21.7.12  Non-Master File (NMF) Adjustments

Manual Transmittal

September 06, 2013

Purpose

(1) This transmits revised IRM 21.7.12, Business Tax Returns and Non-Master File Accounts, Non-Master File (NMF) Adjustments.

Material Changes

(1) Various changes were made throughout the IRM. Also, cross references and hyperlinks were added, removed, or revised, as appropriate:

Subsection Change
IRM 21.7.12 Editorial changes made throughout. Content from IRM 21.8.3, dated August 21, 2012, incorporated into IRM 21.7.12.
IRM 21.7.12.1 Updated section to provide additional information concerning Non Master File processing.
IRM 21.7.12.1(4) Added guidance to forward all new assessments and/or documents establishing accounts on NMF to Cincinnati.
IRM 21.7.12.1(6) Updated section per the transition of BMF International work to Cincinnati. IPU 13U0522 issued 03-13-2013.
IRM 21.7.12.2(1) Updated section for correct routing information for IMF and BMF International issues. IPU 13U0522 issued 03-13-2013.
IRM 21.7.12.3(3) Updated Chart to change BMF International faxes are now sent to Cincinnati per the transition of work. IPU 13U0522 issued 03-13-2013.
IRM 21.7.12.4 Added new paragraph with IRM reference for TAS referrals.
IRM 21.7.12.4.6 Moved guidance on Form 1120-IC-DISC from IRM 21.8.3.1.2.
IRM 21.7.12.4.6.4 Moved guidance on Form 8404 from IRM 21.8.3.1.4
IRM 21.7.12.5 Moved guidance for Form 1040NR Fiduciary from IRM 21.8.3.1.1.
IRM 21.7.12.5.1 Moved guidance for adjusting Form 1040NR Fiduciary from IRM 21.8.3.1.1.1.
IRM 21.7.12.5.1.1 Moved guidance for Form 1040NR Fiduciary claims for abatement of penalty and interest from IRM 21.8.3.1.1.2.
IRM 21.7.12.5.1.2 Moved guidance for Form 1040NR returns incorrectly processed to IMF from IRM 21.8.3.1.1.3.
IRM 21.7.12.5.1.3 Added new subsection on IRC 663(b) elections.
IRM 21.7.12.6 Moved guidance for substantiation of unapplied credits from IRM 21.8.3.1.1.4.
IRM 21.7.12.7 Moved guidance for IRC 1161 of the Taxpayer Relief Act of 1997 from 21.8.3.1.3.
IRM 21.7.12.8 Moved guidance for Form 926 from IRM 21.8.3.1.5.

Effect on Other Documents



This material supersedes IRM 21.7.12, dated August 21, 2012 (effective October 1, 2012). This IRM also incorporates the following IRM Procedural Updates (IPUs) - 13U0522 dated 03/13/2013, 13U0589 dated 03/22/2013 and IPU dated 06/21/2013).

Audience

The primary users of this IRM are Wage and Investment (W & I) Customer Account Services Employees.

Effective Date

(10-01-2013)

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

21.7.12.1  (10-01-2013)
Non-Master File (NMF) Overview

  1. Certain returns are not processed using a pipeline system for entry on the Master File (MF) and these accounts must be recorded on a separate system called Non-Master File (NMF). Non-Master File (NMF) accounts are a collection of revenue accounting transactions whose sole purpose is to provide a means for the assessment of taxes and collection of revenue.

    1. Non-Master File is a system of accounting which provides for not only outstanding liabilities but for all types of return and tax adjustment processing that can not be processed on Master File. See IRM 3.17.46.1.1, General, for additional information.

  2. Non-Master File Assessments are made as remainder assessments per IRC 6201.

    1. Remainder assessments are any credits previously assessed such as Withholding (previously assessed on the Form 941), estimated tax credits (previously assessed on the Declaration of Estimated Tax), gasoline tax credits (previously assessed on the Form 720), etc., are used to reduce the liability prior to assessment. the remainder amount is then the assessment amount. See IRM 3.17.46.1.3, Non-Master File Theory, for additional information.

  3. Non-Master File assessments are input on the Automated Non-Master File (ANMF). This is an independent research database which does not interface with Integrated Data Retrieval System (IDRS). ANMF was introduced in 1991 and contains all open, closed and archived Non-Master File (NMF) accounts processed.

  4. Many forms that were previously processed to NMF have been moved to Master File (MF). See prior revisions of this IRM for more information.

  5. As of September 22, 2006, all Non-Master File (NMF) processing has been centralized in the Cincinnati Submission Processing Center (CSPC). For more information regarding the types of accounts established on ANMF, see IRM 21.2.1.5, Non-Master File.

  6. Forward all new assessments and/or documents to establish accounts on NMF to:
    Cincinnati SPC
    P.O. Box 12267
    Covington, KY 41012

  7. NMF notices are generated in CSPC and mailed to the taxpayer. These notices contain an "N " after the taxpayer identification number (TIN). They can also be identified by a tax class (third digit) of 6 in the document locator number (DLN). There are three different ANMF/NMF notices. They are not computer paragraph (CP) notices, but rather are identified by a form number in the bottom right hand corner. The three notices are listed below.

    1. First notice - Form 6335, First Notice issued on Automated Non Master File.

    2. Fourth notice - Form 4840, Final Notice - Delinquent Account. (There are no second or third notices.)

    3. Annual reminder notice - Form 9774, Annual NMF Accrual Reminder Notice.

  8. A toll-free number (1-888-829-7434) appears on all NMF notices. Calls are routed based on the type of call (individual/international/business). Individual calls are routed to Philadelphia Accounts Management for resolution. As of March 2013 business calls and calls regarding the Foreign Investment of Real Property Tax Act, Form 8288, Form 8288-A, Form 8804, Form 8805, Form 8813, and other international issues are routed to Cincinnati Accounts Management for resolution.

