21.6.8  Split Spousal Assessments (MFT 31)

Manual Transmittal

September 11, 2014

Purpose

(1) This transmits a revised IRM 21.6.8, Individual Tax Returns, Split Spousal Assessments (MFT 31).

Material Changes

(1) Minor editorial changes made throughout the IRM.

(2) IRM 21.6.8.1 - added different statute of limitations to list in (1).

(3) IRM 21.6.8.3 - added clarification to various triggering events.

(4) IPU 14U0156 issued 01-22-2014 IRM 21.6.8.5 - Added exception for ITINs that can be mirrored.

(5) 21.6.8.5.1 - added to (4) that the TC 971 AC 110 allows certain transactions to be mirrored.

(6) IRM 21.6.8.6.1 - added note to (2) saying most of the restitution-based assessments are now on both MFT 30 and MFT 31.

(7) IRM 21.6.8.7 - added note to (12) saying interest may need to be manually verified on non-mirrored accounts.

(8) IPU 14U1002 issued 06-13-2014 IRM 21.6.8.8.2 - moved (3) - (6) to an If/Then table in (2), added clarification that one employee will work all open transcripts and added note to (9) saying if overpayment consists both real and mirrored credits, it may be necessary to issue a manual refund.

Effect on Other Documents

IRM 21.6.8 dated Oct. 1, 2013, is superseded. This IRM also incorporates IRM Procedure Update (IPU) 14U0156 (dated 01-22-2014) and 14U1002 (dated 06-13-2014).

Audience

Employees located in all business operating divisions who have contact with taxpayers either by phone, correspondence or personal contact

Effective Date

(10-01-2014)

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

21.6.8.1  (10-01-2014)
Split Spousal Assessments (MFT 31) Overview

  1. In January 2001, the Master File Tax (MFT) 31, Separate Assessment Module, was added to the Individual Master File (IMF). MFT 31 contains split spousal assessments previously processed to the Automated Non-Master File (ANMF) which meet one or more of the following conditions:

    • Collection action is prohibited against only one spouse.

    • Each spouse is liable for different amounts.

    • Each spouse has different penalty and/or interest suspension periods.

    • Each spouse has a different statute of limitations.

  2. When determining if an account qualifies for MFT 31, if the triggering event is not listed in IRM 21.6.8.3, What is MFT 31, MFT 31 cannot be used. The account either stays on MFT 30 or gets moved to NMF.

21.6.8.2  (10-01-2011)
MFT 31 Disclosure

  1. Returns and return information for individuals filing income tax returns jointly may be disclosed to either of the individuals with respect to whom the return is filed. This only applies to the joint return itself, including attachments to such a return. IRC 6103(e)(8) provides that certain limited collection information regarding one spouse must be disclosed to the other spouse relative to tax deficiencies with respect to a jointly filed return where the individuals filing such return are no longer married or no longer reside in the same household. Disclosures requested pursuant to IRC 6103(e)(8) will be made only upon written request.

  2. Information that must be disclosed upon receipt of proper written request from a spouse who has been assessed the joint tax will include:

    1. Whether the Service has attempted to collect the deficiency from the other spouse;

    2. The amount collected, if any, and the current collection status (i.e., installment agreement, Currently Not Collectible (CNC), etc.);

    3. If the account is CNC, the reason (i.e., unable to locate, etc.).

  3. Information which will not be disclosed includes:

    1. The other spouse's location, name change, or telephone number;

    2. Information about the other spouse's employment, income or assets;

    3. The income level at which a CNC account will be reactivated.

  4. Caution should be exercised when spouses do not have the same power of attorney (POA) to ensure the information of one spouse is not inadvertently disclosed to the POA of the other spouse.

  5. For additional disclosure information, see IRM 21.1.3.2, General Disclosure Guidelines, and IRM 11.3.2.4, Persons Who May Have Access to Returns and Return Information Pursuant to IRC §6103(e).

21.6.8.3  (10-01-2014)
What is MFT 31

  1. MFT 31 is an IMF account code. MFT 31 is used for assessments against an individual taxpayer on a joint module and is generated by one or more of the following:

    • Bankruptcy — either spouse is discharged or dismissed from bankruptcy.

    • Offer in Compromise (OIC) — either spouse makes an offer on a liability.

    • Restitution Related — an assessment of criminal restitution ordered payable to the IRS has been made.

    • Tax Court - either spouse is going to Appeals or petitions the tax court. (Exam / Automated Underreporter (AUR) / Appeals)

    • Innocent Spouse — an assessment is made against a joint module but one spouse is relieved of the liability fully or partially.

    • Exam agreed / unagreed cases — when only one spouse agrees to the tax deficiency, while the other spouse does not agree, but does not appeal or file a petition (this could include a deceased taxpayer and neither the surviving spouse nor the executor sign the Revenue Agent Report).

    • Taxpayer Assistance Order — either spouse files Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order).

    • Installment Agreement — either spouse requests an installment agreement.

      Note:

      These installment agreements are established by Compliance, see IRM 5.19.1.5.5.11.1, Front End Mirror Assessments Process for Installment Agreements (IA) and Currently Not Collectible Hardship Closures (CNC).

    • Currently Not Collectible (CNC) — account qualifies for CNC based on either spouse's financial status.

