21.4.6  Refund Offset

Manual Transmittal

September 10, 2013

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, Federal agency non-tax debts, and Form 8379Injured Spouse Allocation.

Material Changes

(1) IRM 21.4.6, Various editorial changes and formatting throughout.

(2) IRM 21.4.6, Changed the name of Financial Management Service to Bureau of Fiscal Service and removed references to FMS and replaced with Bureau of Fiscal Service throughout.

(3) IRM 21.4.6, Several subsections have been significantly revised and some subsections have been merged. The IPUs listed below contain the references where the information was changed 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 Additionally, some changes may have been superseded by later changes.

(4) IRM 21.4.6, updated Centralized Insolvency Office to Centralized Insolvency Operation throughout.

(5) IPU 13U0627 issued 04–01–2013 IRM 21.4.6.1(1) Note - Added Centralized Insolvency Operation (CIO) to list of designated OUO information.

(6) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.4(2) Second bullet - Added instruction, Additional research is needed if the secondary TIN is invalid.

(7) IRM 21.4.6.4(4) - Revised the priority of offsets and added Unemployment Compensation.

(8) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.4(6) - Removed Note, clarified debt may exist and added link to IRM 21.4.6.5.9.3(9).

(9) IRM 21.4.6.4(7)(f) - Added closing code 60-67, 81 or 83-89 on the account.

(10) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4(10)(c) - Added new TC 971 AC 598 for the manual input of TOP offset record.

(11) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.4.1.1 - Added new sub-section for Tax Offset Reversal

(12) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.4.1.1(1) - Added an example in the 1st bullet and clarifications in the 2nd, 3rd, and 4th bullets.

(13) 21.4.6.4.1.1(1) - Clarified MFJ account and revised verbiage.

(14) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.4.1.1(2) - Clarified to move the credits before abating the tax and added a steplist with instructions.

(15) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2(1) 1st bullet - Added new TC 971 AC 598 for the manual input of TOP offset record.

(16) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2(3) - Added new TC 971 AC 598 for the manual input of TOP offset record.

(17) IIPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.1(2) - Added Reminder that internal phone number is for OUO.

(18) IRM 21.4.6.4.2.1(8)(b) - Added closing codes 60-67, 81 and 83-89 with a transaction date prior to 10/17/2005.

(19) IRM 21.4.6.4.2.1(12) - Added closing code 81.

(20) IRM 21.4.6.4.2.1(13) - Added closing code 81.

(21) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.2(2) - Clarified TC 898(s) and how they will display.

(22) IRM 21.4.6.4.2.2(3) - Updated with -W Freeze, included closing codes 60-67, 81 or 83-89 with a transaction date prior to 10/17/2005.

(23) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.4.2.5(1) If And Then Chart - Clarified when FMS generates the notice information.

(24) IRM 21.4.6.4.2.5(1)- Added unemployment compensation debt.

(25) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.6(2) - Added a new 2nd bullet and for the new TC 971 AC 598 ( manual input of TOP offset record), Revised 4th bullet for TC 899 explanation and added IRM reference, and Added a 5th bullet for the new TC 971 AC 599 (manual input of TOP offset reversal record).

(26) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.7(2) - Added new par. (2) and a Reminder with information on the new TC 971 AC 598 and how it will appear on TXMOD.

(27) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.7 (2), (3), (4), (5), (6), (6)(a), and (8) - Added new TC 971 AC 598 for the manual input of TOP offset record.

(28) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.4.2.9(2) - Clarified TC 899 Type 3 is an IRS Manual Reversal Request or an FMS refund of a TOP offset.

(29) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.9(2) - Added Note for new TC 971 AC 599 for manual input of TOP offset reversal record.

(30) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.4.2.9(5) - Clarified TC 899 Type 3 is an IRS Manual Reversal Request or an FMS refund of a TOP offset.

(31) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.9(5)(a) - Added new TC 971 AC 598 for the manual input of TOP offset record.

(32) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.4.2.9(6) - Added TC 899 Type 4 is netted against TC 899 Type 2 with same OTN.

(33) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.9(9) - Added Note for new TC 971 AC 599 (manual input of TOP offset reversal record) which must be considered in the netting process.

(34) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.10(2)(1,2, & 4) - Added new TC 971 AC 598 (manual input of TOP offset record) and TC 971 AC 599 (manual input of TOP offset reversal record) to netting instructions and removed the Note from (2)(5).

(35) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.10(3) - Moved par.(4) to par.(3), subsequent paragraphs are renumbered.

(36) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.2.10(4) - Added TC 971 AC 598 and TC 971 AC 599 to the formula, Clarified TC 971 AC 598 is posted for audit trail purposes only, and Added IRM reference.

(37) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.4.2.11 new section added on TOP offset reversals involving ID Theft cases.

(38) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.3.1(3) - Added Reminder that internal phone number is for OUO.

(39) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.4.9(2) - Added Reminder that internal phone number is for OUO.

(40) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.1(1) - Removed Par.(2) and added reference to IRM and link to The Source for Telephone Numbers on SERP in par.(1), subsequent paragraphs renumbered.

(41) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.1(2) - Added new TC 971 AC 598 for the manual input of TOP offset.

(42) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.1(3) - Revised Refund Discrepancies If/Then table to an If/And/Then table and clarified procedures.

(43) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.1(3) - Added new TC 971 AC 598 for the manual input of TOP offset record to the 2nd AND box in the IF/AND/THEN chart.

(44) IRM 21.4.6.5.1(3) IF/AND/THEN Chart - Removed "or TOP" from 4th block since no TOP offset would have occurred.

(45) IRM 21.4.6.5.1(4) IF/AND/THEN Chart, 4th scenario THEN box #2 - Added Note: IRS/TAS does not have the authority to bypass a TOP debt.

(46) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.2(4) - Added Reminder that internal phone number is for OUO.

(47) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.2(6) - Added Reminder that internal phone number is for OUO to 2nd THEN box.

(48) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.2(6) Then box 2 - Clarified CSR should contact Fresno TOP/DMF Liaison and revised instructions as a step list, and removed instruction to verify taxpayer address.

(49) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.2(6) Then box 3 - Removed instruction to verify taxpayer address.

(50) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.2(6) Then box 4 - Clarified CSR should contact Fresno TOP/DMF Liaison above for the correct address and phone number and removed last sentence.

(51) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(1) - Clarified Injured Spouse rights are provided on the FMS notice.

(52) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(2) - Removed paragraph (2) reference to Economic Stimulus Payment and subsequent paragraphs are now renumbered in this section.

(53) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(2) Formerly paragraph (3) If And Then Chart - Revised instructions, added steplists for clarification and included instruction to research the CIS archived case file if necessary.

(54) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.3(2) - Updated Note in 4th box IF/AND/THEN chart for when to refer to APP 35. Added DO NOT transfer the call if the taxpayer is simply asking about the status of their claim.

(55) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.3(2)(1) - Added Note in Then column to transfer questions on eligibility or tax law.

(56) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.3(2) IF/AND/THEN Chart - Third Then box, clarified DLNs that were previously closed.

(57) IRM 21.4.6.5.3(2) IF/AND/THEN Chart, 3rd THEN box - Added bullet list for clarification and revised procedures. Also removed Note.

(58) IRM 21.4.6.5.3(2) IF/AND/THEN Chart, 4th and 5th THEN box - Changed "block" to "return" added Exception for returns filed in Fresno.

(59) IRM 21.4.6.5.3(2) IF/AND/THEN Chart, 9th IF/AND/THEN box - Added new procedures for when TC 971 AC 071 is on the account, 45 days have passed and case in controlled to a clerical or site specialized number.

(60) IRM 21.4.6.5.3(2) IF/AND/THEN Chart, last IF/AND/THEN box - Removed reference to IRM 13.1.7.2, TAS Case Criteria in AND box and added reference in THEN box to IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines.

(61) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(3) - Added instruction to enter a CIS Case Note on CIS with the information obtained from the caller and revised 30 day time frame to 45 days.

(62) IRM 21.4.6.5.3(3) - Removed paragraph. All subsequent paragraphs (4 - 13) now renumbered (3-12).

(63) IRM 21.4.6.5.3(3) - Changed "Example" to" Exception" , Removed last part of sentence in 2nd example and added to step list, Removed old step list instructions and updated with new instructions.

(64) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(4) - Added Example for when the refund can be released with TC 571 and removed last sentence in the Note referencing a mis-block.

(65) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.3(4) - Added additional Example for when the taxpayer calls and states they filed Form 8379 in error.

(66) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.3(4) - Removed Note and put information in as new Par. (5)

(67) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(6) - Added instructions for mis-blocked Form 8379s, all subsequent paragraphs are renumbered.

(68) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(7) - Added Letter 285C for tax debts and removed Note which was moved to paragraph (4) as an example.

(69) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.3(7) - Removed wording for tax debts to avoid confusion. Use of letter is optional.

(70) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(8) Second bullet - Added instruction to advise the taxpayer how the allocation was computed and to provide a copy of Form 8379-A, only if taxpayer asks for it.

