21.4.6  Refund Offset

Manual Transmittal

September 12, 2014

Purpose

(1) This transmits revised updates to IRM 21.4.6, Refund Inquiries, Refund Offsets.

Scope

This update adds new procedures for Injured Spouse processing. This section covers processing the offsets of tax overpayments for outstanding Federal tax debts, child support, Treasury Offset Program debts, and Form 8379Injured Spouse Allocation.

Material Changes

(1) Editorial changes have been made throughout this IRM. Several sections/subsections have been removed/revised. The IPUs listed below contain the references where the information was located at the time the IPU was issued. Although the changes are incorporated in the IRM’s content, the location of the information may be different. Additionally, some changes may have been superseded by later changes.

(2) IPU 14U0696 issued 04-15-2014 IRM 21.4.6, Clarified "Federal tax debt " and "Treasury Offset Program debt" throughout IRM 21.4.6 were applicable.

(3) IPU 14U0696 issued 04-15-2014 IRM 21.4.6, Updated all IRM references as a result of removing several sections within the IRM.

(4) IPU 14U0696 issued 04-15-2014 IRM 21.4.6, Removed reference to Debtor Master File (DMF), TC 896, TC 897 and TC 131 throughout the IRM since information is now obsolete.

(5) IPU 14U0269 issued 02-05-2014 IRM 21.4.6, Updated Fresno TOP/DMF Liaison fax number throughout.

(6) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4(1), Clarified currently there are two types of offsets Federal tax offset and TOP offsets. Removed 3rd bullet referencing Debtor Master File (DMF) offset which is obsolete.

(7) IRM 21.4.6.4(2), Rearranged debt indicators and special instructions as a list for clarification.

(8) IRM 21.4.6.4(5), Removed para. (5) and incorporated into para. (2).

(9) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4(8), Updated information to reflect the debt indicator may change daily.

(10) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.4.1(1) 3rd bullet and Note, Clarified TC 896 without an Agency/Sub-Agency (AG/SA) Code, is not a DMF offset. Added references to Doc. 6209.

(11)

(12) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.1(1), Revised NOTE for historical purposes. TC 896 with AG/SA code used for DMF from 1984 through January 11,1999.

(13) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2(1), Added State Income tax and Unemployment debts.

(14) IRM 21.4.6.4.1(2), Updated IRM reference.

(15) IRM 21.4.6.4.2.1(2), Removed OUO reminder.

(16) IRM 21.4.6.4.2.1(10), Removed instruction that a manual refund is required and added to alpha list It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

(17) IRM 21.4.6.4.2.1(11), Removed instruction that a manual refund is required and added to alpha list It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

(18) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.2.1(13)(b), Removed NOTE and added a Reminder to contact Insolvency.

(19) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.2.1(14), Updated TC 520 closing codes.

(20) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.2.1(14)(b), Clarified BPI 9, removed NOTE and added a Reminder to contact Insolvency.

(21) IRM 21.4.6.4.2.2(1), Added MFT 35.

(22) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2.3(1), Removed MFT 29, added Doc Code 88 only for MFT 46 and added new MFT 79.

(23) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2.6(3), Removed paragraph, subsequent paragraphs renumbered.

(24) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.2.9(2) CAUTION, Clarified Manual Reversal Request and added an Exception to explain the difference between a TC 899 Type 3 (manual reversal request) from a TC 899 Type 3 which is a BFS reversal.

(25) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.2.9(5) CAUTION, Clarified Manual Reversal Request and added an Exception to explain the difference between a TC 899 Type 3 (manual reversal request) from a TC 899 Type 3 which is a BFS reversal.

(26) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2.11(1), 3rd and 4th bullet, Clarified TC 766 and TC 767 with an OTN.

(27) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2.11(3), Revised Note to Caution if No Move criteria is involved.

(28) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2.11(3), Added a Reminders to 1st, 2nd, 4th and 5th boxes, added Caution to the 5th box in the IF/THEN chart.

(29) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.2.11(3), Added Caution after IF/THEN chart if a manual account transfer is needed.

(30) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.3.1(1), Removed reference to DMFOL which is obsolete. Subsequent paragraphs renumbered.

(31) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.3.1(2), Formerly par. (4), Added REMINDER: DO NOT reverse a TC 896 with a TC 897, Contact the Fresno TOP/DMF Liaison for instructions.

(32) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.4.3.1(3), Removed instruction to contact Fresno TOP/DMF Liaison.

(33) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.3, Removed Debtor Master File (DMF) Offset. Information is obsolete. All subsequent subsections renumbered.

(34) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.3.1, Removed DMF Offset Research. Information is obsolete. All subsequent subsections renumbered.

(35) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.4, Removed TC 131, Agency Refund/Reversal. Information is obsolete. All subsequent subsections renumbered.

(36) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.5, Removed TC 132, Certification Release. Information is obsolete. All subsequent subsections renumbered.

(37) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.6, Removed 896, DMF Offset. Information is obsolete. All subsequent subsections renumbered.

(38) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.7, Removed TC 820, Manual DMF Offset. Information is obsolete. All subsequent subsections renumbered.

(39) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.8, TC 897, DMF Offset Reversal. Information is obsolete. All subsequent subsections renumbered.

(40) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.4.9, DMF Manual Offset Reversal. All subsequent subsections renumbered.

(41) IRM 21.4.6.5.1(1), Removed date.

(42) IRM 21.4.6.5.1(3) IF/AND/THEN chart 2nd THEN box, Updated to clarify advise the taxpayer of the refund.

(43) IRM 21.4.6.5.1(4) IF/AND/THEN chart 5th THEN box, Added instruction to review the return, determine if the taxpayer can get relief as an Injured Spouse and refer them to Form 8379, Instructions.

(44) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.2, Removed Taxpayer Inquiries for DMF Offset. Information is obsolete. All subsequent subsections are renumbered.

(45) IRM 21.4.6.5.2(2) IF/AND/THEN chart 3rd THEN box second bullet, Added time frame for advising the taxpayer.

(46) IRM 21.4.6.5.2(2) IF/AND/THEN chart, 4th and 5th THEN box, Added Reminder to provide a transfer PIN.

(47) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.2(2) 5th THEN box, Removed Atlanta and Brookhaven from list to prepare 4442 to Memphis.

(48) IRM 21.4.6.5.2(2) IF/AND/THEN chart 6th THEN box, Moved 2nd sentence in par. 2 to par. 1 for clarification.

(49) IRM 21.4.6.5.2(2 ) IF/AND/THEN chart 11th AND box, Clarified more than 45 days and removed open control base and replaced with is not controlled to a specific CSR.

(50) IRM 21.4.6.5.2(2) IF/AND/THEN chart, 12th IF/AND/THEN box, Added new instruction for Form 8379 filed after offset, there is an open control to a CSR, 11-14 week timeframe has passed, to send Form 4442.

(51) IRM 21.4.6.5.2(2) IF/AND/THEN chart 15th AND box, Added 916C letter instruction and relocated 105C/106C to 16th boxes.

(52) IRM 21.4.6.5.2(2) IF/AND/THEN chart 16th IF/AND/THEN box, Added 105C and 106C letter instructions.

(53) IRM 21.4.6.5.2(2) IF/AND/THEN chart 17th AND box, Added taxpayer may or may not be experiencing a financial hardship.

(54) IRM 21.4.6.5.2(2) IF/AND/THEN chart 17th THEN box, Added par. 4 with IRM reference for hardship requests.

(55) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.2(3), Added NOTE, Issuance of a letter is not required when releasing the refund for the exceptions listed.

(56) IRM 21.4.6.5.2(6), Removed 1290C letter.

(57) IRM 21.4.6.5.2(7), Added Exception for APP 21 to do a Form 4442 referral.

(58) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.2(8), Removed reference to 105C/106C letters and replaced with 916C, Claim Incomplete for Processing; No Consideration.

(59) IPU 14U0889 issued 05-20-2014 IRM 21.4.6.5.2(8), Removed reference to Application 137.

(60) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.2(9), Removed Atlanta and Brookhaven from list to transfer to Memphis.

(61) IPU 14U0889 issued 05-20-2014 IRM 21.4.6.5.2(11), Removed reference to Application 137.

(62) IRM 21.4.6.5.2(8), Added a reminder that APP 35 (92035) is only listed in the IRM and not listed as a direct transfer in the TTG.

(63) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.3(2) IF/THEN Table, 1st THEN box, Removed note to transfer to Tax Law.

(64) IRM 21.4.6.5.5(3), Added IRM reference for an exception.

(65) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.2(1), Removed 1st paragraph referencing DMF pre and post offsets. Subsequent paragraphs renumbered.

(66) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.2(1), formerly par. (3), Changed the order of the paragraphs, removed old effective dates and added CP 36D notice information.

(67) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.2(2), formerly par. (4), Removed 1st two sentences and old effective date.

(68) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.2(3), formerly par. (2), Removed effective date.

(69) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(5), Changed debt indicator information to an alpha list to easily display the debt indicators.

(70) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(8), Updated information to reflect the debt indicator may change daily.

(71) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(9), Revised instructions to work Form 8379 regardless of the "N" indicator. Do not release with TC 571.

(72) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(10), Added NOTE, Issuance of a letter is not required when releasing the refund with a TC 571.

(73) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(11), Removed instruction for Form 8379 disallowance. Subsequent paragraphs are renumbered.

(74) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(12), Added instruction to no consider if taxpayer is not entitled to any of the 20XX overpayment and added IRM reference to Form 8379, No Consideration Procedures.

(75) IRM 21.4.6.5.8.3(13), Removed last sentence information is located in IRM 21.4.6.5.8.4.

(76) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(15), Removed NOTE, relocated the information from para. (16), (17) and (18) into an alpha list in para. (15) and relocated the note as an Exception below the table.

(77) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.8.3(15)(c), Added IRM references.

(78) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.8.3(15)(c) Exception, Corrected the list of exceptions that do not require a manual refund and added a note to the IRM reference to clarify when a notice will/will not generate.

(79) IRM 21.4.6.5.8.3(16), Revised IF/AND/THEN chart, Added Exceptions under the chart and reformatted previous instructions into separate paragraphs. All subsequent paragraphs are renumbered.

(80) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.8.3(16)(c), Added IRM references to 1st and 2nd bullets for information to include in the letter.

(81) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(16), Deleted and relocated information into para. (15).

(82) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(17), Deleted and relocated information into para. (15).

(83) IRM 21.4.6.5.8.3(17), Added instruction for the One Name Only box.

(84) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.3(18), Deleted and relocated information into para. (15) all subsequent paragraphs are renumbered.

(85) IRM 21.4.6.5.8.3(18), Added conditions that do not require a manual refund.

(86) IRM 21.4.6.5.8.3(19), Added instruction to send an explanation of actions taken and applicable IRM references.

(87) IRM 21.4.6.5.8.3(20)(e) , Added Caution and IRM reference for IVO involvement.

(88) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.4(2), Removed last part of sentence referencing Tax, TOP or DMF.

(89) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.4(6), Corrected paragraph for 3179C from "S" to "U" , letter updated on 01–06–2014.

(90) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.4(7), Added instruction to consider the period of limitations for both Federal tax offset and TOP offset and added IRM reference.

(91) IRM 21.4.6.5.8.5(4), Added examples of deductions that would to allocated to the spouse to whom they belong.

(92) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.8.5(5), Clarified "on the joint return" and updated IRM reference.

(93) IRM 21.4.6.5.8.5(8), Added CAUTION for clarification a person's domicile and IRM reference.

(94) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.5(8), Restricted NOTE and revised instructions.

(95) IRM 21.4.6.5.8.5.1, Changed title to Same-Sex Spouses.

(96) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.6(2), Added reference to Disclosure guidelines.

(97) IRM 21.4.6.5.8.6(2), Updated instructions to send 3179C letter for additional information.

(98) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.8(1), Added four additional reasons for no consideration and rearranged the order.

(99) IRM 21.4.6.5.8.8(1)(b), Clarified after the time period allowed.

(100) IRM 21.4.6.5.8.8(1)(f), Clarified tax period being worked.

(101) IRM 21.4.6.5.8.8(1)(g), Clarified tax period being worked and added information previously located in (1)(f) and added third sentence from (1)(f) as a NOTE in (1)(g) for clarificaiton.

(102) IRM 21.4.6.5.8.8(1)(l), Added NOTE that the list is not all inclusive.

(103) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.8(2), Added an Exception for what to include in the explanation to the taxpayer when it involves tax or TOP offsets that did not meet the time period limitations. Removed last bullet, information included in first sentence.

(104) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.8.8(3), Added IRM reference.

(105) IRM 21.4.6.5.8.8(3), Removed IRM reference and added instruction to use DUPF.

(106) IRM 21.4.6.5.8.8(4), Added instruction for responses to 916C letter.

(107) IRM 21.4.6.5.8.8(5), Added instruction for responses to 105C and 106C letters.

(108) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9, Changed the title from Statute of Limitations for Processing Form 8379 to Time Period for Submitting Form 8379.

(109) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9, Removed all references to "Statute of Limitations" and revised entire section with applicable time periods per guidance received from Chief Counsel.

(110) IPU 14U0889 issued 05-20-2014 IRM 21.4.6.5.8.9(4)(a), Added Caution and Example for determining the 2 YR period of late filed returns.

(111) IRM 21.4.6.5.8.9(4)(a), Clarified from the cycle of offset.

(112) IPU 14U0889 issued 05-20-2014 IRM 21.4.6.5.8.9(4)(c), Added bullet for when both tax and TOP offsets are involved and an Example on how to apply the 2 YR and 6 YR period.

(113) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.1(1), formerly para. (1)(b), Revised alpha list into separate paragraphs and rearranged the order, all subsequent paragraphs have been renumbered.

(114) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.8.9(1), Removed last part of sentence and added IRM reference.

(115) IRM 21.4.6.5.8.9.1(1), Clarified Form 8379 is timely for any refund requested on Form 1040 or Form 1040X.

(116) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.1(2), Added two year time period for submitting Form 8379 after a Federal tax offset.

(117) IRM 21.4.6.5.8.9.1(2), Clarified must also consider the two year time period for submitting Form 8379 for all prior Federal tax offsets.

(118) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.1(2)(a), Removed instruction for Notice of Disallowance per guidance from Chief Counsel. The tax refund claim was not disallowed, it is the allocation that is not being considered. There should be no Notice of Disallowance for Form 8379 Injured Spouse Allocation.

(119) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.1(4), formerly para. (3), Moved information from para. (3) to para. (4).

(120) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.1(5), formerly (2)(b), Moved information from par. (2)(b) to par. (5).

(121) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.1(6), Added instruction and to send 916C letter if no overpayment available for credit or refund and included IRM reference.

(122) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.2(1), formerly para. (1)(a), Revised alpha list into separate paragraphs.

(123) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.2(2), formerly (1)(b), Added reference to Time Period for Submitting Form 8379 and bullet list for the types of notices issued for tax and TOP offsets.

(124) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.2, formerly (2)(a)&(2)(b) , Removed reference to Period of Limitations and Notice of Disallowance.

(125) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.2(3), Added two year time period for submitting Form 8379 and instruction to send 916C letter, including the IRM reference.

(126) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.8.9.2(4), Added six year period for filing Form 8379 for TOP offset and instruction to send 916C letter, including IRM reference.

(127) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.9.3(7), Removed instruction to other program codes and added new category code DMFT and program code 40100 for Tax Debt.

(128) IPU 14U0282 issued 02-07-2014 IRM 21.4.6.5.9.3(7), Correction to OFP code for DMFT 40110.

(129) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.9.3(9), Removed instruction to work injured spouse and added new category code DMFN and program code 40110 for No Debt and to release with TC 571.

(130) IPU 14U0282 issued 02-07-2014 IRM 21.4.6.5.9.3(9), Correction to OFP code for DMFN 40100.

(131) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.9.3(9) Note, Removed note and relocated information to new paragraph (10).

(132) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.9.3(10)(previously located in para.(9)), Added instruction for when taxpayer states they filed Form 8379 in error and no longer wants Form 8379 to be considered.

(133) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.9.3(19)(b), Added instruction to resolve -B freeze, subsequent list renumbered.

(134) IPU 14U0383 issued 02-27-2014 IRM 21.4.6.5.9.5(8), Added Note to see IRM 21.4.6.5.9.5.1 for same sex couples.

(135) IPU 14U0383 issued 02-27-2014 IRM 21.4.6.5.9.5.1, New subsection for Defense of Marriage Act (DOMA)

(136) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.9.8(3), Added reference to IRM 21.4.6.5.9.3(7) to change IDRS control base.

(137) IRM 21.4.6.5.8.10(1), Added instruction for -Q freeze.

(138) IRM 21.4.6.5.10(1), Added a reminder for the entry of separate items.

(139) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10(2) EXCEPTION, Removed Atlanta and Brookhaven from list of campuses to transfer to Memphis.

(140) IPU 14U0889 issued 05-20-2014 IRM 21.4.6.5.10(2), Removed reference to Application 137.

(141) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10(7), Removed reference to Form 8379 Disallowance.

(142) IRM 21.4.6.5.10.3(2), Added IRM references for determining availability dates and debit interest.

(143) IRM 21.4.6.5.10.3(3), Clarified attributable individually or jointly when considering offsets or refunds.

(144) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10.3(3) IF/THEN Chart, Clarified TOP offset in 1st IF/THEN box and added IRM reference in 1st THEN box.

