21.3.1  Taxpayer Contacts Resulting From Notice Issuance

Manual Transmittal

September 10, 2013

Purpose

(1) This transmits revised IRM 21.3.1, Taxpayer Contacts Resulting From Notice Issuance.

Material Changes

(1) Formatting and editorial changes throughout the document.

(2) Removed sub-sections on obsolete notices: CP 33, CP 58, CP 149, CP 168, CP 314, CP 321, CP 322.

(3) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.1.1 - Clarification of procedures for when to follow Office of Taxpayer Correspondence's Red Button Process.

(4) IRM 21.3.1.1.1(2) revised Erroneous Notice procedures for clarity.

(5) IRM 21.3.1.2.1 Added statement on Annual Reminder Notices with definition.

(6) IRM 21.3.1.4.32(2)b Specified referral to CSCO in Atlanta Campus and added link.

(7) IPU 13U1081 issued 06-11-2013 IRM 21.3.1.4.38 Changed CP 53 refund time frame from 3 weeks to 4 weeks.

(8) IPU 13U0397 issued 02-22-2013 IRM 21.3.1.4.38.1 Added instructions for responses to CP 53A for TY 2012 returns

(9) IPU 13U1202 issued 07-09-2013 IRM 21.3.1.4.47 Added transfer procedures for FERDI accounts in Status 22.

(10) IPU 12U1968 issued 12-20-2012 IRM 21.3.1.4.56 Correction of CP 2057 response phone number and procedures.

(11) IRM 21.3.1.4.56 Clarification of instructions to send copies of CP 2000 or CP 2501.

(12) IPU 13U0397 issued 02-22-2013 IRM 21.3.1.4.58 Moved AUR Process Code 96 to correct line in table

(13) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.4.58 - Clarification of procedures for working and responding to inquiries on accounts with AUR Involvement.

(14) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.4.59 - Added the Filing Location Codes for W&I and SBSE for TC 922 DLNs.

(15) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.4.60 - Added the Filing Location Codes for W&I and SBSE for TC 922 DLNs.

(16) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.4.61 - Added the Filing Location Codes for W&I and SBSE for TC 922 DLNs.

(17) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.4.62 - Added the Filing Location Codes for W&I and SBSE for TC 922 DLNs.

(18) IPU 13U0551 issued 03-18-2013 IRM 21.3.1.4.63 - Added the Filing Location Codes for W&I and SBSE for TC 922 DLNs.

(19) IPU 13U1081 issued 06-11-2013 IRM 21.3.1.4.65 Added subsection on ITIN notice inquiries.

(20) IRM 21.3.1.4.111 Added transfer number for TEGE EP notice application.

(21) IPU 12U1968 issued 12-20-2012 IRM 21.3.1.4.116 BMF Automatic Underreporter Program section has been added.

Effect on Other Documents

IRM 21.3.1, Taxpayer Contacts Resulting From Notice Issuance, dated August 24, 2012 (effective date 10-01-2012) is superseded. IRM Procedural Updates (IPUs) 12U1968 issued December 20, 2012, 13U0397 issued February 22, 2013, 13U0551 issued March 18, 2013 and 13U1202 issued July 9, 2013, have been incorporated into this IRM.

Audience

The primary users of this IRM are employees who answer notice contacts.

Effective Date

(10-01-2013)

Ivy S. McChesney
Director, Accounts Management
Wage and Investment Division

21.3.1.1  (03-23-2012)
Notice Overview

  1. This section provides guidelines for identifying and resolving inquiries concerning Computer Paragraph (CP) notices, internal notices and notices issued during the processing of a return. Guidelines for balance due notices and delinquent return notices are found in IRM 21.3.12, Accounts Management Balance Due Telephone Contacts, and IRM 5.19.2, Return Delinquency. Refer to Document 6209, IRS Processing Codes and Information, Section 9 for a complete list of notices.

  2. Each subsection in this section presents an overview of a specific notice or letter, general procedures for working the notice, and a reference to the Internal Revenue Manual (IRM) for detailed procedures. If during a contact any of the following occur:

    If And Then
    1. It appears there is a hardship situation or
    2. The taxpayer insists on being referred to the Taxpayer Advocate Service (TAS) or
    3. The contact meets TAS criteria
    You cannot resolve the taxpayer's issue the same day Prepare and forward Form 911, Request for Taxpayer Advocate Service Assistance and (Application for Taxpayer Assistance order), to the local Taxpayer Advocate. Refer to the Taxpayer Advocate Service Public Site.

    Note:

    If the taxpayer‘s situation meets TAS criteria 5-7 AND involves identity theft, the case MUST be referred to AM IPSU. Follow procedures in IRM 21.9.2.9, Identity Theft Assistance Request (ITAR) - General Information,



    Caution:

    Before disclosing any tax information, you must be sure you are speaking with the taxpayer or authorized representative. Refer to guidelines in IRM 21.1.3, Operational Guidelines Overview. Also, before leaving any messages on a taxpayer's answering machine, review IRM 11.3.2.6.1 , Leaving Information on Answering Machines/Voice Mail. Fax procedures contained in IRM 11.3.1.11 , Facsimile Transmission of Tax Information, must be reviewed prior to faxing confidential information to the taxpayer.

21.3.1.1.1  (10-01-2013)
Erroneous Correspondence Procedures

  1. See (2) below and if appropriate refer to IRM 25.13.1.3, Erroneous Correspondence Procedures - Red Button Process, for all notice issues.