(71) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(9) - Added Application 186 to list of Applications approved to transfer to Application 35 and revised Note to send Form 4442/e4442 to AM function with an open control and not transfer the call when a Form 4442/e4442 is required.

(72) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.3(9) - Removed Exception and created new par. (10).

(73) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.3(10) - Clarified closed injured spouse cases for the sites listed.

(74) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.3(11) - Added instructions and IRM reference for requests for address change.

(75) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.3(12) - Added Application 186.

(76) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.4 Note - Corrected IRM reference to 21.1.3.18(2) for TAS Guidelines for clarification.

(77) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.6(3) and (5)(c) - Minor editorial changes.

(78) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.7(3) - Changed step list to an alpha list.

(79) IRM 21.4.6.5.8.1(1)(i) - Added Accounts Management Taxpayer Assurance Program.

(80) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.8.2(1)(i) - Added Exception: if the Injured Spouse is not responsible for any part of the debt which offset.

(81) IRM 21.4.6.5.8.2(1)(i) - Added Closing Code 81.

(82) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.8.2(2) - Removed paragraph (2) and added as an Exception in paragraph (1)(i).

(83) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9(3) - Removed instruction to advise of mistake and include blank Form 8857 and referenced new IRM Sub-section 21.4.6.5.9.8, Form 8379, No Consideration Procedures.

(84) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9(4) - Clarified must be entitled to one or more refundable credits and provided some examples.

(85) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.2(2) - Removed obsolete reference to prior processing procedure and subsequent paragraphs are now renumbered.

(86) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.2(5) - Clarified Form 8379 received with an electronically filed return systemically generates through the Correspondence Imaging System (CIS) to Accounts Management.

(87) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(1) - Clarified every effort must be made to issue the refund within the 45-day interest free period, added bullets for determining the interest-free period and provided instructions.

(88) IRM 21.4.6.5.9.3(1) - Clarified when Form 8379 is received in Accounts Management, it must be worked within the 45-day interest free period.

(89) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.9.3(2) - Added new paragraph with instruction if the 45-day interest-free period is missed. All subsequent paragraphs are renumbered.

(90) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(6) - Added Note to explain IAT Results IS tool may respond with a debt indicator "N" and further research is needed when there is an invalid SSN.

(91) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(8) - Removed reference to "one name only" which is now located in paragraph (11), removed Note which is now located as an Exception in paragraph (14) and added Exception for a combat zone case when it involves a tax debt and included IRM reference to IRM 21.4.6.5.18, Combat Zone Cases.

(92) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.9.3(9) Exception - Added an Exception for when taxpayer states they no longer want Form 8379 to be considered.

(93) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.9.3(9) - Added clarification that no offsets have occurred.

(94) IRM 21.4.6.5.9.3(9) - Revised Exception with new instructions.

(95) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(10) - Added Note and IRM reference for disallowance when injured spouse has no refundable credits.

(96) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.9.3(10) - Previous Note renumbered as new par. (10), removed Exception referencing Combat Zone and relocated information under par. (14). All subsequent paragraphs are renumbered.

(97) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(13) - Added instructions for CP36D and included an Exception for manual refunds. All subsequent paragraphs are renumbered.

(98) IRM 21.4.6.5.9.3(13) - Removed MeF from list of research tools. MeF is a system.

(99) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(14) Exception - Clarified instruction for outstanding debt.

(100) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(14) If And Then Chart - Added references to Exceptions in paragraph (14) and paragraph (16) to the 1st, 3rd, 4th and 6th "Then" boxes.

(101) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.9.3(14) - Corrected references in the IF/AND/THEN chart.

(102) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.9.3(14) - Split Exception into two paragraphs for clarity.

(103) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.9.3(14) - Corrected paragraph reference in the 4th and 6th IF/AND/THEN boxes to par. (16).

(104) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(15) - Removed paragraph (15), all subsequent paragraphs are renumbered.

(105) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.9.3(15) - Removed reference to IRM 21.5.1.5.2 and removed sentence referencing situations above.

(106) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(16) - Added Exception for when the remaining overpayment will not offset and instruction to do a credit transfer.

(107) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(16) - Removed paragraph (16), all subsequent paragraphs are renumbered.

(108) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(17) - Added IRM 21.4.6.5.11.6(4) reference to information to include in the letter.

(109) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.9.3(17) - Removed wording for tax debts to avoid confusion. Use of letter is optional.

(110) IRM 21.4.6.5.9.3(17) - Replaced adjustment notice with computer generated notice.

(111) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(18)(b) - Added instruction for resolving -G Math Error Freeze.

(112) IRM 21.4.6.5.9.3(18)(d) - Added link to IRM 25.12.1.12.2 for further instructions.

(113) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.3(18)(e)&(g) - Added reference to IRM 21.4.6.5.17(1), Bankruptcy Cases for instructions.

(114) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.4(1) - Added reference to IRM 21.4.6.5.9.3(1) for processing within the 45-day interest free period.

(115) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.4(4) - Added IRM 21.4.6.5.9.3(5) reference.

(116) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.4(5) - Clarified instruction to update the CIS case to the correct account.

(117) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.4(6) - Added instruction for when there is no TC 150 on the account and to send a letter informing the taxpayer of the delay.

(118) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.5(2) - Revised paragraph (2) to clarify allocation and verification items on Form 8379.

(119) IRM 21.4.6.5.9.5(2) - Removed MeF at the end on sentence.

(120) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.5(4) - Clarified allocated items and dependent related credits and added a reminder if using IAT IS Results Tool for Non-refundable credits.

(121) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.5(8) - Added new paragraph for review of Question 5 on Form 8379 and added If And Then Chart for processing as Community or Non-Community Property. All subsequent paragraphs are renumbered.

(122) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.9.5(8) - Added reference to IRM 21.4.6.5.9.6(2) for telephone contact instructions in last Then box.

(123) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.9.5(8) Clarified procedure in the first IF/AND/THEN box.

(124) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.9.5(8) Added new 3rd IF/AND/THEN box with instruction for when a community property state is entered and the address on ENMOD is a non-community property state.

(125) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.5(9) - Removed instruction to Letter 916C and added reference to IRM 21.4.6.5.9.8, Form 8379, No Consideration Procedures.

(126) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.6(1) - Moved note to request return from paragraph (2) to paragraph (1), if signature needs to be verified.

(127) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.6(2) - Added Return Request Display (RRD) , added instruction to contact the taxpayer by telephone and reference to IRM 21.4.6.5.9.8, Form 8379, No Consideration Procedures if unable to reach the taxpayer by telephone and no reply received.

(128) IRM 21.4.6.5.9.6(2) - Removed MeF at the end on sentence.

(129) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.6(3) - Removed paragraphs (3), (4) and (5) and relocated the information to IRM 21.4.6.5.9.5(8).

(130) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.7(1)(3) - Added instruction to suspend the case for 40 days.

(131) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.7(1)(4) - Removed step (4) and the Note and made a new paragraph (2) with reference to IRM 21.4.6.5.9.5(8).

(132) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.8 - Added new sub-section for Form 8379, No Consideration Procedures. All subsequent sections are renumbered.

(133) IRM 21.4.6.5.9.8(3) Note - Added instruction to change control base to something other than DMF/DMFE.

(134) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.9(2)(a) - Corrected IRM reference.

(135) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.9(2)(c) - Corrected IRM reference.

(136) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.9.9(3)(a) - Added Reminder that internal phone number is for OUO.I

(137) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.9.1(3) New paragraph (3) - Added instruction if allocation was previously disallowed.

(138) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.9.10(1) If And Then Chart - Removed Caution statement from box 6 and Caution statement in paragraph (1), revised chart to put Exam, CI, etc. items together, added Adoption Credit for CAT-A criteria.

(139) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.10(5) - Removed paragraph referencing prior paper Form 8379-A worksheet, subsequent paragraph renumbered.

(140) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.11(1) - Added new paragraph (1) for location on Form 8379 Allocation Worksheets and instruction to keep paper copies.

(141) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.11(2) - Moved references to location and paper copies to new paragraph (1).

(142) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11(2) - Added reference to shortcuts in paragraphs (4), (5) and (6) and added reference for App 20, App 137 and App 186 to transfer to App 35 if it meets the criteria in IRM 21.4.6.5.3.

(143) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.11(2) - Clarified the shortcut methods are optional.

(144) IPU 13U0961 issued 05-21-2013 IRM 21.4.6.5.11(2) Exception - Clarified closed injured spouse cases for the sites listed.

(145) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11(4) - Added new shortcut, NCP SC 3, when injured spouse has none of the income or refundable credits.

(146) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.11(7) - Added reference to IRM 21.4.6.5.16(1)(d).

(147) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.11.4(1) - Added new TC 971 AC 598 for the manual input of TOP offset record to first bullet.

(148) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.11.4(1) - Added new TC 971 AC 599 (manual input of TOP offset reversal record) to second bullet and Caution statement.

(149) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.4(2) - Added reference to IRM 20.2.4.3, Availability Dates for Overpayments.

(150) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.4(2)(1) - Removed CC PICRD and replaced with CC COMPA.