(145) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10.3(3) IF/THEN Chart, Removed 2nd IF/THEN boxes referencing DMF offsets.

(146) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10.3(3) IF/THEN Chart, 2nd (formerly 3rd) IF/THEN boxes, added IRM reference.

(147) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.10.4(2)(1), Removed reference to worksheet line 20 and instruction to use COMPA.

(148) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.10.4(2)(2), Removed reference to line 20 to avoid confusion. NCP and CP worksheets differ.

(149) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.10.4(2)(3), Clarified to compute interest from the posted date of the TC 898 to the assessment date of the adjustment.

(150) IRM 21.4.6.5.10.4(4), Clarified Injured Spouse's share of the refund and removed reference to 1290C letter.

(151) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10.5, Removed Injured Spouse Refund, DMF Offset subsection. All subsequent subsections renumbered.

(152) IRM 21.4.6.5.10.5(1), Added instruction to transfer injured spouse's portion with TC 570.

(153) IRM 21.4.6.5.10.5(2), Added instruction to issue refund in both names unless the one name only box is checked and added the exception with IRM reference.

(154) IRM 21.4.6.5.10.5(2) Exception, Updated IRM reference for exceptions to manual refunds for tax debts.

(155) IRM 21.4.6.5.10.5(4), Clarified injured spouse's share of the overpayment and removed reference to 1290C letter.

(156) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.10.6(5), Removed entire paragraph referencing to DMF offset reversals. Information is obsolete. All subsequent paragraphs are renumbered.

(157) IRM 21.4.6.5.10.6(2)(a) Exception, Updated IRM reference.

(158) IRM 21.4.6.5.11(4), Removed OUO reminder.

(159) IRM 21.4.6.5.11.1(2) Caution, Clarified other Federal agency non-tax debt and added IRM reference to conditions when OBR can be allowed.

(160) IRM 21.4.6.5.11.1(3), Removed last statement on transferring OBRs that cannot be resolved within 24 hours.

(161) IRM 21.4.6.5.11.1(4), Added statement from par.(3) to only transfer OBRs that cannot be resolved within 24 hours.

(162) IRM 21.4.6.5.11.1(5), Clarified if the 23C date has not passed or a clerical error occurred preventing the OBR.

(163) IRM 21.4.6.5.11.1(6), Clarified if the current date is more than 30 days past the 23C date and a clerical error did not occur.

(164) IRM 21.4.6.5.11.1(7), Provided instruction if a clerical error did not occur an OBR must be issued before tax assessment date or 23C date.

(165) IRM 21.4.6.5.11.1(8), Removed second sentence.

(166) IRM 21.4.6.5.11.1(9), Added Caution for IVO involvement.

(167) IRM 21.4.6.5.11.1(10), Clarified before the 23C date of the tax assessment which created the overpayment.

(168) IRM 21.4.6.5.11.1(11) Note, Clarified it may be necessary to coordinate the release of freeze conditions and subsequent adjustments with another IRS function.

(169) IRM 21.4.6.5.11.1(12), Changed the Note to an Exception and clarified the order of offset.

(170) IPU 14U0282 issued 02-07-2014 IRM 21.4.6.5.11.6(3), Removed reference to other category codes and added DMFT.

(171) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.12(4), Added instruction to input correct RFSCDT when the RSED is expired. Subsequent paragraphs renumbered to par.(5), formerly par. (4).

(172) IRM 21.4.6.5.12.2(3)(a) & (3)(d), Removed reminders.

(173) IRM 21.4.6.5.12.3(6) IF/THEN Chart, 1st THEN box, Added instructions in para. 1 & 2 for correcting TC 898 when file errors occur.

(174) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.13.2(2)(b), Removed MFT 31 from the list of offsets which cannot be reversed with TC 766.

(175) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.13.2(3)(e), Added CAUTION statement DO NOT input TOP reversal once a Manual Reversal Request has been initiated.

(176) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.13.3(3), Added Note, Only TOP/DMF Liaisons are authorized to work the TC 766 Reject Listing.

(177) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.13.3(4), Added reference to IRM 21.4.6.4.2.9, TC 899 Reversal or Agency Refund of TOP Offset.

(178) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.13.3(5) IF/THEN Chart, Removed Note and updated instructions for reason code (3).

(179) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.13.3(7), Added instruction to use the IF/THEN chart above to resolve the TC 766 Reject and removed first step, subsequent steps renumbered.

(180) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.13.4, Removed Input of DMF Offset Reversals TC 897. Information is obsolete.

(181) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.13.5, Removed Tax Modules with Multiple DMF Offsets. Information is obsolete.

(182) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.13.6, Removed Multiple Tax Periods with Same-Year DMF Offsets. Information is obsolete.

(183) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.13.7, Removed Multiple Tax Periods, Same Year DMF Offset and Agency Refund. Information is obsolete.

(184) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.14(1), Updated SC 7 statement on the notice.

(185) IPU 14U0838 issued 05-09-2014 IRM 21.4.6.5.14, Updated the verbiage for the Reason Codes (RC).

(186) IRM 21.4.6.5.15(3), Removed OUO reminder.

(187) IRM 21.4.6.5.15.1(3), Removed OUO reminder.

(188) IPU 14U0383 issued 02-27-2014 IRM 21.4.6.5.16, Removed Note referencing debt indicators.

(189) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.16, Removed Form 8379 Disallowance section. All subsequent sections renumbered.

(190) IRM 21.4.6.5.16(1),, Added Note Form 8379, Injured Spouse Allocation can be worked regardless of Combat indicator "1" or" 2" .

(191) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.16(5), Removed instructions for DMF offsets.

(192) IRM 21.4.6.5.16(5), Added BPI 5 and BPI 6 will generate on systemic refunds issued from modules with a combat zone —C Freeze in effect.

(193) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.16.1, Removed Response to Disallowance section. All subsequent sections renumbered.

(194) IRM 21.4.6.5.17(1)(2), Rremoved reminder.

(195) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.17.1, Removed Bankruptcy Involving DMF offset. Information is obsolete. Subsequent section is renumbered.

(196) IRM 21.4.6.5.18(3)(1), Removed OUO reminder.

(197) IRM 21.4.6.5.19(1), Deleted (1)(a) and moved note to (1)(b).

(198) IRM 21.4.6.5.19(1)(b), Removed OUO reminder.

(199) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.19(3) CAUTION, Removed reference to TC 896, add UPC RC 03 and deleted UPC 134 RC 04 and 05.

(200) IRM 21.4.6.5.19(3), Removed OUO reminder.

(201) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.22(1)(e), (1)(f) and (1)(g), Removed references DMF, TC 897, and TC 896.

(202) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.22(1)(e), Added Caution if date of offset is over 6 years a manual reversal request is required.

(203) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.22.1(2), Removed reference to DMF offset reversal.

(204) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.22.1(3), Removed reference to DMF offset reversal.

(205) IRM 21.4.6.5.22(2), Added Caution statement regarding TC 899 Type 1.

(206) IRM 21.4.6.5.23.1(2)(a), Removed OUO reminder.

(207) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.23.1(2), Removed UPC 134 RC 04 for TC 897. Information is obsolete. Subsequent paragraphs renumbered.

(208) 21.4.6.5.23.2(2)(5), Removed OUO reminder.

(209) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.23.3, Removed UPC 142, Information is obsolete. Subsequent subsections renumbered.

(210) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.23.5(1), Removed reference to DMF UPC 189 RC 0. Subsequent paragraphs renumbered.

(211) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.24, Changed title to TOP Utility 50 Run.

(212) IPU 14U0696 issued 04-15-2014 IRM 21.4.6.5.26, Removed Advanced Child Tax Credit. Information is obsolete.

(213) IPU 14U0269 issued 02-05-2014 IRM 21.4.6.5.28, Removed section on Immediate Tax Relief, information is obsolete. All subsequent sections have been renumbered.

(214) IRM 21.4.6.5.28.1(1), Added research CC IMFOLF to determine who is liable for the repayment of the recapture tax and added Caution with instruction to research other TINs.

(215) IRM 21.4.6.5.30, Added instruction Shared Responsibility Payment (SRP) and IRM reference.

Effect on Other Documents

IRM 21.4.6, Refund Inquiries, Refund Offsets, dated September 10, 2013 (effective October 1, 2013) is superseded. The following IRM Procedural Updates (IPUs) issued February 5, 2014 thru May 20, 2014 have been incorporated into this IRM: 14U0269, 14U0282, 14U0383, 14U0696, 14U0838 and 14U0889.

Audience

All Internal Revenue Service employees working paper and phone Form 8379, Injured Spouse Allocation and Refund Offset inquires.

Effective Date

(10-01-2014)

James P. Clifford
Director, Accounts Management
Wage & Investment Division

21.4.6.1  (10-01-2013)
Refund Offset Overview

  1. This section covers processing related to the offset of tax overpayments for outstanding Federal tax debts, child support, Treasury Offset Program debts, State Income tax obligations and Unemployment Compensation debts. Also covered is the processing of Form 8379,Injured Spouse Allocation, and Offset Bypass Indicator (BPI).

    Reminder:

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

21.4.6.2  (04-15-2014)
What Is a Refund Offset?

  1. Internal Revenue Code IRC (§) 6402(a), (c), (d), (e) and (f) require a taxpayer's overpayment to be applied to any outstanding Federal tax debt, child support, Treasury Offset Program (TOP) debt, State income tax obligation or Unemployment Compensation prior to crediting the overpayment to a future tax or issuing a refund. This application of a tax overpayment is called a refund offset.

  2. Refund offsets to child support, TOP debts, State income tax obligations and Unemployment Compensation debts are handled by the Treasury's Bureau of Fiscal Service through the Treasury Offset Program. This occurs after a refund is certified by Internal Revenue Service (IRS) for payment by Bureau of Fiscal Service, but before the refund check is issued or a direct deposit is transferred to the taxpayer's bank account.

21.4.6.3  (04-24-2012)
Disclosure

  1. Before disclosing any tax information:

    • Be sure you are speaking with the taxpayer or authorized representative. Refer to IRM 21.1.3.2, General Disclosure Guidelines, for more information.

    • Review procedures in IRM 11.3.2.6.1, Leaving information on Answering Machines/Voice Mail, before leaving a message on a taxpayer's or authorized representative's answering machine or voice mail.

    • Review procedures in IRM 11.3.1.11, Facsimile Transmission of Tax Information, before faxing confidential information to the taxpayer or authorized representative.

21.4.6.4  (10-01-2014)
Refund Offset Research

  1. There are two types of refund offsets:

    • Federal tax offset

    • Treasury Offset Program offset (effective 01/11/1999)

  2. Command Code (CC) INOLE contains debt liability indicators based on information received from the Bureau of the Fiscal Service. The indicators are used to identify a Federal tax debt, TOP debt, or both. You must thoroughly research for any outstanding Federal tax or TOP debts. Always attach the INOLES or IAT Results IS screens for both spouses showing the debt indicator at the time the Form 8379, Injured Spouse Allocation, is worked. Include BMF screens when there is a X-REF EIN. The debt indicators are:

    • (I) IRS Debt

      Note:

      The (I) indicator is not always set for all Federal tax debts. To determine if there is an outstanding Federal tax debt, you must also research Command Code (CC) IMFOL, CC BMFOL, and/or CC TXMOD as well as CC INOLES even on "N" indicator cases.

    • (F) Bureau of Fiscal Service TOP Debt

    • (B) Both IRS and Bureau of Fiscal Service TOP Debt

    • (N) No Debt

      Note:

      The IAT Results IS screen may respond with a debt indicator "N" when an invalid Social Security Number (SSN) indicator follows the Taxpayer Identification Number (TIN). The IAT Tool is designed to research CC INOLET when the invalid indicator is present. If CC INOLET does not display a debt indicator, then the IAT Results IS screen displays the "N" . Additional research is needed if the secondary TIN is invalid.

    ,

  3. A tax overpayment must offset to an outstanding Federal tax debt before it offsets to TOP debts or is applied to a credit elect. The priorities for offset are:

    1. Federal Tax, Primary Taxpayer Identification Number (TIN)

    2. Individual Retirement Account (additional tax reported on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts).

    3. Civil Penalty

    4. Federal Tax (Secondary TIN)

    5. Business Master File (BMF)

    6. Non-Master File (NMF)

    7. Treasury Offset Program

    8. Credit Elect

    Note:

    The Collection Statute Expiration Date (CSED) must be considered in all cases and the overpayment will offset to the earliest unexpired Imminent CSED for all MFT 29, MFT 30, MFT 31 or MFT 55 modules.

  4. The priority of offsets within Treasury Offset Program are:

    1. Office of Child Support Enforcement
      - Temporary Assistance to Needy Families (TANF) (payments to the state) and/or
      - Non-Temporary Assistance to Needy Families (non-TANF) (payments to the custodial parent through the state)

      Note:

      Bureau of Fiscal Service will reduce the offset against the oldest certified debt first.

    2. Federal Agencies

    3. State Income Tax obligations

    4. Unemployment Compensation

  5. An indicator of "N" means no debt. However, a debt may exist at Bureau of the Fiscal Service , see IRM 21.4.6.5.8.3(9) for instructions.

  6. Generally, the IRS indicator (I) is set when the taxpayer has any one of the following conditions present on his/her account:

    1. Individual Master File (IMF) primary or spousal tax debt

    2. Business Master File (BMF) tax debt

    3. Non Master File (NMF) tax debt (V— freeze, Transaction Code (TC) 130 on entity

    4. Refund Freeze (TC 810)

    5. Taxpayer Delinquency Investigation (TDI)

    6. Bankruptcy (—V or —W freeze, TC 520 on account with closing code 60-67, 81 or 83-89 on the account.)

    7. Criminal Investigation Division (CID) (Z— or —Z freeze, TC 914/TC 916/TC 918)

      Caution:

      There are instances in which one of the above is valid, however if the (I) indicator is not set, see IRM 21.4.6.4, Refund Offset Research, paragraph (2).

  7. The Treasury Offset Program debt indicator (F) is set when Bureau of Fiscal Service informs Internal Revenue Service (IRS) that at least one TOP debt exists and an offset may occur if a refund is authorized. The presence of this indicator does not guarantee a TOP offset will occur. The status of a debt, at Bureau of Fiscal Service may change daily. The debt may be activated, inactivated or deleted within TOP before a refund is issued. Therefore, discrepancies may arise from one cycle to the next and IRS may not be aware of a TOP debt. Consequently, the refund will offset, resulting in having to reverse the offset to process the Form 8379, Injured Spouse Allocation. Also, the refund name line may not match the debtor's name in TOP, allowing a refund to be issued despite the presence of a TOP debt.

  8. The "B" indicator is set when both IRS and TOP debt indicators are present.

  9. Command Code (CC) TXMOD also contains the debt liability indicator, found directly below the Transaction Code (TC) 846 and is displayed in the form of the number "0" or "1" . The indicator is set at the time the TC 846 is generated on the module and is shown as: DMF-LIAB-IND>0 or DMF-LIAB->1.

    1. If the indicator on CC TXMOD is a "0" , the debt indicator on CC INOLE will be an "N" or an "I" . If the CC TXMOD debt liability indicator is a "1" the debt liability indicator on CC INOLE will be an "F" , or a "B" .

    2. If a "0" or "1" debt liability indicator is set on CC TXMOD, it does not guarantee that an offset will or will not occur. This is due to the timing involved in the data exchange between Bureau of Fiscal Service and the IRS.

    3. A TC 898 or TC 971 AC 598 (manual input of TOP offset record) may be present on the tax module even though the indicator is set to 0. In addition, a TC 898 or TC 971 AC 598 may not be present when the indicator is set to 1. The debt indicator on CC INOLE is updated on a daily basis.

  10. Do not use the DMF-LIAB-IND> found on CC TXMOD or CC IMFOL for processing an injured spouse allocation, nor for advising the taxpayer of the existence/non-existence of a TOP debt at Bureau of Fiscal Service. The only purpose of this indicator is to provide necessary information for use in IRS automated telephone responses.

21.4.6.4.1  (10-01-2014)
Tax Offset

  1. A refund offset to an outstanding IMF, BMF, or NMF tax debt is referred to as a tax offset. Tax offsets appear on a tax module as:

    • Transaction Code (TC) 820, manual credit transfer

    • TC 826, computer-generated tax offset

    • TC 896, computer-generated tax offset from IMF to BMF or Individual Retirement Account File (IRAF) without an Agency/Sub-Agency (AG/SA) Code

      Reminder:

      TC 896 without an AG/SA code is not a DMF offset. Refer to Document 6209, Section 8A - Master File Codes, for additional information.

      Exception:

      A TC 896 with an Agency/Sub-Agency (AG/SA) Code reflects a computer-generated offset to the DMF made from 1984 through January 11,1999. It is not a DMF offset if there is no AG/SA code present. Refer to Document 6209, Section 5 - Debtor Master File (DMF), for agency listing.

  2. A tax offset will not occur in certain situations, see IRM 21.4.6.5.10.5Injured Spouse Refund - Tax Offset.

21.4.6.4.1.1  (10-01-2014)
Tax Offset Reversal

  1. A tax offset reversal may be required if the taxpayer's response to the tax assessment results in either a full or partial abatement on a married filing joint (MFJ) account. Any refund generated by the abatement must be paid jointly to both spouses unless one or more TC 706 credits is present and all four of the following items are true:

    • The spouses' names on the account do not both appear on the originating account. Meaning, the TC 706 credits must transfer from one spouse on the originating account either as a single or separate filer or as a joint filer with a new spouse.