    Note:

    NMF notices for Employee Plans (EP) reference has it own toll-free number, 1-877-829-5500.

  9. If calls relating to NMF notices are received on a number other than 1-888-829-7434, questions can be answered if the employee has the ability and expertise to do so. If not, ask the taxpayer to please call 1-888-829-7434 where a specialist will be available to help. DO NOT REFER CALLS ON OTHER ISSUES TO THIS NUMBER. ALSO, THIS TOLL- FREE NUMBER IS FOR CALLS FROM TAXPAYERS OR TAXPAYER REPRESENTATIVES ONLY.

  10. This section provides instructions for employees in Accounts Management who answer the NMF toll free line and also request adjustments to accounts on NMF requiring a correction, abatement, or assessment for:

    • Tax, penalty, or interest

    • Withholding or other refundable credits

    • Miscellaneous taxes not requiring the filing of a regular return

21.7.12.2  (10-01-2013)
What are NMF Adjustments/Correspondence Cases?

  1. NMF Adjustment/Correspondence cases consist of responses or inquiries received from taxpayers concerning accounts housed on the Automated Non-Master File system. Taxpayer inquiries can be for issues related to IMF, BMF or International issues.

  2. NMF correspondence is routed to NMF teams in Accounts Management as follows:

    IF The Issues Are: The Route to:
    BMF and BMF International Issues which include:
    • Form 1120-IC-DISC

    • Form 8697

    • Form 8866

    • Forms 8697/8866

    • BMF NMF Civil Penalty Assessment

    • Forms 8612 and 8613

    • Form 8725

    • Form 8831

    • Form 8924

    • Form 8928

    • Form 8876

    • FIRPTA Issues on accounts prior to January 1, 2006

    • Form 1040NR Fiduciary

    • Form 8404

    • Form 926

    • Issues concerning IRC 1161 of the Taxpayer Relief Act of 1997


    Cincinnati Campus, CAMC
    201 W. Rivercenter Blvd Stop 6222G, Team 203
    Covington, Ky 41011
    Individual Master File (IMF) and IMF International Issues which include:
    • Individual Taxpayer Accounts of $1 billion or more

    • Form 1040NR prior to January 1, 2006

    • Child Support Obligation

    • Split Spousal Assessments prior to January 1, 2006

    • IMF NMF Civil Penalty Assessment


    Philadelphia Campus, PAMC
    2970 Market St,, Mail Stop BLN 3-L08.151, Team 503
    Philadelphia, Pa 19104

  3. When an adjustment is required, the adjustment document is prepared and forwarded to the ANMF team in CSPC Accounting for input to NMF.

  4. All adjustment documents and forms sent to Non-Master File (NMF) Accounting for processing must have a copy of a current NMF transcript or computer display copy attached. Any document received without a transcript attached is returned to the originator. The transcript identifies whether it is a Non-Master File (NMF) account. Transcripts attached to the documents ensure timely processing of refunds, credits and abatements to the ANMF database.

    Note:

    Adjustments are sent to the address on the User Friendly NMF transcript, which should show Cincinnati campus. A User Friendly NMF transcript can be requested on ANMF.

21.7.12.3  (03-13-2013)
NMF Adjustments Research

  1. Use ANMF to research cases. In addition, check MF using IDRS command codes (CCs) SUMRY and/or TXMOD with definer "N" to show when a case has been assigned to the field or correspondence/call is received by an employee. NMF tax account codes can be found in Section 7 of Document 6209, IRS Processing Codes and Information.

  2. Transaction Code (TC) 130 or a V- freeze can indicate a NMF account is present. (CCs) IMFOLE, BMFOLE or ENMOD display this TC.) A TC 130 in Blocking Series (BS) 200-299 indicates a NMF account.

    1. TC 130 is applied to MF accounts to prevent refunds when there are other balance due accounts present.

    2. TC 130 is generally input by the campus Collection Function and creates a V- Freeze.

    3. TC 130 is followed by a designation number of the campus which input the TC 130.

  3. Employees must be alert for inquiries when the taxpayer has received a notice with an "N" after the Taxpayer Identification Number (TIN) or a Document Locator Number (DLN) with a tax class (third digit of DLN) of 6. If so, research NMF. If additional research is needed, the employee prepares Form 4442 and routes via fax to the following campus per case type:

    Case Type Campus Fax Number
    (Internal Use Only)
    Business and Business International Non-Master File Cincinnati ≡ ≡ ≡ ≡ ≡ ≡ ≡
    Individual and Individual International Non-Master File Philadelphia ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. A TC 300 for .00 posted to a zero balance MF account does not necessarily mean no tax is due. Perform NMF research before providing the taxpayer a complete response.

    1. A zero balance MF account with a TC 400 and an M- freeze could indicate the account was transferred to NMF.

    2. TC 400 can indicate a "false credit" posted to the account to zero out the liability and move the balance to another MF or NMF account.

    3. Perform further research on the BS (9th and 10th digit of DLN). See the table below for possible scenarios.

    TC 400 with a BS of Indicates
    00 A transfer from MF to NMF.
    05 An Offer in Compromise, MF to NMF.
    09 A transfer from MF to NMF, but is a special project.
    99 An overflow account necessitating a move to NMF. See IRM 3.17.46, Automated Non-Master file Accounting, for additional information on overflow accounts.