(151) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.4(4) - Added new paragraph with instruction to send correspondence when injured spouse is entitled to all or part of the joint refund and the overpayment is reduced by tax offset, credit elect or any prior refund.

(152) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.11.4(4) & (4)(2) - Removed reference to tax debt to avoid confusion. Use of letter is optional.

(153) IRM 21.4.6.5.11.6(4)&(4)(2) - Removed for tax offsets after the 285C reference.

(154) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(2)(a) - Moved IRM reference previously in (c) to (a).

(155) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(2)(b) - Clarified when Box 12 is checked and the address on ENMOD is different.

(156) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(2)(c) - Deleted (c) and moved IRM reference to (a).

(157) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(9)(1) - Removed last sentence. Instruction is in par. (2).

(158) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(9)(2) - Clarified use of BPI is required.

(159) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(9)(3) - Added reference to IRM 2.4.20-12 for Description of Line Item Numbers.

(160) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.11.7(9)(4) - Added reference to IRM 21.4.4.4.

(161) IPU 13U0900 issued 05-09-2013 IRM 21.4.6.5.11.7(9)(5) - Removed the word "loose" .

(162) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.11.7(9)(6) - Added reference to IRM 21.4.4.5.1, Monitoring Manual Refunds.

(163) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.12(3) NOTE - Second paragraph in the note was moved to paragraph (4) for Emergency hardship refunds. All subsequent paragraphs renumbered.

(164) IRM 21.4.6.5.12(4)(6) - Clarified if the return has not been processed.

(165) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.12(4) - Added Reminder that internal phone number is for OUO.

(166) IRM 21.4.6.5.12.1(3) - Combined information previously located in par. (6) with par. (3).

(167) IRM 21.4.6.5.12.1(4) - Removed reference to 23C date and added offset has not yet occurred.

(168) IRM 21.4.6.5.12.1(5) - Removed reference to 23C date and added Note referencing exception now located in par. (9).

(169) IRM 21.4.6.5.12.1(6) - Relocated information previously located in par. (8) and to new par. (6). All subsequent paragraphs renumbered.

(170) IRM 21.4.6.5.12.1(7) - Clarified freeze codes will determine the date by which an OBR must be processed and moved the last part of the paragraph referencing a clerical error to new par. (9).

(171) IPU 13U0900 issued 05-09-2013 IRM 21.4.6.5.12.1(13) - Revised paragraph to be consistent with requirements in IRM 3.12.179.2.1.1(4) and 3.12.279.14.1(2)(b).

(172) IPU 13U0900 issued 05-09-2013 IRM 21.4.6.5.12.1(14)(g) - Removed last part of sentence for clarity and added IRM reference.

(173) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.13(3)(3) - Clarified when Form 8379, Injured Spouse Allocation instruction applies.

(174) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.1(1) - Removed table and incorporated the information into par. (1) and Exception for processing and IRM reference when TC 971 AC 598 (manual input of TOP offset record) is on the account.

(175) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.13.1(2) - Added Caution statement.

(176) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.1(2) - Removed the Note and incorporated the information into par. (2).

(177) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.13.1(4) - Clarified multiple TC 898 offsets must be reversed separately and must have the corresponding OTN for the offset being reversed.

(178) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.1(5) - Moved par. (7) information to par. (5) and deleted par. (7).

(179) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.1(5) - Moved par. (8) information to par. (6) and deleted par. (8) and subsequent paragraphs are now renumbered.

(180) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.13.1(5) and (6) - Clarified OTN 1 (primary debt) and OTN 2 (secondary debt).

(181) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.13.1(9) - Deleted entire paragraph, information is already in par. (4).

(182) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.13.1(9) - Removed note which is now included in 21.4.6.5.13.1(4).

(183) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.2(2) - Added Note for new TC 971 AC 598 (manual input of TOP offset record).

(184) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.2(3)(a) - Added TC 971 AC 598 (manual input of TOP offset record) and a Reminder that internal phone number is for OUO.

(185) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.2(3)(d) - Added Reminder that internal phone number is for OUO.

(186) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.2(3)(g) - Added instruction for TOP/DMF Liaison to input the new TC 971 AC 598 (manual input of TOP offset record).

(187) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.13.3 - Revised procedures for working the FMS TC 766 Reject Listing due to the centralization of the listings to the TOP/DMF Liaisons.

(188) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.3(4) - Added Note TC 899 type 1,2, 3 or 4 may have been deleted and to consider new TC 971 AC 599 (manual reversal of TOP offset reversal record) when netting the offset.

(189) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.13.3(6) If/Then Chart - Added to Result (03) instruction for TOP offset reversal due to a returned or cancelled refund (TC 740/TC 841).

(190) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.13.3(6) If/Then Chart - Added Reminder to all Then boxes that only the TOP/DMF Liaison is authorized to input a TC 767.

(191) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.13.3(7)(3) Added Reminder that only the TOP/DMF Liaison is authorized to input a TC 767.

(192) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.13.3(8) Added clarification that TOP/DMF Liaison will send email to Headquarters.

(193) IPU 12U1850 issued 11-19-2012 IRM 21.4.6.5.14(3)(4) -Clarified when issuing a manual refund, a BPI is needed.

(194) IRM 21.4.6.5.16(2) Note - Corrected blocking series from 99 to 00.

(195) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.16(3) - Added Note for fully disallowing Form 8379 and included suggested verbiage to include in the letter.

(196) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.16(3)(c) - Added instruction if the address is different on "loose" Form 8379.

(197) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.16.1(3) - Removed specific state references and updated to a Community Property state.

(198) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17 - Changed Title to Bankruptcy Cases Involving Tax Offset.

(199) IRM 21.4.6.5.17(1) - Added instruction to immediately call the CIO or fax Form 4442 so the potential stay violation may be resolved within 48 hours.

(200) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.17(1) Note - Added link to Insolvency Site Directory.

(201) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17(1) - Added tax offset and updated Insolvency contact to the Centralized Insolvency Operation (CIO) and removed note.

(202) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17(1) - Updated CIO telephone number (effective April 1, 2013)

(203) IRM 21.4.6.5.17(1) - Added instruction to immediately call or fax Form 4442 to Centralized Insolvency Operation.

(204) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17(2) - Clarified Insolvency determines if the tax offset is in violation of automatic stay, removed bullet list and instruction for Form 4442.

(205) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17(3) - Removed instruction to contact the Fresno Liaison Office and replaced with new par. (3) instructions if the tax offset was in violation of the automatic stay.

(206) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17(3) 2nd Note - Updated CIO telephone number (effective April 1, 2013)

(207) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17(3) - Added Reminder that internal phone number is for OUO.

(208) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.17(4) - Added procedures for when Insolvency does not approve the refund.

(209) IRM 21.4.6.5.17(4) - Clarified instructions when Insolvency indicates not to issue a refund.

(210) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17.1 - Changed Title to Bankruptcy Cases Involving DMF Offset.

(211) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17.1(1) - Removed par. (1) and replaced par. (1) with updated instructions for cases involving bankruptcy and a DMF offset.

(212) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17.1(1) and (2) - Added Reminders that internal phone number is for OUO.

(213) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17.1(1) - Updated CIO telephone number (effective April 1, 2013).

(214) IRM 21.4.6.5.17.1(1) - Added instruction to immediately call or fax Form 4442 to Centralized Insolvency Operation.

(215) IRM 21.4.6.5.17.1(2) - Removed par. (2) and replaced par. (2) with updated instructions when Insolvency determines the offset is in violation of the automatic stay.

(216) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17.1(2) Note - Updated CIO telephone number (effective April 1, 2013).

(217) PU 13U1176 issued 07-01-2013 IRM 21.4.6.5.17.1(4) - Added procedures for when Insolvency does not approve the refund.

(218) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17.2 - Changed Title to Bankruptcy Cases Involving TOP Offsets.

(219) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17.2(1) - Clarified cases involving Bankruptcy and TOP offsets and added Note: TC 520, CC 83 or CC 89 generates BPI 3 on refunds issued systemically which was previous par. (2).

(220) IRM 21.4.6.5.17.2(1)(b) Note - Updated to include closing codes 60-67, 81 or 83-89 with a transaction date prior to 10/17/2005. Also added, Manual refunds issued from accounts with a -V or -W Freeze require input of BPI 3.

(221) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.17.2(2) - Removed par. (3) and replaced as par. (2) with updated instructions when Insolvency determines the offset is in violation of the automatic stay.

(222) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17.2(2) - Added new TC 971 AC 599 for manual reversal of TOP offset reversal record.

(223) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17.2(3) - Added Reminders that internal phone number is for OUO.

(224) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.17.2(3) Note - Updated CIO telephone number (effective April 1, 2013).

(225) IPU 13U0900 issued 05-09-2013 IRM 21.4.6.5.17.2(3) - Added clarification for approving or disapproving a TOP offset reversal.

(226) RM 21.4.6.5.17.2(3) - Added instruction to immediately call or fax Form 4442 to Centralized Insolvency Operation.

(227) IPU 13U1176 issued 07-01-2013 IRM 21.4.6.5.17.2(4) - Added procedures for when Insolvency does not approve the refund.

(228) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.18(3), Removed last sentence, the information is included in the first two sentences.