      Example:

      Mary Doe filed single for 2013. Her 2013 overpayment offsets with TC 706 to the 2011 account filed as John & Mary Doe, married filing joint.

    • No payments or credits, other than a TC 706 credit, posted to the MFJ account since the tax assessment. Prohibited credits include TC 670, 640, 700, etc.

    • In the case of partial abatements, all TC 706 credits transferred from the same person. (Using the example above, only TC 706 credit(s) are from Mary Doe.)

    • All TC 706 credits occurred within two years before the date of the full or partial abatement.

      Note:

      Compare the TC 706 transaction date to the TC 150, 291, 301, 295, or 299 transaction date.

  2. If the TC 706 credit(s) is/are present and all four of the above items are true, move the applicable TC 706 credit(s) back to the modules where it/they originated.

    Example:

    Husband and wife file a joint return for tax year 2011. IRS assesses an additional $800.00 for their 2011 joint liability based on an examination of the return. The taxpayers divorce. The wife later files an income tax return for 2012 that claims a $500.00 overpayment. The husband does not file an income tax return for 2012 that claims an overpayment. Because of the outstanding tax assessment, the wife's $500.00 credit is transferred in April, 2013 to the married filing joint (MFJ) tax liability for 2011. No other payments or credits are made to the 2011 MFJ account. On September 1, 2013, the IRS partially abates $400.00 of the 2011 tax assessment. Because all four requirements in paragraph (1) above are met move the $100.00 credit that results from the partial abatement back to the wife's 2012 account to prevent the credit from refunding from the 2011 MFJ account.

    Example:

    Husband and wife file a joint return for 2011. IRS assesses an additional $800.00 for their 2011 joint liability based on an examination of the return. Taxpayers divorce. The wife files an income tax return for 2012 that claims a $500.00 overpayment. The husband files an income tax return for 2012 that claims a $300.00 overpayment. Because of the outstanding tax assessment, the $500.00 and $300.00 credits are transferred in April, 2013 to the MFJ tax liability for 2011. No other payments or credits are made to the 2011 MFJ account. On September 1, 2013, the IRS fully abates the tax assessment on tax year 2011. Because all four requirements above are met, move the $500.00 credit back to the wife's2012 account and the $300.00 credit back to the husband's 2012 account. To prevent the credits from refunding from the 2011 MFJ account, move the credit(s) before abating the tax on that year.

    Caution:

    If an adjustment is made to abate the tax, the appropriate hold code 1, 2 or 4 is needed to prevent the generation of the refund on the 2011 MFJ account and a TC 570 must be used for the credit transfer when posting the credit(s) back to the originating account(s). Otherwise, the computer will automatically offset the credit(s) back to pay the balance due.

    1. Reverse the TC 706(s) to the originating account and input TC 570 on the credit side. If credit interest was allowed on the offset, the credit interest must also be reversed with TC 772.

    2. Input TC 571 with Posting Delay Code 1 on the originating account to allow refund to issue after the adjustment to the joint account posts and satisfies that module.

    3. Input adjustment to the joint module, using the appropriate hold code 1, 2 or 4 as appropriate to ensure the overpayment does not offset.

21.4.6.4.2  (02-05-2014)
Treasury Offset Program (TOP) Offset

  1. Bureau of Fiscal Service initiates refund offsets to outstanding federal agency debts or child support, State Income tax obligations and Unemployment Compensation debts. These offsets are referred to as TOP offsets. A TOP offset appears on the module as:

    • TC 898 or TC 971 AC 598 (manual input of TOP offset record) with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse

    • OTN - Starting with 1 indicates primary taxpayer debt

    • OTN - Starting with 2 indicates secondary taxpayer debt

  2. TOP offsets occur after the IRS has certified a refund to Bureau of Fiscal Service for payment (TC 840/TC 846 on account), but before Bureau of Fiscal Service directly-deposits the refund overpayment or mails the refund check.

  3. A TOP offset reduces the amount of the IRS refund by the amount of the TC 898 or TC 971 AC 598.

    Note:

    It is important to understand that the amount of a refund certified by IRS to Bureau of Fiscal Service for payment may not be the amount that is issued by Bureau of Fiscal Service to the taxpayer. The taxpayer may not receive any refund at all if the whole amount is offset.

21.4.6.4.2.1  (10-01-2014)
TOP Offset Bypass Indicator (BPI)

  1. A Treasury Offset Program Bypass Indicator is assigned to all manual and systemic refunds issued to Bureau of the Fiscal Service by IRS. The BPI is a one-digit indicator that identifies for BFS whether the refund is eligible for offset by TOP.

    Note:

    Certain BPIs also identify one of the spouses on a joint refund as eligible for offset. This is required for injured spouse allocation processing.

  2. Generally, a BPI is generated systemically, but when issuing a manual refund, you must input the BPI on CC RFUND.

    Caution:

    Non-Integrated Data Retrieval System (IDRS) manual refunds issued via Form 3753, Manual Refund Posting Voucher, are subject to TOP offset. A BPI is needed on these refunds, but is limited to BPI 0 and 3. If an offset occurs after Form 3753 has been issued, a Transaction Code (TC) 898 will not post to the account. A systemic offset reversal cannot be done. This will require a manual reversal. Contact the Fresno TOP Liaison ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for a manual reversal. Please allow 60 days for the manual reversal to post.

  3. The BPI is posted/displayed along with the TC 840/TC 846 on all output screens such as CC TXMOD, CC IMFOL, CC BMFOL, and on CC MFTRA transcripts. The BPI also shows with the pending transaction. See the following example:

    TC POSTED AMT CYCLE DLN BPI>
    846 04122014 1,586.00 20141405 28221–427–92005–4 0
  4. There are ten BPIs, 0 through 9.

    BPI Validity Eligibility for TOP Offset
    0 IMF and BMF Refund eligible for TOP Offset.
    1 IMF Bypass TOP offset for primary Social Security Number (SSN) debts. (Used when injured spouse is secondary filer.)
    2 IMF Bypass TOP offset for secondary SSN debts. (Used when injured spouse is primary filer.)
    3 IMF and BMF Refund not eligible for TOP Offset.
    4 IMF Bypass TOP offset for all debts other than child support. Eligible for TOP offset for child support only. (Used on all refunds other than injured spouse when combat zone —C Freeze is set.)
    5 IMF Bypass TOP offset for all primary SSN debts. Bypass TOP offset for all secondary SSN debts except child support. (Used when injured spouse is secondary and combat zone —C Freeze is set.)
    6 IMF Bypass TOP offset for all secondary SSN debts. Bypass TOP offset for all primary SSN debts except child support. (Used when injured spouse is primary and combat zone —C Freeze is set.)
    7 IMF and BMF Refund eligible for TOP offset to the Office of Child Support Enforcement and an automatic bankruptcy stay is in effect or when the creditor agency has obtained relief from the automatic stay.
    8 IMF Bypass TOP offset for primary SSN's debts and offset to the Office of Child Support Enforcement and automatic stay is in effect or when the creditor agency has obtained relief from the automatic stay. (Used when the injured spouse is secondary filer.)
    9 IMF Bypass TOP offset for secondary SSN's debts and offset to the Office of Child Support Enforcement and automatic stay is in effect or when the creditor agency has obtained relief from the automatic stay. (Used when the injured spouse is primary filer.)
  5. BPI (0) indicates that any refund should offset for all TOP debts owed under the primary TIN, and secondary SSN if Filing Status 2 (FS2).

    1. It is generated on all refunds when no other condition or manual input results in the use of another BPI.

  6. BPI (1) indicates that any refund should bypass offsets to debts owed by the primary spouse and may offset to any debts owed by the secondary spouse.

    1. It generates on the first refund (TC 846) issued after the reversal of a TOP offset to a primary TIN's debt. This occurs when an input of TC 766 reverses a TC 898 with no debtor TIN. See IRM 21.4.6.4.2.8, TC 766 With OTN TOP Offset Reversal, and IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN, for more information.

    2. It must be input on all manual refunds resulting from an Injured Spouse Allocation form filed by the secondary taxpayer unless combat zone, BPI (5), applies. See paragraph (10) below.

    3. It generates on refunds (TC 846) issued after reference number (RN) 809 is input to release a refund when an injured spouse is the secondary.

  7. BPI (2) indicates that TOP should bypass offsets to debts owed by the secondary spouse and may offset to any debts owed by the primary spouse.

    1. It generates on the first refund, (TC 846) issued after the reversal of a TOP offset to a secondary TIN's debt. This occurs when a TC 766 reverses a TC 898 with a debtor TIN.

    2. It must be input on all manual refunds resulting from an injured spouse allocation form filed by the primary taxpayer, unless combat zone, BPI (6), applies. See paragraph (11) below.

    3. It generates on refunds (TC 846) issued after reference number (RN) 808 is input to release a refund when an injured spouse is the primary.

  8. BPI (3) indicates TOP should bypass the refund completely.

    1. It generates on systemic refunds not eligible for TOP offset. See IRM 21.4.6.4.2.2, IMF TOP Offsets, and IRM 21.4.6.4.2.3, BMF and Civil Penalty TOP Offsets, for conditions that result in the generation of BPI 3 on IMF and BMF refunds.

    2. It must be input when issuing a manual refund not eligible for TOP offset. These instances include bankruptcy, TC 520, closing code 60-67, 81, or 83- 89 with transaction date prior to 10/17/2005, and third party refunds issued from a tax account to a taxpayer not on that account.

  9. BPI (4) indicates that TOP should bypass all debts except child support for both the primary and secondary SSN.

    1. It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

    2. It generates on all CC RFUND manual refunds issued from modules with the combat zone —C Freeze in effect.

  10. BPI (5) indicates that TOP should bypass all debts for the primary SSN and all debts except child support for the secondary spouse.

    1. BPI 5 is required if a manual refund will be issued to an injured spouse who is secondary, from a module with a combat zone —C Freeze.

    2. It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

  11. BPI (6) indicates that TOP should bypass all debts for the secondary SSN and all debts except child support for the primary spouse.

    1. BPI 6 is required if a manual refund will be issued to an injured spouse who is primary, from a module with a combat zone —C Freeze.

    2. It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

  12. BPI (7) Indicates that TOP should offset for all TOP debts owed under the primary TIN (and secondary TIN if Filing Status 2 (FS 2) when the account module contains an unreversed TC 520 with closing code 60-67, 81, 83- 89 with transaction date 10/17/2005 and subsequent.

    1. BPI 7 generates on all refunds when no other condition or manual input results in the use of another BPI and the creditor agency has obtained relief from the automatic bankruptcy stay.

  13. BPI (8) Indicates that TOP should bypass offsets to debts owed by the primary spouse and may offset to any debts owed by the secondary spouse, and the account module contains an unreversed TC 520 with closing code 60-67, 81, 83-89 with transaction date 10/17/2005 and subsequent.

    1. BPI 8 generates on the first refund, TC 846, issued after the reversal of a TOP offset to a primary TIN's debt. This occurs when an input TC 766 reverses a TC 898 with no debtor TIN. See IRM 21.4.6.4.2.8, TC 766 with OTN TOP Offset Reversal, and IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN, for more information.

    2. BPI 8 is a required input on all manual refunds resulting from an injured spouse form submitted by the secondary taxpayer unless combat zone, BPI (5) applies. See paragraph (10) above.

      Reminder:

      Contact Insolvency prior to a reversal of a TOP offset for permission to release the refund either systemically or manually.

  14. BPI (9) indicates that TOP should bypass offsets to debts owed by the secondary spouse and may offset to debts owed by the primary spouse, and the account module contains an unreversed TC 520 with closing code (cc) 60-67, 81, or 83-89 with transaction date 10/17/2005 and subsequent.

    1. BPI 9 generates on the first refund (TC 846), issued after the reversal of a TOP offset to a secondary TIN's debt. This occurs when an input TC 766 reverses a TC 898 with a debtor TIN.

    2. BPI 9 is required input on all manual refunds resulting from an injured spouse allocation form filed by the primary taxpayer unless combat zone, BPI (6) applies. See paragraph (11) above.

      Reminder:

      Contact Insolvency prior to a reversal of a TOP offset for permission to release the refund either systemically or manually.


  15. CC RFUND has a field entitled "BYPASS INDICATOR" . This indicator is normally set to "0" . When CC RFUND is input on a Master File Tax (MFT) Code not eligible for offset, the indicator is set to "3" . When CC RFUND is input on a module with a (—C) combat zone freeze, the indicator is set to "4" . Refer to IRM 21.4.6.4.2.2, IMF TOP Offset, and IRM 21.4.6.4.2.3, BMF and Civil Penalty TOP Offsets, for additional information. The following validity checks are made for BPI's on CC RFUND.

    • BPI (1), (2), (5), (6), (8) and (9) are not valid unless block 9(Injured Spouse) is used.

    • BPI (1) (2), (8) and (9) are not valid when the BPI was set to (4). BPI (5) or (6) must be used for injured spouse in combat zone

    • BPI (0) and (4) are not valid when block 9(Injured Spouse) is used

    • BPI (3) is always valid

    • BPI (4), (5), or (6) are valid, given the above conditions, even when the (—C) combat zone freeze is not on the module. This allows for manual verification of Combat Zone Status.

21.4.6.4.2.2  (10-01-2014)
IMF TOP Offset

  1. TOP offsets are made against any refund issued from MFT 29, MFT 30, MFT 35 and MFT 55 unless a Bypass Indicator (BPI) is generated on the TC 846 or input on a manual refund TC 840.

  2. When married taxpayers file using the "married filing joint" status either taxpayer (or both) may have outstanding obligations that qualify for a TOP offset. As a result, there can be one or two TC 898(s) for each refund issued. TC 898(s) will display the DEBTOR-TIN for offsets to the secondary taxpayer's debt and offsets to the primary taxpayer's debt will not display the DEBTOR-TIN.

    Note:

    The IRS refund file transmitted to Bureau of Fiscal Service contains both the primary and secondary Social Security Number (SSN) on an Filing Status 2 (FS2) joint refund.

  3. A bankruptcy —V or —W Freeze, set by the posting of TC 520, with closing code 60-67, 81 or 83- 89 with a transaction date prior to 10/17/2005, generates a BPI (3) on a TC 846 issued from that module.

  4. A combat zone —C Freeze generates a BPI (4) on a TC 846 issued from that module.

  5. BPI (3) generates on all systemic and manual refunds issued from an individual NMF account, preventing TOP offset.

    Reminder:

    All manual refunds from IMF accounts require the input of the appropriate BPI, except as noted in paragraph (5) above.

21.4.6.4.2.3  (02-05-2014)
BMF and Civil Penalty TOP Offsets

  1. TOP offsets are made against any refund issued from MFT 02, 07, 10, 13, 34, 44, 46 (Doc Code 88 only) , 52, 55, 60, 63, 64, 77, 78 and 79, unless a BPI is systemically generated on the refund or input on a manual refund. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI).

  2. TOP offsets won't be made against refunds issued from an MFT not shown above. BPI (3) generates on all refunds from MFTs that are ineligible for TOP offset.

  3. BPI (3) generates on all systemic and manual refunds issued from a business NMF account to prevent a TOP offset.

21.4.6.4.2.4  (10-01-2013)
TOP Offset Tolerance

  1. Any refund under $25 is not offset by TOP. This tolerance applies to both IMF and BMF.

21.4.6.4.2.5  (04-15-2014)
TOP Offset Notice

  1. Bureau of Fiscal Service issues a TOP offset notice when a taxpayer's refund is offset for child support, TOP debt, a state tax debt, or unemployment compensation debt.

    If And Then
    Refund is requested as a direct deposit or paper check Part or all of refund is offset Bureau of Fiscal Service generates a notice on the day they process the payment. For example: If Bureau of Fiscal Service receives a payment on 09/10/2013 with a payment date of 09/13/2013 the notice will go out before or by the payment date for both paper check and direct deposit.
    Refund is issued as paper check Part of refund was offset Notice is sent as an attachment to paper refund.
    Refund was to be issued as paper check All of refund was offset Notice is sent by itself the day check was to be mailed.
  2. The notice of offset informs the taxpayer that his/her Federal tax refund was offset for a debt owed to a particular agency(s). The notice details are as follows:

    • Payee Name

    • Payment Agency Name (IRS)

    • Amount of each offset

    • Payment Amount before Offset

    • Debtor's TIN

    • Agency(s) receiving the offset

    • Address and phone number of the agency(s)

    • Injured spouse rights

    • Phone number of the TOP Call Center at Bureau of Fiscal Service

    • Bureau of Fiscal Service offset trace number (this is not the same as the offset trace number posted with TC 898)

  3. Do not attempt to identify the agency(s) receiving the offset. Taxpayers who have not received the offset notice are referred to the TOP Call Center at Bureau of Fiscal Service at 1-800-304-3107, TTD 1–866–297–0517 for information. See IRM 21.4.6.5.1, Taxpayer Inquiries on TOP Offset.