  5. Complete Form 12810, Accounts Transfer Request Checklist, to request an assessment be moved from MF to NMF, or NMF to MF. Route to CSPC, Stop 21, Attn: Credit & Account Transfer Unit. See IRM 21.5.2.4.23.9, Moving Assessments, for further instructions.

21.7.12.4  (10-01-2013)
NMF Procedures

  1. The following subsections contain information for designated employees in Accounts Management who prepare documents for input to ANMF and who answer calls on the toll-free line.

  2. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), and you cannot resolve the taxpayer’s issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer these cases to TAS, unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

  3. IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, contains information for TAS referrals.

21.7.12.4.1  (10-01-2013)
NMF Toll- Free Number

  1. The following procedures are for employees receiving inquiries on the NMF toll-free number, 1-888-829-7434. Calls to this number are routed based on the type of call (individual/international/business) and are answered during normal day shift hours at each campus. If a call is received during non business hours, taxpayers are instructed to leave a message and someone will return their call within (3) three business days.

  2. Employees must answer all questions for which they have the expertise and/or access to the necessary ANMF database. If the employee does not have the expertise to answer NMF questions for the specific case type, or does not have the necessary access to the ANMF database, prepare Form 4442, Inquiry Referral, with all necessary information and FAX it to the appropriate campus. See IRM 21.7.12.3 (3), NMF Adjustments Research, for a list of campuses per type of case.

    • Apologize for not being able to answer the inquiry immediately.

    • Inform the caller he/she will receive a call from an expert as soon as possible, but no later than 3 business days for all forms except EP forms (within 10 business days for EP forms).

    • For inquiries relating to the Foreign Investment in Real Property Act (FIRPTA) for tax years prior to January 1, 2006, notate at the top of Form 4442"Expedite-NMF-FIRPTA" for international form referrals. For NMF EP Referrals notate "Expedite-NMF-EP" . For other NMF referrals notate "Expedite-NMF" . (Be sure to include the phone number or phone numbers where the taxpayer can be reached during business hours and the date the call was received.)

      Note:

      If the campus which receives the Form 4442 referral cannot answer the inquiry within the prescribed time frame, a call must be placed to the taxpayer within that time frame informing him/her of the expected response date.

  3. If any of the situations below are indicated, follow procedures in IRM 5.19.1.4.1.1, NMF Notice Responses.

    1. Inability to pay

    2. Additional time to pay is needed

    3. Installment agreement requested

    4. Bankruptcy

    5. Taxpayer is deceased or incarcerated

  4. Whenever an adjustment to an account is required, prepare the proper form and route to the Cincinnati SP campus. For specific case information see the following sections.

21.7.12.4.2  (10-01-2013)
NMF Overassessments

  1. An overassessment (OA) is the portion of the assessment in excess of the correct tax liability. The method of adjusting OAs varies, depending on whether the amount has been paid, or whether the taxpayer is indebted for other accounts.

    Note:

    The amount to be abated is not limited to the outstanding balance on the account, but before issuing a refund or allowing a credit, check to ensure all penalty and interest accruals are up to date and the Refund Statute Expiration Date (RSED) has not expired.

  2. Adjust OAs by:

    1. Abating the OA if the liability is paid or unpaid

    2. Crediting the OA if the liability has been paid, but should be applied to another liability of the same taxpayer for some other tax period or type of tax

    3. Refunding the OA if the liability has been paid and should not be applied as a credit to another liability

  3. When an overassessment is determined, priority for application of the credit is as follows:

    1. Abatement of the outstanding amounts created from the assessment document.

    2. Credit to any other outstanding liabilities for the same taxpayer for any taxable periods. The credit must be applied by the collection statute expiration date. The oldest 23C date must be paid first. If the 23C dates are identical apply to the oldest tax period first.

    3. Refund of any excess amount not needed for "a" or "b" in (2) above.

  4. Use Form 1331-B, Notice of Adjustment, to adjust the account based on a review of the research information received.

  5. See the Forms Job Aid and instructions for assistance in completing this form.

  6. Action required:

    • Prepare abatements for entire amounts of OAs.

    • Indicate the necessary TCs on the posting copy of Form 1331-B.

    • Insert principal and interest in the correct columns, if a payment has been made and a refund is in order.

    • Enter the appropriate refund line item number (Section I area on Form 1331-B).

    • Prepare Form 3753, Manual Refund Posting Voucher, or Form 5792, Request for IDRS Generated Refund (depending on the requirements of the Cincinnati Accounting Function), when the disposition of the OA results in a refund to the taxpayer.

      Reminder:

      All unpaid portions of assessed tax must be abated before any portion of the total OA can be credited or refunded.

      Note:

      Search outstanding MF accounts when an OA involves a refund ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ before completing the allowance document and scheduling the refund.

    • Route to the Cincinnati Accounting Function.

21.7.12.4.2.1  (05-17-2010)
NMF Husband Only/Wife Only Assessments — Claims Filed

  1. Husband only/Wife only is an assessment determined by Exam which is assessed for the full amount against each spouse. These are called split assessments. Effective January 1, 2000, split assessments are processed to IMF as MFT 31.

  2. For current procedures on spousal assessment cases, see IRM 21.6.8, Split Spousal Assessments (MFT 31).

21.7.12.4.2.1.1  (10-01-2008)
Spousal Assessment Transcripts

  1. Spousal Assessment transcripts are generated to Cincinnati Accounting when a credit transaction (TC 640, TC 670, or TC 700) posts to an ANMF account.

  2. Cincinnati NMF Accounting reviews the IMF transcripts before referral to Accounts Management using the conditions below. If all of these conditions are not met, return the transcript(s).

