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Part 21. Customer Account Services

Chapter 6. Individual Tax Returns

Section 3. Credits (Cont. 2)

21.6.3  Credits (Cont. 2)

21.6.3.4 
Credits Procedures

21.6.3.4.2 
Refundable Credits

21.6.3.4.2.7 
Earned Income Tax Credit (EITC)

21.6.3.4.2.7.13  (10-01-2004)
EITC Math Errors

  1. A math error notice will be issued if taxpayer fails to:

    1. Include a valid SSN for the primary taxpayer.

    2. Include a valid SSN for the secondary taxpayer.

    3. Include a valid SSN for each EITC qualifying child.

    4. Pay SE tax on SE income (SE tax will be assessed to the extent of allowable EITC; if SE tax is over the allowable EITC amount, it will be assigned an Unallowable code 99).

    5. Correctly compute AGI (modified AGI for TY 96 through TY 2001) (EITC may be reduced or eliminated).

    6. Correctly consider investment income in the EITC computation (EITC may be reduced or eliminated).

    7. Meet the age requirement when there is no qualifying child.

    8. Claim a qualifying child meeting the age criteria for EITC.

    9. See IRM 21.6.3.4, Credits Procedures, paragraph (4) for information regarding an incorrect SSN due to SSA records indicating the TIN belongs to a person that was deceased prior to the tax year.

  2. In addition, a math error notice will be issued if taxpayers claim for EITC was denied as the result of deficiency procedures and taxpayer claims EITC in a subsequent year without attaching a properly completed Form 8862, Information to Claim Earned Income Credit After Disallowance. See IRM 21.6.3.4.2.7.15, EITC Recertification, for procedures.

  3. If Taxpayer Notice Codes (TPNC) 701/702/741/743/745/748 are used, a special math error notice (CP 11A/12A/13A) is issued to the taxpayer. Additional TPNCs may be present on the math error notice. Use CC IMFOLR to determine the TPNC(s). (See Document 6209, ADP and IDRS Information, for the complete TPNC listing and wording.)

21.6.3.4.2.7.13.1  (10-01-2003)
Tracking EITC Correspondence and Telephone Inquiries

  1. EITC compliance activities are charged to a separate appropriation. Use the following procedures to track EITC-related activity.

  2. When you receive any taxpayer contact, claim, amended return, or correspondence related to a current tax year math error notice that does not require an adjustment to the account, check for one of the following Taxpayer Notice Codes (TPNCs):

    • 701

    • 702

    • 741

    • 743

    • 745

    • 748

  3. If one or more of the TPNCs listed above is present, follow normal procedures for responding to the taxpayer AND input:

    If the inquiry originated via correspondence or a Toll Free number : Then input :
      TC Amount SC RC HC Block
    Correspondence 290 .00 0 053 N/A 05
    1040 and 8815 290 .00 0 054 3 05
    4262 Do NOT input TC 290 for tracking.
    ACS 290 .00 0 051 N/A 05

    Exception:

    Do not input TC 290 if any of the following freeze codes are present:

    • A, Duplicate Return freeze

    • B, Potential Manual Interest/Penalty Adjustment

    • I, Invalid TIN freeze

    • K, Credit Module Balance

    • O, Module transferred from Retention Register

    • P, Refund canceled, deletion, repayment

    • R, Additional liability freeze

    • R, RPS multiple 610 freeze

    • L, AIMS Indicator Examination freeze

21.6.3.4.2.7.13.2  (05-04-2007)
EITC Math Error Reply

  1. Taxpayer may reply to an EITC math error or submit a claim, amended, or duplicate return to request EITC. Perform SSN validity check, as needed.

    Note:

    See IRM 21.6.3.4.2.7.15, EITC Recertification, for EITC recertification math errors.

  2. The age requirement for taxpayers claiming EITC will be reviewed for correctness. A math error will be issued for taxpayers without a qualifying child and for the qualifying child(ren) when the year of birth does not match SSA records or fall within the age range (See IRM 21.6.3.4.2.7.1, EITC Eligibility Criteria).