  2. There are three types of MFT 31 accounts:

    • Split/Transfer - MFT 31 accounts created or in process prior to January 2005 or a qualifying NMF 20 account (collection statute expiration date (CSED) expired after January 1, 2005);

    • Mirrored - Bankruptcy by only one spouse, innocent spouse claim, OIC filed by only one spouse, joint OIC defaulted by one spouse, Form 911 filed by only one spouse, one spouse requests an installment agreement or one spouse qualifies for CNC;

    • Exam / Appeals / AUR - Only one spouse is going to Appeals or petitions the tax court, when one spouse has petitioned bankruptcy court, or a court ordered restitution payable to IRS in a criminal tax case.

  3. As of January 1, 2005, the triggering event will determine when the account is moved from MFT 30 to MFT 31 and what type of MFT 31 account is established. The transaction code (TC) 971 action code (AC) will identify the triggering event.

    Triggering Event When MFT 31 account is established Type of MFT 31 account Identified by TC 971 Action Code
    Bankruptcy by only one spouse Upon discharge or dismissal Mirror 100
    OIC submitted by only one spouse Resolution decision and approval Mirror 101
    Joint OIC Default of accepted OIC by only one spouse Mirror 101
    Court order requiring payment of restitution to IRS in a criminal case, for any accounts created after Mar. 23, 2011

    Note:

    prior to 3/23/2011, action code 102 was used when one spouse agreed to an Exam, one spouse went to Appeals or one spouse agreed to an AUR assessment.

    Upon receipt of assessment documents Exam 102
    Individual assessments on a joint account Filing of petition, agreement to tax adjustment by only one spouse, default by only one spouse, or innocent spouse claim received in open examination Exam / Appeals / AUR 103
    Innocent Spouse Upon receipt of a processable Form 8857, Request for Innocent Spouse Relief, in the Cincinnati Centralized Innocent Spouse Operation Mirror 104
    Taxpayer Advocate case Filing of Form 911 by only one spouse Mirror 106
    Installment Agreement Upon approval of the installment agreement Mirror 107
    Currently Not Collectible Upon approval of CNC Mirror 109

    Caution:

    Installment agreement and CNC MFT 31 modules are created by Compliance Services Collection Operations (CSCO) in Philadelphia only. See IRM 5.19.1.5.4.12.1, Front End Mirror Assessments Process for IA and CNC Closures, for more information.

  4. MFT 31 accounts are not established by the Accounts Management (AM) function. If problems are identified with the MFT 31 set up, the originating function must correct the account.

  5. If a MFT 31 account has been established, then the primary taxpayer identification number (TIN) joint MFT 30 account will show:

    • A TC 971 AC 100, 101, 102, 103, 104, 106, 107, or 109 will indicate the account is on MFT 31. The action code identifies the reason.

    • The TC 971 will contain a cross-reference TIN (XREF TIN) field entry showing either the primary or secondary TIN.

    • If it's a mirrored account, the input of a TC 971 AC 045 (used prior to January 1, 2005) or AC 145 (used after January 1, 2005) generates a TC 400 to zero out the MFT 30 account.

  6. A pending TC 971 AC 10X (listed above) indicates that an MFT 31 account(s) is being created.

  7. Notice and/or letter issuance is generated using the "Current Name Line" for the MFT 30 liability and the Primary Taxpayer Name Line (PTNL) for MFT 31 liability.

21.6.8.4  (10-01-2005)
Split/Transfer Account Overview

  1. MFT 31 accounts established or in processing between January 2001 and January 2005 were established as split/transfer accounts.

  2. Split/transfer accounts included transactions and balances for the liable spouse after the other was relieved, in full or in part, of the liability due to:

    • Innocent spouse relief

    • Bankruptcy discharge

    • Accepted OIC

    • Tax Court ruling

    • Open in Exam

    Note:

    Taxpayer Advocate cases were not included in the initial MFT 31 program.

  3. Split/transfer accounts were only established after January 1, 2005, if the case was:

    • Sent to the Accounting function for processing prior to January 1, 2005, or

    • Open in Innocent Spouse inventory and one MFT 31 account was established prior to January 1, 2005.

    • Open in Examination prior to January 1, 2005.

21.6.8.4.1  (10-01-2013)
Split/Transfer Accounts

  1. The following actions created a split/transfer account:

    • The TC 971 with AC 100, 101, 102, 103, or 104 plays a key role in creating the MFT 31 account. The originating office (Collection, Exam or Appeals) inputs a TC 971 with the appropriate AC to the joint tax liability account using command code REQ77.

    • The social security number (SSN) of the obligated spouse (for whom the MFT 31 module is created) is entered in the cross-reference TIN (XREF TIN) field. In some cases, both spouses may be obligated. If so, two TC 971s are input.

    • The TC 971 AC 100, 101, 102, 103, and 104 generates a TC 971 with the same AC to open the MFT 31 account tax year. The TC 971 posts on the MFT 31 with the XREF TIN field of the primary taxpayer. This is how the primary taxpayer's MFT 30 tax account is identified.

    • To move the liability to MFT 31, the originating office prepares Form 12810, Account Transfer Request Checklist, and the Accounting function inputs a TC 971 AC 045 to IDRS, systemically generating a TC 400 and M- freeze on the joint account and a CP 96 to the transfer function. Form 3413, Transcription List (Account Transfer-In), is prepared using the transactions from the CP 96 (determined by the originating office) to process the liability to the MFT 31 account.