(229) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.18(5), Clarified DMF offsets are identified by agency codes 03-62.

(230) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.19 - Updated Title to clarify Mixed Entity Cases with TOP/DMF Offsets.

(231) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.19(1)(2) - Added Reminder that internal phone number is for OUO.

(232) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.19(1)(3) - Removed Note from step 3) and relocated as step 5).

(233) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.19(4) - Added TC 899.

(234) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.19(1)(4) - Added new TC 971 AC 599 for manual input of TOP offset reversal record..

(235) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.19(3) - Added new TC 971 AC 598 for the manual input of TOP offset record and TC 971 AC 599 for the manual input of TOP offset reversal record.

(236) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.20 - Updated Title to clarify Scrambled SSN Cases with TOP/DMF Offsets.

(237) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.20(3)(1) - Added Reminder that internal phone number is for OUO.

(238) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.20(3)(3) - Added TC 899 and reference to IRM 21.4.6.4.2.8.

(239) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.21(1) - Added Reminder that internal phone number is for OUO.

(240) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.21(1)(a) - Clarified AG/SA is Agency/Sub-Agency.

(241) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.21(3) - Added Reminder that internal phone number is for OUO.

(242) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.22(1)(g) - Added new TC 971 AC 598 for the manual input of TOP offset record.

(243) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.22(1)(i) - Updated to include other refundable credits and IRM reference to IPU 12U1962 issued 12-19-2012 IRM 21.6.4.4.16.3.

(244) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.25 - Renamed title to TOP/DMF Unpostable Conditions.

(245) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.25.1(2) - Clarified AG/SA is Agency/Sub-Agency.

(246) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.25.1(3) - Added Reminder that internal phone number is for OUO.

(247) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.25.1(3) Reminder - Added reference to IRM 21.4.6.5.13.2.

(248) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.25.2(1)(e) Note - Added new TC 971 AC 598 (manual input of TOP offset record) and TC 971 AC 599 (manual input of a TOP offset reversal record) to the instructions.

(249) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.25.2(2)(5) - Added new TC 971 AC 598 (manual input of TOP offset record) and TC 971 AC 599 (manual input of TOP offset reversal record)and added a Reminder that internal phone number is for OUO.

(250) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.25.3 - Renumbered paragraphs (2) thru (5) to a step-list in par. (1) and clarified Form 8379 in (1)(c).

(251) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.25.4(1) - Added Agency Reversal (TC 899).

(252) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.25.4(2) - Added reference to DU 898 on CC TXMOD, added reference to IRM 21.4.6.5.13.2, and deleted steplist.

(253) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.25.4(2) - Added Note with new TC 971 AC 598 (manual reversal of TOP offset) instructions.

(254) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.25.4(3) - Added instruction to research CC UPTIN, reference to IRM 3.17.79-5 for Refund Schedule Number Research (RSN) and reference to 21.4.6.5.13.2 if TC 898 was deleted.

(255) IPU 13U0627 issued 04-01-2013 IRM 21.4.6.5.25.6(3)(2) - Added new TC 971 AC 599(s) for manual input of TOP offset reversal records.

(256) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.26(1) - Updated when Utility 50 is run from August to October and clarified unresolved conditions.

(257) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.26(1)(a) - Added TC 766.

(258) IPU 12U1962 issued 12-19-2012 IRM 21.4.6.5.26(3) - Removed par. (3) referencing four listings. Subsequent paragraphs now renumbered.

(259) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.25.7(4) Note - Added a manual reversal is required when TC 898/896 is over 6 years and reference to IRM 21.4.6.5.13.2.

(260) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.28 - Updated section to remove obsolete information. Removed par. (1) and inserted new par. (1) with history information on The Economic Growth and Tax Relief Reconciliation Act of 2001.

(261) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.28(2) - Clarified IRS processed the Immediate Tax Relief checks after taxpayers filed their returns for Tax Year 2000.

(262) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.28(3) - Clarified Injured Spouse entitled to his/her portion of the credit.

(263) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.28(4) - Removed obsolete information regarding filing for Immediate Tax Relief Credit.

(264) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.28(5) - Removed obsolete information in par. (5), subsequent paragraphs renumbered.

(265) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.29 - Updated section to remove obsolete information. Removed par. (1), (2) and (3) and revised information into new par. (1), (2) and (3). Also relocated previous par. (5) to new par. (3).

(266) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.30(1) - Added tax year 200612 to clarify when TETR refunds were claimed.

(267) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.30(3) - Removed obsolete information in par. (3).

(268) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.31(1) - Removed paragraph (1) obsolete information, all subsequent paragraphs are renumbered.

(269) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.31(1) - Corrected reference to paragraph (5), removed last sentence and Note.

(270) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.31(1) - Removed last sentence and relocated the information as a Note in paragraph (1).

(271) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.31(2) - Removed Note referencing Stimulus payment.

(272) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.31(2) - Removed first sentence in par. (2), deleted par. (4) and combined information in par. (2).

(273) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.31(5) - Editorial change.

(274) IPU 12U1696 issued 10-10-2012 IRM 21.4.6.5.31(7) - Removed paragraph (7) referencing filing Form 8379 for Stimulus payment only. All subsequent paragraphs are renumbered.

(275) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.31.1(3) - Editorial changes for clarification.

(276) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.32(2) - Moved par. (3) to par. (2) and added (2008, 2009 and 2010) to par. (2), subsequent paragraphs renumbered.

(277) IRM 21.4.6.5.33(1) - Clarified working individuals, added 1040A and reference to chart in IRM 21.4.6.5.33(5).

(278) IPU 13U0404 issued 02-22-2013 IRM 21.4.6.5.33(5) - Added a reference to IRM 21.6.3.4.2.13 and included an example for allocating the credit if the If And Then chart.

Effect on Other Documents

IRM 21.4.6, Refund Inquiries, Refund Offsets dated 08-31-12 is superseded. The following IRM Procedural Updates (IPUs), issued from October 10, 2012 through May 21, 2013, have been incorporated into this IRM: 12U1696, 12U1850, 12U1962, 13U0404, 13U0627, 13U0900 and 13U1176 dated 10-10-12 through 07-01-2013.

Audience

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

Effective Date

(10-01-2013)

Ivy S. McChesney
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, Federal agency non-tax 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  (10-01-2013)
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, non-tax child support, Federal agency non-tax debt, State income tax obligation or Unemployment Compensation prior to crediting the overpayment to a future tax or making a refund. This application of a tax overpayment is called a refund offset.

  2. Refund offsets to child support, Federal agency non-tax debts, State income tax obligations and Unemployment Compensation debts are handled by the Treasury's Bureau of Fiscal Service through the Treasury Offset Program (TOP). 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 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  (10-01-2013)
Refund Offset Research

  1. There are three types of refund offsets:

    • Tax offset

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

    • Debtor Master File (DMF) offset, prior to 01/11/1999

  2. You must thoroughly research for any outstanding IRS or TOP obligations. Always attach the INOLES or IAT Results IS (Injured Spouse) screens for both spouses showing the debt indicator of (I) IRS Debt, (F) Bureau of Fiscal Service Debt Non-Tax Debt, (B) Both IRS and Bureau of Fiscal Service Debt, or (N) No Debt, at the time the Form 8379, Injured Spouse Allocation, is worked. Include BMF screens when there is a X-REF EIN.

    • The (I) indicator is not always set for all IRS tax debts. To determine if there is an outstanding IRS 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.

    • The IAT Results IS (Injured Spouse) 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 (Injured Spouse) screen displays the "N" . Additional research is needed if the secondary TIN is invalid.

  3. A tax overpayment must offset to an outstanding tax debt before it offsets to non-tax 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 (TOP) - Debtor Master File (DMF)

    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 (TOP) 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. Command Code (CC) INOLE contains debt liability indicators based on information received from the Bureau of the Fiscal Service . Bureau of Fiscal Service debt records are updated daily; however, IRS CC INOLE is only updated weekly. Therefore, CC INOLE may not have the most current debt information. The indicators are used to identify an IRS freeze or tax debt, TOP non-tax debt, or both. The indicators are the letters: "N" ," I" ," F" ," B" .

  6. An indicator of "N" means no debt. However, a debt may exist at Bureau of the Fiscal Service , see IRM 21.4.6.5.9.3(9) for instructions.

  7. 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)..

  8. The Treasury Offset Program (TOP) non-tax 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, but the debt indicator found on CC INOLE is updated weekly. 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. 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.

  9. A fourth indicator, (B), is set when both IRS and TOP debt indicators are present.

  10. Command Code (CC) TXMOD also contains 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->1 or DMF-LIAB-IND>0.

    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 weekly basis, whereas, Bureau of Fiscal Service may update a debtor's status daily.

  11. 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 non-tax 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  (10-01-2013)
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)

      Note:

      A TC 896 with an Agency/Sub-Agency Code (AG/SA), is a computer generated offset to DMF. See IRM 21.4.6.4.3, Debtor Master File (DMF) Offset.