21.4.6.4.2.6  (04-15-2014)
TOP Offset Research

  1. TOP offsets and related transactions post to the tax module where the refund creating the offset originated.

  2. The following Transaction Codes (TC) are used solely for TOP offsets:

    • TC 898 (TOP offset record generated by Bureau of Fiscal Service)

    • TC 971 AC 598 (manual input of TOP offset record which is used when the TC 898 record, generated by Bureau of Fiscal Service, is deleted in error)

    • TC 766 with Offset Trace Number (OTN) (IRS reversal of TOP offset)

    • TC 899 (TOP offset reversal record generated by Bureau of Fiscal Service) See IRM 21.4.6.4.2.9, TC 899, Reversal or Agency Refund of TOP Offset, for the record type descriptions.

    • TC 971 AC 599 (manual input of TOP offset reversal record which is used when the TC 899 Type 1, 2, 3 or 4 record, generated by Bureau of Fiscal Service, is deleted in error)

  3. IRS personnel do not have access to the TOP debtor database and cannot tell if a debt exists before a TOP offset occurs.

    Exception:

    In instances involving the offset bypass refunds, IRS personnel are required to contact Bureau of the Fiscal Service for debt information before issuing a refund. See IRM 21.4.6.5.5, Hardship Refund Request.

  4. IRS is not informed of the agency(s) receiving the offset. Only the total amount(s) offset for the primary SSN and/or secondary SSN is available. See IRM 21.4.6.4.2.7, TC 898, TOP Offset.

21.4.6.4.2.7  (10-01-2013)
TC 898, TOP Offset

  1. A TOP offset appears on Command Code (CC) TXMOD as a Transaction Code (TC) 898 with an Offset Trace Number (OTN), the offset amount is shown as OFFST-AMT. If the secondary spouse owes the debt, the debtor TIN will also be shown DEBTOR-TIN. If there is no DEBTOR-TIN shown, the taxpayer with the primary TIN is the debtor.

  2. A TC 971 AC 598 will appear on TXMOD with the OTN shown as MISC field and the offset amount will be shown as MEMO-MONEY-AMT. The debtor TIN (primary or secondary) will be shown as XREF-TIN

    Reminder:

    TC 971 AC 598 is a manual input of a TOP offset record which is used when the TC 898 has been deleted in error.

  3. A TC 898 or TC 971 AC 598 must be netted against the refund it came from to determine the actual refund amount that Bureau of Fiscal Service sends or deposits for the taxpayer.

  4. A TC 898 or TC 971 AC 598 will not identify the agency(s) receiving the offset.

  5. Each TC 898 or TC 971 AC 598 can represent an offset to one or more agencies for the same TIN.

  6. There can be one or two TC 898(s) or TC 971 AC 598(s) per refund.

    1. The Refund for both taxpayers on a joint return (FS2) could be offset for separate debts that are reported to IRS and shown as separate TC 898(s) or TC 971 AC 598(s).

    2. Both offsets must be subtracted from the original refund amount, TC 840/TC 846, to determine how much of the refund the taxpayers actually received.

  7. This example shows a TOP offset to the primary spouse's debt for $1000. The taxpayer was sent a refund of $586 ($1586 - $1000). If the DEBTOR-TIN was present and filed with the secondary spouse's SSN, the offset would have been to the secondary spouse's debt.

    Example of a TOP Offset
    TC POSTED AMT CYC DLN OTN
    846 03122011 1,586.00 20111005 28221-061–32956–1 BPI>0
    898 03122011   20111105 28277–061–32956–1  
    OTN-CD>10733–40509
    OFFST-AMT>1,000.00
  8. The TC 898 or TC 971 AC 598 TOP offset is dated the same as the prior posted TC 840 from which it originated. The TC 898 Document Locator Number (DLN) is the same as the prior TC 840 from which it originated.

  9. A TC 898 or TC 971 AC 598, originating from a computer generated refund, will match the date of the TC 846. A TC 898 originating from a computer generated refund, TC 846, has the same DLN except for the document code which is changed to 77.

  10. The OTN is an "offset trace number" used by IRS and Bureau of Fiscal Service to "connect" offsets with related reversals and the refund from which they came. It is 10 characters in length separated by a hyphen in the middle. The OTN begins with a "1" if the offset was for a primary taxpayer and a "2" if the offset was for a secondary taxpayer.

  11. A TC 898 with document code 45, TOP offset of manual refund, re-sequences for 10 cycles, if TC 840 with the same DLN is not posted. After 10 cycles it unposts as Unpostable Code (UPC) 137 or UPC 437, RC 1.

  12. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437.

  13. In some instances, a TC 898 will unpost as UPC 151 RC 0 due to a name control mismatch when Bureau of Fiscal Service returns the record to IRS. See IRM 21.4.6.5.23.3, UPC 151.

21.4.6.4.2.8  (10-01-2013)
TC 766 with OTN TOP Offset Reversal

  1. There are situations when, after an offset occurs, that we have to request that Bureau of Fiscal Service reverse the offset so a refund can be issued to the taxpayer. See IRM 21.4.6.5.7, Reasons to Reverse TOP Offset.

  2. A TOP offset reversal posts as a TC 766 with an Offset Trace Number (OTN) that is the same as the OTN of the TC 898 TOP offset being reversed. See IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN.

  3. The TC 766 is a credit to the taxpayer's account and posts with an actual money amount. It creates an IRS accounts receivable which is reimbursed by Bureau of Fiscal Service through the reversal of the agency offset.

  4. The TC 766 posts with the return due date or return received date, whichever is later.

    Exception:

    The TC 766 posts with the date of the refund creating the offset when that refund includes credit interest. See IRM 21.4.6.5.10.4, Injured Spouse Refund TOP Offset, for instructions on computing credit interest when a TOP Offset that included credit interest is reversed and the subsequent refund will be computer generated.

  5. The following example shows a posted TC 766, TOP offset reversal, for $550.00, resulting from an injured spouse allocation form filed by the secondary taxpayer. It reversed the prior posted TC 898 with the same OTN and no DEBTOR-TIN. The refund generated from this reversal has a BPI of 1. This allows TOP to offset the refund to any debt owed by the secondary spouse and it prevents TOP from offsetting the refund to any debt owed by the primary spouse.

    Example of a TOP Offset Reversal for Injured Spouse Allocation
    TC POSTED AMT CYC DLN OTN
    846 03062012 1,586.00 20121209 28221–067–92005–2 BPI>0
    898 03062012   20121210 28277–067–92005-2  
    OTN>12345–67890
      OFFST-AMT>1,000.00 SPLIT-REFUND-CD>0
    290 04192012 .00 20121214 28254–109–00001–2  
      ADJ-RSN-CD>86      
    766 04152012 550.00- 20121214 28254–109–00001–2  
    OTN>12345–67890
    846 04192012 550.00 20121214 28254–109–00001–2 BPI>1
  6. A TC 766 TOP offset reversal may post to the taxpayer's account and still be denied by Bureau of Fiscal Service in whole or in part when:

    1. The agency issued a refund of the TOP offset and IRS did not have a TC 899, type 2, posted yet.

    2. Bureau of Fiscal Service is initiating a TOP offset reversal, TC 899, type 1, resulting from a returned or undelivered refund.

  7. TC 766(s) that are rejected in whole or in part by Bureau of Fiscal Service are output on a weekly Bureau of Fiscal Service TC 766 Reject Listing and provided to the TOP Liaison Office for resolution.

    Caution:

    NEVER input a TC 767 to reverse a TC 766 with an OTN unless it is on the TC 766 Reject Listing from Bureau of Fiscal Service. See IRM 21.4.6.5.12.3, TC 766 Reject Listing, for correcting these rejects.

21.4.6.4.2.9  (04-15-2014)
TC 899, Reversal or Agency Refund of TOP Offset

  1. The Transaction Code (TC) 899 is generated by input from Bureau of Fiscal Service (BFS) and the participating agencies to report an action taken on a particular offset. The TC 899 posts to the tax module with a type code (OFFST-REC-TYPE), amount, and the OTN of the TOP offset with which it is associated.

  2. There are four types of TC 899:

    • Type 1 - Bureau of Fiscal Service TOP offset reversal

    • Type 2 - Agency refund of TOP offset

    • Type 3 - IRS Manual Reversal Request or Bureau of Fiscal Service refund of TOP offset.

      Caution:

      When a Manual Reversal Request is submitted (identified as PENDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when there is a TC 899, Type 3 present.

      Exception:

      A TC 899 Type 3 is also used to correct an account due to a BFS or IRS processing error. If PENDMRR or MRRTONHQ is not present in the IDRS case control activity, then the TC 899 Type 3 is a BFS/IRS correction. There will not be a corresponding TC 700 with this type of reversal. Work the case.

    • Type 4 - Agency refund reversal

      Note:

      TC 971 AC 599 with a Type 1,2,3 or 4, represents a manual input of an erroneously deleted TC 899 Type 1,2,3 or 4 transaction. TC 971 AC 599 must be considered when netting the TOP offset amount.

  3. TC 899, type 1, with negative money amount, is used by Bureau of Fiscal Service to report a TOP offset reversal. Bureau of Fiscal Service generates this transaction when a partial offset occurs and the remainder is refunded, but later returned. Reasons for this include refund checks that are undeliverable, returned, uncashed after 13 months, lost, or stolen and require re-issuance.

  4. TC 899, type 2, with negative money amount, is used by the agencies participating in TOP to report a refund of a TOP offset.

    1. The agency is required to make the refund payable in the name or names that were on the IRS entity and refund file at the time the original refund and TOP offset occurred.

    2. The amount may be for all or part of the TC 898 with the same OTN.

    Reminder:

    A TC 898 may consist of two or more offsets to different agencies. Therefore, the TC 899, type 2 amount may only be for part of the TOP offset.

  5. TC 899, type 3, with negative money amount, is used by Bureau of Fiscal Service for an IRS Manual Reversal Request and for a refund issued by Bureau of Fiscal Service.

    Caution:

    When a Manual Reversal Request has been submitted (identified as PENDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when there is a TC 899, Type 3 present.

    Note:

    A Type 3 is also used to correct an account due to a BFS or IRS processing error. If there is no PENDMRR or MRRTONHQ in the IDRS case control activity, then the TC 899 Type 3 is a BFS/IRS correction. There will not be a corresponding TC 700 with this type of reversal.


    Bureau of Fiscal Service is required to make the refund payable in the name or names that were on the IRS entity and refund file at the time the original refund and TOP offset occurred.

    1. The amount may be for all or part of the TC 898 or TC 971 AC 598 with the same OTN.

  6. TC 899, type 4, with positive money amount, is used by the agencies participating in TOP to correct a previously reported refund of a TOP offset.
    TC 899 type 4 is netted against a prior TC 899, type 2, with same OTN, which is the true amount of the agency refund still remaining.

  7. In the following example, a TC 899, type 2, agency refund posted for $450.00. The agency refunded the remainder of the TOP offset originating from the TC 846 dated 03/06/2012 to the taxpayer. There is now no remaining TOP offset and the taxpayers received the following refunds totaling $1,586.00.

    • $586.00 dated 03/06/2012 (TC 846 $1,586.00 — TC 898 $1,000.00)

    • $550.00 to the injured spouse dated 04/19/2012

    • $450.00 from the agency that received the offset

    Example:

    TC POSTED AMT CYC DLN OTN
    846 03062012 1,586.00 20121209 28221-067-92005-2 BPI>0
    898 03062012 .00 20121210 28277-067-92005-2 OTN>12345-67890
    OFFSDT-AMT>1,000.00 XREF>OTN-CD>12345–67890
    290 04192012 .00   200114 29254–109–00001–2  
      ADJ-RSN-CD>86 …  
    766 04152012 550.00- 20121214 28254-109-00001-2 OTN-CD>12345-67890
    846 04192012 550.00 20121214 28254-109-00001-2 BPI>1
    899 03062012 .00 20121222 28221-067-92005-2  
    OFFST-AMT> 450.00–OFFST-REC-TYPE>2 OTN-CD>12345–67890
  8. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437, for TC 899 UPC 137 or UPC 437 resolution.

  9. In some instances, a TC 899 will unpost due to an erroneously deleted TC 898. See IRM 21.4.6.5.23, TOP Unpostable Conditions, for instructions.

    Note:

    You may see a TC 971 AC 599 with Type 1, 2, 3 or 4 which represents the manual input of an erroneous deleted TC 899. TC 971 AC 599 must be considered when netting the TOP offset amount.

21.4.6.4.2.10  (04-01-2013)
Netting TOP Offsets and Reversals

  1. The net TOP offset amount is needed to:

    1. Inform the taxpayer of the actual amount offset from his/her refund and still outstanding.

    2. Determine the amount of offset available for reversal.

  2. You must take into consideration all TOP transaction codes with the same OTNs to determine the net TOP offset amount. Disregard the signs (+ or −) of each transaction code when completing the steps below:

    1. Determine the TOP offset, TC 898,or TC 971 AC 598 and the OTN of the offset that is to be netted.

    2. Subtract from the TC 898 or TC 971 AC 598: all TC 899(s) or TC 971 AC 599(s), type 1, type 2, or type 3, with the same OTN.

    3. Subtract from the TC 898 all TC 766(s) with the same OTN.

    4. Add to the TC 898 or TC 971 AC 598: all TC 899(s) or TC 971 AC 599(s), type 4, with the same OTN.

    5. Add to the TC 898 all TC 767(s) with the same OTN.

  3. Consider all unpostable conditions before reversing TOP offsets. You must ensure all unpostables (TC898 or TC899 types 1, 2, 3 or 4) are resolved before reversing the TOP offset amount for TOP transactions with the same OTN. See IRM 21.4.6.5.23, TOP Unpostable Conditions.

    Example:

    There is a TC 898 for $1,500.00 on the account. A TC 899 type 2 (agency refund) for $45.00 is posted. There is an unpostable TC 899 type 4 (agency offset reversal) for $45.00 and then there is another unpostable TC 899 Type 1 (Bureau of Fiscal Service TOP offset reversal) for $1,500.00 (the full amount of the TC 898). You must take into consideration all TOP transaction codes with the same OTNs. To correct the account, you will request Unpostables to correct the TC 899 Type 4 first (this would negate the TC 899 Type 2 previously posted) and then request unpostables to correct the TC 899 Type 1 for $1,500.00. Once the unpostable conditions are corrected, the formula to Net the TOP Offset amount is:

    Net TOP Offset Amount for Above Example
    TC 898 ($1,500.00) – TC 899 types 2 ($45.00) +TC 899 type 4 ($45.00), – TC 899 type 1 ($1,500.00= 0

    Note:

    The OTN must be the same for all these transactions when computing the net TOP offset amount.

  4. Written as a formula, the above steps appear as follows:

    Net TOP Offset Amount
    TC 898 or TC 971 AC 598 – TC 899 or TC 971 AC 599 types 1, 2, or 3 – TC 766s + TC 899 or TC 971 AC 599 type 4 + TC 767s = Net TOP Offset Amount

    Note:

    The OTN must be the same for all these transactions when computing the net TOP offset amount.

    Exception:

    In some instances, the TC 898 was erroneously deleted which required a manual reversal request to bring back the TOP Offset. You may see a TC 971 AC 598 posted for audit trail purposes only. A TC 700 posts to the account for the amount of the TOP Offset reversal. You must consider the TC 700 when netting the TOP Offset amount. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset for more information.

21.4.6.4.2.11  (02-05-2014)
TOP Offsets Involving ID Theft

  1. Before inputting any adjustment for a TOP offset on a taxpayer's account, research and consider the following transactions:

    • TC 898,

    • TC 899 (types 1, 2, 3 or 4),

    • TC 766 with OTN,

    • TC 767 with OTN,

    • TC 700 (manual reversal requests),

    • TC 971 AC 598, and

    • TC 971 AC 599.


    Refer to IRM 21.4.6.4.2.10, Netting TOP Offsets and Reversals, IRM 21.4.6.5.12, TOP Offset Reversals , and IRM 21.4.6.4.2.8, TC 766 with OTN TOP Offset Reversal for additional information.

  2. Ensure that there are no unpostable TC 898 or TC 899 transactions on the account. If an unpostable condition exists, the unpostable condition must be resolved and considered when netting the amount of the TOP offset reversal. See IRM 21.4.6.5.23, TOP Unpostable Conditions, and IRM 21.5.5.4.2, Resolving Unpostables.

    Caution:

    An unposted (UPC) or deleted (DU) TC 898 or TC 899 with an OTN indicates a TOP offset or TOP offset reversal has occurred and must be considered for netting purposes when determining the correct reversal amount.

  3. Use the following chart to determine when it is necessary to do a TOP offset reversal:

    Caution:

    If the case meets "No Move" criteria, disregard any instructions to place the account in debit balance and only submit the manual reversal request to the TOP Liaison.

    IF THEN
    The TC 846 and TC 898 TOP offset are the same.

    Reminder:

    There is no "lost refund" .

    1. Adjust the account to put the account in debit balance.

      Reminder:

      DO NOT net the refund amount. Reverse the amount of the entire TOP offset if available. See IRM 21.4.6.4.2.10, Netting TOP Offsets and Reversals.

    2. Input the TOP Offset Reversal, TC 766 with OTN. Use HC 4, RC 087, and PC 8 when applicable and post delay the TOP offset reversal by 1 cycle. See IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN.

    3. Complete ID Theft case processing and ensure no credit is left on the account.

    The TC 846 and TC 898 are NOT the same.
    1. Adjust the account to put the account in debit balance.