  2. When the "split" assessment is based on the processing of the original return, the MFT 31 separate assessment module will reflect a TC 150.

  3. When the "split" assessment is due to an audit or other subsequent assessment, (increasing tax, decreasing credits, etc.), NO TC 150 will be present on the MFT 31 module.

  4. The TC 971 XREF TIN on MFT 31 for both the primary and secondary TIN will reflect the primary TIN for the joint tax account.

    Note:

    If TC 971 AC 102 or 103 is present on MFT 31, a TC 971 AC 110 may be necessary to ensure duplicate payment of a deficiency does not occur. The AC 110 is used to link duplicate Tax Court assessments for Accounts Receivable tracking.

    Note:

    For a TC 971 AC 102 dated March 23, 2011, or later, the module will contain a TC 971 with AC 180 - 189 in lieu of AC 110.

21.6.8.5  (01-22-2014)
Mirrored Account Overview

  1. MFT 31 accounts not established prior to January 1, 2005, will be established as a mirrored account, with the exception of Action Code 102 and 103, which are never mirrored.

  2. As of January 1, 2005, Master File programming for the MFT 31 allows the systemic mirroring of the MFT 30 module.

  3. The mirroring process systemically establishes two MFT 31 accounts, one for each spouse's SSN and allows credits to be systemically credited to the spouse's account.

    Note:

    Tax adjustments input after the account is mirrored are not systemically mirrored on the spouse's account, however, adjustments to the earned income credit and withholding do mirror.

  4. The following account conditions cannot be mirrored:

    • Accounts with an Internal Revenue Service Number (IRSN) or an Individual Taxpayer Identification Number (ITIN) as the primary TIN. These accounts will be moved to Non-Master File (NMF).

      Exception:

      ITINs with the 4th and 5th digits with the following ranges can be mirrored: 70-88, 90-92 and 94-98.

    • Accounts where the secondary SSN is invalid, unless the invalid condition can be resolved.

    • Accounts where the secondary taxpayer is deceased.

  5. Payments with designated payment code (DPC) 31 are not mirrored to the spouse's account.

21.6.8.5.1  (10-01-2014)
Mirrored Accounts

  1. Two TC 971s are input on the MFT 30 module indicating the triggering event, one with the primary SSN as the cross-reference TIN and the second with the secondary SSN as the cross-reference TIN.

  2. TC 971 AC 145 input on the MFT 30 account generates a TC 400 on the MFT 30 account and copies all transactions on the MFT 30 account to the two MFT 31 accounts. An M- Freeze, Account Transfer Out Freeze, is generated on all three accounts. Credits are generated to all three accounts, making them appear to be in zero balance.

    Caution:

    Do not erroneously advise the taxpayer that the account is full paid. The balance due will be re-established when the M- freeze is released.

  3. A TC 370 is systemically generated and posted to both MFT 31 accounts when TC 971 AC 145 posts. The TC 370 establishes the secondary entity, if necessary.

  4. TC 971 AC 110 is systemically generated and posts to the MFT 31 accounts. TC 971 AC 110 will cross-reference the account to the spouse's TIN and allow certain transactions to mirror to the cross reference TIN.

  5. TC 972 AC 145 input on all three accounts, MFT 30 and both MFT 31 accounts, causes the following:

    • Releases M- freeze.

    • Generates TC 402 which debits each module.

    • Generates TC 971 AC 132 on MFT 30.

  6. TC 971 AC 132 generates TC 604 credit to zero balance the MFT 30 account. The TC 604 will have a unique Julian date of 996.

  7. The entire mirroring process can take 4 - 6 weeks.

  8. Once the MFT 31 modules have been created, only certain transaction codes will mirror. The following table shows which transaction codes posting to an MFT 31 account will be systemically mirrored using a corresponding credit (TC 766 Reference Number 337), or debit (TC 767 Reference Number 337), on the related MFT 31 account.

    Mirrored transaction codes include:
    61X 64X 66X 67X
    68X 69X 70X 72X
    73X 76X 80X 82X
  9. To stop the mirroring of credits, input a TC 972 AC 110 using the transaction date of the TC 971 AC 110.

    Example:

    When one account is paid in full and the payments should no longer be mirrored, input a TC 972 AC 110 on both accounts to stop the mirroring.

21.6.8.6  (10-01-2013)
Exam/Appeals/AUR MFT 31 Account Overview

  1. MFT 31 Exam / Appeals / AUR modules are created when an assessment of restitution is made pursuant to a court order in a criminal case, when only one spouse requests to go to Appeals, petitions Tax Court, signs an agreement with regard to a proposed tax adjustment, when default has occurred for only one spouse, or when an innocent spouse claim is filed during open examinations.

  2. The modules are systemically established but not mirrored.

  3. These accounts can be identified with a TC 971 AC 102 or 103. Beginning March 23, 2011, Action Code 102 is used exclusively to create or identify restitution-based assessments MFT 31 modules.