  2. A tax offset will not occur in certain situations, see IRM 21.4.6.5.9.3, Form 8379 Filed With The Original Return.

21.4.6.4.1.1  (10-01-2013)
Tax Offset Reversal

  1. A tax offset reversal may be required if the taxpayer's response results in either a full or partial abatement of the tax assessment 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 2012. Her 2012 overpayment offsets with TC 706 to the 2010 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 2009. IRS assesses an additional $800.00 for their 2009 joint liability based on an examination of the return. The taxpayers divorce. The wife later files an income tax return for 2011 that claims a $500.00 overpayment. The husband does not file an income tax return for 2011 that claims an overpayment. Because of the outstanding tax assessment, the wife's $500.00 credit is transferred in April, 2012 to the married filing joint (MFJ) tax liability for 2009. No other payments or credits are made to the 2009 MFJ account. On September, 1, 2012, the IRS partially abates $400.00 of the 2009 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 2011 account to prevent the credit from refunding from the 2009 MFJ account.

    Example:

    Husband and wife file a joint return for 2009. IRS assesses an additional $800.00 for their 2009 joint liability based on an examination of the return. Taxpayers divorce. The wife files an income tax return for 2011 that claims a $500.00 overpayment. The husband files an income tax return for 2011 that claims a $300.00 overpayment. Because of the outstanding tax assessment, the $500.00 and $300.00 credits are transferred in April, 2012 to the MFJ tax liability for 2009. No other payments or credits are made to the 2009 MFJ account. On September 1, 2012, the IRS fully abates the tax assessment on tax year 2009. Because all four requirements above are met, move the $500.00 credit back to the wife's 2011 account and the $300.00 credit back to the husband's 2011 account. To prevent the credits from refunding from the 2009 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 2009 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  (10-01-2013)
Treasury Offset Program (TOP) Offset

  1. Bureau of Fiscal Service initiates refund offsets to outstanding federal agency debts or child support. 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  (10-01-2013)
TOP Offset Bypass Indicator (BPI)

  1. A Treasury Offset Program (TOP) Bypass Indicator (BPI) 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 Bureau of Fiscal Service 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/DMF Liaison ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for a manual reversal. Please allow 60 days for the manual reversal to post.

    Reminder:

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

  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 03062009 1,586.00 200808 28221–067–92005–9 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 non-tax 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 21.4.6.5.13.1, 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 a required input when issuing a manual refund to an injured spouse who is secondary, from a module with a combat zone —C Freeze. A manual refund must be issued when BPI (5) is needed.

  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 a required input when issuing a manual refund to an injured spouse who is primary, from a module with a combat zone —C Freeze. A manual refund must be issued when BPI (6) is needed.

  12. BPI (7) Indicates that TOP should offset for all non-tax 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 non debtor TIN. See IRM 21.4.6.4.2.8, TC 766 with OTN TOP Offset Reversal, and IRM 21.4.6.5.13.1, 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.

      Note:

      All injured spouse forms filed by the secondary taxpayer against a DMF or tax offset require a manual refund and the input of BPI (1) or (5). See IRM 21.4.6.5.11.7, Issuing the Injured Spouse Refund.

  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) 6X (60-67), cc 83, or cc 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. 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) above.

      Note:

      All injured spouse allocation forms filed by the primary taxpayer against a DMF or Tax Offset require a manual refund and the input of BPI (2) or (6). See IRM 21.4.6.5.11.7, Issuing the Injured Spouse Refund.


  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, below 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  (10-01-2013)
IMF TOP Offset

  1. TOP offsets are made against any refund issued from MFT 30, MFT 55 or MFT 29 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  (12-18-2009)
BMF and Civil Penalty TOP Offsets

  1. TOP offsets are made against any refund issued from MFT 02, 07, 10, 13, 29, 34, 44, 46, 52, 55, 60, 63, 64, 77, and 78, 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  (10-01-2013)
TOP Offset Notice

  1. Bureau of Fiscal Service issues a TOP offset notice when a taxpayer's refund is offset for child support, a Federal agency non-tax debt, a state tax debt, or unemployment compensation debt. This notice is the equivalent of the former DMF offset notices, Computer Paragraph (CP) 47 and CP 149.

    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 09/10/2012 with a payment date of 09/13/2012 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  (10-01-2013)
TOP Offset Research

  1. TOP offsets and related transactions post to the tax module where the refund creating the offset originated. The TOP transaction codes are completely different from those formerly used for DMF, but they serve similar purposes.

  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 does not have a separate account for TOP offsets as it had for the Debtor Master File (DMF).

  4. IRS personnel do not have access to the TOP debtor database and cannot tell if a non-tax 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 21.4.6.5.6, Hardship Refund Request.

  5. IRS is not informed of the agency(s) receiving the offset. Only the total amount(s) offset for the primary TIN 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 201110 28221-061–32956–1 BPI>0
    898 03122011   201111 28277–061–32956–1  
    OTN>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. A TC 898 or TC 971 AC 598, originating from a computer generated refund, will match the date of the TC 846.

  9. The TC 898 Document Locator Number (DLN) is the same as the prior TC 840 from which it originated. 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 21.4.6.5.25.2, 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 21.4.6.5.25.4, 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 21.4.6.5.8, Reasons to Reverse DMF/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 21.4.6.5.13.1, 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 21.4.6.5.11.4, 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 03062009 1,586.00 20091209 28221–067–92005–9 BPI>0
    898 03062009   20091210 28277–067–92005-9  
    OTN>12345–67890
      OFFST-AMT>1,000.00 SPLIT-REFUND-CD>0
    290 04192009 .00 20091214 28254–109–00001–9  
      ADJ-RSN-CD>86      
    766 04152009 550.00- 20091214 28254–109–00001–9  
            OTN>12345–67890
    846 04192009 550.00 20091214 28254–109–00001–9 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/DMF 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 21.4.6.5.13.3, TC 766 Reject Listing, for correcting these rejects.

21.4.6.4.2.9  (10-01-2013)
TC 899, Reversal or Agency Refund of TOP Offset

  1. The Transaction Code (TC) 899 is generated by input from Bureau of Fiscal Service 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:

      You must wait for the TC 700 credit to post to the account when there is a TC 899, Type 3 present.

    • 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, or lost and 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.

    3. TC 899, type 2, serves the same purpose as the Debtor Master File (DMF) TC 131 with negative money amount.

    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:

    You must wait for the TC 700 credit to post to the account when there is a TC 899, Type 3 present.


    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.

    1. TC 899, type 4, serves the same purpose as the DMF TC 131 with positive money amount.

  7. In the following example, a TC 899, type 2, agency refund posted for $450.00. An agency refunded the remainder of the TOP offset originating from the TC 846 dated 03/08/2007 to the taxpayer. There is now no remaining TOP offset and the taxpayers received the following refunds totaling $1,586.00.

    • $586.00 dated 03/08/2007 (TC 846 $1,586.00 — TC 898 $1,000.00)

    • $550.00 to the injured spouse dated 04/19/2007

    • $450.00 from the agency that received the offset

    Example:

    TC POSTED AMT CYC DLN OTN
    846 03062009 1,586.00 20091209 28221-067-92005-9 BPI>0
    898 03062009 .00 20091210 28277-067-92005-9 OTN>12345-67890
        OFFSDT-AMT>1,000.00     XREF>OTN-CD>12345–67890
    290 04192009 .00   200114 29254–109–00001–9  
      ADJ-RSN-CD>86 …  
    766 04152009 550.00- 20091214 28254-109-00001-9 OTN-CD>12345-67890
    846 04192009 550.00 20091214 28254-109-00001-9 BPI>1
    899 03062009 .00 20091222 28221-067-92005-9  
        OFFST-AMT> 450.00–OFFST-REC-TYPE>2     OTN-CD>12345–67890

  8. See IRM 21.4.6.5.25.2, 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 21.4.6.5.25, TOP/DMF 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 21.4.6.5.25., TOP/DMF 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 would 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 21.4.6.5.13.2, Manual Reversal of TOP Offset for more information.

21.4.6.4.2.11  (10-01-2013)
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,

    • TC 767,

    • 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 21.4.6.5.13, TOP/DMF 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 21.4.6.5.25, TOP/DMF 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:

    IF THEN
    The TC 846 and TC 898 TOP offsetare the same.

    Reminder:

    There is no "lost refund" .

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

    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 21.4.6.5.13.1, 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.

    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/DMF 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/DMF Liaison at ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures. See IRM 21.4.6.5.13.2, Manual Reversal of TOP Offset.

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

    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/DMF 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/DMF Liaison at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures. See IRM 21.4.6.5.13.2, Manual Reversal of TOP Offset.

    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.

    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.

21.4.6.4.3  (11-25-2011)
Debtor Master File (DMF) Offset

  1. A refund offset to an outstanding child support or Federal agency debt made before 1999 is referred to as a Debtor Master File offset. A DMF offset appears on a tax module as:

    • TC 896 accompanied by an Agency/Sub-Agency (AG/SA) code

    • TC 820 with no cross-reference

  2. A TC 896 with an 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. See IRM 21.4.6.4.1, Tax Offset.

  3. A TC 820 may represent a manual DMF offset, but these were only used in a limited number of instances to effect an offset to an agency or repay an agency for an erroneous refund.

