retention Register) for the same tax period.

    • Either account contains an unreversed TC 914, 916, or 918.

    • Either account contains a module with an unreversed TC 400 and there is a module for the same tax period in the other account.

    • One account contains a module with an unreversed TC 576 and the other account contains a module for the same tax period which either contains an unreversed TC 570 or is in a debit balance status.

    • Either account contains Mail Filing Requirement (MFR) 08 and Scramble Indicator (SCI) 01, 10, 12, 13, 20 or 23.

    • Both accounts contain a module in TDI Status 03 (indicator other than 08) or TDA Status 22, 24, 26, or 60, and the Primary or Collection Location Codes are not in agreement.

    • Both accounts contain a module for same tax year and the resulting merge would cause more than 52 TCs 766, document code 54, blocking series 400-499 to be posted in the accounts.

    • Both accounts contain a module for the same tax period with an unreversed TC 520 (except closing codes 81 or 85-88).

    • Both accounts contain an unreversed TC 810 for the same tax period.

    • The "from" account contains a civil penalty name line which does not match the name control of the "to" account.

    • The name control of the "from" account does not match the name control of the "to" account.

    • Both accounts contain an unreversed TC 930 or 424 or one account contains an unreversed TC 930 and the other account contains an unreversed TC 424.

    • The "from" account contains a TC 896 or TC 898 within 6 years of the original offset date. See IRM 21.4.6.5.21, Re-sequence Cases.

    • For MFT 55, both modules contain an unreversed TC 608.

    Caution:

    DO NOT merge Individual Retirement Accounts (IRA) accounts.

21.6.2.4.2  (10-01-2007)
Multiple Individuals Using the Same TIN

  1. Cases involving multiple taxpayers using the same Taxpayer Identification Number (TIN) are classified as mixed entity or scrambled SSN cases. Preliminary research must be completed before the case can be accurately identified as a mixed entity or scrambled SSN case. Normally, these conditions are identified while working CP 36, Duplicate/Amended Filing Condition, transcripts.

  2. A mixed entity case is created when two or more taxpayers file a return with the same TIN. This may be due to an inadvertent taxpayer or tax preparer error, a processing error, or identity theft. Mixed entity cases are reclassified as scrambled SSN cases if the common number (CN) owner cannot be identified.

    Note:

    The common number is the Taxpayer Identification Number (TIN) being used by both taxpayers.

  3. A scrambled SSN case is created when the following conditions exist:

    • Returns are filed by two or more taxpayers using the same SSN, and

    • Research and/or taxpayer contact does not clearly indicate which taxpayer owns the CN.

    Note:

    If a different valid TIN is located for either taxpayer, the account must be separated using mixed entity procedures. It is not a scrambled SSN case. See IRM 21.6.2.4.3, Mixed Entity Procedures.

  4. A "true" scrambled SSN case occurs when the Social Security Administration (SSA) assigns the same SSN to more than one taxpayer. This may be validated during preliminary research of NUMIDENT (MFTRA type "U" ). NUMIDENT may reflect SSA assignment of the SSN to multiple individuals.

  5. A "secondary" scrambled SSN case occurs when one or both of the taxpayers is not the primary taxpayer. Scrambled SSN procedures apply to the CN.

    Caution:

    Do not reference the primary spouse's TIN when corresponding with the a secondary taxpayer involved in a secondary scrambled case.

    • Place the scrambled indicator on the entity of the secondary spouse's TIN (the CN) as well as the IRSNs. The scrambled indicator is input on the CN and IRSNs only.

    • Update the joint name lines on a joint account where the CN is being used as a secondary TIN to replace the CN with the assigned IRSN.

    • Input TC 971 AC 17 to cross reference the IRSN to the primary SSN on the joint account.

    • Follow erroneous refund procedures under the joint account if any credits that require a valid SSN were previously allowed an resulted in a refund.

  6. A multiple filer case is created when the same TIN appears as a primary TIN on one account and as a secondary TIN on another account for the same tax period. Examination reviews multiple filer cases and sends those involving two or more taxpayers to the Entity function. Entity corresponds with all taxpayers requesting verification of their TINs. The resolution is coordinated with AM, using mixed entity or scrambled SSN case procedures, if the Entity function does not locate a different valid TIN for all taxpayers. See IRM 3.13.5.10,TIN-Related Actions.