21.6.8.6.1  (10-01-2014)
Exam/Appeals/AUR MFT 31 Accounts

  1. Exam / Appeals / AUR MFT 31 accounts are commonly established for one spouse. When both spouses have an MFT 31 account for the same tax period, the taxpayers may still be individually liable. The presence of a TC 971 AC 110 indicates the taxpayers are responsible for the same debt, and payments will be reflected on both accounts to assure proper balance due information. See IRM 21.6.8.8.1, DUPASMT Transcripts, for information on how the payments get credited from one spouse to the other.

  2. If there is one MFT 31 and the same assessment has posted on MFT 30, if either taxpayer disagrees with the assessment, send a Form 4442, Inquiry Referral, to the area that created the MFT 31 module.

    Note:

    Most of the restitution-based assessments are on both the MFT 30 and MFT 31.

21.6.8.7  (10-01-2013)
MFT 31 Procedures

  1. Follow normal procedures for inquiries on MFT 31 accounts. Refer to all established IRM procedures to resolve issues (e.g., payment tracers; account, refund, penalty and interest inquiries / computation; transcript requests, statute, etc.). Depending on the issue, it may be necessary to research the MFT 30 and both the primary and secondary MFT 31 modules.

  2. The same notice routines are applicable for MFT 31 as for MFT 30. Therefore, be aware that notices generating from a MFT 31 account will carry the "1040" type tax listed on the notice.

  3. If an inquiry involves a combination of a current Master File account (MFT 31 / MFT 30) and a Non-Master File (possibly a split assessment account prior to Jan. 01, 2001), which requires research on the ANMF system, prepare Form 4442, Inquiry Referral, and route the case to the NMF Function.

    Caution:

    If the inquiry is only for MFT 31, do not refer to the NMF function.

  4. Follow established referral procedures for issues and freeze conditions outside the AM scope of work.

  5. Taxpayer calls regarding Innocent Spouse eligibility issues, status of current claims, or general inquiries regarding the filing of a claim, should be referred to the Innocent Spouse toll-free number at 1-855-851-2009. You must address all other taxpayer issues prior to giving out the toll-free number. Ensure you have answered all inquiries relating to non-Innocent Spouse issues.

    Note:

    This toll-free number is for Innocent Spouse (Form 8857) calls only; follow normal procedures for Injured Spouse (Form 8379) inquiries.

  6. An offset can occur from a joint account (MFT 30) to the MFT 31 account for the primary SSN and secondary SSN.

  7. When responding to a balance due inquiry, if an MFT 31 module appears to have a zero balance, you must access command code (CC) TXMOD to verify the mirroring process has been completed. If the MFT 31 module contains a TC 150 and a TC 402, the mirroring is finished. If not, allow two weeks for the process to be completed.

  8. If the taxpayer wants to make a payment before the MFT 31 account is established, post the payment to the MFT 30 account along with a TC 570.

  9. When making a payment intended for an MFT 31 account, taxpayers should notate "PTNL" after their SSN and "MFT 31" in the memo section. "PTNL" helps to correctly apply the payment to the taxpayer's MFT 31 module.

  10. If the taxpayer wants to make a payment using the Electronic Federal Tax Payment System (EFTPS), advise the taxpayer to follow these steps in order to have the payment correctly applied to MFT 31:

    1. Select the payment tab.

    2. Select the drop down menu on "Select Tax Form" .

    3. From the drop down menu, select "1040 Separate Assessment / Innocent Spouse" .

  11. Notice status 21, 56, and 58 history cannot be transferred to MFT 31 when it is established. The original 1% start date which triggers a 1% Failure to Pay (FTP) penalty will be lost. Use the date of the FTP indicator to compute the FTP. Indicators are:

    • MFT 30 shows status 58

    • TC 971 AC 035

    • TC 971 AC 069

  12. Once the MFT 31 accounts are created, the notice status for the spouses may differ. This may cause the penalties and interest to compute differently. In addition, if the Failure to Pay penalty is assessed at different times, the amount of interest owed will be different.

    Note:

    If a taxpayer inquires about the interest computation, you may need to manually verify the interest was computed correctly due to systemic limitations on non-mirrored accounts.

21.6.8.7.1  (10-01-2008)
Missing Payments

  1. Research missing MFT 31 payments using normal procedures. See IRM 21.5.7, Payment Tracers.

  2. DPC 31 prevents the associated payment from being cross-referenced to the other related MFT 31 account. DPC 31 payments should NOT be manually mirrored.

  3. Use the following procedures to ensure payments are credited to the appropriate accounts:

    Note:

    Consider an account with TC 972 AC 110 as a non-mirrored account when using the chart below.

    If Then
    Payment was applied to a mirrored MFT 31 account in error Follow normal credit transfer procedures to move the payment to the correct account. See IRM 21.5.8, Credit Transfers. The debit will be systemically mirrored on the spouse's account.
    Payment was erroneously applied to an MFT 31 account that is not mirrored
    1. Follow normal credit transfer procedures to move the payment to the correct account. See IRM 21.5.8, Credit Transfers.

    2. If the payment was manually mirrored to the spouse's account, take the following actions on the spouse's account:

      • Input TC 290 .00

      • Input reference number 337 with payment amount entered as a negative amount.

      • Enter the return processable date (RPD) - posting date of the payment.

      • Use hold code (HC) 3, reason code (RC) 099, blocking series (BS) 05, priority code (PC) 9.

      • Enter "Reverse misapplied payment" in the remarks field.