  2. IMPORTANT: Correspondence which is not erroneous and does not need to be reported via the Red Button Process to the Office of Taxpayer Correspondence (OTC) or Computer Security Incident Response Center (CSIRC) includes correspondence sent to the taxpayer's last known address but where it is later found that:

    • the taxpayer no longer resides there, or

    • the address was incorrect due to a potential identity theft issue. Correspondence which may indicate a potential identify theft issue: Letter 4464C, Letter 4883C, Letter 5071C, or CP 05.

21.3.1.2  (03-23-2012)
What Is a Notice?

  1. A Computer Paragraph (CP) notice results from:

    • Input of notice codes

    • Computer analysis of an account on Master File (MF)

    • Posting of a transaction


  2. Computer Paragraph (CP) notices may:

    • Request payment

    • Give instructions

    • Provide information

    • Request information

    • Propose penalties or assessments


  3. To determine the last notice sent to the taxpayer, review the Notice History Section on CC TXMOD or CC ENMOD.

  4. Notice (CP) numbers usually are printed in the upper right corner of a CP notice. Each notice contains taxpayer's name, address, Taxpayer Identification Number (TIN), and a computer generated or pre-printed message.

  5. Internal notices/transcripts are issued to alert IRS employees of possible necessary action. A copy of these notices are not sent to the taxpayer.

21.3.1.2.1  (10-01-2013)
Notice Types and Definitions

  1. Submission Processing Notices:

    • If a return is not processable due to missing information, Submission Processing sends the taxpayer a notice requesting the information. The Internal Revenue Restructuring and Reform Act of 1998 (RRA '98) requires the inclusion of telephone numbers on most notices. The phone number shown on these notices is the Toll-Free Customer Response line appropriate for the taxpayer's Business Operating Divisions (BODs).

    • These notices are pre-printed, some have boxes checked to indicate exactly what information is needed (a single copy is sent to the taxpayer). A return envelope is enclosed with the notice.

    • These returns have not completed processing and Integrated Data Retrieval System (IDRS) shows a dummy module with a Letter 12C , Individual Return Incomplete for Processing: Form 1040, Form 1040A and 1040EZ, or command code ERINV shows an ERS status code indicating a Letter 12C has been sent. Encourage the taxpayer to return the requested information in the envelope provided along with a copy of the notice. If the taxpayer returns the notice with the information, the return is treated as filed on the original received date.

  2. Settlement Notice—Informs the taxpayer of payment and interest due, math errors, and adjustments.

  3. Math Error Notice—Informs taxpayer of a math error found during processing and identifies the line on the return where the error occurred.

  4. Balance Due Notice—Requests payment, generates if a return does not have a math error and has a balance due. This is the first notice of balance due.

  5. Adjustment Notice—Informs taxpayer of adjustment made to the account by examination, adjustments, or by taxpayer request. Generally the fourth and fifth digits of the Document Locator Number (DLN) of a Data Processing (DP) subsequent adjustment is 54. The fourth and fifth digits of the DLN of an Examination adjustment are 47.

  6. Offset Notice—Informs taxpayer of the offset of an available overpayment to an outstanding debit balance.

  7. Information Notice—Issued to provide information internally or to taxpayer. A response is not needed.

  8. Credit Transfer Notice—Informs taxpayer of a credit transfer when the CORR–DATE field in FRM 34 is overlaid.

  9. IDRS Notice—Issued as a subsequent balance-due or return delinquency notice.

  10. Annual Reminder Notices—Issued annually as a reminder to taxpayers who have a tax delinquent account as of the date of the notice." Annual notices of tax delinquency under IRC 7524 are issued for calendar years after 1996. This was a part of Public Law 104-168 dated 07-30-1996 the Taxpayer Bill of Rights. These notices are not "collection" type notices asking for payment.

21.3.1.3  (03-23-2012)
Notice Resolution Actions Research

  1. The following actions are common to all notice resolutions:

    If And Then
    Refund is due Normal processing time has not elapsed, per IRM 21.4.1.3, Refund Inquiry Response Procedures
    1. Review the account to determine if the return has posted or a processing problem exists. If either of these conditions exists follow appropriate IRM procedures for resolution.

    2. If there is no indication the return is having a processing problem or it has not yet posted, advise taxpayer of normal processing time, per IRM 21.4.1.3.1.1, Return Not Found

    .
    Refund is due Normal processing time has elapsed Research, per IRM 21.4.1, Refund Research .
    There is a balance due Taxpayer agrees
    1. Request full payment.

    2. AM IMF phone assistors refer to IRM 21.3.12.4, Determine the Earliest The Taxpayer Can Full Pay

    3. All others refer to IRM 5.19.1.5.2, Can Full Pay Balance Due Now (Payoff) .

    There is a balance due A payment is not properly credited Transfer credit, per IRM 21.5.8, Credit Transfers
    There is a balance due Taxpayer agrees but cannot pay in full Set up a payment plan, per IRM 21.3.12.4, Determine the Earliest The Taxpayer Can Full Pay.
    Penalties and interest are assessed Taxpayer does not agree Refer to IRM 20.1, Penalty Handbook, or IRM 20.2, Interest.
    Taxpayer does not agree with notice Documentation is needed from taxpayer or files 1. Request documentation.