  3. If the case has an L freeze, forward immediately to Examination function via Form 5101, Examination Referral Slip.

  4. If taxpayer agrees with the math error on a debit balance account:

    1. Input TC 290 .00 with priority code 6 to release the G freeze.

    2. Use the appropriate RC, SC, and blocking series.

    3. If taxpayer does not respond, the G freeze will release automatically in 12 cycles.

  5. If a response to the math error requires EITC allowance, math verify the EITC if the amount is ≡ ≡ ≡ ≡ ≡ . (If EITC was claimed on the original return it was not math verified during original processing.) If available, use CC RTVUE to determine if non-taxable earned income (NEI) was transcribed. Do not pull the return solely for NEI review; use the information on CC RTVUE. See IRM 21.6.3.4.2.7.18, EITC and Command Code DDBCK.

  6. If taxpayer submits informant correspondence indicating that someone used their SSN or the SSN of an EITC qualifying child, refer to IRM 21.5.10.4.5, Exam Soft Notices CP 85 A, B & C and CP 87 A, B, C, & D.

  7. If taxpayer submitted an original return for the IRS to compute, CP 51 was issued. Math error TPNCs set by Error Resolution System (ERS) will not print on the notice. Take this into consideration if the taxpayer replies.

    If Then
    Taxpayer inquires about EITC Verify SSN.
    SSN is not a valid SSN 1. DO NOT allow EITC.
    2. Set a math error by inputting TC 290 .00, HC 3, SC 2, RC 053, blocking series 77/78. (Creates a G freeze.)
    3. Send the Letter 3050C, EITC/Dependent/Child & Dependent Care Credit - Math Error, to thoroughly explain the math error issue.
    SSN is a valid SSN Allow EITC using normal procedures. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  8. Mixed Entity/Scrambled SSN EITC case considerations:

    If Then
    EITC is claimed on a mixed entity case (See IRM 21.6.2.4.3, Mixed Entity Procedures) Do not allow EITC until the mixed entity condition is resolved. Once resolved use CC DUPED, if current year return, to update DUPOL. Do not use CC DDBCK when processing mixed entity cases.
    It is a "true" scrambled SSN case (both taxpayers are moved to IRSNs because SSA issued the same SSN to multiple taxpayers) Allow EITC for both taxpayers. For all other scrambled cases, refer to IRM 21.6.2.4.4, Scrambled SSN Case Procedures.

21.6.3.4.2.7.13.3  (10-12-2006)
Inquiries Concerning EITC Math Error Notices

  1. If taxpayer makes a statement, asks a question, or indicates a misunderstanding of the EITC math error(s):

    1. DO NOT follow unsubstantiated math error procedures.

    2. Follow "no consideration procedures" in IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns, if a claim/amended/duplicate return is received.

    3. Close the case with a Letter 3050C, EITC/Dependent/Child & Dependent Care Credit - Math Error, explaining the EITC criteria.

  2. If taxpayer does not provide the correct information and requests the account adjustment be made (after a full explanation of the legislative provisions was given), follow the unsubstantiated math error procedures in IRM 21.5.4.4.5, Math Error Unsubstantiated Protest Processing.

    Note:

    If the -G freeze is no longer present on the account then see IRM 21.5.4.4.3, Processing Responses to Math Error Notices.

  3. Taxpayer with an invalid SSN may have EITC erroneously allowed and refunded if TC 510 was input in a prior year. If the taxpayer requests an adjustment which will increase EITC:

    1. DO NOT begin erroneous refund procedures to recover the EITC previously refunded.

    2. DO NOT allow additional EITC.

    3. Input an adjustment to set the math error per IRM 21.5.4.4.1, Setting the Initial Math Error Action; consider other changes requested by the taxpayer.

    4. Send the Letter 3050C to the taxpayer to thoroughly explain the math error.

  4. Taxpayer who is incarcerated, as shown in the address or on a Form W-2, Wage and Tax Statement, requires additional research if EITC is claimed.