    Payment was intended for an MFT 31 Mirrored account Follow normal credit transfer procedures to move the payment to the correct account. See IRM 21.5.8, Credit Transfers. The credit will be systemically mirrored on the spouse's account.
    Payment was intended for an MFT 31 account that is not mirrored
    1. Follow normal credit transfer procedures to move the payment to the correct account. See IRM 21.5.8, Credit Transfers.

    2. Take the following actions on the spouse's account:

      • Input TC 290 .00

      • Input reference number 337 for the payment amount

      • Enter the RPD - posting date of the payment

      • Use HC 3, RC 099, BS 05, PC 9.

      • Enter "Manually mirror payment" in the remarks

    Note:

    Never adjust the spouse's account to reflect a payment with DPC 31.

21.6.8.7.2  (10-01-2013)
Adjusting MFT 31 Accounts

  1. Adjustments are input to MFT 31 in the same manner as the MFT 30 and will post without a TC 150 present.

  2. Adjustments to tax are not mirrored, however, adjustments to the earned income tax credit and withholding do mirror. See IRM 21.6.8.5.1, Mirrored Accounts, for a list of transaction codes posting to an MFT 31 account which will be mirrored using a corresponding credit (TC 766 Reference Number 337). It may be necessary to make multiple adjustments, one on the primary spouse's account and one on the secondary spouse's account.

    Note:

    If an MFT 31 module contains a TC 604 and a previously posted TC 971 AC 104, reverse the TC 971 AC 131 or 132 prior to inputting the adjustment. If a balance due remains after the adjustment posts, re-input the TC 971 to generate a TC 604. See IRM 25.15.15.7.1(4), Common Mirroring Unpostable Transaction Codes, for more information and to avoid an Unpostable 171 RC 2.
    If the MFT 31 module contains a TC 604 with a TC 521 and a TC 971 AC 031, see IRM 21.5.2.3, Adjustment Guidelines - Research, for more information.

  3. The adjustment amount may vary for the primary and secondary taxpayer. Verify adjustment amounts before inputting the adjustment.

  4. Information input to MFT 31 is not transmitted to the Social Security Administration. Do not input Item Reference Numbers to change self employment tax (889), self employment income (878 / 879) or medicare income (895 / 896) to MFT 31 accounts. Input the necessary adjustment, without the Item Reference Numbers on the MFT 31 account(s). Changes to self employment tax, self employment income, and medicare income must be input to MFT 30. Input TC 290 .00, the appropriate Item Reference Numbers, RC(s) and HC 4 to the joint MFT 30 account.

  5. Penalty abatement requests should only be considered for the taxpayer requesting abatement. Since taxpayers are separately liable for the MFT 31 balance, it would not be appropriate to automatically remove the penalty on the non requesting spouse. Use the Reasonable Cause Assistant (RCA) for the requesting spouse. If you have determined the requesting spouse does not have the joint history of compliance, then it would be appropriate to bypass a First-Time Abate (FTA) determination by RCA. Select "cancel" in the FTA window and proceed with reasonable cause consideration.

  6. Adjustment requests for an MFT 31 module with action code 102 or 103 are generally referred to the originating function.

  7. Overpayments created as a result of adjustment will not systemically generate a refund. The credit will be held on the account and an REFMFT31 transcript will generate, see IRM 21.6.8.8.2, REFMFT31 Transcripts. To prevent a transcript from generating, include Hold Code 4 when inputting an adjustment that will create an overpayment. Manually offset or refund the overpayment.

    Caution:

    Prior to offsetting or refunding, always check the XREF TIN to ensure the credit created is not mirrored credit, TC 766.

  8. Certain credits cannot be adjusted on MFT 31. Error message 99 will be displayed on CC ADJ54 saying the Reference Number is either invalid or cannot be used with the MFT on the screen. When this happens, the adjustment will have to be input on MFT 30. Take the following steps on MFT 30:

    1. Input a TC 972 using the Action Code that created the TC 604.

    2. Input the credit adjustment using CC ADJ54 with a Posting Delay Code 1.

    3. Re-input the TC 971 and appropriate Action Code to post the TC 604.

      Note:

      Each transaction must post before the next transaction is input. A Posting Delay Code may be used.


    Once the credit has posted to MFT 30, take the following action on the MFT 31 module:

    • Input a TC 290 .00

    • Enter the transaction date of the credit in the RET-PROC-DT field on CC ADJ54

    • Input Credit Reference Number 337 for the amount of the credit

    • Use RC 099 and the RC of the credit being mirrored, HC 3, PC 9 and BS 05.

21.6.8.7.3  (10-13-2010)
MFT 31 Refunds

  1. Systemic refunds from MFT 31 are issued in the primary taxpayer's name only. In order for a refund to be issued in both the primary and secondary taxpayer's names, a manual refund must be issued. If the MFT 31 overpayment is a joint overpayment, a manual refund must be issued.

    Example:

    An amended return is filed resulting in an overpayment.


    Issue the manual refund using the joint MFT 30 name line.

  2. Multiple manual refunds must be issued if the joint overpayment:

    • Includes a DPC 31 payment

    • Is not entirely available on one account, see Exhibit 21.6.8-1, Exhibit 21.6.8-2, Exhibit 21.6.8-3, Exhibit 21.6.8-4, and Exhibit 21.6.8-5 for examples

      Caution:

      TC 766 credits with credit reference number 337 cannot be refunded. If the joint overpayment includes payments made by both spouses which are mirrored to the other spouse's MFT 31 account, the total amount of the joint overpayment is not available for refund from one MFT 31 account. The TC 766 portion of the overpayment must be reversed using TC 767.