    Reminder:

    If you are staffing the toll-free lines at a remote site and you will need to pull the document using CC ESTAB to resolve the issue, follow the procedures in IRM 21.5.2.3, Adjustment Guidelines — Research.

    2. Open a control base.
    3. If necessary suppress all balance due notices (STAUPS/TC 470).
    4. Refer to IRM 21.5.4, General Math Error Procedures, IRM 21.5.10, Examination Issues, and IRM 21.7.12, Non-Master File (NMF) Adjustments.


21.3.1.3.1  (10-01-2011)
Dual Notices

  1. Section 3201(d) of RRA 98 requires the Service to (whenever practicable) mail duplicate notices separately to each individual filer of a joint tax return. This process is referred to as dual notice issuance. Systemic generation of dual notices began in calendar year 2001.

  2. Dual notices are issued as follows:

    1. All notices are sent dual if Service records indicate filers live at different addresses.

    2. If Service records indicate filers live at the same address, then any notice required by statute must be sent separately to each spouse. In addition, certain other notices that contain elements of notices required by statute must be sent separately. For examples of notices that are sent separately, refer to IRM 5.1.10.5, Contact Letters.


  3. Notices that do not need to be sent separately include Submission Processing pipeline notices (including Math Error notices) and Collection installment agreement monthly reminder notices. Most of the dual notices include language to explain why the Service is sending seemingly duplicate notices.

21.3.1.3.2  (10-01-2002)
Examination Notice of Deficiency Procedures

  1. If taxpayers have questions concerning notices of deficiency, direct them to call the number on the notice, or write to address shown. Advise of the following:

    1. If they choose to petition Tax Court, they have 90 days from the notice date.

    2. A telephone call or written communication does not extend the time for filing a petition with the Tax Court.

    3. The last date to file a petition is included in the header information of the letter.

21.3.1.4  (10-01-2002)
Notice Descriptions

  1. The most common notices are listed below and divided into four categories:

    • IMF Individual Master File (IMF) notices

    • Business Master File (BMF) notices

    • Non-Master File (NMF) notices

    • Submission Processing Notices

21.3.1.4.1  (10-01-2011)
CP 02H Casualty/Disaster Loss Reminder Notice (Katrina/Wilma/Rita)

  1. A CP 02H , Casualty/Disaster Loss Reminder Notice (Katrina/Wilma/Rita), is a reminder notice for the balance due as a result of an amended tax return filed and reporting a grant received as a result of Hurricane Katrina, Rita or Wilma.

  2. Refer to IRM 21.6.6.3.49, Section 3082(a) of the Housing and Economic Recovery Act of 2008 - Disaster Primary Housing Grant Relief, for additional information.

21.3.1.4.2  (03-23-2012)
CP 05 Information Regarding Your Refund

  1. A CP 05/05A, Information Regarding Your Refund, is issued to taxpayers.

  2. The notice informs the recipient their refund is being held pending additional review.

  3. Refer to IRM 21.5.6.4.35.3, -R Freeze Modules With Integrity & Verification Operation (IVO) Involvement (4464C Letter or 4115C Letter), for additional information.

21.3.1.4.3  (01-26-2010)
CP 08 Additional Child Tax Credit

  1. A CP 08, Additional Child Tax Credit, is issued to notify taxpayer of potential eligibility to claim additional Child Tax Credit. The notice is issued when the taxpayer:

    • Computes an amount for the Child Tax Credit, has zero tax liability, and fails to use the remaining portion of the credit to claim the Additional Child Tax Credit, or

    • Indicates eligibility for the Child Tax Credit (by checking the boxes on line 6c) but does not claim the Child Tax Credit due to zero tax liability and does not claim the Additional Child Tax Credit.

  2. Refer to IRM 21.6.3.4.2.8.3, CP 08, Additional Child Tax Credit , for procedures on working CP 08 notices.

21.3.1.4.4  (10-01-2004)
CP 09 Earned Income Credit (EIC)

  1. A CP 09, Earned Income Credit, is issued to notify taxpayer of potential eligibility for Earned Income Tax Credit (EIC).

    1. Answer questions concerning eligibility and how to claim the credit. If the taxpayer qualifies, advise as in b through d.

    2. Advise the taxpayer to provide the qualifying child's Social Security Number (SSN) and sign the notice.

    3. Inform the taxpayer that if the EIC is allowed and the taxpayer has more than three children, the additional Child Tax Credit may be affected. Advise the taxpayer to complete Form 8812, Additional Child Tax Credit. Publication 972, Child Tax Credit, has more information.

    4. Instruct the taxpayer to submit the completed and signed CP 09 in the envelope provided.


  2. Refer to IRM 21.6.3.4.2.7.8, EITC - CP 09/CP 27.

21.3.1.4.5  (10-01-2012)
CP 10 Math Error With Reduced Credit Elect

  1. A CP 10, Math Error With Reduced Credit Elect , is issued to notify taxpayer that an overpayment applied to the next year's tax as a credit-elect was reduced due to an error on a 1040 series return.