    1. If taxpayer reports an additional Form W-2 with wages from a penal institution, refer to Examination.

    2. If taxpayer reports information other than income earned while in a penal institution and:

      If Then
      No EITC allowed previously on the account 1. Taxpayer cannot claim EITC for amounts received for services while taxpayer is an inmate, (includes on a work-lease program or in a halfway house). Does not matter if income is from penal institution (e.g., telemarketing from prison). If taxpayer worked prior to or following incarceration, that income could be earned income.
      2. Research to determine if the wages/income on which the EITC is based was received for services provided while taxpayer was an inmate in a penal institution. (Use CC IRPTR, review of the return, etc.)
      EITC was allowed previously on the account Research to determine if the wages/income on which the EITC is based was received for services provided while taxpayer was an inmate in a penal institution. (Use CC IRPTR, review of the return, etc.)
      EITC allowed based on penal institution income Refer to Examination.
      EITC allowed appropriately Follow normal procedures to process the claim.

21.6.3.4.2.7.13.4  (10-01-2002)
CP 54 Notices With Math Error Involvement

  1. When primary taxpayer's TIN is invalid, the taxpayer may receive a CP 54 and/or math error notice. Written responses to CP 54 notices that do not involve EITC are worked in Entity. If taxpayer attaches correspondence in response to a math error notice or attaches correspondence inquiring about a math error issue, these will be worked in Accounts Management. See the following IRMs to resolve the issues:

    • IRM 3.13.5, IMF Account Numbers, for resolving invalid TINs and IRCHG instructions

    • IRM 21.6.1.5.4, Missing or Invalid Exemption TINs Procedure, for correcting exemptions

    • See IRM 21.6.3.4.2.7, Earned Income Tax Credit, and See IRM 21.6.3.4.2.7.13.2, EITC Math Error Reply, for addressing EITC math errors

21.6.3.4.2.7.14  (10-01-2002)
Advance EITC

  1. Taxpayer who expects to qualify for the EITC may get the credit in advance. It is included in his/her pay.

    1. Taxpayer must file a Form W-5, Earned Income Credit Advance Payment Certificate, with his/her employer each year.

    2. The amount of AEIC paid to taxpayer is shown on Form W-2, Wage and Tax Statement.

    3. The amount of AEIC, reported on Form 1040, U.S. Individual Income Tax Return, is included with the TC 150 amount and is displayed on a transcript or TXMOD.

    4. The allowable EITC is shown as a TC 768.

  2. Taxpayer may file an amended return to change the amount of AEIC if he/she receives an additional or corrected Form W-2, or if originally claimed AEIC is not transcribed with the return.

  3. Action required:

    1. Verify AEIC change with the Forms W-2.

    2. Input TC 290 for a positive amount to change the tax and item reference number 885, for the same positive amount to increase the AEIC.

    3. Input TC 291 with a minus after the amount and item reference number 885, for the same negative amount to decrease previously reported AEIC. Do not reduce the posted amount to less than zero.

    4. Use RC 049, and the appropriate SC and blocking series.

21.6.3.4.2.7.14.1  (10-01-2002)
Taxpayer Non-Receipt of AEIC From Employers

  1. If a taxpayer calls regarding an employers refusal to include the credit in wages after employee submitted Form W-5, Earned Income Credit Advance Payment Certificate, to the employer:

    1. Send Letter 2830C, Letter to Employer Concerning Non Receipt of Advance EITC, to the employer to inform them of the requirement to pay AEITC.

    2. Send Letter 2831C, Letter to Employee Concerning Non Receipt of Advance EITC, to inform the employee (taxpayer) of the action taken based on the complaint. This can also be done orally.

21.6.3.4.2.7.15  (07-03-2007)
EITC Recertification

  1. Due to the complex nature of the EITC Recertification Process, this subsection and the following subsection (See IRM 21.6.3.4.2.7.15.1, EITC Recertification Math Errors) should be read in their entirety. Adhere closely to all procedures on this issue.

  2. Under the Taxpayer Relief Act of 1997, Public Law 10534, taxpayers who are denied EITC as a result of deficiency procedures, will be denied EITC as a mathematical or clerical error for the subsequent year(s) unless they provide information that demonstrates eligibility for the credit and file Form 8862, Information to Claim Earned Income Credit After Disallowance, with the subsequent tax return. Beginning with tax year 1997 returns:

    1. Taxpayers who are denied EITC as a result of deficiency procedures will be denied EITC for a tax year filed after the denial unless the taxpayer attaches a properly completed Form 8862 to their return and otherwise demonstrates eligibility for the credit.