      Reminder:

      DO NOT net the refund amount. Reverse the amount of the entire TOP offset if available. See IRM 21.4.6.4.2.10, Netting TOP Offsets and Reversals.

    2. Input TOP Offset Reversal, TC 766 with OTN. Use HC 4, RC 087 and PC 8 when applicable and post delay the TOP offset reversal by 1 cycle. Refer to IRMIRM 21.4.6.4.2.10, Netting TOP Offsets and Reversals.

    3. Complete ID Theft case processing and ensure no credit is left on the account.

    There is a posted TC 740 or TC 841 and the account shows TC 899 type 1 with the same OTN of the posted TC 898.

    Reminder:

    There is no "lost refund" .

    1. Do not input a TOP offset reversal. See IRM 21.4.6.4.2.9(3), TC 899, Agency Refund of TOP Offset.

    2. Complete ID Theft case processing and ensure no credit is left on the account.

    The TOP offset is over 6 years old AND the TC 846 and TC 898 are the same.

    Reminder:

    There is no "lost refund" .

    Caution:

    If TXMOD shows an open base with MRR/NHQ do not submit request for a manual reversal. A request was previously submitted.

    1. Contact the Fresno TOP Liaison at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset.

    2. Adjust the account to put the account in debit balance.

      Caution:

      If case meets no move criteria disregard any instructions to place the account in debit balance, and only submit the manual reversal request to the TOP Liaison.

    3. Take no further action until the manual reversal request has completed.

    4. Complete ID Theft case processing and ensure no credit is left on the account.

      Note:

      A manual reversal request is needed if the TC 898 is either missing or deleted in error.

    The TOP offset is over 6 years old AND the TC 846 and TC 898 are NOT the same.

    Caution:

    If there is an open base with MRR/NHQ do not submit request for a manual reversal. A request was previously submitted.

    1. Contact the Fresno TOP Liaison at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset.

      Reminder:

      DO NOT net the refund amount. Reverse the amount of the entire TOP offset if available. See IRM 21.4.6.4.2.10, Netting TOP Offsets and Reversals.

    2. Follow IRM 21.4.6.4.2.10, Netting TOP Offset and Reversal.

    3. Adjust the account to put the account in debit balance.

      Caution:

      If case meets no move criteria disregard any instructions to place the account in debit balance, and only submit the manual reversal reqeust to the TOP Liaison.

    4. Take no further action until the manual reversal request has completed.

    5. Complete ID Theft case processing and ensure no credit is left on the account.

      Note:

      A manual reversal request is needed if the TC 898 is either missing or deleted in error.

    Caution:

    If a manual account transfer (TC 370/TC 400) is necessary, input the TOP offset reversal and transfer the credit to excess collections before moving the account. See IRM 21.6.2.4.2.11, Moving Specific Year Account Information.

21.4.6.5  (01-01-2001)
Refund Offset Procedures

  1. This section discusses procedures for refund offsets. Inquiries regarding offsets may originate from the non-receipt or reduction of a refund, from the receipt of an offset notice, or from other issues on an account that may cause an erroneous offset.

  2. It is important to first research the taxpayer's account to verify what type of offset(s) occurred before attempting to answer questions about an offset.

21.4.6.5.1  (10-01-2014)
Taxpayer Inquiries on TOP Offset

  1. The taxpayer is sent a notice of offset by Bureau of Fiscal Service for Treasury Offset Program offsets. Inquiries relating directly to the TOP offset are referred to the agency listed on the notice, or to the TOP Call Center at 1-800-304-3107 or, TTD 1–866–297–0517, if a notice was not received. See IRM 21.4.6.4.2.5, TOP Offset Notice, for notice information. Also see The Source for Telephone Numbers on SERP for the hours of operation.

  2. The following tables can assist you in resolving taxpayer inquiries related to TOP offsets, TC 898 (TOP offsets) or TC 971 AC 598 (manual input of TOP offset). Use Letter 3179C, Refund Offset to Treasury Offset Program Nontax Obligation, when responding to an inquiry in writing.

  3. For taxpayer inquiries regarding Refund Discrepancies:

    IF AND THEN
    Taxpayer claims he/she didn't receive a refund of overpayment.   Advise the taxpayer to allow five business days for direct deposit and 14 days for paper check to arrive,
    1. Provide the amount of the TC 846 issued.

    2. Advise the taxpayer to contact the agency on the notice if an offset occurs.

    Taxpayer claims he/she didn't receive a refund of overpayment there is a TC 898 or TC 971 AC 598 on the account, Determine if any of the refund amount was issued per IRM 21.4.6.4.2.7 and advise the taxpayer of the refund.
    Taxpayer claims his/her refund was less than expected, amount agrees with TC 846/840.   Research to resolve the discrepancy (processing error, math errors, or other tax or TOP offset). If applicable, refer taxpayer to TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517 for offset information.
    Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840, no TOP offset has occurred, research to resolve the discrepancy (processing error, math errors, or other tax offset).
    Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840, a TOP offset has occurred and the TOP offset notice was not received. Refer Taxpayer to TOP Call Center above for offset information.
    Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840, a TOP offset has occurred and the TOP offset notice was received. Refer Taxpayer to agency on notice.
    Taxpayer is aware of offset made, but claims the remainder of the refund not received.   Advise taxpayer to allow five days for direct deposit or 14 days for paper check to arrive. If not received, send taxpayer Form 3911, Taxpayer Statement Regarding Refund to begin trace of refund check.
    Taxpayer claims agency has no record of offset.   Refer taxpayer to TOP Call Center above for offset verification.
  4. For Taxpayers, Disputing the Debt or TOP Offset:

    If And Then
    Taxpayer inquires about existence of a debt   Refer taxpayer to agency that notified him/her of the debt, or if unknown, refer taxpayer to TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517.
    Taxpayer claims he/she does not owe debt or he/she is not the debtor   Refer taxpayer to agency on the due process offset notice, or if unknown, to TOP Call Center above (agency must determine who owes debt and issue any subsequent refund).
    Taxpayer claims debt was discharged in bankruptcy 1. IRS was not aware of bankruptcy prior to issuing refund 1. Refer taxpayer to agency on offset notice, or if unknown, to TOP Call Center above (agency must issue refund). Contact Insolvency as necessary. Insolvency (Bankruptcy) National Field/Centralized Site Directory
    2. IRS was aware of bankruptcy and should have placed a BPI 3 on refund 2. Refer case to Insolvency. They may request that you reverse TOP offset and issue a refund with BPI 3. Insolvency (Bankruptcy) National Field/Centralized Site Directory
    Taxpayer is requesting a refund due to hardship and 1. Offset already occurred 1. Refer taxpayer to agency on notice. Advise the taxpayer that IRS cannot bypass a completed TOP offset for hardship. Review the return and determine if the taxpayer can get relief as an "Injured Spouse" and refer them to Form 8379 , Instructions.
    2. Offset has not occurred 2. See IRM 21.4.6.5.5, Hardship Refund Request.

    Note:

    IRS/TAS does not have the authority to bypass a TOP debt.

  5. For taxpayers inquiring about Other Issues:

    If Then
    Taxpayer indicates Form 8379,Injured Spouse Allocation, was filed Initiate procedures to verify offset and receipt of Form 8379. See IRM 21.4.6.5.2, Injured Spouse Inquiries.
    Taxpayer is requesting agency contact information Refer taxpayer to TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517, for agency address and phone number.
    Taxpayer is unable to resolve problem through contact with office of creditor agency listed on offset notice Refer taxpayer to TOP Call Center, they may provide a more helpful contact.

21.4.6.5.2  (10-01-2014)
Injured Spouse Inquiries

  1. An injured spouse may contact IRS before or after an offset occurs. Often, the spouse is aware that an offset will take place and wants to know how to get his/her share of the refund. The spouse may also call about the injured spouse Form 8379, Injured Spouse Allocation, rights which are provided in the Bureau of Fiscal Service offset notice.

  2. When the taxpayer calls concerning his/her injured spouse allocation, TC 150 with Blocking Series (BS) 92 or TC 971 Action Code (AC) 071 and there is a math error on the account, refer to IRM 21.5.4.4.7, Math Error with Injured Spouse. Do not make any changes to the account or release the refund without first contacting the area that worked the injured spouse allocation.

    If And Then
    Taxpayer inquires about his/her portion of refund prior to filing original return  
    1. Advise the taxpayer it may be necessary to obtain Form 8379 and file it with original return. Remind taxpayer to write (Injured Spouse) in the upper left hand corner of their Form 1040.

    2. Advise taxpayer to allow up to 11 weeks for ELF returns and up to 14 weeks for paper returns processing time.

    Taxpayer inquires about his/her portion of refund after filing original return Form 8379 was not filed with the original return,
    1. Advise the taxpayer to submit Form 8379 with signature, attach all Forms W-2, W-2G, or 1099 showing federal income tax withholding and send it to campus where the original return was filed.

    2. Advise the taxpayer NOT to include a copy of the tax return with the Form 8379 nor to file it with a Form 1040-X unless changes to the tax return need to be made.

    3. Advise taxpayer to allow up to 8 weeks processing time.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92 and tax or TOP offset has not occurred.
    • Advise taxpayer to allow 11 weeks for electronic filed returns and 14 weeks for paper processing time from the time the Form 1040, U. S. Information Return , was received. DO NOT issue 4442/e4442.

    • If 11-14 weeks has passed and the case has not been worked and is assigned to a CSR, send Form 4442 /e4442, Inquiry Referral, to the CSR working the case. Advise the taxpayer to allow 30 days to process.

    • If 11-14 weeks has passed and the case has not been worked and the case is controlled to a clerical, site specialized control number or there is an open control base not assigned to a specific CSR, annotate the taxpayer's account as follows:

      1. Enter a Case Note (CN) with the information obtained from the caller if you have access to CIS, or

      2. Annotate AMS with the information obtained from the caller if you do not have access to CIS.

      3. Inform the taxpayer we have added a note to their case and to allow 30 days to process.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92, the Form 8379 allocation has been worked and a tax or TOP offset has occurred. Research the CIS archived case files if necessary. Advise the taxpayer of the reason for the offset.

    Note:

    If you work at a remote call site and you don't have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations, transfer the call to 92035, Application 35. DO NOT transfer the call if the taxpayer is simply asking about the status of their claim.

    Reminder:

    Provide a transfer PIN per IRM 21.1.3.2.5, Initial Authentication Transfer Procedures/Transfer PIN.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92, the Form 8379 allocation has been worked and a tax or TOP offset has NOT occurred. Research the CIS archived case files if necessary.

    Note:

    If you work at a remote call site and you don't have access to CIS or do not work injured spouse allocations, transfer the call to 92035, Application 35. DO NOT transfer the call if the taxpayer is simply asking about the status of their claim.

    Reminder:

    Provide a transfer PIN per IRM 21.1.3.2.5, Initial Authentication Transfer Procedures/Transfer PIN.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92, a TOP offset has or has not occurred and Form 8379 was not worked and the case is closed.
    1. Send 4442/e-4442 to the AM Function where the return is located. Indicate taxpayer's phone number and whether taxpayer can provide a copy of Form 8379.

      Exception:

      For returns filed in Fresno or cases previously closed by , Fresno and Philadelphia, send 4442/e4442 to Memphis.

    2. Advise taxpayer to allow 6 to 8 weeks.

    .
    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is not blocked 92 and a paper return was filed.
    1. Prepare Form 4442/e-4442 to forward case to the appropriate AM Function where the taxpayer filed their original paper return. Indicate taxpayer's phone number and whether taxpayer can provide a copy of Form 8379.

      Exception:

      For paper returns filed in Fresno, send 4442/e4442 to Memphis.

    2. Advise taxpayer to allow 6 to 8 weeks.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is not blocked 92 and an ELF return was filed. If the return was an ELF return, do not forward a referral. Explain to the taxpayer that our records show the Form 8379 was not filed with the return. Request the taxpayer provide a signed copy of the Form 8379.
    Taxpayer says Form 8379 was filed after offset and no refund was received. TC 971, AC 071 is posted. Advise taxpayer to wait 45 days from transaction date (TC 971 posting date) for a response.
    Taxpayer says Form 8379 was filed after offset and no refund was received. More than 45 days have passed since TC 971, AC 071 was input, and there is no case control.
    1. Advise the taxpayer to resubmit a signed Form 8379.

    2. Advise the taxpayer to allow up to 8 weeks from the time they re-file the Form 8379.

    Taxpayer says Form 8379 was filed after offset and no refund was received. More than 45 days have passed since TC 971, AC 071 was input, and the case is controlled to a clerical, site specialized control number or is not controlled to a specific CSR Annotate the taxpayer's account as follows:
    1. Enter a Case Note (CN) with the information obtained from the caller if you have access to CIS, or

    2. Annotate AMS with the information obtained from the caller if you do not have access to CIS.

    3. Inform the taxpayer we have added a note to their case and allow 30 days to process.

    Taxpayer says Form 8379 was filed after offset and no refund was received. There is an open control base to a CSR and 11-14 weeks has passed and the case has not been worked Send Form 4442 /e4442, Inquiry Referral, to the CSR working the case. Advise the taxpayer to allow 30 days to process.
    Taxpayer says Form 8379 was filed after offset and no refund was received. There is no TC 971, AC 071. Advise the taxpayer it may be necessary to re-file Form 8379, Injured Spouse Allocation, if more than 45 days have passed. Advise the taxpayer to allow up to 8 weeks from the time they re-file the Form 8379.
    Taxpayer says Form 8379 was filed after offset and no refund was received. A TC 840/TC 846 posted after receipt of Form 8379; and IRS processed Form 8379 and issued a refund.
    1. Check for TOP offset to a debt of the spouse.

    2. Take necessary action if refund was not received and follow refund trace procedures. See IRM 21.4.1.3.4, Refund Issued But Lost, Stolen, Destroyed or Not Received.

    Taxpayer says Form 8379, Injured Spouse Allocation was filed with or without original return. IRS sent Letter 916CClaim Incomplete for Processing; No Consideration .,. . Research CIS for an explanation of the no consideration and explain the reason for the no consideration to the taxpayer.
    Taxpayer says Form 8379, Injured Spouse Allocation was filed with or without original return. IRS previously denied Form 8379, a Letter 105C ,Claim Disallowed or Letter 106C, Claim Partially Disallowed, was sent and a TC 290 for .00, blocking series 98/99 (input after receipt of Form 8379). Research CIS for an explanation the previous denial and explain the reason for the denial to the taxpayer.
    Refer to IRM 21.5.3.4.6.2, Appeals and Responses to Letter 105C and 106C, IF/AND/THEN chart to assist the taxpayer.
    Taxpayer filed Form 8379 in any manner. A refund was not issued and the taxpayer may or may not be experiencing a financial hardship.
    1. Consider whether the case should be referred to the Taxpayer Advocate Service. See IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines.

    2. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward it to TAS.

    3. Advise taxpayer to be prepared to send a copy of Form 8379 to the TAS Office where the Form 911 was submitted.

    4. If a hardship exists, refer to IRM 21.4.6.5.5, Hardship Refund Request.

  3. There are always exceptions to the situations described above. Analyze each inquiry carefully to determine the correct course of action.

    Exception:

    If Form 8379 was filed for any filing status other than Married Filing Joint (FS 2) release the refund with a TC 571.

    Exception:

    If the taxpayer states they filed the Form 8379 in error or no longer wants the Form 8379,Injured Spouse Allocation, to be considered:

    1. Verify the request is from the injured spouse who filed the allocation.

    2. Notate on CIS or AMS, if you do not have access to CIS, the injured spouse requested that Form 8379 not be considered.

    3. Input TC 571 if TC 570 (-R FRZ) is on the account.

      Note:

      Issuance of a letter is not required per IRM 21.3.3.2, What is the Definition of Correspondence? – Policy Statement P-21.3 (Formerly P-6-12) Exclusion List, when releasing the refund for the exceptions above.

  4. If the taxpayer's Form 8379, Injured Spouse Allocation, can be processed with a faxed copy of Form 8379 request a copy and work the case.

  5. In the event of a mis-blocked form, the block must be pulled to look for other Form 8379s. Accounts Management will work all Form 8379s found in the block. Command Code ESTAB is used to request the entire block using the Document Locator Number (DLN). See IRM 2.3.17.5, Request Codes for CC ESTAB and IRM 2.3.17-1, Input Format, CCESTAB—Document Request for information on requesting the entire block.

  6. Send Letter 3179C, Refund Offset to Treasury Offset Program Nontax Obligation, or Letter 285C, Refund/Overpayment Applied to Account, when responding in writing to injured spouse inquiries regarding TOP and tax offsets respectively.

  7. When the taxpayer disagrees or does not understand the injured spouse allocation by the IRS:

    • If you work at a remote call site, and you don't have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations, transfer the call to 92035 Application 35 if it meets the criteria in paragraph 8 below.

    • If you work injured spouse allocations, verify the Form 8379 Allocation Worksheet. After verifying the allocation is correct, advise the taxpayer how the allocation was computed. Send the taxpayer a copy of the Form 8379 Allocation Worksheet only if they ask for it. The Form 8379 Allocation Worksheet should be on the CIS case file, if not pull the Form 8379 Allocation Worksheet.