    Note:

    DO NOT scramble ITIN cases.

  7. Route cases with a Z freeze, and/or a P- freeze (P- freeze with IDRS category code PFRZ), to the Fraud Detection Center (FDC). Take no action unless the Z and/or P- freeze is released. If the Z and/or P- freeze is released, follow mixed entity or scrambled SSN case procedures. See IRM 21.6.2.4.3, Mixed Entity Procedures for established mixed entity procedures. See IRM 21.6.2.4.4, Scrambled SSN Case Procedures, for established scrambled SSN procedures.

    Caution:

    Do not follow FDC instructions which deviate from established procedures. Established procedures do not permit FDC determinations of the CN owner.

  8. Refer to the FDC "leads" related to alleged stolen identity accounts, data that may lead to a fraudulent filing of tax returns for the purpose of gaining false or inflated refunds, or potential ERO schemes, etc. Do not refer the case. Continue to work the case. Use Form 4442 to provide the following information:

    1. SSN(s) and tax year(s) involved

    2. Brief description (e.g. alleged stolen identity)

    3. Copy of the source of allegation (e.g. copy of taxpayer correspondence) if available

    4. Copy or CIS print of the paper return (if a subsequent paper return was filed and taxpayer(s) are alleging stolen identity)

21.6.2.4.2.1  (10-01-2007)
Telephone Inquiries

  1. CSRs must prepare a Form 4442 to refer taxpayer inquiries regarding mixed entity and Scrambled SSN cases.

  2. A mixed entity case controlled on IDRS can be identified by control category "MXEN."

  3. An account that has been scrambled can be identified by control category "SSA2" or using CC ENMOD or IMFOLE:

    • CC ENMOD will show a literal "SCSSN-CD>" with indicator 01, 10, 12, 13, or 20

    • CC IMFOLE will show a literal "SCR-SSN"

  4. An account in the process of being scrambled can be identified by control category "SCRM." Cases will be controlled on either TXMOD or ENMOD.

  5. Include any information which would assist in resolving the mixed entity or scrambled SSN case.

    Example:

    If the SSN was used by more than one family member, notate the name and correct SSN for each individual on Form 4442.

  6. If you identify a mixed entity case while staffing the AM toll-free telephone line or are located in a Taxpayer Assistance Center (TAC), prepare Form 4442, Inquiry Referral as follows:

    If there is... And Then refer Form 4442 to...
    An open control   The employee who has a control on the account.
    No open control A CP 36 was generated The campus where the CP 36 was generated.
    No open control A CP 36 was not generated The AM paper function at the campus that processed the original return.

    Exception:

    If the taxpayer has not yet filed a return, and tax-related identity theft is indicated, follow procedures in IRM 21.1.3.24,SSN Misuse and/or Identity Theft and IRM 21.3.4.14.5.1,Identity Theft.

  7. Refer Scrambled SSN Forms 4442 as follows:

    If there is... Then refer Form 4442 to...
    An open control The employee who has a control on the account.
    No open control To the AM paper function at the site that scrambled the account. The site is identified by the first two digits in the second name line of the common number (the number used by both taxpayers). Route Form 4442 to the paper function and notate "Attention Scrambled SSN Coordinator" on the top of the form.

    Caution:

    If a scrambled SSN indicator 01, 10, 12, 13 or 20 is not present on the account, do not prepare and route Form 4442 to the Scrambled SSN Coordinator.

  8. CSRs must not take action on mixed entity or Scrambled SSN accounts. This includes but is not limited to the following:

    1. Do not input an address change on the account(s). Notate both the old and new address on Form 4442.

    2. Do not release overpayment(s) held on the account(s).

    3. Do not attempt to resequence the account(s).

    4. Do not attempt to unscramble the account(s).

    5. Do not input adjustments.

    6. Do not release freeze conditions on the account.

  9. If the taxpayer cannot pass disclosure, do not terminate the call. Do not give out account information on the common number. Complete Form 4442, including all information obtained from the taxpayer.