      Note:

      Procedural changes affect certain TY 2002 and later tax returns. If the sole reason the EITC was reduced or disallowed in the earlier year was because it was determined that a child listed on Schedule EIC was not the taxpayer's qualifying child, AND the taxpayer is claiming the EITC without a qualifying child, Form 8862 is not required. The recertification indicator will remain until the taxpayer claims the credit with a qualifying child(ren), attaches a properly completed Form 8862, and otherwise demonstrates eligibility for the credit.


    2. Taxpayers who are denied EITC as a result of deficiency procedures, and whose claim for EITC is determined to be due to reckless or intentional disregard of the EITC rules and regulations, will be denied EITC for two tax years after the determination. Such denial shall be made pursuant to deficiency procedures.

    3. Taxpayers who are denied EITC as a result of deficiency procedures, and whose claim for EITC is determined to be due to fraud, will be denied EITC for ten tax years after the determination. Such denial shall be made pursuant to deficiency procedures.

  3. When EITC is disallowed due to deficiency procedures, Examination sends CP 79, Earned Income Credit Eligibility Requirement, to the taxpayer explaining the EITC disallowance and the recertification requirements. Examination will set a Recertification Indicator based on the result of the examination (See IRM 21.6.3.4.2.7.15.1, EITC Recertification Math Errors).

  4. To claim EITC for a current tax year (after EITC was disallowed in a previous tax year as a result of deficiency procedures), taxpayers must file Form 8862WITH the current tax year return.

    Note:

    Generally, Form 8862 is required only for the first return the taxpayer files claiming the EITC after the disallowance. However, if the taxpayer files a second return claiming the EITC before demonstrating eligibility with respect to the first return, the indicator will not have been removed, and the taxpayer is required to attach Form 8862 to the second return.

    Exception:

    For TY 2002 and subsequent, if the sole reason the EITC was reduced or denied in the earlier year was because it was determined that a child listed on Schedule EIC was not the taxpayer's qualifying child, AND the taxpayer is claiming the EITC without a qualifying child, Form 8862 is not required.

  5. If taxpayer submits Form 8862 for a year other than the current tax year, research CC TXMOD to determine if the form was submitted in response to a math error on a late filed prior year return. If the form was filed in response to a math error, See IRM 21.6.3.4.2.7.15.1, EITC Recertification Math Errors, for appropriate procedures.

    Note:

    If the Form 8862 is submitted for the year in which the denial (deficiency assessment) occurred (TC 300 present), return Form 8862 to the taxpayer explaining that the form does not certify the taxpayer for EITC claimed on a prior return. Include Publication 3598, "What You Should Know About the Audit Reconsideration Process" . Use the appropriate paragraph in Letter 0032C, EITC Qualifications and Adjustments, when corresponding with the taxpayer:

  6. If taxpayer submits Form 8862 prior to filing his or her first tax return after the denial (deficiency assessment), return Form 8862 to taxpayer and explain the requirement to file it with the next tax return on which he or she claims the EITC (next tax return claiming the EITC with a qualifying child, if the sole reason the EITC was disallowed in the earlier year was because it was determined that a child listed on Schedule EIC was not the taxpayer's qualifying child).

  7. If Form 8862 is received without the return and the return has posted, research to see if a math error notice was issued. If the taxpayer files the Form 8862 in response to the math error notice and the recertification indicator is present (1, 2, 3, 4 or 9) then see IRM 21.6.3.4.2.7.15.1, EITC Recertification Math Errors.

    Note:

    If the taxpayer files the Form 8862 in response to the math error notice but the recertification indicator has been removed (blank) then update CC DDBCK and follow the response received. If unable to access CC DDBCK and the SSNs are valid, allow the EIC.

  8. If the taxpayer calls and states he filed his return and Form 8862 was not attached or taxpayer wants to fax Form 8862, advise taxpayer he will receive a math error notice and to send in the form when he receives the notice.

  9. If taxpayer received a CP 79 and the reason for taxpayer's contact is for information or clarification concerning the CP 79 or the recertification process, explain:

    • EITC was disallowed in full or in part as the result of an examination.

    • In order to claim EITC for the next return on which the taxpayer claims the EITC after the deficiency assessment, taxpayer must file Form 8862 with the return.