    1. Research IDRS.

    2. Explain reason for notice.

    3. Take actions indicated in the following table.

    If And Then
    Taxpayer agrees A balance is due 1. Advise taxpayer to correct their copy of the return. Remind the taxpayer the decrease in the amount of credit elect may effect the Estimated Tax (ES) payments for the first quarter.
    2. Request full payment.
    3. Refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer does not agree A refund is due 1. Adjust account using oral statement if applicable.
    2. Request documentation only if necessary.
    3. Determine if the credit elect will systemically move after the adjustment. See IRM 21.6.3.4.2.1, Outstanding Balance Considerations Prior to Refund or Credit Elect.
    4. Advise and explain the TOP offset to the taxpayer if the indicator shows possibility of offset.
    5. Advise taxpayer they should receive refund in 2 to 4 weeks.
    Taxpayer does not agree A balance is due 1. Refer to IRM 21.5.4, General Math Error Procedures, for information on working math errors.
    2. Refer to IRM 21.3.12.4 ,Determine the Earliest the Taxpayer Can Full Pay

21.3.1.4.6  (10-01-2012)
CP 11 Math Error, Balance Due of $5 or More

  1. A CP 11, Math Error, Balance Due of $5 or More, is issued as a first notice. Notifies taxpayer of an error in the math on an individual return that results in a balance due. Refer to table below:

    If And Then
    Taxpayer agrees A balance is due 1. Advise taxpayer to correct their copy of the return.
    2. See IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer does not agree A refund is due 1. See IRM 21.5.4.4.3, Processing Responses to Math Errors.
    2. Math verify the return and then adjust account using oral statement if applicable.
    3. Request documentation from the taxpayer only if necessary.
    4. Advise and explain the TOP offset to the taxpayer if indicator shows possibility of offset.
    5. Advise taxpayer they should receive refund in 2 to 4 weeks.
    Taxpayer does not agree A balance is due 1. See IRM 21.5.4.4.3, Processing Responses to Math Errors.
    2. Math verify the return and then adjust account using oral statement if applicable.
    3. Request documentation from the taxpayer only if necessary.
    4. See IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.

21.3.1.4.6.1  (12-29-2009)
CP 11M Math Error, Balance Due

  1. A CP 11M is issued as a first notice to inform taxpayer the IRS computed eligibility to claim the Making Work Pay and Government Retiree Credit. Notice is generated from the taxpayer notice code (TPNC) 661. Refer to table in IRM 21.3.1.4.6, CP11, Math Error, Balance Due of $5 or More, above for required actions and IRM references for full instructions.

21.3.1.4.7  (01-26-2010)
Submission Processing
Missing Information 12C Letter

  1. During processing a Letter 12C, Individual Return Incomplete for Processing: Form 1040, Form 1040A and 1040EZ, is sent to IMF taxpayers requesting information missing from the return.

  2. Returns are not returned to the taxpayer. The return is suspended awaiting response from the taxpayer.

21.3.1.4.7.1  (10-01-2012)
Researching the 12C Letter

  1. Check IDRS for the following Information:

    If Then
    Code and Edit sends the request for information Research IDRS using CC ENMOD to determine what information was missing on the original return. Information. A history item should be on CC ENMOD that will display the selective paragraphs input on Letter 12C.
    Error Resolution sends the request for information Use Command Code (CC) ERINV to view the ERS status code information. Refer to IRM 21.4.1-1, Error Resolution System (ERS) STATUS CODES.
    The taxpayer has received the Letter 12C Advise the taxpayer to respond to the letter supplying the requested information.

21.3.1.4.8  (10-01-2012)
CP 12 Math Error, Overpayment of $1 or More

  1. A CP 12, Math Error, Overpayment of $1 or More, is issued as a first notice to inform the taxpayer of an error in the math on an individual return that changes the refund amount. A refund hold will be applied when the account meets Notice Review criteria for certain notices (CP 12, 16, 21, and 24). The account will reflect a TC 570 with blocking series "55555" indicating the refund hold has been applied and a TC 971 ac 804, (the miscellaneous field will reflect the CP number). The hold will systemically expire 7 calendar days after the TC 971 ac 804 daily cycle. If both the ac 804 and ac 805 are present, the hold will be for 7 calendar days. Refer to table below:

    If And Then
    If the taxpayer received more of a refund than requested taxpayer disagrees
    1. Review the return to determine if taxpayer is correct.
    2. If the taxpayer's original filing was correct and the service sent the taxpayer more of a refund than requested, this is considered an erroneous refund. See IRM 21.4.5.4, Erroneous Refund Categories and Procedures to determine the appropriate category and procedures for working the case.
    Taxpayer does not agree A balance is due See IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    If the taxpayer received more of a refund than requested Taxpayer agrees Advise taxpayer to correct their copy of the return.

21.3.1.4.8.1  (01-26-2010)
CP 12A EIC Math Error - Overpayment of $1 or More

  1. A CP 12A, EIC Math Error - Overpayment of $1 or More, is issued as a first notice when:

    1. EITC was claimed on a return and there is a math error

    2. There is an invalid SSN (primary or secondary) on the return.


  2. The notice informs taxpayer of an error in the math on an individual return that changes the refund amount. Refer to table in IRM 21.3.1.4.8, CP 12 Math Error, Overpayment of $1 or more, above for required actions and IRM references for full instructions.

21.3.1.4.8.2  (01-26-2010)
CP 12M Math Error, Overpayment

  1. A CP 12M is issued as a first notice to inform taxpayer the IRS computed eligibility to claim the Making Work Pay and Government Retiree Credit. Notice is generated from the Taxpayer Notice Code (TPNC) 661. Refer to table in IRM 21.3.1.4.8, CP 12 Math Error, Overpayment of $1 or more, above for required actions and IRM references for full instructions.