21.4.6.4.3.1  (04-01-2013)
DMF Offset Research

  1. Command Code (CC) DMFOL and CC MFTRA G are no longer available to research DMF offsets.

  2. Information about a DMF offset can be obtained from various sources. Use Command Code (CC) IMFOL, CC BMFOL, CC INOLEX, and CC TXMOD to identify the DMF transactions. Refer to Document 6209 for a list of AG/SA codes.

  3. To get the address and phone number of DMF (TC 896) accounts, contact the Fresno TOP/DMF Liaison. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ You will need the AG/SA code.

    Reminder:

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

    Caution:

    No assumptions or conclusions should be drawn from the existence of a prior year DMF offset and a current year TOP offset.

  4. The following transaction codes were used for the DMF program:

    • TC 131, agency refund or refund reversal

    • TC 132, release of prior-year certification and —V Freeze

    • TC 896, computer-generated DMF offset to AG/SA

    • TC 820, manual DMF offset

    • TC 897, reversal of DMF offset to AG/SA

21.4.6.4.4  (01-01-2001)
TC 131, Agency Refund/Reversal

  1. A TC 131 is posted to the entity when an agency deletes or decreases the debt during the processing year (PY) or issues a refund of a prior offset. It is also used to correct a prior TC 131 agency refund that was not issued.

  2. TC 131 continues to be used by agencies when issuing a refund of a prior-year DMF offset. Agency refunds of TOP offsets post as a TC 899, type 2.

  3. A TC 131 agency refund identifies the AG/SA, the amount of the refund, and the year of the offset being refunded. TC 131 posts with a positive money amount when it is a refund, and a negative money amount when it is a correction to a prior TC 131.

  4. See IRM 21.4.6.5.13.6, Multiple Tax Periods with Same-Year DMF Offset.

21.4.6.4.5  (08-31-2012)
TC 132, Certification Release

  1. A TC 132 is posted to the entity, overlaying the TC 130, when IRS releases all agency debt certifications in the last cycle of the year. The TC 132 posts with the same cycle as the TC 130. Cycle 199804 is the last posting for a DMF TC 132.

  2. The TC 132 is the only record of a prior-year DMF certification when no offset occurred in that processing year.

21.4.6.4.6  (12-18-2009)
TC 896, DMF Offset

  1. All computer-generated offsets from tax year 1984 through 01/11/1999 are shown as a TC 896 with an AG/SA code. If there is no AG/SA code present, the TC 896 is not a DMF offset.

  2. TC 896:

    1. Is an IDRS-generated transaction that posted as a debit to the IMF or BMF and resulted in a transfer of funds to the creditor agency.

    2. Generates an IMF CP 47 or a BMF CP 149, Notice of Offset, to the taxpayer.

    Example:

    A TC 896, 01/GA, is an offset to the Office of Child Support for the State of Georgia. Refer to Document 6209, IRS Processing Codes and Information,Section 5.5 Debtor Master File Research (DMF) for the DMF Agency and Subagency Codes.

21.4.6.4.7  (04-24-2012)
TC 820, Manual DMF Offset

  1. TC 820 manual DMF offsets were used to:

    1. Repay an erroneous refund to an agency.

    2. Offset an overpayment in excess of $500 that could not be initiated systemically.

    3. Make all offsets to child support prior to 1984.

  2. The TC 820 is a one-sided document and does not have a corresponding credit on another module. The credit posts on the Non Master File (NMF). You must request the source Document Locator Number (DLN) of a TC 820 to determine where it was applied. Have your Lead Tax Examiner contact AM Headquarters Process and Program Management Section at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ only if it is a DMF (TC 820) offset and you are unable to confirm the offset. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Offsets for child support prior to 1984 were processed with a TC 820/TC 824, and Blocking Series (BS) 000-099 in 1982 and (BS) 900-999 in 1983. Research the entity module to determine the state agency.

    1. If the TC 820 is not blocked as stated, it was not a child support offset.

    2. If the TC 820 is blocked as stated, inform the taxpayer that Health and Human Services referred a debt in his/her name due to a delinquent child support obligation and the amount offset was paid to the state shown on the entity.

  4. If a reversal of a DMF offset is needed, see IRM 21.4.6.5.13.2, Manual Reversal of TOP Offset.

21.4.6.4.8  (01-01-2001)
TC 897, DMF Offset Reversal

  1. The reversal of a posted TC 896 appears on the module as a TC 897 with corresponding AG/SA codes. TC 897 posts as a credit to the IMF or BMF account and results in a transfer of funds from the creditor agency back to IRS.

  2. DMF offsets are reversed by least priority; last offset out is first offset reversed, etc.

21.4.6.4.9  (04-01-2013)
DMF Manual Offset Reversal

  1. A manual offset reversal is required to bypass Unpostabe Code (UPC) 189 when:

    1. An agency reports a refund of a prior year offset, TC 131, and there was more than one offset to the same debt from separate tax periods. The TC 131 is netted against the offset from each period rather than just the offset to which it applies.

    2. An agency erroneously reported a refund of a prior year offset and the agency or IRS is unable to correct the TC 131 being netted against the offset reversal.

  2. Contact the Fresno TOP/DMF Liaison ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when either of these conditions are identified.

    Reminder:

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

  3. The Fresno TOP/DMF Liaison Office will verify with the Agency that the funds are still available to reverse.

  4. If the funds are still available and it is determined a manual reversal is needed, see IRM 21.4.6.5.13.2, Manual Reversal of TOP/DMF Offset.

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  (10-01-2013)
Taxpayer Inquiries on TOP Offset

  1. The taxpayer is sent a notice of offset by Bureau of Fiscal Service for Treasury Offset Program (TOP) offsets after 01/11/1999. 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 (TOP) 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.
    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. IRS cannot bypass completed TOP offset for hardship.
    2. Offset has not occurred 2. See IRM 21.4.6.5.6, 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 21.4.6.5.3, 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  (04-01-2013)
Taxpayer Inquiries on DMF Offset

  1. Research Command Codes (CC) TXMOD, IMFOL, or BMFOL to determine if an offset occurred. Confirm the year and tax module from which the offset occurred. Identify the Debtor Master File (DMF) offset, TC 896, in question and determine which AG/SA received the offset.

  2. IRS issues a notice (CP 47 for IMF; CP 149 for BMF) for DMF offsets at the time of offset.

  3. Use CC IMFOL, BMFOL, ENMOD and TXMOD to identify the DMF transactions.

  4. Contact the Fresno TOP/DMF Liaison ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , for the AG/SA address and phone number, if needed.

    Reminder:

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

  5. IRS transfers all offsets to the agencies in the same cycle the offset occurred. The federal agencies then transfer the funds to the sub-agencies on a weekly basis. Only Child Support transfers the funds on a monthly basis.

  6. The following table may assist you in resolving specific inquiries regarding DMF offsets.

    If Then
    Taxpayer states local agency has no record of offset Confirm offset information on CC TXMOD, IMFOL, or BMFOL. Provide the taxpayer with the amount, date, and cycle of the TC 896. Advise taxpayer to call and confirm offset with agency headquarters.
    Taxpayer states DMF offset notice was not received CSR should contact the Fresno TOP/DMF Liaison≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , for the address and phone number of the AG/SA.

    Reminder:

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

    Note:

    You must have the AG/SA before contacting the Liaisons.

    1. Upon receipt of AG/SA information, provide the taxpayer with the name, address and phone number of the agency.

    2. Provide the taxpayer with the amount, date, and cycle of TC 896.

    Taxpayer requests another DMF offset notification in writing Issue Letter 1290C, Refund/Overpayment Offset to Debtor Master File Obligation, to taxpayer with all applicable offset information.
    Taxpayer indicates that agency address or telephone number for a DMF offset is wrong CSR should contact the Fresno TOP/DMF Liaison above, for the correct address and phone number of the AG/SA.

  7. When writing the taxpayer, give the amount, date, and cycle of the offset and refer taxpayer to the agency. A suggested reply is:

    "Your 2011 overpayment of $1,244.00 was sent to the Office of Child Support Enforcement, State of Louisiana, on March 11, 2011, in Cycle 20111209. If the agency cannot locate the offset after you furnish this information to them, request that they contact their state or headquarters office to confirm the IRS offset."

21.4.6.5.3  (10-01-2013)
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.

      Note:

      If a taxpayer inquires about their eligibility or has a tax law question, transfer the call to 92137.

    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.

    • 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.

    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.

    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.

      Exception:

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

    2. Advise taxpayer to allow 6 to 8 weeks. Indicate taxpayer's phone number and whether taxpayer can provide a copy of Form 8379.

    .
    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. 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. 45 days have passed since TC 971, AC 071 was input, and the case is controlled to a clerical, site specialized control number or there is an open control base 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 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. A TC 290 for .00, blocking series 98/99, was input after receipt of Form 8379; and IRS denied the Form 8379 (Letter 105C,Claim Disallowed or Letter 106C, Claim Partially Disallowed should have been sent). Research CIS for an explanation of the denial. If you are unable to determine the reason or the taxpayer disagrees with our findings, advise the taxpayer it may be necessary to request an appeal as instructed in the 105C/106C letter.
    Taxpayer filed Form 8379 in any manner. A refund was not issued,
    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.