    Exception:

    If you are an employee assigned to Application 21 and you do not have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations:

    1. Prepare Form 4442/e-4442

    2. Check the Spanish box in Line 21

    3. Forward the case to the appropriate AM Function.

  8. Effective February 28, 2011, Application 35, an Injured Spouse Allocation (ISA) telephone application was enabled for CSRs who are fully trained in Injured Spouse Allocation processing issues. If you are on Application 20 or Application 186 and a call meets the following criteria, transfer the call to 92035:

    • How we determined the Injured Spouse's share of the refund

    • Injured Spouse disallowance issues.

    • Injured Spouse no consideration issues Letter 916C, Claim Incomplete for Processing; No Consideration.

    • Injured Spouse's share of the refund offset

    • Wrong Spouse offset

    • Hardship cases

    • Injured Spouse manual refund S- freeze TC 740

    • Taxpayer received Letter 3179C, Refund Offset to Treasury Offset Program Nontax Obligation, or other letter related to the Injured Spouse issue

      Exception:

      Do not transfer if the letter is a Bureau of Fiscal Service letter. Refer taxpayer to TOP Call Center at 1–800–304–3107.

    Note:

    If the case does not meet TAS criteria or the criteria above, prepare Form 4442/e4442, Inquiry Referral, and refer to the appropriate AM function where there is an open control. Do not transfer the call when a Form 4442/e4442 is required.

    Reminder:

    Any application requiring specific criteria to be met before transferring the call is only listed in the IRM. The Telephone Transfer Guide directs you to this specific IRM reference to ensure the above criteria is met before transferring to 92035. You will not find 92035 listed in the TTG as a direct transfer.

  9. Injured spouse cases originally worked and closed in Fresno and Philadelphia should be directed to Memphis Accounts Management.

  10. If a taxpayer calls and wants to update their address after filing Form 8379, refer to IRM 21.3.4.11.2, Taxpayer Requests for Address Change for instructions.

  11. All Application 20 and Application 186 employees will answer all procedural and Injured Spouse/Refund Offset inquiries for which they have been trained.

  12. Employees staffing Application 35 will not transfer calls to lower level account applications.

21.4.6.5.3  (04-15-2014)
Congressional Correspondence

  1. Injured Spouse Congressional inquiries are referred to the appropriate Local Taxpayer Advocate Office (LTA) for control and assignment. Refer to IRM 13.1.8.2, Control Principles.

    Note:

    For other types of Congressional inquiries, refer to IRM 21.1.3.18(2), Taxpayer Advocate Service (TAS) Guidelines.

    The Local Taxpayer Advocate, (LTA) forwards Congressional inquires that deal strictly with TOP offsets (to child support or TOP debts) to the Bureau of Fiscal Service at the following address:

    Bureau of Fiscal Service
    Legislative & Public Affairs Office
    401 14th Street SW
    Room 556 C
    Washington, DC 20227

21.4.6.5.4  (10-01-2013)
Agency Inquiries

  1. All letters or documents from an agency and addressed to IRS are referred back to agency headquarters or Bureau of the Fiscal Service if they concern:

    • The amount of the debt owed

    • Removal of the debtor from the Treasury Offset Program

    • A refund of the offset amount

  2. Agency correspondence "certifying" a debtor, or requesting that a debtor's tax refund be offset, is returned to the agency. Advise correspondents to contact their headquarters office for debt collection.

  3. The AM Function may receive copies of legal documents regarding support obligations. They are intended for the Full Collection program. Forward to the Non-Master File unit. See IRM 21.4.6.5.25, Non-Master File Child Support.

  4. Any notices received by IRS from an agency must be returned to that agency. Do not call the agency.

    Exception:

    Notices received from an agency that are addressed to a taxpayer using the IRS Campus address are disposed of as classified waste. These are due process notices and there is no requirement that IRS return them to the agency or forward them to the taxpayer.

  5. Do not forward agency correspondence to IRS Headquarters unless directed to do so by Headquarters. Agency inquiries must be answered by the IRS campus or territory office receiving the correspondence.

21.4.6.5.5  (10-01-2014)
Hardship Refund Request

  1. Any taxpayer contact that meets any of the Taxpayer Advocate Service (TAS) criteria listed in IRM 13.1.7.2, TAS Case Criteria, should be referred to TAS. If criteria is met, follow procedures outlined in IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, for preparation of Form 911, or Form e-911,Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order).

  2. A taxpayer may submit a Form 911 or request a hardship refund of all or a portion of the overpayment on the return even though he/she may owe a Federal tax debt, child support or TOP debt.

  3. In general, IRS may honor a hardship refund request if the taxpayer has no debt or owes only Federal taxes. See IRM 21.4.6.5.11.1(12)(5), Offset Bypass Refund (OBR), for an exception to that rule.

  4. If you intend to honor a hardship and a tax debt exists, See IRM 21.4.6.5.11.1, Offset Bypass Refund (OBR), before taking any action.

  5. When issuing a hardship refund under any circumstance, inform the taxpayer that if he/she owes a child support or Federal agency debt submitted for tax refund offset, Bureau of Fiscal Service may apply his/her refund to the debt through TOP. IRS has no say in this matter. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals, for levy proceeds. You can tell the taxpayer:

    1. IRS no longer maintains child support or TOP debts.

    2. Bureau of Fiscal Service maintains these debts and affects the offset through TOP.

    3. He/she may contact the TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517 to determine if a debt is owed and whether an offset will occur. See IRM 21.4.6.5.1, Taxpayer Inquiries on TOP Offset.

    4. Only the agency to which the debt is owed can honor a hardship request for a TOP offset.

21.4.6.5.6  (04-15-2014)
Credit Elect

  1. IRC § 6402(b) provides that a taxpayer can elect to have an overpayment applied to a future tax, once all tax and TOP debts subject to offset under IRC § 6402(a), (c), (d), (e) and (f) are satisfied.

  2. Bureau of the Fiscal Service maintains the TOP debts subject to offset under IRC § 6402(c), (d), (e), and (f). Bureau of Fiscal Service provides a file, with each debtor’s TIN, name control, and the total amount of debt owed, to the Enterprise Computing Center at Martinsburg (ECC-MTB) on a weekly basis.

  3. ECC-MTB searches this file after any applicable tax offsets are determined but before crediting the credit elect amount.

    1. The amount of credit elect is reduced by the total amount of debt owed.

    2. Any amount remaining in excess of debt owed is credited as requested.

    3. The amount of credit elect, up to the amount of the debt owed, is released for refund and includes any applicable interest.

    4. A CP 45, Reduced Credit Elect is issued to inform the taxpayer of the reduction in the amount of his/her credit elect and the possible need to make additional estimated tax payments.

    5. Bureau of Fiscal Service matches the refund through TOP and offsets the amount to the agency debt(s).

  4. When the amount of a credit elect is reduced by a TOP offset, but the credit later becomes available as a result of an injured spouse allocation, no comparison is made against the BFS debtor file. If the tax year has not ended, the credit is applied systemically. If the tax year has ended, input a credit transfer, TC 830/TC 710, using CC ADD48.

21.4.6.5.7  (04-15-2014)
Reasons to Reverse TOP Offset

  1. This information is intended as a guide to determine when it is acceptable to reverse a Treasury Offset Program offset and when the offset should remain on the account. It is not all-inclusive. You may encounter situations that require an opinion by IRS Chief Counsel.

21.4.6.5.7.1  (04-15-2014)
Allowable TOP Offset Reversals

  1. A reversal of a TOP offset can be done to:

    1. Issue a refund to an injured spouse.

    2. Correct IRS initiated processing errors such as math errors, data input errors, or misapplied payments. Levy proceeds that result in offsets are not considered misapplied payments.

    3. Satisfy the balance due on a superseding return.

    4. Resolve bankruptcy cases originating from Insolvency in the territory offices.

    5. Re-sequence an account when the offset is on the "from" account. See IRM 21.4.6.5.19, Re-sequence Cases.

    6. Reprocess a return to another TIN.

    7. Reprocess a return to another tax period.

    8. Resolve Combat Zone cases, see IRM 21.4.6.5.16, Combat Zone Cases.

    9. Recover a refund issued as a result of a totally false return; (e.g., returns detected by the Questionable Refund Program, Criminal Investigation, Accounts Management Taxpayer Assurance Program, etc.).

    10. Levy proceeds which do not create an overpayment and are within 9 months of making the levy, must meet the criteria in IRC § 6343(d).

21.4.6.5.7.2  (04-15-2014)
Unallowable TOP Offset Reversals

  1. A reversal of a TOP offset cannot be input to:

    1. Solely satisfy an audit or under-reporter deficiency posted after the offset occurs unless the offset resulted from a TC 640/TC 670 payment intended specifically for the tax audit increase. The taxpayer must have specified that the payment is a cash bond.

    2. Satisfy a balance due on a tax return that posted after the return which created the offset; this includes multiple year filings where an overpaid return(s) posts before a balance due return(s).

    3. Satisfy a balance due that resulted from an amended return received after the due date on the module where the offset occurred.

    4. Refund or credit a tax account because the offset resulted from an over-collected or erroneously collected levy which creates an overpayment per IRC § 6402, unless the IRS erroneously levied another taxpayer's account.

    5. Honor a credit election.

    6. Honor a disaster claim.

    7. Honor an Offset Bypass Refund (OBR) hardship request. See IRM 21.4.6.5.5, Hardship Refund Request, and IRM 21.4.6.5.11.1, Offset Bypass Refund (OBR).

    8. Reverse a TOP offset to the Office of Child Support Enforcement that occurred after October 17, 2005 due to an automatic stay for bankruptcy.

    9. Reverse a TOP offset to a creditor agency (other than the Office of Child Support Enforcement) that occurred after October 17, 2005 when the tax module contains an unreversed TC 520 with closing code 60–67, 81, or 83-89. The creditor agency may have obtained relief from the automatic stay.

      Note:

      If it is determined that the creditor agency did not obtain relief from the automatic stay, then the TOP offset may be reversed.

      Exception:

      When working a Form 8379, Injured Spouse Allocation , always reverse the injured spouse's share of the refund, if the injured spouse is not responsible for any part of the debt which offset. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals.

21.4.6.5.8  (04-15-2014)
Form 8379 Injured Spouse Allocation

  1. The spouse, whose portion of a joint income tax overpayment was or will be offset to a Federal tax debt or TOP debt for which he/she is not liable, is known as the "injured spouse." The injured spouse must file Form 8379, Injured Spouse Allocation, to request his/her portion of the joint refund.

    Caution:

    An injured spouse is not the same as an "innocent spouse." Refer to IRM 25.15, Relief from Joint and Several Liability.

  2. When a taxpayer wants a Form 8379, Injured Spouse Allocation, but mistakenly uses Form 8857, Request for Innocent Spouse Relief, return the Form 8857 to the taxpayer, advising him/her of the mistake. Include a blank Form 8379 with instructions.

  3. When a taxpayer wants to claim innocent spouse relief, but mistakenly uses Form 8379, Injured Spouse Allocation, return the Form 8379 to the taxpayer. See IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures for instructions.

  4. The injured spouse must have made payments such as Federal Income Tax Withheld from wages or estimated tax payments, unless they are entitled to one or more refundable credits claimed on the joint return, such as Federal Income Tax Withholding, Earned Income Credit, or Additional Child Tax Credit, etc.

    Exception:

    Joint filers whose principal home was in a community property state at any time during the tax year may not have to meet the requirement in paragraph (4) above. See IRM 21.4.6.5.9, Community Property Allocation.

21.4.6.5.8.1  (10-01-2007)
Filing Form 8379

  1. Form 8379, Injured Spouse Allocation, may be filed as an attachment to the original individual tax return or by itself.

  2. A surviving spouse is entitled to file a Form 8379 and receive a refund on behalf of the deceased injured spouse even though the surviving spouse owes the obligation.

21.4.6.5.8.2  (04-15-2014)
Form 8379 Processing

  1. For Form 8379 received with the original return (Form 1040 series):

    1. The return is processed using Blocking Series (BS) 920–929,

    2. When the TC 150 posts, a CP 36D notice generates to the AM Function,

    3. The BS sets a TC 570 freeze to hold the credit until the Form 8379 is worked, and

    4. The CP 36D notices for paper returns continue to print in Files for association with the original return and shipped to AM.



    See IRM 21.4.6.5.8.3, Form 8379 Filed with Original Return, for more information.

  2. Form 8379 received with an electronically filed return:

    1. A CP 36D notice systemically generates through the Correspondence Imaging System (CIS) to AM, and

    2. Accepting Form 8379 electronically reduces the amount of time for the form to be received and worked by the campuses, and the amount of time for the refund to be issued.



    See IRM 21.4.6.5.8.3, Form 8379 Filed with Original Return, for more information.

  3. Form 8379(s) received without the original return are not numbered. They are forwarded to the Accounts Management (AM) Function and require the input of a Transaction Code (TC) 971, Action Code (AC) 071, when the case is controlled. For instructions concerning Form 8379 filed by itself, see IRM 21.4.6.5.8.4, Form 8379 Filed by Itself.

21.4.6.5.8.3  (10-01-2014)
Form 8379 Filed with Original Return

  1. When Form 8379, Injured Spouse Allocation, filed with the original return, is received in Accounts Management, it must be worked within the 45-day interest free period.

    To determine whether the 45-day interest-free period has been met, consider these three dates:

    • Return due date (determined without regard to any extension of time for filing the return).

    • Return received date (used when the return is filed after the return due date, determined without regard to any extension of time for filing the return).

    • Return processible date (RPD) (date return was received in processible form).


    To the latest of these three dates, add 45 calendar days. If the date of the refund check is not on or before that date, interest must be allowed on the refund. See IRM 20.2.4.7.5.2, 45-Day Rule and All Original Tax Returns, for the dates of systemically generated refunds. The 45-day interest-free charts (located here) may also be used for determining what date your adjustment must be input in order to meet the 45-day interest-free period for a systemically generated refund.


    When a manual refund is required, Form 5792 must be processed no later than the 42nd day when the 43rd day is a work day. Form 3753 must be processed no later than the 43rd day.

  2. If the 45-day interest-free period is missed, allow credit interest on the overpayment. Generally, credit interest is allowed from the availability date of the overpayment to the refund schedule date (less the applicable back-off period). See IRM 20.2.4, Overpayment Interest. The availability date of the overpayment is determined by the payment(s) and/or credit(s) of which it is comprised.

    If the Payment/Credit is a Then the availability date of the overpayment is the
    Prepaid or timely credit (e.g., estimated tax payment, withholding, or a payment before the due date (determined without regard to any extension of time for filing). Due date of return (determined without regard to any extension of time for filing).
    Subsequent payment/credit made dated on or after the due date (determined without regard to any extension of time for filing). Payment received date/credit date.

    Reminder:

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

    Caution:

    Interest may be computed from other than the availability date of the overpayment when the original tax return was filed late (IRC 6611(b)(3)), or in unprocessible form (IRC 6611(g)). In the event the return was filed late/unprocessible, interest on an overpayment is allowed from the later of the date of the overpayment, the delinquent return received date or the Return Processible Date (RPD).

    If the return is Then allow interest from the later of
    Timely filed (i.e., return received by the original or extended due date). The return due date (determined without regard to any extension of time for filing), the date of the overpayment (as determined in the preceding table), or the return processible date (if the RPD is after the extension date).
    Late filed (i.e., return not received by the original or extended due date). The late return received date, the date of the overpayment (as determined in the preceding table), or the return processible date.
  3. Taxpayers may file an Injured Spouse Allocation by attaching a Form 8379, Injured Spouse Allocation to the back of their original Form 1040, U.S. Individual Income Tax Return, Form 1040A, U.S. Individual Tax Return, Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents, indicating "Injured Spouse" in the upper left corner of the Form 1040 series.

  4. When Form 8379 is filed, the TC 150 Document Locator Number (DLN) is assigned blocking series 920-929. This generates a Computer Paragraph CP 36D, Injured Spouse Claims Notice. The blocking series 920-929 sets a TC 570 freeze to hold the credit until the Form 8379 is worked.

  5. Research Command Code INOLES or IAT Results IS tool under both the primary and secondary Social Security Number (SSN), for the debt indicator:

    1. "N" - No debt

    2. "F" - TOP debt

    3. "I" - IRS debt

    4. "B" - Both Federal tax debt and Treasury Offset Program debt

    See IRM 21.4.6.4, Refund Offset Research.

  6. The (I) indicator is not always set for all Federal tax debts. Research any cross reference TINs along with CC IMFOL, CC BMFOL, CC TXMOD, MFT 29 and MFT 31, etc. for any outstanding tax debts. Always capture and/or attach INOLES or IAT Results IS screens for both spouses showing the debt indicator (I), (F), (B) or (N) at the time the Injured Spouse Allocation is being worked.

    Note:

    The IAT Results IS screen may respond with a debt indicator "N" when an invalid SSN indicator follows the TIN. The IAT tool is designed to research CC INOLET when the invalid indicator is present. If INOLET does not display a debt indicator, then the IAT Results IS screen displays "N." Additional research is needed if the secondary TIN is invalid.

  7. When working an injured spouse allocation with a Federal tax offset "I" debt, the control base must be changed from DMFC (97140 paper)/DMFE (97144 electronic) to DMFT (40110 Tax Debt).

    Note:

    Do not change your control base for (B) debts which are both tax and TOP.