21.3.1.4.9  (12-01-2012)
CP 13 Math Error, Settlement

  1. A CP 13 is issued to notify taxpayer that:

    1. An error occurred in the math on an individual return.

    2. Payment is not required if the balance due on the notice is less than $5.00.

    3. An overpayment of less than $1.00 is not refunded without a written request from the taxpayer. Refer to the table below if the taxpayer disagrees with the notice.

    If And Then
    Taxpayer does not agree A refund is due 1. See IRM 21.5.4.4.3, Processing Responses to Math Errors.
    2. Math verify the return and then adjust account using oral statement if applicable.
    3. Request documentation from the taxpayer only if necessary.
    4. Advise and explain the TOP offset to the taxpayer if indicator shows possibility of offset.
    5. Advise taxpayer they should receive refund in 2 to 4 weeks.
    Taxpayer does not agree A balance is due See IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.


21.3.1.4.9.1  (10-01-2011)
CP 13M Math Error, Settlement

  1. A CP 13M is issued as a first notice to inform taxpayer the IRS computed eligibility to claim the Making Work Pay and Government Retiree Credit. Notice is generated from the taxpayer notice code (TPNC) 661. Refer to the table, IRM 21.3.1.4.9, CP 13 Math Error, Settlement, above for required actions.

21.3.1.4.10  (10-01-2002)
CP 14 Balance Due $5 or More, No Math Error

  1. A CP 14, Balance Due $5 or More, No Math Error, is issued as a first notice to notify taxpayer of a balance due when no math error or ES discrepancy exists. Do the following:

    1. Research IDRS.

    2. Explain reason for balance due. It may be the result of a missing payment or the assessment of a penalty.

    3. If taxpayer agrees with the notice, request payment in full (refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay).

    4. If a payment is missing, research IDRS for payment (refer to IRM 21.5.8, Credit Transfers).

    5. Check for pending Installment Agreement (IA), the taxpayer may have requested an IA.

21.3.1.4.11  (10-01-2011)
CP 15 Civil Penalties Notice

  1. A CP 15, Civil Penalties Notice, is issued to notify taxpayer a civil penalty was assessed and why it was assessed.

    If Then
    Taxpayer agrees with the notice Request payment in full. Refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay
    Taxpayer disagrees 1. Advise taxpayer to send documentation to assessing function.
    2. Refer to IRM 20.1.1-5, Penalty Reference Numbers, for an explanation of the three digit reference number which identifies the penalty type.

21.3.1.4.12  (10-01-2011)
CP 15B Civil Penalty Notice

  1. A CP 15B , Civil Penalty Notice, is issued to notify taxpayer a trust fund recovery civil penalty was assessed.

    If Then
    Taxpayer requests a payment plan Establish an installment agreement (IA). Refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer disputes assessment. Explain they were identified as a responsible officer of a corporation that owes trust fund monies.
    Taxpayer claims they are not a responsible officer. Refer taxpayer to the Advisory group that handles the address where they reside. Refer to IRM 5.19.1.4.4 , Trust Fund Recovery Penalty Issues.

21.3.1.4.13  (10-01-2012)
CP 16 Overpayment with Offset

  1. A CP 16, Overpayment with Offset, is issued as a first notice to notify taxpayer of an error in the math on an individual return resulting in an overpayment that was applied to another IMF tax liability. A refund hold will be applied when the account meets Notice Review criteria for certain notices (CP 12, 16, 21, and 24). The account will reflect a TC 570 with blocking series "55555" indicating the refund hold has been applied and a TC 971 ac 804, (the miscellaneous field will reflect the CP number). The hold will systemically expire 7 calendar days after the TC 971 ac 804 daily cycle. If both the ac 804 and 805 are present, the hold will be for 7 calendar days.

    1. Explain offset process if requested to do so.

    2. Refer to IRM 21.3.1.4.8, Math Error, Overpayment of $1 or more, for resolution of math error notices.

21.3.1.4.14  (10-01-2012)
CP 17 Refund of Unfrozen Excess ES Credits

  1. A CP 17, Refund of Unfrozen Excess ES Credits, is issued to notify taxpayer of a refund of unfrozen estimated credits.

    1. Advise taxpayer no action is required.

    2. Tell taxpayer they will receive a refund within 2 to 4 weeks of the notice date if no other Federal taxes or obligations are owed and a refund amount remains.

21.3.1.4.15  (10-01-2002)
CP 18 Refund Discrepancy/Unallowables

  1. A CP 18, Refund Discrepancy/Unallowables, is issued to notify taxpayer a portion of the refund was withheld due to an unallowable item on the return. Advise taxpayer they will receive an explanation of the adjustment by the date stated on the notice.

21.3.1.4.16  (05-18-2011)
CP 19 Examination Unallowable Items Notice, Balance Due

  1. A CP 19, Examination Unallowable Items Notice, Balance Due, is issued to notify taxpayer of one or more unallowable items on the return and of a balance due. Advise taxpayer a response is necessary.

    If Then
    Taxpayer agrees with notice Advise taxpayer to sign and return notice.
    Taxpayer requests a payment agreement Refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer disagrees with notice Advise taxpayer to return bottom portion of notice along with supporting documentation or explanation.