  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.

  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 Letter1290C, Refund/Overpayment Offset to Debtor Master File Organization, Letter 3179C, Refund Offset to Treasury Offset Program (TOP) Nontax Obligation, or Letter 285C, Refund/Overpayment Applied to Account, when responding in writing to injured spouse inquiries regarding DMF, 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.

  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, Application 137, 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 Letter 105C, Claim Disallowed, or Letter 106C, Claim Partially Disallowed

    • 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 (TOP) 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.

  9. Injured spouse cases originally worked and closed in Atlanta, Brookhaven, 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, Application 137, 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.

21.4.6.5.4  (10-01-2013)
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 federal agency non-tax 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

21.4.6.5.5  (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 (TOP)

    • 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 21.4.6.5.27, 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.

21.4.6.5.6  (10-01-2013)
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 worked by 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 tax or non-tax child support or Federal agency debt.

  3. In general, IRS may honor a hardship refund request if the taxpayer has no debt or owes only Federal taxes.

  4. If you intend to honor a hardship and a tax debt exists, See IRM 21.4.6.5.12.1, 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 21.4.6.5.8.1, Allowable DMF/TOP Offset Reversals, for levy proceeds. You can tell the taxpayer:

    1. IRS no longer maintains non-tax child support or Federal agency 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.

21.4.6.5.7  (10-01-2013)
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 non-tax debts subject to offset under IRC § 6402(a), (c), (d), (e) and (f) are satisfied.

  2. Bureau of the Fiscal Service maintains non-tax 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 FMS 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.

21.4.6.5.8  (08-31-2012)
Reasons to Reverse DMF/TOP Offset

  1. This information is intended as a guide to determine when it is acceptable to reverse a Debtor Master File (DMF) or Treasury Offset Program (TOP) 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.

21.4.6.5.8.1  (10-01-2013)
Allowable DMF/TOP Offset Reversals

  1. A reversal of a DMF or 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 21.4.6.5.21, 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 21.4.6.5.18, 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).

21.4.6.5.8.2  (10-01-2013)
Unallowable DMF/TOP Offset Reversals

  1. A reversal of a DMF or 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 21.4.6.5.6, Hardship Refund Request, and IRM 21.4.6.5.12.1, Offset Bypass Refund (OBR).

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

    9. Reverse a non-tax 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 non-tax 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 21.4.6.5.8.1, Allowable DMF/TOP Offset Reversals.

21.4.6.5.9  (10-10-2012)
Form 8379 Injured Spouse Allocation

  1. The spouse, whose portion of a joint income tax overpayment was or will be offset to a tax or non-tax 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 21.4.6.5.9.8, 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 21.4.6.5.10, Community Property Allocation.

21.4.6.5.9.1  (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.

21.4.6.5.9.2  (10-01-2013)
Form 8379 Processing

  1. Prior to 01/01/1999, Forms 8379, Injured Spouse Allocation were processed as pre and post offset, using Blocking Series (BS) 920-929 when filed with original return, and BS 930-939 when filed by itself.

  2. Effective 01/01/1999, 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 21.4.6.5.9.4, Form 8379 Filed by Itself.

  3. Effective 01/01/2000, Form 8379 received with the original return (Form 1040 series) continue using BS 920–929 and the CP 36D notice, generates to the AM Function when the TC 150 posts in BS 920–929. The BS sets a TC 570 freeze to hold the credit until the Form 8379 is worked. For instructions concerning Form 8379 filed with the original return, see IRM 21.4.6.5.9.3, Form 8379 Filed with Original Return.

  4. Effective 01/01/2001, Form 8379 was accepted into the Electronic Filing Program for tax year 2000 and subsequent. The electronic Form 8379 can only be filed with the original return, not by itself. 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. For instructions concerning Form 8379 filed with the original return, see IRM 21.4.6.5.9.3, Form 8379 Filed with Original Return.

  5. Effective 01/01/2005, Form 8379 , Injured Spouse Allocation, received with an electronically filed return systemically generates a transcript CP 36D notice through the Correspondence Imaging System (CIS) to Accounts Management. The CP 36D notices for paper returns continue to print in Files to be associated with the original return and shipped to Accounts Management.

21.4.6.5.9.3  (10-01-2013)
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 (Injured Spouse) tool under both the primary and secondary Social Security Number (SSN), for the no debt indicator (N), TOP non-tax indicator (F), IRS indicator (I), or indicator (B) for both IRS and Treasury Offset Program (TOP) obligations. See IRM 21.4.6.4, Refund Offset Research.

  6. The (I) indicator is not always set for all IRS Tax debts. Research any cross reference SSNs 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 (Injured Spouse) 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 (Injured Spouse) 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 tax offset "I" debt, the control base must be changed to something other than DMFC (97140 paper)/DMFE (97144 electronic). Change the control base for paper and electronic filed cases to the appropriate category and program code such as; TPRQ 40000, DUPF 40050, or XRET 40051, etc. Refer to IRM 21.5.1.5.2, Cases Currently Assigned in CIS.

    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, but the debt indicator found on CC INOLE is updated weekly. 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 and no offsets have occurred, 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).

    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 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.

  10. If the injured spouse is not entitled to any of the 20XX overpayment, the allocation should be disallowed. See IRM 21.4.6.5.16, Form 8379 Disallowance.

  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. 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. If the Form 8379 has not been processed in BS 920–929, you must input a TC 971 AC 071.

  13. 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. Input the adjustment with a 290 .00, RN 808/RN 810 or RN 809/RN 811 when the refund will be computer generated.

    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.

  14. If there is an outstanding IRS obligation for the primary or secondary taxpayer, compute the Injured Spouse refund. See IRM 21.4.6.5.11, Allocation of Injured Spouse Form 8379. After the computation is complete follow the procedures below.

    Exception:

    If both taxpayers owe a married filing joint debt and it is the only IRS 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 an IRS debt, a manual refund is not required when the remaining overpayment will full pay the IRS debt(s).

    If And Then
    There is an IRS obligation on the primary taxpayer's account The injured spouse is the primary taxpayer, and the injured spouse's portion of the overpayment is more than the obligation Issue a manual refund to the injured spouse for the difference using BPI 2, and BS 9. See Exception above the table.
    There is an IRS obligation on the primary taxpayer's account and the secondary TP owes an Bureau of Fiscal Service debt The injured spouse is the primary taxpayer, and the injured spouse's portion of the overpayment is less than the obligation and the secondary taxpayer is entitled to a portion of the overpayment. Issue a manual refund to the secondary taxpayer using BPI 1 and BS 9. Any remaining overpayment will release to any outstanding debt.
    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 above the table.
    There is an IRS obligation on the secondary taxpayer's account The injured spouse is the secondary taxpayer, and the injured spouse's portion of the overpayment is more than the obligation Issue a manual refund to the injured spouse for the difference using BPI 1 and BS 9. Any remaining overpayment will release to any outstanding debt. See Exception above the table. Also see exceptions in paragraph (16) below when an offset will not occur.
    There is an IRS obligation on the secondary taxpayer's account The injured spouse is the secondary taxpayer, and the injured spouse's overpayment is less than the obligation Transfer his/her share to the balance due module and issue a manual refund with BPI 2 and BS 9, to the primary taxpayer. This allows for offset to the primary taxpayer's non IRS debt.
    There is an IRS obligation on the secondary taxpayer's account The injured spouse is the primary taxpayer Issue a manual refund to the injured spouse using BPI 2 and BS 9. Any remaining overpayment will release to any outstanding debt. See Exception above the table.Also see exceptions in paragraph (16) below when an offset will not occur.

    Exception:

    A manual refund is not required on an active combat zone case when it involves a tax debt. See IRM 21.4.6.5.18(2), Combat Zone Cases, for additional information.

  15. For each scenario above, issue the manual refund in both names unless the one name only box is checked on Form 8379 ,Injured Spouse Allocation.

  16. Upon posting of a TC 840 with BS 9, any remaining overpayment is released to the appropriate debt.

    Exception:

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

    • The IRS 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 $1.00.

  17. Send an explanation of the action taken to the taxpayers. Send Letter 1290C, Refund/Overpayment Offset to Debtor Master File Organization, Letter 3179C, Refund Offset to Treasury Offset Program (TOP) Nontax Obligation, or Letter 285C, Refund/Overpayment Applied to Account, if applicable. A letter is only required when a computer generated notice will not be sent. See IRM 21.4.6.5.11.6(4), Injured Spouse Refund—Tax Offset, for the information to include in the letter.

  18. 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.

    2. (-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.

    3. (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.

    4. (—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.

    5. (—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 21.4.6.5.17(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).

    6. (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.

    7. (—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 21.4.6.5.17(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).

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

21.4.6.5.9.4  (10-10-2012)
Form 8379 Filed by Itself

  1. Form 8379, Injured Spouse Allocation filed by itself must be processed within 45 days of receipt. See IRM 21.4.6.5.9.3(1), Form 8379 Filed with Original Return, for processing within the the 45-day interest free period.