    • A debit balance remains on the other account not containing the credit

    • The amount of tax originally assessed is the same on both accounts

    • Both accounts are in notice status, tax delinquent account (TDA) status, or status 53

    • Either account is not in status 71, 89 or has a posted TC 914

  3. Action required:

    1. Examine the NMF transcripts to determine if the credits on one account, or the combination of credits on both accounts, fully pay the tax, penalty, and interest (including accruals) of the petitioning spouse account. Also, research the CC IMFOLI for any existing credits which may have been processed to MF in error.

      If Then
      The account is full paid and a credit is located on MF Determine if it was intended for the NMF account and transfer, if appropriate.
      The account is not full paid after combining all credits Take no action and close your control base.

    2. Once the liability has been full paid, abate the non-petitioning or unagreed spouse account using standard NMF abatement procedures. (A non-petitioning or unagreed spouse is one who has either not agreed to the assessment or has not petitioned the tax court.)

      Note:

      Be sure to check the cross reference section of the NMF transcript for any information which will help in resolving the issue. For example, a Form 870 waiver date (also may be available on CC IMFOLA), prior refund information, or penalty codes.

    3. If credits exist on the NMF account after all credit transfer and abatement procedures are completed, research for any other Outstanding Balance List (OBL).

      If Then
      Other OBLs exist Apply as necessary.
      No other OBLs exist Prepare Form 3753, Manual Refund Posting Voucher, to refund the credit to the taxpayer. (Be careful not to refund payments made by one to the other. If necessary, pull the payment voucher to determine whose credit it is.)

    4. It is not necessary to release the V- freeze, because Accounting sends a request to Collection to release the freeze once the NMF account becomes zero balance.

21.7.12.4.2.2  (10-01-2008)
NMF Letter 898 (DO) Cases — Claims Filed

  1. When a collecting agent fails to collect tax, or the person liable for the tax refuses to pay, the tax is assessed against the person liable for the tax. See 49.4291-1 of Facilities and Services Excise Taxes Regulations (26 CFR 49.4291-1).

21.7.12.4.2.3  (11-14-2008)
MF Return Posted to NMF

  1. Occasionally, a MF return is erroneously posted as a NMF return. Input these returns to MF as original or amended returns, depending on the information available.

  2. Action required:

    1. Research all related Index Cards if the return was not a balance due.

    2. Request a transcript of the ANMF account.

    3. Prepare Form 1331-B, Notice of Adjustment, to abate the NMF assessment.

    4. Input a credit transfer using Form 3809, Miscellaneous Adjustment Voucher, to transfer any payment to MF.

    5. Prepare a corrected return and route to MF as non-remit. Staple the NMF return behind it.

21.7.12.4.3  (04-09-2010)
NMF Assessments

  1. Various types of NMF assessments are explained in the following subsections.

21.7.12.4.3.1  (01-01-2005)
Current Assessments

  1. These are assessments of paid or unpaid tax liability, except deficiency or additional assessments resulting from regular examination.

  2. Remittances received with the tax returns are assessed as current assessments, regardless of whether the return is:

    • Full paid

    • Overpaid

    • Part paid

    • Delinquent

    • Tentative

    • Subject to installment privileges

21.7.12.4.3.2  (10-01-2011)
Deficiency Assessments

  1. Deficiency Assessments are deficiencies in income, estate, gift taxes, and certain excise taxes (including assessable penalties and interest), assessed on the basis of determination made by:

    • Examination findings

    • Appeals findings

    • Tax Court decisions (IMF are being processed to MFT 31)

  2. This category also includes:

    • Transferee assessments

    • Assessments based on remittances received with signed waivers indicating agreement on Examination deficiencies

    • Assessments based on remittances tendered by taxpayers as payments on Examination deficiencies, as opposed to deposits made under IRC 6603

      Note:

      If an undesignated remittance is made in the full amount of a proposed liability, such as an amount proposed in a revenue agent's or examiner's report, the undesignated remittance will be treated as a payment of tax, a notice of deficiency will not be mailed, and the taxpayer will not have the right to petition the Tax Court for a redetermination of the deficiency (Rev. Proc. 2005-18 section 4.03).

21.7.12.4.3.3  (01-01-2005)
Additional Assessments

  1. These are additional taxes, penalties, and interest assessed on employment and excise tax cases. See IRM 21.7.12.4.3.2, Deficiency Assessments, for the description of determinations made by entities and the categories they include.

21.7.12.4.3.4  (10-01-2013)
Quick Assessments

  1. Quick assessments are made to assess:

    • Additional taxes and agreed deficiencies when the statutory period will expire before assessment procedure can be completed under normal processing

    • Deficiencies involving bankruptcy and receivership cases under IRC 6871

    • Additional and delinquent taxes in bankruptcy cases

    • Over $100,000 agreed deficiency that can not be assessed within 30 days from the agreement date under normal processing procedures

21.7.12.4.3.5  (10-01-2013)
Prompt Assessments

  1. Prompt assessments are made on the basis of an administrative determination that an assessment cannot be delayed, but the account does not qualify for a jeopardy or quick assessment.

  2. Notices sent for prompt assessments are not mailed to the taxpayer but instead are hand delivered. The same form and interest computation is used as with a quick assessment.

21.7.12.4.3.6  (10-01-2013)
Jeopardy Assessments

  1. These assessments are made under IRC 6851, IRC 6861, or IRC 6862. They are made when it is determined collection will be endangered if normal procedures are followed. They include assessments on (this list is not all inclusive):

    • Current returns

    • Cases involving termination of taxable periods

    • Deficiencies

    • Additional or delinquent taxes

21.7.12.4.3.7  (12-21-2009)
Processing Additional NMF Assessments

  1. Additional assessment cases are generated from various sources, including Form 3870, Request for Adjustment, Form 3465, Adjustment Request, taxpayer letters, and remittances. Most NMF assessments worked in Accounts Management are additional assessments.