21.3.1.4.17  (10-01-2011)
CP 20 Audit/Unallowable Items Notice, Overpayment

  1. A CP 20, Audit/Unallowable Items Notice, Overpayment, is issued to notify taxpayer of one or more unallowable items on the return as well as an overpayment. Advise taxpayer this notice requires a response.

    If Then
    Taxpayer agrees with tax increase Advise taxpayer to sign, date, and return bottom portion of notice.
    Taxpayer disagrees Advise taxpayer to submit documentation with bottom portion of the notice.
    Taxpayer has returned notice and a refund is due Advise taxpayer the refund will be issued in four to six weeks if no other tax is due or obligations are owed. Also advise of possible TOP offset.

21.3.1.4.18  (10-01-2012)
CP 21A Data Processing Adjustment Notice, Balance Due of $5 or more

  1. A CP 21A, Data Processing Adjustment Notice, Balance Due of $5 or more, is issued to notify taxpayer of a DP tax adjustment resulting in a balance due when account is in Taxpayer Delinquent Account (TDA) Status.

    1. Research IDRS.

    2. Explain the reason for the notice.


  2. For resolution, follow the table below:

    If And Then
    Taxpayer agrees There is an even balance Advise no action is necessary.
    Taxpayer agrees A balance is due Request payment in full. Refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer indicates a payment was made Has not been credited
    1. Research for missing payment.

    2. Transfer the payment if needed.

    3. Refer to IRM 21.5.8, Credit Transfers.

    Taxpayer disagrees Adjustment resulted from a DP tax adjustment
    1. Verify the correctness of the adjustment.

    2. Review the CIS image to determine if the adjustment posted agrees with the adjustment requested by the taxpayer.

    3. If it has been determined the case was not worked correctly, apologize to the taxpayer and make the necessary corrections.

    4. If not trained in working paper complete an in-house referral per IRM 21.3.5.4.2.1.1, Preparing an e-4442.

    Adjustment resulted from examination of the return Taxpayer disputes deficiency assessment Advise the taxpayer that under certain conditions, you can request an audit reconsideration. Refer to IRM 4.13.2.1, Research/Initial Case Screening.
    Adjustment resulted from return executed by the service under IRC 6020(b) Taxpayer disputes deficiency assessment Advise taxpayer they can request an audit reconsideration if:
    1. The taxpayer has information that was not previously considered which, if timely submitted, would have resulted in a change to the assessment.

    2. An original delinquent return is filed by the taxpayer after an assessment was made as a result of a return executed by the IRS under IRC 6020(b) or other substitute for return procedures.

    3. There was an IRS computational or processing error in assessing the tax. Refer to IRM 4.13.1.7, Acceptance of Request.

21.3.1.4.19  (10-01-2012)
CP 23 ES Discrepancy, Balance Due of $5 or More

  1. A CP 23, ES Discrepancy, Balance Due of $5 or More, is issued to notify taxpayer of a discrepancy between estimated tax credits claimed on the return and credits posted to the account, resulting in a balance due of $1.00 or more.

  2. This notice also notifies taxpayer of a math error.

  3. Review payment amounts and dates.

    If Then
    A payment or credit-elect is missing
    1. Research for missing payment.

    2. Transfer credit if appropriate.

    3. Refer to IRM 21.5.8, Credit Transfers.

    4. If TP states payments are under spouse's SSN refer to IRM 21.6.3.4.2.3.3, ES Joint Allocation.

    Taxpayer agrees with the notice Request full payment of balance due. Refer to IRM 21.3.12., Accounts Management Balance Due Telephone Contacts.

21.3.1.4.20  (10-01-2012)
CP 24 Estimated Tax Discrepancy, Overpayment of $1 or More

  1. A CP 24, Estimated Tax Discrepancy, Overpayment of $1 or More, is issued to notify taxpayer of discrepancy between estimated tax credits claimed on return and credits posted to the account, resulting in an overpayment of $1.00 or more. In addition to a discrepancy in estimated tax payments, a CP 24 may advise taxpayer their return contained a math error or the statute for refund has expired. A refund hold will be applied when the account meets Notice Review criteria for certain notices (CP 12, 16, 21, and 24). The account will reflect a TC 570 with blocking series "55555" indicating the refund hold has been applied and a TC 971 ac 804, (the miscellaneous field will reflect the CP number). The hold will systemically expire 7 calendar days after the TC 971 ac 804 daily cycle. If both the ac 804 and 805 are present, the hold will be for 7 calendar days.

    If Then
    This is an estimated tax discrepancy Review payment dates and amounts shown on the notice.
    Taxpayer indicates a payment is erroneously credited to account
    1. Research IDRS to locate account where payment belongs.

    2. Apply to correct account, or

    3. If you cannot locate correct account, transfer to Excess Collection or Unidentified File.

    4. Refer to IRM 21.5.8, Credit Transfers.

    Taxpayer received a refund of an erroneously credited payment Refer to IRM 21.4.5, Erroneous Refunds.
    Taxpayer agrees with notice
    1. Advise taxpayer a refund will be issued within 2 to 4 weeks of the date on the notice if no other tax is due or obligations are owed.

    2. Advise taxpayer of a possible TOP offset.

    Notice contains math error information Refer to math error notice resolution in IRM 21.3.1.4.5, CP 10, Math Error With Reduced Credit Elect.