  2. A TC 971, AC 071, is input upon receipt of Form 8379 without the original return for Tax, TOP or DMF.

  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 Tax, DMF, and TOP offset. Refer to IRM 21.4.6.5.9.3(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 (TOP) Nontax Obligation with paragraph "S" informing the taxpayer of the delay in processing the Form 8379, Injured Spouse Allocation.

21.4.6.5.9.5  (10-01-2013)
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 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 original 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.

    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 Allow the additional credit (TC 806) with the injured spouse adjustment.
    Withholding credit is less than reported Do not adjust if within IRS tolerance guidelines per IRM 21.5.1, General Adjustments.

  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.

    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 21.4.6.5.9.6(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 21.4.6.5.9.8, Form 8379, No Consideration Procedures.

  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 21.4.6.5.9.8, 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 taxpayers main home was in a community property state and the one name only box on Form 8379 has not been checked.

21.4.6.5.9.6  (10-01-2013)
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 letter to request the missing information and suspend the case for 40 days.


    If unable to reach the taxpayer by telephone and no reply is received, see IRM 21.4.6.5.9.8, Form 8379, No Consideration Procedures and return a copy of the Form 8379, if available.

21.4.6.5.9.7  (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 21.4.6.5.9.6(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 21.4.6.5.9.8, Form 8379, No Consideration Procedures, for instructions.

21.4.6.5.9.8  (10-01-2013)
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 Married Filing Joint IRS debt is owed (by the same two spouses) and the debt is more than the existing overpayment.

    3. If the Form 8379 is filed with the original return and the account is in zero or debit balance with no math error. 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. In either situation, 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.

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

    5. 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.

    6. 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.

  2. Send the taxpayer a "no consideration" letter.

    • Letter 916C, Claim Incomplete for Processing; No Consideration, is used for "no consideration" .

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

  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).

    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 to something other than DMFC/DMFE such as TPRQ.

21.4.6.5.9.9  (10-01-2013)
Statute of Limitations for Processing Form 8379 and Reversing DMF, TOP, or TAX Offsets

  1. Form 8379, Injured Spouse Allocation, is not a separate claim, but instead is the 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), that claims a credit or refund.

  2. Overview.

    1. If Form 8379 is submitted with the jointly filed Form 1040 or Form 1040-X there are no special statute of limitations considerations. The Form is simply part of the information for the claim on Form 1040/Form 1040-X. The claim is subject to IRC § 6511(b), see IRM 21.4.6.5.9.9.1, Form 8379 Attached to Joint Form 1040/Form 1040-X.

      Note:

      IRC § 6511(a), provides that a claim must be filed within three years from the filing of the tax return or two years from the date of payment, which ever is later. Although a claim may be submitted within the preceding time periods, the amount of the overpayment that may be credited or refunded is subject to limitation by IRC § 6511(b). Refer to IRM 25.6.1.10, Claims, Abatements and Refunds, for more details.

    2. If IRS disagrees with the claim (including the allocation), it issues a Notice of Disallowance starting a 2-year period under IRC § 6532 (a) during which a taxpayer may file a tax refund suit. A standard Notice of Disallowance (which is sent by certified or registered mail) informs a taxpayer that he or she may go to Appeals during the 2-year period, but the time for filing suit is not suspended. IRS and taxpayer, however, may enter an agreement to extend the period.

    3. If the Form 8379 is not submitted with the jointly filed Form 1040 or Form 1040-X the non-debtor spouse may submit Form 8379, Injured Spouse Allocation, at anytime for any portion of the overpayment for which no Notice of Disallowance was issued. If a Notice of Disallowance was issued, then the non-debtor spouse has two years to submit Form 8379. See IRM 21.4.6.5.9.9.2, Form 8379 Not Attached to Joint Form 1040/Form 1040-X.

      Note:

      At the time the offset occurs, if there is no Form 8379, IRS/Bureau of Fiscal Service presume an allocation of the overpayment in favor of the debtor's creditors. This, in effect is a disallowance of the claim to the non-debtor spouse. When an offset occurs, the IRS does not send a Notice of Disallowance to the non-debtor spouse. Without such a notice, no period of limitation for the non-debtor spouse to obtain administrative review of that allocation ever begins to run.

  3. At present, a TOP/DMF offset reversal will not post to Master File if the offset occurred more than 6 years prior to the offset reversal request. To effectuate the offset reversal, you will:

    1. Contact the Fresno TOP/DMF Liaison ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures.

      Reminder:

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

    2. Do not close your base to the Liaison office.

    3. Allow at least 60 days for the manual reversal to post.

21.4.6.5.9.9.1  (10-10-2012)
Form 8379 Attached to Joint Form 1040/Form 1040-X

  1. Initial processing.

    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 an overpayment does not exist, or no amount is available for credit or refund per IRC § 6511(b), then the Form 8379, Injured Spouse Allocation, would not be processed as there would be no joint credit or refund to offset and the allocation 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 the Form 8379 is forwarded to Accounts Management (AM) for processing. See paragraph (2) below if AM disallows the allocation on Form 8379.

  2. Disallowance of Allocation on Form 8379, Injured Spouse Allocation.

    1. If AM rejects the Form 8379 and a Notice of Disallowance is issued to the non-debtor spouse, the Notice of Disallowance starts the 2-year IRC § 6532(a) period.

    2. 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 21.4.6.5.11, Allocation of Injured Spouse Form 8379.

  3. 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 21.4.6.5.9.8, Form 8379, No Consideration Procedures.

21.4.6.5.9.9.2  (10-01-2013)
Form 8379 Not Attached to Joint Form 1040/Form 1040-X

  1. Initial processing.

    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 an overpayment does not exist or no amount is available for credit or refund per IRC § 6511(b), then there would be no joint credit or refund to offset and the allocation 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 contest the allocation.

  2. Period of Limitations for Contesting the IRS/Bureau of Fiscal Service Allocation.

    1. No Notice of Disallowance is issued regarding the IRS/Bureau of Fiscal Service presumptive allocation. In order to trigger a period of limitations for submitting Form 8379, Injured Spouse Allocation, the non-debtor spouse is entitled to a Notice of Disallowance to inform him/her that all or part of the amount requested on the joint return has been offset. As no Notice of Disallowance is issued to the non-debtor spouse, the non-debtor spouse has an unlimited period to file Form 8379 with the IRS.

      Example:

      The Form 1040 (tax year 1997) has been filed timely and had claimed a refund, but it was offset. The Form 1040 filing did not include Form 8379. No Notice of Disallowance was issued to the non-debtor spouse regarding the allocation IRS/Bureau of Fiscal Service made in favor of the debtor spouse's creditors. In 2007, IRS receives the Form 8379 for the 1997 tax year. The Form 8379 is eligible for processing because the spouses filed the Form 1040, U.S. Individual Income Tax Return, on time under IRC § 6511 and a Notice of Disallowance was not issued to the non-debtor spouse regarding the offset.

    2. If a Notice of Disallowance was issued, it would trigger the 2-year IRC § 6532 (a) period. Extra information would have to be included in any such notice to explain to the non-debtor spouse that IRS will consider Form 8379 during this 2-year period. Normally the only formal administrative consideration given to a claim by IRS after an IRC § 6532(a) notice is issued is given by Appeals. See IRM 21.4.6.5.16, Form 8379 Disallowance.

21.4.6.5.9.10  (10-10-2012)
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 an injured spouse 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 (-LQ 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 (-LQ 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 (-LQ 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.
    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 21.4.6.5.32, 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.

21.4.6.5.10  (11-19-2012)
Community Property Allocation

  1. Different community property laws may apply to allocations regarding overpayments offset to tax or non-tax debts. Follow IRM 25.18.5, Injured Spouse, or instructions on SERP under Local/Sites/Other, Accounts Management Services (AMS), Community Property Worksheets, under Injured Spouse Checklist select Injured Spouse Allocation Worksheet Instructions for instructions pertaining to injured spouse cases filed when community property is involved.

  2. A Federal agency, as creditor, can assert a right to the non-obligated spouse's share of the joint refund in those states where the community property can be reached for payment of the debts of one spouse. The IRS can assert its rights as creditor in collecting tax debts through tax offset, but may not assert this right on behalf of other Federal agencies in collecting their debts through TOP offsets. Care must be taken to determine which laws apply in each circumstance.

  3. The community property states are:

    • Arizona

    • California

    • Idaho

    • Louisiana

    • Nevada

    • New Mexico

    • Texas

    • Washington

    • Wisconsin

  4. IRS Chief Counsel determined that Earned Income Tax Credit (EITC) must be allocated without regard for community property laws. When processing an injured spouse form against a Debtor Master File (DMF) or Treasury Offset Program (TOP) offset, all EITC must be allocated on Form 8379 Injured Spouse Allocation Worksheet prior to applying each state's applicable laws to the remaining overpayment. This has no effect on injured spouse forms filed against tax offsets since IRS creditor rights permit an offset based on the applicable state law regardless of how EITC may be allocated.

  5. Special exceptions exist for many of the community property states identified above, Refer to IRM 25.18.5, Community Property - Injured Spouse.


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