  8. The status of a debt at Bureau of Fiscal Service may change daily. Beginning January 2014, the debt indicator found on CC INOLE is updated daily. The debt may be activated, inactivated or deleted within TOP before a refund is issued. Therefore, discrepancies may arise from one cycle to the next and IRS may not be aware of a TOP debt. Consequently, the refund will offset, resulting in having to reverse the offset to process the Form 8379, Injured Spouse Allocation.

  9. When working a Form 8379 and the debt indicator on CC INOLE is "N" for both taxpayers do not release the overpayment with a TC 571. You will work the injured spouse case and issue a refund to the injured spouse for his/her share of the overpayment. In addition, retain the IDRS category code as DMFC (97140 paper)/ DMFE ( 97144 electronic).

  10. If the taxpayer states they filed the Form 8379 in error or no longer wants the Form 8379,Injured Spouse Allocation, to be considered and there is a debt, you must verify the request is from the injured spouse who filed the allocation before you release the refund with a TC 571.

    1. Verify the request is from the injured spouse who filed the allocation.

    2. Notate on CIS the injured spouse requested the Form 8379 not be considered.

    3. Change your control base to something other than DMFC/DMFE such as TPRQ.

    4. Release the overpayment with TC 571. Issuance of a letter is not required per IRM 21.3.3.2, What is the Definition of Correspondence? – Policy Statement P-21.3 (Formerly P-6-12) Exclusion List.

  11. On all other Forms 8379 received with the original return:

    1. If the injured spouse is the primary taxpayer and the refund is requested in both names, input a TC 290 for .00 with Reference Number (RN) 808 and the dollar amount of the allocated refund. If the one name only box of Form 8379 is checked, input a TC 290 for .00 with RN 810 and the dollar amount of the allocated refund, or

    2. If the injured spouse is the secondary taxpayer and the refund is requested in both names, input a TC 290 for .00 with reference number RN 809 and the dollar amount of the allocated refund. If one name only box of Form 8379 is checked, input a TC 290 for .00 with reference number RN 811 and the dollar amount of the allocated refund.

    This results in the systemic generation of 2 refunds (TC 846). The appropriate Bypass Indicator (BPI) will automatically be set with the input of the RN 808/RN 810 or RN 809/RN 811. Do not make an entry in the Amended Claims Date (AMD-CLMS-DT) field.

  12. If the injured spouse is not entitled to any of the 20XX overpayment, the allocation should not be considered. See IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures.

  13. Verify the Form 8379 has been processed in BS 920–929. All Forms 1040 series indicating "Injured Spouse" in the upper left corner are blocked in BS 920–929. This blocking series permits the CP 36D, Injured Spouse Claims Notice, to be issued. Two copies of the CP 36D notice, with a transcript of the account are generated. One copy of the CP 36D notice is used as a "charge out" in files; the other is scanned into CIS or forwarded to the Accounts Management Function with the Form 8379,Injured Spouse Allocation.

  14. When the CP 36D, Injured Spouse Claims Notice, is received in the AM Function, use Command Code (CC) RTVUE, (CC) TRDBV or Return Request Display (RRD) to view the return on-line and work the Form 8379. You must complete Form 8379 Allocation Worksheet and attach the Form 8379 Allocation Worksheet to the CIS case. If the refund will be computer generated, input the adjustment with a 290 .00, RN 808/RN 810 or RN 809/RN 811.

    Exception:

    If a manual refund is issued, a TC 290 .00, HC and PDC are not needed, provided that Blocking Series 9 is input on your manual refund document.

  15. If there is an outstanding IRS obligation for the primary or secondary taxpayer, compute the Injured Spouse refund. See IRM 21.4.6.5.10, Allocation of Injured Spouse Form 8379.

  16. When the overpayment has not offset and there is an IRS obligation, follow the IF/AND/THEN Chart below:

    IF AND THEN
    There is an IRS obligation on the primary taxpayer's account The injured spouse is the secondary taxpayer Issue a manual refund using BPI 1 and BS 9. Any remaining overpayment will release to any outstanding debt. See exception below.
    There is an IRS obligation on the secondary taxpayer's account The injured spouse is the primary taxpayer Issue a manual refund using BPI 2 and BS 9. Any remaining overpayment will release to any outstanding debt. See exception below.

    Exception:

    The following is a list of conditions (not all inclusive) when the remaining overpayment will not offset if the secondary taxpayer owes a Federal tax debt. In these instances, you will need to manually transfer the credit to the secondary taxpayer's tax debt.

    • The Federal tax debt is under a previous spouse's SSN.

    • The account does not have a XREF EIN/SSN.

    • Future year debt owed by the secondary taxpayer.

    • Invalid SSNs (name control mismatch, etc.).

    • Clearance of overpayment for amounts less than $5.00.

  17. Issue the manual refund in both names unless the "One Name Only" box is checked on Form 8379, Injured Spouse Allocation.

  18. The following conditions do not require a manual refund:

    • If both taxpayers owe a married filing joint debt and it is the only Federal tax debt owed, input RN 808/RN 809 or RN 810/RN 811 for the difference of the Injured Spouse's portion of the overpayment and joint liability. Any remaining overpayment will release to the joint outstanding debt.

    • If only one taxpayer owes a Federal tax debt and the remaining overpayment will full pay the debt(s).

    • If an active combat zone case involves a Federal tax debt. See IRM 21.4.6.5.16(2), Combat Zone Cases, for additional information.

  19. Send an explanation of the action taken to the taxpayers if applicable. Letter 3179C,Refund Offset to Treasury Offset Program (TOP) Nontax Obligation, see IRM 21.4.6.5.10.4(4), Injured Spouse Refund-TOP Offset, for the information to include in the letter. Letter 285C, Refund/Overpayment Applied to Account, see IRM 21.4.6.5.10.5(4), Injured Spouse Refund—Tax Offset, for the information to include in the letter.

    Note:

    See IRM 21.6.7.4.1, Source and Reason Codes — CP 21/CP 22 Notices, for conditions when a notice will/will not generate.

  20. Some entity or module freeze may need to be resolved before the Form 8379, Injured Spouse Allocation, can be processed. Some freezes and the actions required to process the injured spouse allocation are:

    1. Invalid SSN entity freeze: Resolve problem with the SSN before processing the Form 8379.

      Note:

      If the secondary SSN is invalid and a refund is requested in one name only, a manual refund is required.

    2. The -B Freeze is set when the Statute of Limitations for refund has expired. See IRM 21.5.6.4.4, -B Freeze, IRM 21.5.2.3, Adjustment Guidelines Research, and IRM 21.5.3.4, General Claim Procedures to resolve the -B Freeze.

    3. (-G) Math Error Freeze, Forms 8379 received with an original return that shows a math error on the return should not be processed without first attempting to resolve the math error. Refer to IRM 21.5.4.4.7, Math Error with Injured Spouse. If you are unable to resolve the math error, work the allocation based on the information you have.

    4. (I—) Credit Interest Freeze, sometimes set by the posting of TC 150, CCC U, indicating no reply by taxpayer to IRS letter requesting missing information: Identify the missing information on the original return, if available, and write the taxpayer requesting it, explaining that the injured spouse Form 8379 can not be processed until the information is received. Suspend the case for 40 days with a new IRS received date. Send no-consideration letter and re-file the Form 8379 with the original return if no reply is received.

    5. (—R with Julian date 999) TDI Refund Freeze: Contact TDI to determine if the freeze will be released or whether the injured spouse may have his/her portion of the overpayment by issuing a manual refund. See IRM 25.12.1.12.2, Processing Injured Spouse Allocations for instructions.

      Caution:

      For —R IVO Freeze, see IRM 21.6.2.4.2.5.2, TIN Related Problem Cases with Previous IVO Involvement , for information. Do not work the injured spouse allocation until the ID Theft issue is resolved.

    6. (—V) Bankruptcy Freeze: Contact Insolvency to determine if the injured spouse’s portion of the refund may be issued manually and whether a BPI 3 is necessary due to the bankruptcy. See IRM 21.4.6.5.15(1), Bankruptcy Cases, for instructions.

      Reminder:

      When Insolvency approves the manual refund, you must indicate approval on Form 5792. Annotate in Box 20, Remarks, Approved by Insolvency (or Technical, if applicable). Be sure to check Box 23, Bankruptcy Code Case. Remarks must also reflect which tax module the TC 520 is on and No TC 521 is pending. For additional information, refer to IRM 3.17.79.4.1(2)(ac), Case Review and Command Code REFAP (Refund Approval).

    7. (V—) Outstanding Liability Freeze: Research to determine the liable spouse and issue a manual refund to the injured spouse for the amount of his/her portion of the refund that exceeds the amount for which he/she is liable.

    8. (—W) Litigation/Bankruptcy Freeze: Contact Insolvency to determine if the injured spouse’s portion of the refund may be issued manually and whether a BPI 3 is necessary due to the bankruptcy. See IRM 21.4.6.5.15(1), Bankruptcy Cases, for instructions.

      Reminder:

      When Insolvency approves the manual refund, you must indicate approval on Form 5792. Annotate in Box 20, Remarks, Approved by Insolvency (or Technical, if applicable). Be sure to check Box 23, Bankruptcy Code Case. Remarks must also reflect which tax module the TC 520 is on and No TC 521 is pending. For additional information, refer to IRM 3.17.79.4.1(1)(ac), Case Review and Command Code REFAP (Refund Approval).

    9. (—Y) Offer in Compromise: Contact Collections to determine if the injured spouse’s portion of the refund can be issued manually.

21.4.6.5.8.4  (04-15-2014)
Form 8379 Filed by Itself

  1. Form 8379, Injured Spouse Allocation filed by itself must be processed within 45 days of receipt. See IRM 21.4.6.5.8.3(1), Form 8379 Filed with Original Return, for processing within the 45-day interest free period.

  2. A TC 971, AC 071, is input upon receipt of Form 8379 without the original return.

  3. Input TC 971, AC 071, using CC REQ77 when a Form 8379, Injured Spouse Allocation is received without the original return and the clerical function has not already input the transaction. The transaction date is the stamped received date on the Form 8379.

  4. Research for the Federal tax or TOP offset. Refer to IRM 21.4.6.5.8.3(5) for instructions.

  5. When a TC 971, AC 071 was input on the wrong account, update the CIS case to the correct account. Input TC 971, AC 071 on the appropriate account.

  6. If there is a return attached to Form 8379 and research indicates that there is no TC 150 on the account, see IRM 21.6.7.4.2.5, TC 150 Not Located — Duplicate or Amended Return Obtained to process the return. Send a Letter 3179C, "Refund Offset to Treasury Offset Program Nontax Obligation" with paragraph "U" informing the taxpayer of the delay in processing the Form 8379, Injured Spouse Allocation.

  7. Consider the period of limitations for both Federal tax offset and TOP offset. See IRM 21.4.6.5.8.9, Period of Limitations for Processing Form 8379.

21.4.6.5.8.5  (10-01-2014)
Review the Form 8379 for Completeness

  1. Rev. Rul. 80–7 intends that income, deductions, personal exemptions, credits, and payments shown on the joint return be allocated to the spouse to whom they belong.

  2. The Form 8379, Injured Spouse Allocation, must be reviewed to determine that all income shown on the joint return has been properly allocated. Verify the allocated items with Form(s) W-2 and/or CC IRPTR, IMFOL, RTVUE, TRDBV or Return Request Display.

  3. The taxable amount of Unemployment Compensation or Social Security Benefits shown on the joint return must be used when allocating the separate Adjusted Gross Income (AGI) for each spouse who received the benefit(s).

  4. Items of income, expenses, credits and deductions must be allocated to the spouse who would have entered the item on his or her separate return. Dependent related credits should be allocated to the spouse claiming the dependent.

    Example:

    Student loan interest deduction, IRA deduction, etc. would be allocated to the spouse whom, if filing separately, would have reported it on his/her separate return.

    Reminder:

    If using the IAT IS Results Allocation Worksheet and the base tax after non-refundable credits is zero, allocate the entire non-refundable credit to the injured spouse, regardless of who is claiming the credit or dependents on Form 8379.

  5. Withholding credits must be verified and allocated to the spouse to whom they belong.

    If verification reveals Then
    Withholding credit is more than reported on the joint return and the income has been reported on the joint return Allow the additional credit (TC 806) with the injured spouse adjustment.
    Withholding credit is less than reported on the joint return Do not adjust if within IRS tolerance guidelines per IRM 21.5.1.4.12, Tolerances.
  6. When a breakdown is not provided by the taxpayer, allocate estimated tax payments as follows: Divide the injured spouse's Married Filing Separate (MFS) tax by the sum of the MFS tax for both spouses and multiply that amount by joint estimated tax payments.

    Injured spouse’s MFS tax Both spouses' MFS tax × Joint estimated tax payments = Injured spouse’s portion of estimated tax payments
  7. Earned Income Tax Credit (EITC) must be allocated if the injured spouse has qualifying earned income and EITC was included on the original tax return.

    Reminder:

    We are responsible for correcting the taxpayer's account to reflect the correct information. Refer to IRM 21.5.1, General Adjustments, for tolerance considerations.

  8. Review question 5 on Form 8379 to determine if the taxpayer resides in a community property state.

    Caution:

    The domicile of a person does not change merely because of entry into the military and being stationed in another jurisdiction. For further information, see IRM 25.18.1.2.1, Domicile.

    If And Then
    Question 5 is checked "yes" or "no" Box checked is correct for state taxpayer resides Process Form 8379 based upon box checked.
    Checked "yes" A non-community property state is entered on line 5 Process Form 8379 without regard to community property laws.
    Checked "yes" A community property state is entered and the address on ENMOD is a non-community property state Process Form 8379 based upon the box checked and state provided.
    Checked "no" A community property state is entered Process Form 8379 based upon community property laws of that state.
    Checked "no" Information indicates taxpayer resided solely in a community property state Process Form 8379 based upon community property laws of that state.
    Left blank Information on return, W-2s, or entity indicates taxpayer resided solely in a non-community property state Process Form 8379 without regard to community property laws.
    Left blank Information indicates taxpayer resided solely in a community property state Process Form 8379 according to community property laws of that state.
    Left blank Information indicates taxpayer may have resided in both types of states, or in two or more community property states
    1. Attempt to telephone taxpayer. See IRM 21.4.6.5.8.6(2), Incomplete Form 8379 Signed or Filed with Original Return.

    2. Accept an oral response to line 5.

    3. If unable, to reach taxpayer by telephone see IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures.

    Note:

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

  9. If the Form 8379 , Injured Spouse Allocation, is filed with the original return and the account is in zero or debit balance with no math error, do not consider the Form 8379. If the Form 8379 is filed by itself, and there was no offset on the module or a corrected math error has created a balance due, you should not consider the Form 8379. See IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures, for instructions.

  10. When the wrong spouse is identified as the injured spouse on Form 8379, Injured Spouse Allocation, and the form is filed with the original signed return, work the form without contacting the taxpayer if either the following apply:

    1. You can determine without doubt who is the injured spouse and the one name only box has not been checked on Form 8379.

    2. The taxpayer's main home was in a community property state and the one name only box on Form 8379 has not been checked.

21.4.6.5.8.5.1  (10-01-2014)
Same-Sex Spouses

  1. As a result of a Supreme Court decision, the Service issued Rev. Rul. 2013-17, effective September 16, 2013, with the following guidance on tax treatment of same sex spouses:

    • The terms “spouse,” “husband,” and “wife” includes individuals of the same sex who were lawfully married under the laws of a state whose laws authorize the marriage of two individuals of the same sex and who remain married.

    • The Service will recognize a marriage of individuals of the same sex that was created under the laws of the state even if the married couple resides in a state that does not recognize same sex marriages.

    • The terms “spouse,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a formal relationship that is recognized under state law that does not constitute a marriage under the laws of that state, such as Registered Domestic Partners (RDP).

  2. The rules for the applying state community property laws for injured spouse allocations differ from non-community because the state law determines whether the couple is subject to community or non-community property laws.

  3. Whether a State recognizes same-sex marriage does not affect if a taxpayer is entitled to injured spouse relief. It does not matter where a taxpayer resides. The question is only whether the taxpayer is legally married, i.e., was married in a state or other jurisdiction that recognizes same-sex marriage. If the answer is yes, the taxpayer qualifies for injured spouse relief.

    Note:

    Community property allocations are dependent upon whether the states recognize community property rights for same-sex marriage. We cannot properly calculate their entitlement to injured spouse allocations (for federal tax purposes) without knowing whether the state community property laws apply.

  4. For same-sex couples residing in a non-community property state, process Form 8379 the same as opposite sex couples.

  5. In order to properly allocate Form 8379, you must determine whether a taxpayer is considered married within the community property state. Therefore, you must verify that the community property state listed on Line 5 recognizes same-sex marriage.

    Note:

    At this time, only California and Washington recognize same-sex marriage. The remaining seven community property states (Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, and Wisconsin), do not recognize same-sex marriage.

    1. A same-sex marriage is performed in a state that recognizes same-sex marriage. The same-sex couple resides in a community property state that recognizes same-sex marriage (California or Washington). Process Form 8379 the same as opposite sex couple for that community property state.

    2. A same-sex marriage is performed in a state that recognizes same-sex marriage. The same-sex couple resides in a community property state that does not recognize same-sex marriage (Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, and Wisconsin). Process Form 8379 using non-community property rules since the residing state does not recognize same-sex marriage.