    Caution:

    Never give out account information on the common number, even if the taxpayer can pass disclosure. The common number contains tax information for multiple taxpayers.

  10. If the taxpayer has not responded to the 239C letter, advise the taxpayer to complete the 239C letter questionnaire and return it with all of the documentation requested. See IRM 21.6.2.4.4.3, Determining if Refund Should be Released, for documentation requested in the 239C letter. Refunds will be held until a complete 239C letter response is received.

    Note:

    Do not release refunds on accounts that have been or are in the process of being scrambled. If the taxpayer is claiming a hardship, which may warrant the issuance of a manual refund, refer the case to TAS for hardship determination per IRM 21.4.4.2,Why Would A Manual Refund Be Needed?

21.6.2.4.2.2  (10-01-2007)
Taxpayer Inquiries Involving Identity Theft

  1. Examine taxpayer inquiries for any indication of identity theft. Examples include, but are not limited to references to a 673C letter, a notice of tax due, a missing refund, or the amount of the refund is different than the amount claimed, etc. and the taxpayer claims s/he did not file more than one return.

  2. Follow procedures in IRM 21.6.2.4.2.3,Preliminary Research.

21.6.2.4.2.3  (10-01-2007)
Preliminary Research

  1. Make every effort to locate the correct TIN for each taxpayer before contacting the taxpayer(s).

  2. Request all returns for the year(s) involved (including returns filed at other sites). Research SCFTR if unable to secure return(s).

  3. Search returns, schedules, and forms for a different TIN.

  4. Research CC IMFOL, RTVUE, NAMES, INOLE, DUPOL, FFINQ and REINF.

  5. Compare the returns for:

    • Name

    • Social Security Number

    • Address

    • Occupation

    • Exemptions

    • Signatures (except for e-filed returns when a signature is unavailable)

    • Similar tax data

    • Forms W-2, etc.

    • Marital status changes

    • Tax preparer

  6. Request MFTRA, type "U" , to obtain NUMIDENT information. If NUMIDENT clearly indicates which taxpayer was assigned the SSN, see example below, follow mixed entity procedures in IRM 21.6.2.4.3, Mixed Entity Procedures. Change the control category to "MXEN." If NUMIDENT shows multiple issuances of the social security card and the names are the same or similar, no determination should be made. Continue research and processing.

    Example:

    Both John Smith and Jane Smythe are using the SSN. NUMIDENT indicates that the SSN was assigned to John Smith only.

    Caution:

    NUMIDENT is for internal use only; never send to the taxpayer.

  7. Search returns for indications of identity theft. If the returns contain the same primary name and address, and the standard documentation supporting identity theft is included with one return, then stop here and follow applicable procedures in IRM 21.6.2.4.3.9,Mixed Entity - Identity Theft Indicated. Change the control category to "MXEN."

  8. Research the SSN (valid and invalid) to determine if there was a mixed entity or scrambled case in prior years, and to locate any possible cross-reference TIN.

    If And Then
    A different TIN is located   Research CC NAMES and INOLE. Verify the TIN belongs to the taxpayer. Follow mixed entity procedures in IRM 21.6.2.4.3, Mixed Entity Procedures. Change the control category to "MXEN" .
    A different valid TIN is not located Identity theft is indicated Follow procedures in IRM 21.6.2.4.3.9, Mixed Entity - Identity Theft Indicated. Change the control category to "MXEN."
    A different valid TIN is not located Identity theft is not indicated Correspond with the taxpayers, using 239C letter. See Exhibit 21.6.2-1, Paragraphs for 239C Letter. Always include the questionnaire. Retain copies of the 239C letters in the case file. See IRM 21.6.2.4.4.3, Determining if Refund Should be Released, for additional information that must be requested in the 239C letter. Suspend case for 40 days, 70 days for overseas taxpayers.

    Caution:

    Do not advise the taxpayer to contact SSA for a "Social Security Administration Social Security Number Verification" printout in the first 239C letters.

    Note:

    All internal research must be completed prior to sending the 239C letters. Internal research consists of steps 1 through 7.