  2. Action required:

    1. Research all necessary Index Cards or request NMF transcripts, if necessary.

    2. Request the return, if filed (if necessary).

    3. Manually compute applicable tax, penalty, and interest.

    4. Prepare Form 5734, Non-Master File Assessment Voucher, listing the increase in tax, penalty, and interest.

    5. Attach Form 5734 to the front of the return or adjustment document.

21.7.12.4.3.8  (12-21-2009)
Transportation Tax and Communications Tax Assessments

  1. When a person refuses to pay the excise tax on air transportation or a communications service, the airline or communications service provider reports the information to IRS. A list of these individuals is sent to Accounts Management from Examination and Document Perfection functions.

  2. Action required:

    1. Examine the lists ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ within any given quarterly tax period (January–March, April–June, July–September, October–December). Do not accumulate amounts from one quarter to another.

    2. Prepare Form 5734, Non-Master File Assessment Voucher, for each person identified and attach to the related list.

    3. Route Form 5734 to Receipt and Control for numbering. Use MFT 46 and tax class 6.

    4. Route to Cincinnati Accounting for billing, after numbering.

21.7.12.4.4  (10-01-2009)
Taxpayer Inquiry Letters

  1. Analyze the letter to determine proper disposition. Use the table below.

    If Then
    Questions are of a general nature and can be answered by Accounts Management Correspond with or phone the taxpayer.
    Questions concerning the law surrounding a specific IRS assessment (including protest of the assessment) 1. Route to Exam.
    2. Send Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to advise the taxpayer of the transfer, if routed to Area Office Exam.
    Questions concerning any Alcohol and Tobacco Tax and Trade Bureau (formerly AT&F) forms 1. Forward to:
    Alcohol and Tobacco Tax and Trade Bureau, (TTB)
    Room 8002 FOB
    550 Main Street
    Cincinnati, OH 45202
    ATTN: Chief, Technical Services
    2. Send Letter 86C to advise the taxpayer of the transfer.
    During a taxpayer contact, you determine the case meets TAS criteria, and you cannot resolve the issue the same day

    Note:

    The following two situations meet the definition of "Same Day Resolution:" The issue can be resolved within 24 hours or the IRS takes steps within 24 hours to resolve the taxpayer's issue.

    Complete Form 911, Request for Taxpayer Advocate Service Assistance, and refer the taxpayer to the Taxpayer Advocate Service (TAS). See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, or IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines. (The TAS provides assistance to taxpayers who have problems that the IRS has not resolved through normal channels.)

21.7.12.4.5  (01-01-2005)
Stopping NMF Notices

  1. Follow the procedures below to stop NMF notices:

    1. Prepare Form 3177, Notice of Action for Entry on Master File, with TC 470 to notify Cincinnati Accounting to stop notices when an adjustment is pending on any NMF account.

    2. Include the reason to stop notices and the amount of adjustment using the "Other" line of Form 3177.

    3. Include your name and phone number. This information is included in the History section of the NMF account when NMF inputs the TC 470.

21.7.12.4.6  (10-01-2013)
Form 1120-IC-DISC, Interest Charge Domestic International Sales Corporation Return and Form 4876-A, Election to be Treated as an Interest Charge DISC

  1. A corporation files Form 4876-A to elect to be treated as an interest charge domestic international sales corporation (IC-DISC). The election must be filed within 90 days after the beginning of the tax year if it is the taxpayer's first tax year or during the 90 days preceding the first day of the tax year if this is not the taxpayer's first tax year. There are no indicators on MF or NMF to indicate that the Form 4876-A is being processed.

  2. The Form 4876-A election determination is made by Cincinnati Submission Processing. A "data file" is kept by Code and Edit during the processing of these forms. For additional information see IRM 3.11.16.36, Form 4876-A - Election To Be Treated as an Interest Charge DISC/Scope (CSPC Only).

  3. When a call is received concerning the status of the Form 4876-A, research NMF for an indication that the taxpayer is liable for Form 1120-IC-DISC or MF for an indication that the taxpayer is liable for Form 1120. If information cannot be located on Nonmaster File (NMF) ask for the date the Form 4876-A was mailed and follow the chart below.

    IF Then
    Less than 30 days have lapsed since the form was mailed
    1) Notify the taxpayer that the Service has not had sufficient time to process the election request.
    2) Determine the number of days remaining for processing.
    3) Notify the taxpayer to allow "XX" number of days before making any additional inquiries.

    Example:

    A taxpayer files Form 4876-A on May 3, 2011. The Service receives an inquiry on the status of the election on May 24, 2011. The 30 day processing time has not yet expired. Notify the taxpayer to allow an additional 10 days to process the election request. If they have not received notification on the status of the Form 4876-A after those 10 days have expired they can then follow up on the status of the election request.

    More than 30 days have lapsed since the form was mailed
    1) Prepare, print Form 4442, and forward to Code and Edit, Stop 34.
    2) Notify the taxpayer that a response should be received within 30 days.

    Note:

    Submission Processing will initiate a letter to notify the taxpayer of the status of their Form 4876-A.

  4. Form 1120-IC-DISC must be filed if the corporation elected, by filing Form 4876-A to be treated as an interest charge domestic international sales corporation (IC-DISC), and suck election is in effect for the tax year the corporation is a former IC-DISC or the corporation is a former DISC.