21.6.8.8  (03-23-2007)
MFT 31 Transcripts

  1. Two transcripts, DUPASMT and REFMFT31, will generate to the AM function as a result of the MFT 31 process. Automatic controls will be established through Case Control Activity (CCA). See IRM 21.6.8.8.1, DUPASMT Transcripts, and IRM 21.6.8.8.2, REFMFT31 Transcripts, for transcript procedures.

  2. Two additional transcripts are generated for MFT 31. AM does not work either of these. They are:

    • SPSSNMFT31 - These transcripts are worked by the Submission Processing (SP) Entity Function.

    • MIRRORFAIL - These transcripts are worked by the functional area creating or attempting to create the MFT 31.

21.6.8.8.1  (03-12-2013)
DUPASMT Transcripts

  1. DUPASMT transcripts generate when payments post to either spouse's MFT 31 account. This occurs when the MFT 31 was created by a TC 971 AC 102 — Exam Tax Court Case, prior to March 23, 2011, or AC 103 — Appeals Tax Court Case. If the module contains a TC 971 AC 110, the transcript will be issued after the posting of each subsequent payment transaction (TC 670, TC 706, etc.).

  2. Under normal circumstances DUPASMT transcripts will not generate on Mirrored MFT 31 accounts. Payments applied to a Mirrored MFT 31 account will be systemically mirrored (duplicated) on the spouse's MFT 31. However, if the mirroring process is interrupted (original computer generated TC 971 AC 110 is reversed and later input manually), systemic mirroring is lost and a DUPASMT transcript will generate.

  3. The tax liability, in whole or in part, is reflected on both spouse's MFT 31 accounts. The payment(s) must be reflected on both accounts to assure proper balance due information and Accounts Receivable.

  4. If the account is in OIC status, send a referral to CSCO for resolution.

  5. If the account is in Status 72, send a referral to the Centralized Insolvency Operation in Philadelphia for resolution.

  6. If research shows a second open control, category "REFM" , recontrol your control base to the "REFMFT31" control.

  7. Follow normal procedures if there are any other open controls, unless the condition above applies.

  8. If research does NOT show an open control with category "REFM" :

    1. Compare the primary and secondary's tax modules.

    2. Input TC 290 .00 to the spouse's module that does NOT have the payment(s) credited to their account.

    3. Enter reference number 337 for the amount of the payment.

      Caution:

      Do not create a credit balance when inputting reference number 337. If the payment amount is more than the balance due, input the balance due amount.

    4. Enter the Return Processable Date (RPD). The RPD is the posting date of the payment.

    5. Use HC 3, RC 099, BS 05, and PC 9.

  9. When adjusting a statute year module and an entry is required in the "RFSCDT" field on CC ADJ54, use the refund statute expiration date (RSED) on the module with override code S.

  10. When the module is paid in full, input a TC 972 AC 110 on both accounts to stop future transcripts from generating.

21.6.8.8.2  (06-13-2014)
REFMFT31 Transcripts

  1. The REFMFT31 transcript generates when an MFT 31 account reflects an overpayment. A computer generated TC 570 will post in the cycle the overpayment is created.

  2. Upon receipt of an REFMFT31 transcript, research all related MFT 30 and MFT 31 modules (on both the primary and secondary TIN) to determine necessary actions as shown below.

    If Then
    The module is in OIC status Send a referral to CSCO for resolution
    The module is in Status 72 Send a referral to the Centralized Insolvency Operation in Philadelphia for resolution
    The REFMFT31 transcript generated on a restitution related case Fax a referral to CSCO at:
    1-855-807-8978
    RBA Team

    Note:

    Restitution related cases can be identified by a TC 971 AC 102, with the MFT 31 module created on or after March 23, 2011. Restitution payments can be identified with a DPC 26.

    The module on the primary or secondary TIN has an open control category "IRRQ" with activity code "DUPASMT" or another REFMFT31 transcript Contact the employee with the open control. Advise the employe to close the control to your control base (earliest received date rules apply). If the control is to a clerical number or unassigned queue, close the control to your control base. One employee will work all open transcript issues on both the primary and secondary module.
    There are any other open controls Follow normal procedures
  3. If the module contains a TC 971 AC 100, 102, 103, 104, 106, 107, or 109 and both MFT 31 modules are not full paid and all payments are NOT reflected on both accounts, determine which payment(s) or portion of payment is missing from the module. Manually mirror the payment(s) following the steps below. If the payment(s) have a DPC 31, do NOT manually mirror the payment.

    Note:

    Perform a side by side comparison of the two MFT 31 modules before adjusting either account.

    1. Input an adjustment to the spouse's module that does NOT have the payment.

    2. Make a separate adjustment for each missing payment, if more than one.

    3. Enter TC 290 .00 and reference number 337 for the amount of the payment.

      Caution:

      Do not create a credit balance when inputting reference number 337. If the payment amount is more than the balance due, input the balance due amount.