  9. Response(s) or lack of response(s) to the 239C letters will determine whether mixed entity or scrambled SSN case procedures are followed.

    Note:

    Never base ownership of the CN on who has used the SSN the longest.

    If Then
    Neither taxpayer responds Follow scrambled SSN case processing procedures in IRM 21.6.2.4.4, Scrambled SSN Case Procedures. Change control category to "SCRM."
    At least one taxpayer responds and supplies a different valid TIN Research CC NAMES and INOLE. Verify the TIN belongs to the taxpayer. Follow mixed entity procedures in IRM 21.6.2.4.3, Mixed Entity Procedures. Change the control category to "MXEN."
    One taxpayer responds with identity theft documentation Follow procedures in IRM 21.6.2.4.3.9,Mixed Entity - Identity Theft Indicated. Change the control category to "MXEN."
    Both taxpayers respond with identity theft documentation Follow procedures in IRM 21.6.2.4.4,Scrambled SSN Case Procedures. Change control category to "SCRM."
    At least one taxpayer responds and indicates that they bought, borrowed, or stole the SSN Follow mixed entity procedures in IRM 21.6.2.4.3, Mixed Entity Procedures. Change the control category to "MXEN."
    Only one taxpayer responds or both taxpayers respond indicating they were assigned the SSN by SSA Follow scrambled SSN procedures in IRM 21.6.2.4.4, Scrambled SSN Case Procedures. Change control category to "SCRM."
    Taxpayer responds indicating they filed both returns Follow procedures in IRM 21.6.7.4.12, Return for Each Form W-2.

21.6.2.4.2.4  (10-01-2005)
Case History Sheet

  1. Mixed entity and scrambled SSN history sheets must include all information and actions taken to resolve the case. Include the following:

    • Common number (CN)

    • IRS or CP notice received date

    • Tax periods involved

    • Each taxpayer's name, address and IRSN (if applicable)

    • Research requests (e.g., IMFOL, MFTRA), include dates

    • DLN of returns requested, include date requested and date received

    • Other TINs and actions, include dates other actions are taken

    • All taxpayer contact

  2. Forms 13708, 13708A, 13708B, and/or 13708C, Mixed Entity/Scrambled SSN Case History Sheet, are required when working cases involving multiple individuals using the same SSN. All account actions, taxpayer contact and SSA contact must be included on the history sheet.

21.6.2.4.3  (10-01-2005)
Mixed Entity Procedures

  1. A mixed entity case is created when two taxpayers file a return with the same TIN, also known as the common number (CN). Normally, this condition is identified while working CP 36, Duplicate/Amended Filing Conditions, transcripts.

21.6.2.4.3.1  (05-31-2007)
Resolving Mixed Entity Cases

  1. Analyze the case and identify the correct and incorrect taxpayer for the CN as follows:

    1. Taxpayer A correctly used the TIN and remains on the CN.

    2. Taxpayer B incorrectly used the TIN and is input to a valid TIN located through research/taxpayer contact or an Internal Revenue Service Number (IRSN).

      Caution:

      Taxpayer B is moved to an IRSN only when it has been verified that the CN does not belong to Taxpayer B and a valid different number cannot be located.

      Example:

      Taxpayer A, John Smith and Taxpayer B, Jane Smythe are both using the CN. NUMIDENT indicates that the CN was assigned to John Smith. NUMIDENT does not indicate that the CN was ever assigned to Jane Smythe. Research and correspondence with Taxpayer B does not provide a valid TIN for Taxpayer B, Jane Smythe. Taxpayer A, John Smith is the correct CN owner and would remain on the CN. Taxpayer B, Jane Smythe is the incorrect taxpayer and would be moved to an IRSN.

  2. If either account contains an offset (TC 896 or TC 898) to a state or federal agency, take no action before referring to IRM 21.4.6.5.19, Mixed Entity Cases.