  5. The Form 1120-IC-DISC return is due the 15th day of the ninth month after the tax year ends. The first Form 1120-IC-DISC filed by a corporation establishes the taxable year ending.

    Note:

    No extension of time to file are allowed.

  6. Form 1120-IC-DISC, , is processed on NMF (MFT 23). In various instances, Accounts Management can be required to assess penalties and interest, resolve duplicate filing conditions, and process amended returns. Use the following information and procedures when processing this form.

21.7.12.4.6.1  (01-01-2005)
Assessing Penalties, Form 1120-IC-DISC

  1. Form 1120-IC-DISC, filers can be liable for penalties assessed under IRC 6686. These penalties apply if the taxpayer fails to provide necessary information or fails to file a return.

  2. The Document Perfection department determines if the corporation is liable for these penalties and routes Form 3465, Adjustment Request, to the Accounts Management department for assessment.

  3. Action required:

    1. Review Form 3465, Adjustment Request, and compute the correct penalty assessment. See IRM 20.1.9, International Penalties.

    2. Prepare Form 5734, Non-Master File Assessment Voucher, to assess the penalty. Enter TC 240 in Item 10 to indicate a penalty assessment.

    3. Enter tax class 6, document code 55, and BS 190–199 as the adjustment DLN and route to Cincinnati Submission Processing, Accounting Operations, NMF Team 104, Stop 21.

21.7.12.4.6.2  (10-01-2008)
Assessing Interest on Form 1120-IC-DISC, IRC 992(c) Distributions

  1. Under certain circumstances, IRC 992(c) provides that a corporation that fails to satisfy certain conditions to qualify as a Domestic International Sales Corporation (DISC) for a taxable year specified in IRC 992(a)(1) can qualify as a DISC for that taxable year if it makes a distribution to its shareholders. If the corporation makes the distribution after the 15th day of the 9th month after the close of the taxable year to which the distribution applies, the corporation must also pay a charge (which is treated as interest) within a 30-day period beginning with the day on which such distribution is made. See IRC 992(c)(2)(B).

  2. Normally, the Clearing and Deposit department receives a payment and letter from the corporation identifying the payment as interest on a distribution made under IRC 992(c). This letter is sent to Accounting/NMF for preparation of an assessment document.

  3. Action required:

    1. Prepare Form 5734, Non-Master File Assessment Voucher, to assess the payment as interest using TC 340.

    2. Research the Index Cards and the ANMF data base for the DLN of the latest Form 1120 series return filed by the corporation and request the return.

    3. Send the letter and return to the Exam Classification department. Note on the routing slip that the taxpayer is claiming benefits of IRC 992(c), the amount of interest assessed, and the date the payment was received.

    4. Route Form 5734 to Accounting for billing.

    Note:

    If the original return is charged out to Exam, notate the routing slip with the same information in 3) above, and send the letter to the area where the return is charged.

21.7.12.4.6.3  (10-01-2009)
Processing Form 1120-IC-DISC Duplicate Filing Conditions

  1. When a return marked "amended" or "duplicate" is found in Submission Processing, it is sent to the Accounts Management department without being numbered.

  2. Action required:

    1. Secure the original return, if not attached, using the DLN from Form 1120-IC-DISC, Alpha Index File, located in Files Function.

    2. Attach the amended return to the original return and send them to the Exam Classifier. (Form 1120-IC-DISC is nontaxable but is considered Exam criteria.)

    3. Line through "amended" or "duplicate" and input as the original, if there is no record of an original return being filed.

21.7.12.4.6.4  (10-01-2013)
Additional Assessment or Claim on Form 8404, Interest Charge on DISC - Related Deferred Tax Liability

  1. Form 8404 is filed by shareholders of IC-DISCs to figure and report their interest owed on DISC-related deferred tax liability.

  2. Form 8404 is due by the due date of the federal income tax return for the tax year that ends with or includes the Form 1120-IC-DISC's tax year end. Form 8404 is processed under MFT 23.

  3. Form 8404 for corporations, trusts and decedent estates are filed with Cincinnati Submission Processing.

    Note:

    Form 8404 for individuals is filed with Austin Submission Processing.

  4. A DISC shareholder may defer a portion of its income attributable to DISC activities by paying, in the manner described in IRC Section 992(c)(2)B. Certain interest is charged based on the amount of tax postponed. The assessment of the interest is made via NMF when Form 8404, Interest Charge on DISC-Related Deferred Tax Liability, is filed.

  5. If the shareholder underpays the interest as a result of an audit adjustment, amended return, carryback, etc., or because the original amount reported was based on an estimate or any other reason, the shareholder must file an amended Form 8404 to increase the assessment. Route all corporation, trust, and decedent estate Form 8404 to Cincinnati Accounting for assessment. Route individual Form 8404 to Austin Submission Processing.

  6. If the shareholder overpays the interest, Form 843, Claim For Refund and Request for Abatement, should be filed to claim the overpayment. Action required:

    1. Request the original Form 8404.

    2. Compute the amount by which interest will be decreased using the information on the Form 843. Refer to IRM 20.2, Interest, for methods of computing interest.

    3. Prepare Form 1331, Notice of Adjustment, noting the reason for the decrease in interest.

    4. Route to Cincinnati Accounting.

21.7.12.4.7  (10-01-2013)
Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts

  1. Prior to January 1, 2005, all Forms 8697 and Forms 8866 were processed on NMF. Effective January 1, 2005, these forms are processed on Master File as BMF or IMF for Form 1120 and Form 1040. Effective in July 2005, Forms 8697 related to Form 1041 and Form 1065 are processed on Master File. When working these cases, both IDRS and NMF must be researched. See IRM 21.7.4.4.21, Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, for BMF processing procedures, and IRM 21.6.6.3.27, Form 8697 - Interest Computation Under the Look-Back Method for Completed Long-Term Contracts for IMF processing procedures. Also see IRM 20.2.11.12, Look-Back Interest, for additional information.