    4. Enter the posting date of the payment as the RPD.

    5. Use HC 3, RC 099, PC 9, BS 05.

  4. If the overpayment was created by a mirrored credit or a mirrored adjustment, reverse the credit for the amount of the overpayment. Use separate reference numbers 337 for each credit causing the overpayment if multiple transactions have created the credit balance.

    1. Input a TC 290 .00

    2. Enter the transaction date of the credit in the RET-PROC-DT field on CC ADJ54.

    3. Input reference number 337 for the credit(s) creating the overpayment with a minus sign behind the money amount.

    4. Use a HC 3, RC 099, PC 9, and BS 05.

    Note:

    If an overpayment consists of both real and mirrored credits, it may be necessary to issue a manual refund. Use a HC 4 on your adjustment if issuing a manual refund. See the Caution in (9).

    Caution:

    Research both accounts to determine what type of payment created the credit. If the mirrored credit corresponds with a refund offset, see (7).

  5. When adjusting a statute year module and an entry is required in the "RFSCDT" field on CC ADJ54, use the RSED on the module with override code S.

  6. Input TC 972 AC 110 on both MFT 31 accounts to prevent future payments from mirroring. When inputting the TC 972, use the transaction date of the TC 971 AC 110.

  7. In situations where two refunds have offset into the MFT 31 accounts causing a true credit and a false credit within 3 cycles of one another, ensure only the proper amount of tax, penalty and interest has been collected between the two accounts. It may be necessary to reverse a refund offset, TC 706, instead of the TC 766. See Exhibit 21.6.8-5 for an example of an offset that occurred one week apart.

    Note:

    When offsets occur in the same cycle and the overpayments are the same, divide the individual offset by the total offset. The percentage calculated, multiplied by the amount of overpayment, will determine the amount to return to the individual. This would also apply if payments are made in the same cycle.

    Example:

    Travis had $700 offset and Sarah had $400 offset to pay a total debt of $800. Travis paid 63.6% of the total offset ($700 / $1100). Travis is entitled to $190.80 ($300 overpayment X 63.6%) and Sarah is entitled to $109.20.

    Exception:

    If the spouses are still filing married filing jointly and overpayments have been offset to both MFT 31 accounts, reverse one of the offsets and corresponding credit.

    Note:

    If an offset occurs in the same cycle and the overpayments are not the same, or payments were made in the same cycle, apply the formula from the first note to the lesser of the overpayments. The remainder of the larger overpayment will be removed by inputting reference number 337 with a minus sign.

    Example:

    Using the example above, assume Travis' overpayment is $200.00 and Sarah's is $300. A TC 701 for $127.20 would be input on Travis' account and a TC 701 for $72.80 would be input on Sarah's account. A $100 overpayment would still exist on Sarah's account after the credits mirror. Remove the $100 credit using reference number 337 with a minus sign.

  8. Perform research to determine if the taxpayer is liable for other taxes.

    1. If other taxes are due, release the freeze and allow the credit to offset to the balance due account(s).

      Note:

      An overpayment on MFT 31 will offset to MFT 30.

    2. If you determine an offset will not occur in a normal manner, as when certain freeze conditions exist, move the credit to the balance due account following normal credit transfer procedures.

      Note:

      If payment was intended for a taxpayer's MFT 31 account, the credit can only be applied to an account for which the taxpayer is liable (MFT 30 or 31). The credit cannot be applied to the spouse's MFT 31 account.

    3. If research determines no additional taxes due, release the TC 570 freeze via normal freeze release procedures and allow the refund to generate to the taxpayer.

      Caution:

      When the system continues to post additional TC 570s for the same overpayment, you must ensure the overpayment does not contain any portion of a mirrored credit. If the overpayment does not contain a mirrored credit, a manual refund will have to be issued.

  9. If it is necessary to issue a Manual Refund, follow the procedures in IRM 21.4.4, Manual Refunds, and IRM 21.6.8.7.3, MFT 31 Refunds:

    1. Attach all required documentation and proof of research to the manual refund request.

      Note:

      Accounting will return a manual refund request that does not contain the required information and/or documentation.

    2. Issue the manual refund in the joint MFT 30 name line only if the overpayment is a joint overpayment.

      Example:

      Taxpayer A makes a payment which overpays the account. The overpayment will be refunded in Taxpayer A's name only.

    3. Issue the manual refund with the name line of the MFT 31 account if the refund is being issued to the individual.

    Caution:

    DO NOT manually refund any credit or credit balance that is a result of a mirrored credit. The TC 766 reference number 337 is a mirrored credit ONLY and is not available for refund or offset. The true credit will be posted under the related SSN and have a credit transaction code such as TC 670 or TC 706.

    Note:

    If the mirrored credit or credit balance can not be reversed from the mirrored account, complete Form 8758, Excess Collection File Addition, to have the mirrored credit or credit balance moved to Excess Collections (Account 6800). When preparing Form 8758, be sure to notate that the credit is not valid. Input a TC 971 AC 296 with the spouse's SSN as the XREF.