21.3.1.4.21  (10-01-2004)
CP 25 Estimated Tax Discrepancy, Balance Due <$5, Overpayment <$1

  1. A CP 25, Estimated Tax Discrepancy, Balance Due <$5, Overpayment <$1, is issued to notify taxpayer of a discrepancy between estimated tax credits claimed on return and credits posted to the account, resulting in an overpayment of less than $1.00, or a balance due of less than $5.00.

  2. This notice also informs taxpayer that no refund is issued for less than $1.00 unless taxpayer requests it in writing, and no payment is necessary of a balance due.

  3. Refer to table in IRM 21.3.1.4.19, CP 23 Estimated Tax Discrepancy Balance Due of $5 or More, above for resolution.

21.3.1.4.22  (01-26-2010)
CP 27 EIC Potential for Taxpayer Without Qualifying Children

  1. A CP 27, EIC Potential for Taxpayer Without Qualifying Children, is issued to notify taxpayer without children of possible eligibility for the EITC.

    1. Answer questions about eligibility.

    2. Advise how to claim the credit.

    3. If the taxpayer qualifies, advise taxpayer to sign the notice and return in the envelope provided.

  2. Refer to IRM 21.6.3.4.2.7.8, EITC - CP 09/CP 27.

21.3.1.4.23  (10-01-2011)
CP 29 Amended Return Posted, No Original

  1. A CP 29, Amended Return Posted, No Original, are forward to the Files function. The returns are pulled, batched and routed to Accounts Management (AM) for assignment.

  2. Refer to IRM 21.5.6.4.9, E- Freeze.

21.3.1.4.24  (10-01-2012)
CP 30 Estimated Tax Penalty Notice

  1. A CP 30, Estimated Tax Penalty Notice, is issued to notify taxpayer all or part of an overpayment has been applied to an estimated tax penalty. Advises taxpayer all or some of required estimated tax payments were not timely.

    If Then
    Taxpayer indicates a payment was not credited to account Research for missing payment.
    The taxpayer's credit elect was reduced due to the assessment of an ES penalty. Advise taxpayer they may need to make up the difference on the first quarter payment or increase future ES payments.
    Taxpayer wants to have part or all of penalty removed
    Before advising the taxpayer to file Form 2210, determine if the taxpayer meets the criteria. IRM 20.1.3.2.1.7.1, Form 2210 or Form 2210-F.
    If the taxpayer qualifies for the ES Penalty Waiver, advise taxpayer to complete Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts , and provide appropriate mailing address.

    Note:

    Form 2210 with instructions is not included with the notice.

21.3.1.4.25  (01-26-2010)
CP 30A Estimated Tax Penalty Recompute Notice

  1. A CP 30A, Estimated Tax Penalty Recompute Notice, is issued to notify taxpayer that Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, was incorrect, resulting in a refund.

    1. A response is not required unless taxpayer disagrees.

      If Then
      Taxpayer disagrees Review Form 2210 and explain how amount was computed.
      Taxpayer still disagrees Advise taxpayer they may either:
      1. Return the voided check with a written explanation of why they disagree, or

      2. Keep check and pay penalty if they received notice that a penalty has been assessed.

    2. Refer to IRM 21.4.3, Returned Refunds/Releases, for more information on returning refund checks.

21.3.1.4.26  (10-01-2012)
CP 31 Undelivered Refund Notice

  1. A CP 31, Undelivered Refund Notice, is issued to notify taxpayer a refund was returned as undeliverable. The notice asks taxpayer to supply the correct address.

    If Then
    Taxpayer states that they have not moved and gives address that exactly matches Master File (MF) and there is a TC 740 on the module. Refer to IRM 21.4.3.4.3, Undeliverable Refund Checks, for procedures before allowing interest to compute.
    There is a new address and there is a TC 740 on the module. Input address with CC CHK64.
    2. Refer to IRM 21.4.3.4.3, Undeliverable Refund Checks.

21.3.1.4.27  (10-01-2002)
CP 32 and CP 32A New Refund Check - Old Check Not Cashed

  1. Issued when an original refund check is not cashed within one year. The CP 32 is issued to notify taxpayer the refund was reissued. The CP 32A is issued to notify taxpayer we will not reissue again without a request from the taxpayer.

    If Then
    Taxpayer has moved Correct address.
    More than 30 days have passed since the notice was issued and taxpayer has not received the refund Refer to IRM 21.4.1, Refund Research.

21.3.1.4.28  (10-01-2012)
CP 36 Duplicate Filing Notice

  1. The CP 36, Duplicate Filing Notice, is an internal notice issued when there is a duplicate filing condition on the module, the duplicate filing case is controlled on IDRS and assigned for review. Refer to IRM 21.6.7.4.4.1, CP 36 — Control, for more information.

21.3.1.4.28.1  (10-01-2012)
CP 36D Injured Spouse Claims Notice

  1. The CP 36D, Injured Spouse Claims Notice, is an internal notice issued when a Transaction Code (TC) 150 with Document Code 05, 07, 09, or 11, posts with blocking series 920–929 (indicating that Form 8379, Injured Spouse Allocation, was filed). The original return and claim are sent to Customer Service for processing.

21.3.1.4.29  (12-14-2011)
CP 39 Overpayment Applied to Balance Due - Secondary SSN

  1. A CP 39, Overpayment Applied to Balance Due - Secondary SSN, is issued to notify taxpayer an overpayment for a return on which the taxpayer is the secondary SSN has been applied to the balance due on a return for another year, which is the return identified in the heading of the notice. The notice explains that a joint filer is responsible for paying the tax due on the return as originally filed and any tax resulting from subsequent adjustment (e.g., an examination). Advise taxpayer this is an information notice and a response is not required.