    Exception:

    If the taxpayer is claiming a refund of interest, and a TC 150 has not posted to MF, the refund must be processed to NMF. See IRM 21.7.12.4.9, Form 8697/Form 8866 Refund Request, No TC 150 Posted on Master File, for processing procedures.

21.7.12.4.8  (10-01-2011)
Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method

  1. Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method, is a form similar to Form 8697. It is almost identical to the Part I, Regular Method, on Form 8697.

  2. Follow Form 8697 processing procedures in IRM 21.7.4.4.21,Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, when a Form 8866 is received.

  3. As with Form 8697, the taxpayer is instructed to file Form 8866 with the appropriate income tax return, if additional interest is owed. If the taxpayer is due a refund, Form 8866 should be filed separately.

  4. Prior to January 1, 2005, Form 8697 and Form 8866 that claimed look-back interest were processed under Non-Master File with the interest issued using "manual refund" procedures. Effective January 1, 2005, look-back interest adjustments are processed under Master File and posted to the applicable income tax return for the taxpayer required to file Form 8697/Form 8866.

    Exception:

    If the taxpayer is claiming a refund of interest, and a TC 150 has not posted to Master File, the refund must be processed to NMF. See IRM 21.7.12.4.9 Form 8697/Form 8866 Refund Request, No TC 150 Posted on Master File, for processing procedures.

  5. If interest is due to the IRS, the taxpayer is instructed to file Form 8697 or Form 8866 with the related income tax return. The amount due should be included in the "total tax" (TC 150) line. Balance due Form 8697/Form 8866 are not filed separately unless the related income tax return has previously been filed and the balance amount on the Form 8697 was not included on the original return (TC150).

21.7.12.4.9  (05-17-2010)
Form 8697/Form 8866 Refund Request, No TC 150 Posted on Master File

  1. Research both IDRS and NMF to determine if a manual refund was previously issued.

  2. Research both IDRS and NMF for any outstanding balances and if needed, prepare Form 2424 to offset.

  3. When a determination is made to process the refund to NMF, the following procedures must be followed to prepare the case for input.

    1. Complete Form 3753, Manual Refund Posting Voucher, using normal manual refund procedures in IRM 21.4.4.4, Preparation of Manual Refund Forms, and attach the following:
      • Form 8697/Form 8866
      • Look-back Excel calculation of interest
      • Add-on interest computation (COMPA)
      • INOLE and BMFOLI/IMFOLI
      • 1st page of completed Form 1331-B

    2. Complete Form 1331-B, Notice of Adjustment, and attach the following:
      • Form 8697/Form 8866
      • Look-back Excel calculation of interest
      • Add-on interest computation (COMPA)
      • Copy of completed manual refund Form 3753

    3. Complete Form 10869, Returns or Other Documents Transmittal, and attach the following:
      • Form 3753 and attachments
      • Form 1331-B and attachments

    4. Route Form 10869 and attachments to Cincinnati Submission Processing, Manual Refund, Stop 2107.

  4. You must follow manual refund monitoring procedures in IRM 21.4.4.5.1, Monitoring Manual Refunds, until the TC 840 posts. Using CC ACTON, input the following history items on IDRS for the applicable MFT and tax period.

    • 8697/8866NMF

    • PRPD1331B

    • PRPD3753

    • TC840xxxxx (Input the money amount in whole dollars)

    • TC770xxxxx (Input the money amount in whole dollars)

    • TC766xxxxx (Input the money amount in whole dollars)

  5. Monitor NMF until the TC 840 posts. Once posted, update and close your IDRS base per IRM 21.4.4.5.1(2), Monitoring Manual Refunds.

21.7.12.4.10  (01-01-2005)
Child Support Obligation

  1. IRC 6305 authorizes IRS to assess and collect child support payments ordered by state courts, but which have fallen into arrears. When certified by the Secretary of Health and Human Services, the arrearage is treated as taxes collectible.

  2. The assessment is processed to NMF on MFT 59.

  3. A first notice and Letter 753(C), Child Support Payments Assessed (NMF), are prepared to inform the taxpayer of the reason for the assessment. It advises the taxpayer to contact the State Child Support Collection Office if there are questions regarding the assessment.

  4. Any decrease to the original assessment must be initiated by the originating state office. IRM 3.17.46, Automated Non-Master File Accounting, contains detailed information and procedures.

21.7.12.4.11  (01-01-2005)
NMF Civil Penalty Assessment

  1. Joint civil penalty assessments must be processed on NMF since MF civil penalty modules (MFT 13 or 55) cannot accommodate joint liabilities. These modules appear as MFT 28 on NMF. The reason can be identified by the abstract number. See IRM 3.17.46, Automated Non-Master File Accounting, for more information and procedures.

21.7.12.4.12  (01-01-2005)
Form 8612 and Form 8613 Processing

  1. Form 8612, Return of Excise Tax on Undistributed Income of Real Estate Investment Trusts (REITs), is used by a REIT to compute and pay the excise tax on undistributed income imposed under IRC 4981.

  2. Form 8613, Return of Excise Tax on Undistributed Income of Regulated Investment Companies (RICs), is used by a RIC to compute and pay the excise tax on undistributed income under IRC 4982.

  3. REITs and RICs are required to distribute a certain percentage of their ordinary income (taxable income) and their capital gain net income to their shareholders. The 4% excise tax is applied against the excess of the required distributions (line 4) over the actual distributed amounts (line 8).