Exhibit 21.6.8-1 
Example: No TC 766 Credits on One Account, No DPC 31 Payments On Either Account

Spouse 1 Account Spouse 2 Account
Overpayment - $1,000.00
TC 670 $200.00
TC 670 $300.00
TC 670 $500.00
Overpayment - $1,000.00
TC 766 $200.00
TC 766 $300.00
TC 766 $500.00
Issue joint manual refund for joint overpayment using joint MFT 30 name line:
TC 840 $1,000.00
Reverse TC 766 overpayment credits. Input:
337 $200.00–
337 $300.00–
337 $500.00–

Note:

Include HC 3, PC 9 and RPD - payment date (TC 766)

If there is an unreversed TC 971 AC 110, input TC 972 AC 110 If there is an unreversed TC 971 AC 110, input TC 972 110

Exhibit 21.6.8-2 
Example: TC 766 Credits on Both MFT 31 Accounts, No DPC 31 Payments on Either Account

Spouse 1 Account Spouse 2 Account
Overpayment - $1,000.00
TC 670 $200.00
TC 766 $300.00
TC 670 $500.00
Overpayment - $1,000.00
TC 766 $200.00
TC 670 $300.00
TC 766 $500.00
Reverse TC 766 overpayment credit. Input:
337 $300.00–

Note:

Include HC 3, PC 9 and RPD - payment date

Reverse TC 766 overpayment credits. Input:
337 $200.00–
337 $500.00–

Note:

Include HC 3, PC 9 and RPD - payment date (TC 766)

Issue joint manual refund for joint overpayment using joint MFT 30 name line:
TC 840 $700.00
Issue joint manual refund for joint overpayment using joint MFT 30 name line:
TC 840 $300.00
If there is an unreversed TC 971 AC 110, input TC 972 AC 110 If there is an unreversed TC 971 AC 110, input TC 972 AC 110

Exhibit 21.6.8-3 
Example: No TC 766 Credits on One Account, DPC 31 Payment Present

Spouse 1 Account Spouse 2 Account
Overpayment - $1,000.00
TC 670 $200.00 DPC 31
TC 670 $300.00
TC 670 $500.00
Overpayment - $800.00
TC 766 $300.00
TC 766 $500.00
Issue joint manual refund for joint overpayment using joint MFT 30 name line:
TC 840 $800.00
Reverse TC 766 overpayment credits. Input:
337 $300.00–
337 $500.00–

Note:

Include HC 3, PC 9 and RPD - payment date (TC 766)

Issue manual refund to spouse 1 for DPC 31 payment using spouse 1's MFT 31 name line:
TC 840 $200.00
 
If there is an unreversed TC 971 AC 110, input TC 972 AC 110. If there is an unreversed TC 971 AC 110, input TC 972 AC 110.

Exhibit 21.6.8-4 
Example: TC 766 Credits and DPC 31 Payments On Both Accounts

Spouse 1 Account Spouse 2 Account
Overpayment - $700.00
TC 670 $200.00 DPC 31
TC 670 $400.00
766 $100.00
Overpayment - $800.00
TC 670 $300.00 DPC 31
TC 766 $400.00
TC 670 $100.00
Issue joint manual refund for joint overpayment using joint MFT 30 name line:
TC 840 $400.00
Issue joint manual refund for joint overpayment using joint MFT 30 name line:
TC 840 $100.00
Issue manual refund to spouse 1 for DPC 31 payment using spouse 1's MFT 31 name line:
TC 840 $200.00
Issue manual refund to spouse 2 for DPC 31 payment using spouse 2's MFT 31 name line:
TC 840 $300.00
Reverse TC 766 overpayment credits. Input:
337 $100.00–

Note:

Include HC 3, PC 9 and RPD - payment date

Reverse TC 766 overpayment credits. Input:
337 $400.00–

Note:

Include HC 3, PC 9 and RPD - payment date (TC 766)

If there is an unreversed TC 971 AC 110, input TC 972 AC 110. If there is an unreversed TC 971 AC 110, input TC 972 AC 110.

Exhibit 21.6.8-5 
Example: Refund Offset on Both Spouse's Accounts, TC 766 Generated on Both Accounts

Spouse 1 Account Spouse 2 Account
Overpayment - $1,988.74
TC 150 0.00
TC 806 1,426.00–
TC 766 1,342.00– CR-ID-NUM 336
TC 768 1,028.00–
TC 846 3,796.00
TC 765 1,028.00
TC 767 1,121.00 CR-ID-NUM 336
TC 196 130.75
TC 670 57.00–
TC 670 100.00–
TC 706 2,520.26–
TC 276 57.25
TC 196 340.26
TC 766 1,988.74–
Overpayment - $2,017.04
TC 150 0.00
TC 806 1,426.00–
TC 766 1,342.00– CR-ID-NUM 336
TC 768 1,028.00–
TC 846 3,796.00
TC 765 1,028.00
TC 767 1,121.00 CR-ID-NUM 336
TC 196 130.75
TC 766 57.00–
TC 766 100.00-
TC 706 1,988.74-
TC 766 2,520.26-
TC 196 340.26
TC 276 28.95
Spouse 1 refund applied to account (TC 706) which full paid the module. Spouse 2 refund mirrored (TC 766) creating overpayment. Credit will be resolved when the TC 701 is input on Spouse 2 which will generate a TC 767 on Spouse 1 one cycle after the TC 701 posts. Spouse 2 refund applied to account (TC 706). Spouse 1 refund mirrored (TC 766) overpaying module. Credit will be resolved by reversing Spouse 2 refund (TC 701 1,988.74) and reversing the remainder of the TC 766 overpayment (TC 767 28.30).

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