    • If the return is filed claiming EITC and a completed Form 8862 is not attached, any EITC claimed will be disallowed.

      Caution:

      See IRM 21.6.3.4.2.7.15.1, EITC Recertification Math Errors, for recertification indicator "1" .

    • If the return is filed claiming EITC and a completed Form 8862 is attached, the refund may be delayed until taxpayer's entitlement to claim EITC is verified.

  10. When the 2 or 10 year ban is set, a CP 79A, Earned Income Credit Two Year Ban, or CP 79B, Earned Income Credit Ten Year Ban, is issued advising the taxpayer of the ban and of the next year he/she will be eligible to claim EITC again.

  11. Beginning in 2006, when the EITC Recertification Indicator 1 or 9 is removed, a CP 74 is issued informing the taxpayer that they have recertified for EITC and will receive a refund within 6 weeks, provided they owe no other taxes or debts the IRS is required to collect.

  12. If taxpayer has additional information to submit, or requests reconsideration, follow the procedures in IRM 21.5.10, Examination Issues.

21.6.3.4.2.7.15.1  (10-01-2007)
EITC Recertification Math Errors

  1. Once EITC is disallowed through deficiency procedures (TC 30X with TC 765), taxpayer must file Form 8862 with the next return on which the taxpayer claims the EITC. Examination reviews all returns with Form 8862, Information to Claim Earned Income Credit After Disallowance, to determine if EITC is allowable.

    Note:

    When applying tolerance criteria per the instructions below, and the taxpayer submits Form 8862 for multiple tax periods, treat each year as a separate case.

  2. The entity module will reflect the EITC recertification indicator if EITC was disallowed through deficiency procedures, or if Examination determines that recertification is no longer required. Command Code ENMOD displays the EITC indicator under the literal: EIC-RECERT-IND> and displays the year the taxpayer is first required to recertify again if claiming EITC children after the prohibited years, under the literal: EITC-EL-TXPD>.

  3. If the taxpayer responds to an EITC recertification error and does not understand the reason for the math error notice, see IRM 21.5.4, General Math Error Procedures, and explain:

    1. The prior disallowance.

    2. The need to file Form 8862 if the taxpayer believes he or she is entitled to EITC for the current tax year

    3. If the taxpayer files Form 8862, Examination will review to determine if EITC is allowable.

  4. If the taxpayer cannot or will not file Form 8862 and demands EITC then follow procedures in IRM 21.5.4.4.5, Math Error Unsubstantiated Protest Processing.

    Note:

    If the -G freeze is no longer present on the account then see IRM 21.5.4.4.3, Processing Responses to Math Error Notices.

  5. Use the following procedures if the account contains a recertification indicator (RI) and a claim or inquiry is submitted in response to an EITC recertification math error.

    Reminder:

    The claim or inquiry must include a Form 8862 if recertification is required.

    RI is and Action: unable to access DDBCK Action: able to access DDBCK
    1

    Note:

    Recertification required

    		 EITC is:

    • < ≡ ≡ ≡ ≡ ≡ - allow claim

    • = or > ≡ ≡ ≡ ≡ (filed within 60 day statutory period) - follow unsubstantiated math error procedures

    • = or > ≡ ≡ ≡ ≡ (filed after 60 day statutory period) - route to Examination as CAT A

    		 Follow DDBCK's response

    Reminder:

    On DDBCK's Return Summary Screen overlay "YYYYMMDD" , under Change Dates, with the received date of the Form 8862. Use Category Code "EICC" .

    9

    Note:

    Recertification required

    Note:

    Denotes taxpayer's EITC was adjusted due to an adjustment in income.

    		 EITC is:

    • < ≡ ≡ ≡ - allow claim

    • = or > ≡ ≡ ≡ ≡ ≡ (filed within 60 day statutory period) - follow unsubstantiated math error procedures

    • = or > ≡ ≡ ≡ ≡ (filed after 60 day statutory period) - route to Examination as CAT A

    		 Follow DDBCK's response

    Reminder:

    On DDBCK's Return Summary Screen overlay "YYYYMMDD" , under Change Dates, with the received date of the Form 8862. Use Category Code "EICC" .