  3. Consider possible changes to the Return Processable Date. See IRM 21.5.6.4.13, I- Freeze.

  4. For mixed entity cases involving identity theft, see IRM 21.6.2.4.3.9,Mixed Entity - Identity Theft Indicated.

  5. Route cases with a Z freeze, and/or a P- freeze (P- freeze with IDRS category code PFRZ), to the Fraud Detection Center (FDC). Take no action unless the Z and/or P- freeze is released. If the Z and/or P- freeze is released, follow established mixed entity procedures.

    Caution:

    Do not follow FDC instructions which deviate from established procedures. Established procedures do not permit FDC determinations of the CN owner.

  6. Refer to the FDC "leads" related to alleged stolen identity accounts, data that may lead to a fraudulent filing of tax returns for the purpose of gaining false or inflated refunds, or potential ERO schemes, etc. Do not refer the case. Continue to work the case. Use Form 4442 to provide the following information:

    1. SSN(s) and tax year(s) involved

    2. Brief description (e.g. alleged stolen identity)

    3. Copy of the source of allegation (e.g. copy of taxpayer correspondence), if available

    4. Copy or CIS print of the paper return (if a subsequent paper return was filed and taxpayer(s) are alleging stolen identity)

21.6.2.4.3.2  (10-01-2006)
Valid TIN Located - Taxpayer "A" Posted First

  1. The following procedures must be used when a valid different TIN is found for Taxpayer B and Taxpayer A posted first:

    1. Input TC 290 in blocking series 00 and use Taxpayer A's return as the source document. Notate in remarks "Mixed entity."

      Note:

      If Taxpayer A's return is not present, input TC 290, blocking series 05, and "NSD" to release the "A" freeze.

    2. Input TC 971 with action code 002. Enter Taxpayer B's TIN as a cross reference.

    3. Update the entity on Taxpayer A's account if the original information has changed.

    4. Transfer Taxpayer B's payments to his/her account and establish a current entity if not present.

      Note:

      If TC 000 is the first action input, the credit transfer bypasses the NAP validity check.

    5. Take the appropriate steps to post Taxpayer B's tax information to the correct TIN. See (2) below.

    6. If the taxpayer or the preparer used an incorrect TIN, send a 257C letter advising the taxpayer of the correct TIN to use. If Submission Processing (SP) processed the return using a different TIN, send a 257C letter but do not mention the TIN SP edited on the return during processing.

  2. Consider the following when processing Taxpayer B's tax information to the correct TIN:

    If Then
    There is no TC 150 on Taxpayer B's account for the module involved Reprocess Taxpayer B's return. See IRM 21.5.2.4.23, Reprocessing Returns/Documents.
    There is a TC 150 on Taxpayer B's account for the tax period involved Adjust the account. Follow IRM 21.6.7.4.4, Duplicate or Amended Returns - CP 36 (Duplicate Filing Condition).

21.6.2.4.3.3  (10-01-2007)
Valid TIN Located - Taxpayer "B" Posted First

  1. The following procedures must be used when a valid different TIN is found for Taxpayer B and Taxpayer B posted first:

    1. Adjust the CN account to reflect Taxpayer A's return data. Adjust the ASED, if necessary. Notate in remarks "Mixed entity - Dup becomes original."

      Caution:

      If Taxpayer B requested a direct deposit and the refund did not generate due to the TC 976 then TC 971 AC 001 must be input before adjusting the CN to agree with Taxpayer A's return. TC 971 must post before the adjustment. Use a cycle delay of 2 cycles on the adjustment when inputting the TC 971 and the adjustment at the same time. The TC 971 AC 001 will prevent the refund from being direct deposited into Taxpayer B's account.

      Note:

      If a refund was issued on the CN to Taxpayer B, it must be moved to Taxpayer B's valid TIN. See IRM 21.5.2.4.23.10, Moving Refunds, for moving refund procedures.

    2. Use a hold code to prevent issuing erroneous notices to the taxpayer.

    3. Notify the taxpayer if a balance due results.

    4. Correct the entity module.

    5. Transfer Taxpayer B's payments to his/her correct account.

    6. Take the appropriate steps to post Taxpayer B's tax information to the correct TIN. See (2) below.

    7. Input TC 971 with action code 001. Enter Taxpayer B's TIN as cross-reference.

    8. If the taxpayer or the preparer used an incorrect TIN, send a 257C letter advising the taxpayer of the correct TIN to use. If SP processed the return using a different TIN, then send a 257C letter but do not mention the TIN SP edited on the return during processing.