21.4.6.5.8.6  (10-01-2014)
Incomplete Form 8379 Signed or Filed with Original Return

  1. Review the form for the signature of the injured spouse, unless it was filed with an original signed return.

    Note:

    Request the original return from Files, if it was not received with Form 8379 and the TC 150 is blocked 92.

  2. If the Form 8379, Injured Spouse Allocation, is incomplete, attempt to contact the taxpayer or authorized representative by phone and request the missing information such as:

    • Allocation of income to each taxpayer

    • Allocation of itemized deductions (Schedule A)

    • Allocation of exemptions other than personal exemptions

    • Allocation of credits to each taxpayer

    • Form W-2, Wage and Tax Statement. If unable to verify with original return, use command codes (CC) IRPTR, SUPOL, IMFOL, RTVUE, TRDBV, or Return Request Display (RRD).
      Make two telephone attempts within 3 business days of each other and document CIS case notes with the dates and times of these attempts. If leaving a message for the taxpayer or authorized representative, request a call back within 2 business days. If unable to contact the taxpayer or authorized representative by telephone then send a 3179Cletter to request the missing information and suspend the case for 40 days. See IRM 21.4.6.3, Disclosure, for guidelines for general disclosure and leaving information on answering machines or voice mail.


    If unable to reach the taxpayer by telephone and no reply is received, see IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures and return a copy of the Form 8379, if available.

21.4.6.5.8.7  (10-10-2012)
Form 8379 Unsigned and Filed Without Original Return

  1. If a Form 8379, Injured Spouse Allocation, is unsigned and was not filed with the original signed return or attached to a signed Form 1040-X, Amended U.S. Individual Income Tax Return:

    1. Determine all other missing information.

    2. Input a TC 971, AC 071 if needed.

    3. Request that the taxpayer send a signed copy of the form via fax or mail and provide any other missing information. See IRM 21.4.6.5.8.6(2), Incomplete Form 8379 Signed or Filed with Original Return for instructions and suspend the case for 40 days.

  2. If the taxpayer does not provide the missing information within 40 days, see IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures, for instructions.

21.4.6.5.8.8  (10-01-2014)
Form 8379, No Consideration Procedures

  1. Form 8379, Injured Spouse Allocation, should not be considered:

    1. If a Form 8379 is filed for any filing status except Married Filing Joint.

    2. If the Form 8379 is not attached to the joint Form 1040 or Form 1040X, but is instead filed separately (after offset), and is received after the time period allowed. See IRM 21.4.6.5.8.9, Time Period for Submitting Form 8379.

    3. If Married Filing Joint Federal tax debt is owed (by the same two spouses) and the debt is more than the existing overpayment.

    4. The injured spouse has no payments or refundable credits.

    5. The injured spouse's portion of tax exceeds their refundable credits.

    6. If the Form 8379 is filed with the original return and the tax period being worked is in zero or debit balance with no math error.

    7. If the Form 8379 is filed by itself, and there was no offset on the tax period being worked or a corrected math error has created a balance due.

      Note:

      For either situation (f) or (g) above, advise the taxpayer that the Form 8379 cannot be processed when there is a balance due or no overpayment exists on the account. If, at a later date, they file an amended return and a credit or overpayment is generated from the amended return, he/she could, at that time, file a new Form 8379, Injured Spouse Allocation.

    8. The case is suspended for missing and/or additional information and no reply is received within 40 days.

    9. If the taxpayer wants to claim Innocent Spouse Relief, but mistakenly uses Form 8379, Injured Spouse Allocation. Return the Form 8379 to the taxpayer advising of the mistake and include a blank Form 8857, Request for Innocent Spouse Relief, with instructions and Pub 971, Innocent Spouse Relief.

    10. If a Letter 105C, Claim Disallowed was previously sent because the return was not timely filed, advise the taxpayer that we cannot consider Form 8379, Injured Spouse Allocation.

    11. An agency refund (TC 899 or TC 971 AC 599) was issued for the entire amount of the offset.

    12. The injured spouse is not entitled to a refund, based on community property laws (tax offsets only).

      Note:

      The above list is not all inclusive, there maybe other situations that may warrant no consideration.

  2. Send the taxpayer a Letter 916CClaim Incomplete for Processing; No Consideration, letter advising the taxpayer why the allocation is not being considered.

    Exception:

    Use the following explanations for tax or TOP offset when not considering Form 8379 due to the time period limitations per IRM 21.4.6.5.8.9(4) (a) and (4)(b):

    1. If the time period for submitting Form 8379 is not met for a tax offset, advise the taxpayer "We are sorry, we cannot process your Form 8379, Injured Spouse Allocation. Your Form 8379 was received on (enter date) and the overpayment from tax year (20XX) was applied to the (20XX) Federal tax debt on (enter date). This is beyond the period when we will consider allocating a joint refund that was already paid or offset."

    2. If the time period for submitting Form 8379 is not met for a TOP offset, advise the taxpayer "We are sorry, we cannot process your Form 8379, Injured Spouse Allocation. Your Form 8379 was received on (enter date) and the overpayment from tax year (20XX) was applied to a Treasury Offset Program outstanding debt on (enter date). This is beyond the period when we will consider allocating a joint refund that was already paid or offset."

  3. Input a TC 290 .00 with the appropriate blocking series (e.g. blocking series 00 if the original return is attached to the allocation or blocking series 05 if the original return is not attached), see IRM 21.5.3.4.6.3, No Consideration Procedures.

    Note:

    If TC 150 or TC 976 is in blocking series 92 in error (Injured Spouse is not annotated on the top of the Form 1040 and no Form 8379 is attached to the document), input TC 571 to release the -R freeze or TC 290 .00 to release the -A freeze, do not send 916C letter. Change your control base from DMFC/DMFE to DUPF.

  4. If the taxpayer responds to a Letter 916C, Claim Incomplete for Processing; No Consideration, research CIS for an explanation for the previous no consideration. If the taxpayer sends additional information and the Form 8379, Injured Spouse Allocation, can be allowed, follow normal injured spouse processing procedures. If the Form 8379cannot be allowed, send the taxpayer a Letter 916C with the explanation for the no consideration.

  5. If the taxpayer responds to a previous Letter 105C, Claim Disallowed, or Letter 106C, Claim Partially Disallowed, research CIS for an explanation of the previous denial and explain the reason for the denial to the taxpayer. If the taxpayer sends additional information and the Form 8379, Injured Spouse Allocation, can be allowed, follow normal injured spouse processing procedures. If the injured spouse allocation cannot be allowed, do not send another disallowance letter. See IRM 21.5.3.4.6.2,Appeals and Responses to Letter 105C and 106C, for further instructions.

21.4.6.5.8.9  (10-01-2014)
Time Period for Submitting Form 8379

  1. Form 8379, Injured Spouse Allocation, is not a separate claim. See IRM 21.5.3.2(3), What Are Claims for Credit, Refund, and Abatement?. It is an avenue the non-debtor spouse uses to provide additional information regarding his or her share of the overpayment shown on a jointly filed original tax return (Form 1040,U.S. Individual Income Tax Return, or amended return Form 1040-X, Amended U.S. Individual Income Tax Return.

  2. Taxpayers may file Form 8379 with the return or after offset.

    1. Some taxpayers will attach Form 8379 to their joint Form 1040 or Form 1040X, see IRM 21.4.6.5.8.9.1, Form 8379 Attached to Joint Form 1040/Form 1040X.

    2. Others may file Form 8379 after filing Form 1040 or Form 1040X, see IRM 21.4.6.5.8.9.2, Form 8379 Not Attached to Joint Form 1040/Form 1040X.

  3. If the IRS offsets the refund claimed on a Form 1040/Form 1040X (in whole or in part) to a Federal tax debt or a TOP debt, the IRS does not issue a Notice of Claim Disallowance, as nothing is being disallowed.

  4. If the Form 8379 is not attached to the joint Form 1040 or Form 1040X, but is instead filed separately, the time period for filing Form 8379 is as follows:

    1. Federal Tax Debts - Within 2 years from the cycle of offset.

      Caution:

      For late filed returns with pre-paid credits, you must figure the 2-year period from the cycle of offset. Use the IDRS Online Input Table to determine the date to use.

      Example:

      Form 1040 for 201012 is a late filed return with prepaid credits (e.g. withholding, estimated payments, etc.), the TC 150 carries the 23C date (assessment date) of 12162013; however, the overpayment offsets (TC 826) to a prior year balance due account in cycle 20140405 with the original due date (04152011) of the 201012 tax return because of the withholding credit. To determine the actual effective date of offset, you will use the Doc. 6209, 2014 - IDRS Online Input Table, find cycle 201404 under the column titled "OUTPUT CYCLE NUMBER" and the date to the left of that cycle under the column titled "ASSESSMENT OR SCHEDULED 23-C DATE" will be the date to use to determine if the Form 8379 was filed timely. In this example, if Form 8379 was filed within two years of 2/10/2014, it will be considered timely.

    2. Treasury Offset Program Debts - Within 6 years from the date of offset.

      Note:

      To determine when the Bureau of Fiscal Service notified the non-debtor spouse of the offset, use the TC 846/TC 840 date from which the offset occurred.

    3. Both Federal Tax Debt and Treasury Offset Debt on the same account - You must consider the 2 year rule for the tax offset and the 6 year rule for the TOP offset.

      Example:

      Form 1040 for 201112 filed on March 26, 2012 and tax offset occurred to a prior year balance due account. A TOP offset also occurred on March 26, 2012. The Form 8379 was received on April 7, 2014. Do not consider the tax offset since the 2 year period for receiving the Form 8379 has expired. You will consider the TOP offset because the Form 8379 was filed within the 6 year period. Send a 285C letter explaining to the taxpayer that the tax offset did not meet the 2 year period, however, the TOP offset can be refunded because it meets the 6 year period of TOP offsets.

21.4.6.5.8.9.1  (10-01-2014)
Form 8379 Attached to Joint Form 1040/Form 1040-X

  1. If the Form 8379 is attached to the joint Form 1040 or Form 1040X and the Form 1040 or Form 1040X is timely under IRC § 6511, the Form 8379 is timely for any refund requested on Form 1040 or Form 1040X.

  2. If a timely Form 1040-X is filed, AM must also consider the 2 year time period for submitting Form 8379 for all prior Federal tax offsets. See IRM 21.4.6.5.8.9(4), Time Period for Submitting Form 8379.

  3. If the jointly filed claim on Form 1040, U.S. Individual Income Tax Return, or Form 1040-X, Amended U.S. Individual Income Tax Return, was not timely per IRC § 6511(a), or IRS determines there is no overpayment available for credit or refund per § 6511(b), then the Form 8379, Injured Spouse Allocation, is not considered as there would be no joint credit or refund to offset and the allocation irrelevant.

  4. If the Form 1040 or Form 1040-X was not timely per IRC § 6511(a) and a 105C, Claim Disallowed, letter was previously sent, send a 916C, Claim Incomplete for Processing; No Consideration, letter and advise the taxpayer that we cannot consider Form 8379, Injured Spouse Allocation, since the return was not timely filed. See IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures.

  5. If the non-debtor spouse resubmits the Form 8379 with required documentation for Appeals consideration during this period, AM may reconsider its rejection of the allocation before forwarding the new Form 8379 to Appeals. If AM accepts the resubmitted allocation it is unnecessary to forward the case to Appeals. See IRM 21.4.6.5.10, Allocation of Injured Spouse Form 8379.

  6. If the Form 1040 or Form 1040X has been determined to have no overpayment available for credit or refund then a 916C letter must be sent to advise the taxpayer why the allocation is not being considered. See IRM 21.4.6.5.8.8, Form 8379, No Consideration Procedures.

21.4.6.5.8.9.2  (04-15-2014)
Form 8379 Not Attached to Joint Form 1040/Form 1040-X

  1. If the jointly filed claim on Form 1040, U.S. Individual Income Tax Return or Form 1040-X , Amended U.S. Individual Income Tax Return, was not timely per IRC § 6511 (a), or IRS determines there is no overpayment available for credit or refund per IRC § 6511 (b), then there would be no joint credit or refund to offset and Form 8379 allocation filed by itself is irrelevant.

  2. If the jointly filed claim on Form 1040 or Form 1040-X was timely per IRC § 6511(a), and IRS determines an overpayment exists, and an amount is available for credit or refund per IRC § 6511(b), then IRS and Bureau of Fiscal Service will offset the joint overpayment by allocating it in favor of the debtor spouse's creditors. The non-debtor spouse may submit Form 8379, Injured Spouse Allocation, to request his/her share of the joint overpayment. The Form 8379 must be received within the period for submission per IRM 21.4.6.5.8.9, Time Period for Submitting Form 8379.

    • For Federal tax debts, The IRS will issue a CP 49 notice advising the taxpayer to which account the overpayment was applied.

    • For TOP offsets, BFS issues the Notification of Offset that provides the creditor agency contact information.

  3. If the IRS receives the Form 8379 from the non-debtor spouse more than 2 years after the offset against a Federal tax debt send a 916C letter and advise the taxpayer that we cannot process the allocation because Form 8379 was not submitted within two years of the tax offset. See IRM 21.4.6.5.8.8(2)(a), Form 8379, No Consider Procedures, for instructions on what to include in the letter.

  4. When the refund is offset to a TOP debt, the non-debtor spouse must file Form 8379 no later than six years from the date the Bureau of Fiscal Service (BFS) notifies him/her of the offset. If the IRS receives the non-debtor-spouse’s Form 8379 later than 6 years after the offset against a TOP debt, send 916C letter and advise the taxpayer that we cannot process the Form 8379 because it was not submitted within 6 years of the TOP offset. See IRM 21.4.6.5.8.8(2)(b), Form 8379, No Consider Procedures, for instructions on what to include in the letter.

21.4.6.5.8.10  (10-01-2014)
Exam and CI Cases

  1. Form 8379, Injured Spouse Allocation, are not sent to EXAM. However, an EXAM freeze on an account which also has a —R freeze, may affect the timing when the injured spouse allocation is worked. The following table may assist you in resolving injured spouse cases when an EXAM freeze (-L, -Q, - E) or CI freeze (-Z or Z-) is present.

    Note:

    Do not route a copy or your original injured spouse case to EXAM or Criminal Investigation (CI).

    Caution:

    Use appropriate Priority Code when adjusting accounts with an open -L freeze.

    IF And Then
    Taxpayer's overpayment is being held by EXAM (-L or -LE freezes) pending review of his/her tax return AIMS status is 08 or less and no EITC is involved Work your case.
    Taxpayer's overpayment is being held by EXAM (-L or -LE freezes) pending review of his/her tax return AIMS status is 08 or less and EITC is involved Work your case up to the amount of EITC.
    Issue a letter to the taxpayer informing them upon completion of his/her Examination they can resubmit a new Form 8379, Injured Spouse Allocation, if needed. Explain to the taxpayer that any amount of EITC allowed will be allocated to the spouse who earned the income upon which the EITC is based.
    Taxpayer's overpayment is being held by EXAM (-L or -LE freezes) pending review of his/her tax return AIMS status is greater than 08 Issue a letter to the taxpayer informing him/her that the allocation of Form 8379 will be computed after the examination is completed.
    Suspend your case and change your control base to a monitor (M) status.
    Upon completion of the examination, work your case. Secure a copy of the return, if necessary.
    Contact Exam for a copy of the return.
    Contact the taxpayer to obtain a copy of the return, if not readily available from Exam.
    If offset has occurred   Work the case regardless of EXAM status.
    Taxpayer's overpayment is not being held by EXAM, however, there may be a -L or -LR freeze on the account by EXAM pending review of his/her tax return The TC 570 creating the -R freeze has the same DLN as the original return with blocking series 92 Process the case regardless of the AIMS status.
    Taxpayer's overpayment is being held by -Q Freeze. There is a TC 576 on the module Hold until the -Q freeze is released with TC 572 by EXAM or IVO.
    Suspend your case and change your control base to a monitor (M) status.
    You have an Injured Spouse and the case is suspended to CAT-A for the First-Time Homebuyer Credit (FTHBC), Earned Income Tax Credit (EITC) and/or Adoption Credit The case is Selected Work the case up to the amount of the FTHBC, EITC and/or Adoption Credit. Issue a letter to the taxpayer informing them upon completion of their Examination they can resubmit a new Form 8379, Injured Spouse Allocation, if needed for any additional credit that is allowed. For more information on FTHBC, refer to IRM 21.4.6.5.28, First-Time Homebuyer Credit , See Exhibit in IRM 21.5.3-4, First-Time Homebuyer Credit – Additional CAT-A Criteria or IRM 21.6.3.4.2.11, First-Time Homebuyer Credit.
    Taxpayer's overpayment is being held by CI pending review of his/her tax return There is a -Z or Z- Freeze on the account Questionable Refund Program (QRP) Do not refer your case to CI or EXAM. Do not send a letter to the taxpayer. If the tax module shows a Project Code of 0173, 0263, 0390, 0584, 0603 or 0611, these QRP cases are under the control of CI SDC and notice has been sent to the taxpayer. If you receive a call and the account shows any type of CI involvement you may advise the taxpayer that their return is being reviewed but do not advise of CI involvement.
    Suspend your case and change your control base to a monitor (M) status.
    Upon completion of the examination, work your case. Secure a copy of the return, if necessary.
    Contact Exam or CI for a copy of the return.
    Contact the taxpayer to obtain a copy of the return, if not readily available from Exam or CI.

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