    2 The tax year is < the EITC-EL-TXPD

    Note:

    Taxpayer is under a 2 year EITC ban & not entitled to EITC

    		 Disallow the credit.
    Send a Letter 1265C, include appeal rights, and use the following language:
    "Your Earned Income Tax Credit (EITC) has been disallowed because your return is subject to IRC 32(k)(1)(B)(ii) which places a two year prohibition on claiming EITC. This prohibition resulted from a prior examination in which your EITC was disallowed and it was determined that your EITC claim was due to reckless or intentional disregard of the EITC rules and regulations."     		Follow procedures, located to the left, used by employees unable to access DDBCK
    2 The tax year is > or = to the EITC-EL-TXPD

    Note:

    Recertification required

    		 EITC is:

    • < ≡ ≡ - allow claim

    • = or > ≡ ≡ ≡ ≡ ≡ (filed within 60 day statutory period) - follow unsubstantiated math error procedures

    • = or > ≡ ≡ (filed after 60 day statutory period) - route to Examination as CAT A

    		 Follow DDBCK's response
    3 The tax year is < the EITC-EL-TXPD

    Note:

    The taxpayer has recertified for EITC after the banned years, but is still under a ban for the banned years.

    Example:

    Taxpayer's EITC is disallowed for tax year 2005 in October of 2006. RI 2 is set and the taxpayer is prohibited from claiming EITC for tax years 2006 and 2007. For tax year 2008 the taxpayer claims EITC, attaches Form 8862 to their return and successfully recertifies for EITC. The RI 2 is then replaced with an RI 3.

    		Disallow the credit.
    Send a Letter 1265C, include appeal rights and use the appropriate language based on whether the taxpayer was under a 2 year or 10 year ban.     		Follow procedures, located to the left, used by employees unable to access DDBCK
    3 The tax year is > or = to the EITC-EL-TXPD

    Note:

    Recertification not required

    		 EITC is:

    • < ≡ ≡ ≡ ≡ ≡ - allow claim

    • = or > ≡ ≡ - send to Examination as CAT A

    		 Follow DDBCK's response
    4 The tax year is < the EITC-EL-TXPD

    Note:

    Taxpayer is under a 10 year ban & not entitled to EITC

    		 Disallow the credit.
    Send a Letter 1265C, include appeal rights, and use the following language:
    "Your Earned Income Tax Credit (EITC) has been disallowed because your return is subject to IRC 32(k)(1)(B)(i) which places a ten year prohibition on claiming EITC. This prohibition resulted from a prior examination in which your EITC was disallowed and it was determined the claim for EITC was due to fraud."     		Follow procedures, located to the left, used by employees unable to access DDBCK
    4 The tax year is > or = to the EITC-EL-TXPD

    Note:

    Recertification required

    		 EITC is:

    • < ≡ ≡ ≡ ≡ - allow claim

    • = or > ≡ ≡ ≡ (filed within 60 day statutory period) - follow unsubstantiated math error procedures

    • = or > ≡ ≡ ≡ ≡ (filed after 60 day statutory period) - route to Examination as CAT A

    		 Follow DDBCK's response

  6. Use the following procedures for claims or inquiries for accounts that do not reflect an EITC recertification math error:

    If And Then
    Taxpayer did not claim EITC on the original return Files Form 1040X (TY 2002 and subsequent) claiming EITC for self/spouse only and the recertification indicator is 1 Verify the SSNs
    1. If the SSNs are missing or invalid, reject the claim (See IRM 21.5.3, General Claims Procedures).
    2. If the SSNs are valid, allow the EITC.
    3. Return Form 8862, if attached, to the taxpayer explaining the need to file when claiming EITC with qualifying children.
    Taxpayer did not claim EITC on the original return Files Form 1040X (TY 2001 and prior) with Form 8862 attached, claims EITC for self/spouse only, the recertification indicator is 1 1. Verify the SSNs.
    2. If the SSNs are missing or invalid, reject the claim per IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns.
    3. If SSNs are valid, allow the EITC.
    Taxpayer did not claim EITC on the original return Files Form 1040X (TY 2001 and prior) with noForm 8862 attached, claims EITC for self/spouse only and the recertification indicator is 1 1. Reject the claim per IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns.
    2. Advise taxpayer that EITC was disallowed in a previous year and that they must submit a completed Form 8862 with the claim for EITC.
    Taxpayer did not claim EITC on the original return. Files Form 1040X with Form 8862 attached, claims EITC for qualifying children, the recertification indicator is 1 or 9 and the amount of EITC claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Update CC DDBCK using Category Code "EICX" .
    2. If CC DDBCK validates SSNs, allow the EITC.