    9. If Taxpayer A indicates "yes" to the PECF and Taxpayer B did not, then prepare a dummy Form 1040X. Refer to procedures in IRM 21.6.7.4.11, Presidential Election Campaign Fund.

  2. The following should be taken into consideration when processing Taxpayer B's tax information to the correct TIN:

    If Then
    The TC 976/977 return bypassed DIF scoring Forward to Examination for DIF scoring. Use local procedures. DO NOT refer Forms 1040EZ.
    There is no TC 150 on Taxpayer B's account for the tax period involved Reprocess Taxpayer B's return. See IRM 21.5.2.4.23, Reprocessing Returns/Documents.
    There is a TC 150 on Taxpayer B's account for the tax period involved Adjust the account, if necessary. Follow IRM 21.6.7.4.4, Duplicate or Amended Returns - CP 36 (Duplicate Filing Condition).

21.6.2.4.3.4  (10-01-2007)
Valid Different TIN Not Located for Taxpayer "B"

  1. If a different valid TIN is not located for Taxpayer B through research/correspondence, obtain an Internal Revenue Service Number (IRSN) for Taxpayer B and take the following action:

    If Then
    Taxpayer A posted first

    1. Follow procedures in IRM 21.6.2.4.3.2, Valid TIN Located - Taxpayer "A" Posted First. Enter the IRSN where entry of a TIN for Taxpayer B is applicable.

      Exception:

      Do not send the 257C letter. Send a 239C letter advising Taxpayer B to contact SSA and use the IRSN for federal tax purposes until SSA determines the correct SSN. SSA will advise the taxpayer to file Form W-7 to obtain an ITIN if the taxpayer cannot obtain a SSN. See Exhibit 21.6.2-1, Paragraphs for 239C Letter.

    Taxpayer B posted first

    1. Follow procedures in IRM 21.6.2.4.3.3, Valid TIN Located - Taxpayer "B" Posted First. Enter the IRSN where entry of a TIN for Taxpayer B is applicable.

    2. If Taxpayer B received a refund which included items requiring a valid primary TIN, follow erroneous refund procedures. See IRM 21.4.5, Erroneous Refunds.

      Exception:

      Do not send the 257C letter. Send a 239C letter advising Taxpayer B to contact SSA and use the IRSN for federal tax purposes until SSA determines the correct SSN. SSA will advise the taxpayer to file Form W-7 to obtain an ITIN if the taxpayer cannot obtain a SSN. See Exhibit 21.6.2-1, Paragraphs for 239C Letter.

21.6.2.4.3.5  (10-01-2005)
Invalid SSN - Mixed Entity

  1. When a mixed entity situation occurs on an invalid SSN, take the following actions:

    If Then
    A different valid TIN is located for each taxpayer

    1. Consider the TC 150 to be Taxpayer A and TC 976/977 to be Taxpayer B.

    2. Input a TC 041 to move data on the invalid TIN to Taxpayer A's valid TIN.

    3. Follow procedures in IRM 21.6.2.4.3.2, Valid TIN Located - Taxpayer "A" Posted First.

      Exception:

      Send both taxpayers a 257C letter.
    A different valid TIN is located for only Taxpayer A (the first posted return)

    1. Obtain an IRSN for Taxpayer B.

    2. Input a TC 041 to move data on the invalid TIN to Taxpayer A's valid TIN.

    3. Follow procedures in IRM 21.6.2.4.3.2, Valid TIN Located - Taxpayer "A" Posted First.

      Exception:

      Send a 257C letter to Taxpayer A. Send a 239C letter advising Taxpayer B to contact SSA and use the IRSN for federal tax purposes until SSA determines the correct SSN. SSA will advise the taxpayer to file Form W-7 to obtain an ITIN if they cannot obtain a SSN. See Exhibit 21.6.2-1, Paragraphs for 239C Letter.

    A different valid TIN is located for only Taxpayer B (t