21.3.1.4.30  (10-01-2012)
CP 41 Unresolved Manual Refund Freeze

  1. A CP 41, Unresolved Manual Refund Freeze, is an internal notice generated when:

    1. An unresolved manual refund freeze (-X Freeze) is present on the Master File for more than seven cycles.

    2. The account is not in zero balance because an adjustment did not post within the seven cycles.

    3. The notice shows the manual refund created the balance due condition.

      Exception:

      A TC 840 in Blocking Series 600–609 suppresses the CP 41 for 20 cycles. A TC 840 in Blocking Series 9XX with a Julian date under 400 bypasses the-X Freeze and issuance of the CP 41.

  2. The CP 41 is forwarded to the Files function. The manual refund document is pulled and the case is forwarded to Customer Service to be worked.

  3. Refer to IRM 21.5.6.4.48 , -X Freeze, for procedures.

21.3.1.4.31  (10-01-2012)
CP 42 Secondary SSN Offset Notice

  1. A CP 42, Secondary SSN Offset Notice, is issued to notify taxpayer of an offset of an overpayment for the return that is the subject of the notice to satisfy a Federal tax obligation for a joint return for another tax year on which the taxpayer was the secondary SSN. Be aware of disclosure criteria. Refer to IRM 21.1.3.2, General Disclosure Guidelines.

    If And Then
    Taxpayer agrees with notice An overpayment remains; Advise the taxpayer he should receive a refund within 4 weeks, if he owes no other taxes.
    Note: Advise taxpayer of a possible TOP offset for child or spousal support, Federal non-tax debts, or state income tax.
    Four weeks have passed the taxpayer did not receive refund check; Advise the taxpayer to check and see if he owes other taxes (e.g., state or are they behind on child support).
    If not; refer to IRM 21.4.2, Refund Trace and Limited Payability .
    Taxpayer agrees with the notice. The balance due remains on a prior year account. Request payment in full.
    Refer to IRM 21.3.12.4 , Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer indicates he sent in a payment There is no payment (TC 670) posted on the account Research to locate the missing payment.
    Refer to IRM 21.5.7, Payment Tracers.
    Taxpayer disagrees Taxpayer states spousal obligation is not correct
    1. Request taxpayer to supply justification to the Account Management function.

    2. Request written documentation only if the issue cannot be resolved with oral statement.

    Taxpayer disagrees Balance due arose from a return filed by one spouse
    1. Advise the spouse who is not liable to file Form 8379, Injured Spouse Claim Allocation.

    2. Refer to IRM 21.4.6.5.3, Injured Spouse Inquiries .

    Note:

    For an audit reconsideration, refer to IRM 21.5.10, Examination Issues. For a Substitute for Return (SFR), refer to IRM 5.19.2 , Return Delinquency. For AUR issue refer to IRM 21.3.1.4.55, Resolving or Referring Underreport Cases.


21.3.1.4.32  (10-01-2013)
CP 44 Credit Available For Application to Non-IMF Account

  1. A CP 44, Credit Available For Application to Non-IMF Account, is issued when there is a refundable credit of ≡ ≡ ≡ ≡ ≡ ≡ on a tax module and there is a TC 130 present in the entity module. This is a three part notice; Part 1 is sent to the taxpayer and Parts II and III are generated to the Service.

    1. Informs the campus that an IMF overpayment is available for application to a non-IMF outstanding liability, or of an overpayment available to use in an Offer-in-Compromise.

    2. Informs taxpayer an available overpayment was applied to an outstanding balance on another account.


  2. After application of credit, remaining overpayment is refunded.

    1. Advise taxpayer to allow six to eight weeks on a non-individual account for IRS to determine if a tax liability exists.

    2. If more than 8 weeks have elapsed and taxpayer has not received any information, prepare Form 4442, Inquiry Referral, and send to CSCO in the Atlanta campus. Include taxpayer's day and evening telephone numbers.


21.3.1.4.33  (10-01-2012)
CP 49 Overpayment Adjustment-Offset

  1. A CP 49, Overpayment Adjustment - Offset, is issued to notify taxpayer the overpayment on an individual return was applied to a prior year’s unpaid IMF liability.

    If And Then
    Taxpayer agrees with notice A balance due remains on prior year Request full payment. Refer to IRM 21.3.12.4, Determine the Earliest the Taxpayer Can Full Pay.
    Taxpayer agrees with notice An overpayment remains
    1. Advise taxpayer a refund will be issued within six weeks if no other Federal taxes or obligations are owed (TOP offset for child or spousal support, Federal non-tax debts, or state income tax).

    2. Refer to IRM 21.4.1, Refund Research , if 4 weeks have passed.

    Payment was made Was NOT properly credited to the prior year account Research IDRS to locate payment (e.g., TC 670). Refer to IRM 21.5.7, , Payment Tracers.
    Taxpayer disagrees with notice Supplies supporting information
    1. Adjust the account as appropriate.

    2. Send the taxpayer a notice explaining the adjustment to tax.

    3. Advise the taxpayer about Penalty and Interest is charged until the account is paid in full. Refer to IRM 20.1, Penalty Handbook and IRM 20.2, Interest.


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