    Note:

    The TC 971 AC 056 is not required as CC DDBCK systemically removes the recertification indicator.


    If unable to access CC DDBCK:

    • Validate SSNs

    • If the SSNs are missing or invalid, reject the claim per IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns .

    • If valid allow the EITC

    • Input TC 971 AC 056 to remove recertification indicator
    Taxpayer did not claim EITC on the original return Files Form 1040X with Form 8862 attached, claims EITC for qualifying children, the recertification indicator is 1 or 9 and the amount of EITC claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1. Update CC DDBCK using Category Code "EICX" .
    2. If CC DDBCK validates the SSNs follow DDBCK's response.
    If unable to access CC DDBCK:

    • Validate SSNs

    • If the SSNs are missing or invalid, reject the claim per IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns .

    • If valid, route claim to Examination as CAT A.

    • Use the appropriate routing procedures.
    Taxpayer did not claim EITC on the original return Files Form 1040X without Form 8862, claims EITC for qualifying children and the recertification indicator is 1 1. Reject the claim per IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns.
    2. Advise taxpayer EITC was disallowed in a previous year and they must submit a completed Form 8862 with the claim for EITC.
    Taxpayer files Form 1040X or other claim to increase EITC claimed on the original return The recertification indicator is 1 or 9 and the case is open on AIMS in Campus Examination Forward the case to the open Examination control using Form 5101.

21.6.3.4.2.7.16  (05-04-2007)
EITC Criminal Investigation Referrals

  1. The Criminal Investigation function (CI) reviews original returns deemed suspicious. CI:

    1. Intercepts questionable paper refunds with CC NOREF or CC NOREFE.

    2. Stops electronic funds transfer refunds with CC CRMNLE TC 916.

    3. Codes the original return with a Computer Condition Code (CCC) 3 to generate TC 570 and an R freeze to hold the credit.

  2. See IRM 21.5.6.4.41, Z – Freeze, for the appropriate action(s) to take.

  3. Refer ANY claims/amended returns for EITC which Adjustments considers suspicious to CI.

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

21.6.3.4.2.7.17  (01-12-2007)
EITC Certification Program

  1. For TY 2003 through TY 2005, Compliance performed a certification test and certain EITC claimants were chosen to participate.

  2. An account involved in the program can be identified by a TC 971, AC 136 or a TC 971, AC 137 X-REF MFT 00 or 01 on TXMOD.

    Note:

    MFT 00 and 01 represent codes present in the X-REF information and do not equate to an actual MFT.

    Caution:

    If a subsequent TC 972, AC 136 or 137 is present, the taxpayer has been removed from the Certification program and the following procedures do not apply. Follow existing claim procedures.

  3. If a taxpayer was among those selected to participate in one of the programs, AIMS (TC 424/420) was established when the tax return was filed if the taxpayer claimed EITC with the qualifying children. If the taxpayer did not claim EITC with the qualifying children during original processing, the TC 424/420 was not established.

    Note:

    If the taxpayer files their TY 2003, 2004, or 2005 original return after December 31, 2006, claiming EITC with the qualifying child(ren) and was selected to participate in one of the programs, an AIMS (TC 424/420) will be established when the return is processed.

  4. If DDBCK indicates "Selected Reroute to EITC KCSC" or when working claims where CC DDBCK cannot be utilized and a TC 971, AC 136 or a TC 971, AC 137 X-REF MFT 00 or 01 without a subsequent TC 972, AC 136 or 137 present:

    1. Input any tax increase/credit decrease as appropriate. See IRM 21.5.3.4.7, Claims with Examination Involvement.

    2. Reroute to EITC KCSC or if applicable forward the documents to the address indicated ( See IRM 21.6.3.4.2.7.17.1, Taxpayer Inquiries Regarding EITC Certification, paragraph (2)).

    3. Claims where CC DDBCK cannot be utilized input TC 971 AC 013.