  4. Form 8612 and Form 8613 are due by March 15 following the calendar year to which the excise tax liability applies. They are subject to late filing and payment penalties. Refer to IRM 20.1.2, Failure to File/Failure to Pay Penalties. An extension of time to file can be requested by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, by the return due date.

  5. Both forms are processed on NMF. Follow normal NMF procedures for any adjustments required.

    • Form 8612 is MFT 89, document code 21, tax class 6.

    • Form 8613 is MFT 14, document code 22, tax class 6.

21.7.12.4.13  (10-01-2013)
Form 8725, Excise Tax on Greenmail

  1. Form 8725, Excise Tax on Greenmail, is used to report and pay the 50% excise tax imposed under IRC 5881. The term "greenmail" means any amount a corporation (or any person acting in concert with a corporation) pays directly or indirectly to acquire its stock from any shareholder if:

    1. The transferring shareholder held the stock for less than two years before entering into the agreement to make the transfer of stock.

    2. The shareholder, or any person acting in concert with the shareholder, or any person related to any of such persons, made or threatened to make a public tender offer for stock of the corporation, at some time during the two year period ending on the date of acquisition.

    3. The acquisition was made under an offer that was not made on the same terms to all shareholders.

  2. Form 8725 is due by the 90th day following receipt of any portion of the greenmail. (A separate Form 8725 must be filed for each agreement to transfer stock.) It is subject to late filing and payment penalties. Refer to IRM 20.1.2, Failure to File/Failure to Pay Penalties. An extension of time to file can be requested by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, by the return due date.

  3. The amount of (excise) tax (line 6) is a flat 50% of the total gain or other income (line 5).

  4. The tax period is the "Date of initial receipt of greenmail" listed at the top of Form 8725. For example, if the taxpayer enters November 2012, the tax period is 201211.

  5. Form 8725 can be filed under either an employer identification number (EIN) or social security number (SSN), depending on the type of entity filing the return. Returns are processed NMF. Follow normal NMF procedures for any adjustments required.

    • MFT 27

    • Document code 21

    • Tax class 6

21.7.12.4.14  (10-01-2008)
Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests

  1. Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests, is used to report and pay excise taxes on any transfer of a residual interest in a REMIC to a disqualified organization, or any transfer of a residual interest to a pass-through entity with a disqualified organization as a record holder.

  2. The due date of the return is based on the portion of the return required to be completed by the taxpayer.

    If Then
    Sections B or C are completed The due date is April 15 of the year following the calendar year in which the residual interest is transferred to a disqualified organization.
    Part II is completed The due date is the 15th day of the 4th month following the close of the tax year of the pass-through entity during which the disqualified person is a record holder.

  3. An extension of time to file can be requested by filing Form 7004,Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.

  4. Forms 8831 are processed NMF as:

    • MFT 89

    • Document (Doc.)code 21

    • Tax class 6

    • Abstract number 221

    • BS 000 - 399 without remittance, 400 - 499 with remittance

  5. All refund claims, amended returns, or claims requiring penalty computations are routed to Accounts Management. Follow normal NMF procedures for any adjustments required. Form 8831 is subject to late filing and late payment penalties. Refer to IRM 20.1.2,Failure to File/Failure to Pay Penalties.

  6. When correspondence or a telephone call from the taxpayer is received on Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests, for Resolution Trust Corporation Receivership (RTC) cases, be certain the first notice was generated to the taxpayer (either the original first notice, if no amended return, or the first notice after an amended return was processed). Then prepare Form 3177, Notice of Action for Entry on Master File, and forward for input of TC 530 Closing Code (CC) 15 to the Cincinnati Accounting NMF Unit. (Per an inter-agency agreement between IRS and the Federal Deposting Insurance Corporation (FDIC), no annual reminder notice is required.)

21.7.12.4.15  (05-16-2011)
Form 8924, Excise Tax on Certain Transfers of Qualifying Geothermal or Mineral Interests

  1. Form 8924, Excise Tax on Certain Transfers of Qualifying Geothermal or Mineral Interests, is used to report and pay the excise tax on certain transfers of qualifying geothermal or mineral interests. This form was created because of a tax provision in Division C, Title IV, section 403(c) of the Tax Relief and Health Care Act of 2006 entitled "Tax Incentive For Sale Of Existing Mineral And Geothermal Rights To Tax-Exempt Entities" . The return is due by the 90th day following the taxable transfer. See IRM 3.17.46.5.41, Form 8924, Excise Tax on Certain Transfers of Qualifying Geothermal or Mineral Interests, for additional information.

  2. Forms 8924 are subject to late filing and late payment penalties. Refer to IRM 20.1.2.2, Failure to File a Tax Return or to Pay Tax - IRC 6651, for more information. An extension of time to file can be requested by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

  3. Forms 8924 are processed to NMF as:

    • MFT 41

    • Doc. code 40

    • Tax class 6

    • Abstract number 012

    • Blocking Series (BS) 300 - 399 without remittance and BS 400 - 499 with remittance

  4. To amend a previously filed Form 8924, taxpayers can file a corrected return and write "Amended" at the top of the form. All amended returns, claims and correspondence are routed to the NMF team in Accounts Management. Normal NMF procedures must be followed for any adjustments required.

21.7.12.4.16  (05-16-2011)
Form 8928, Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code

  1. Form 8928, Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code, is used to report and pay the excise tax on certain failures by group health plans or employers. This form was enacted due to the Tax Relief and Health Care Act of 2006 (P.L. 109-432), Section 403. The due date of the return is dependent on the Section as follows:

    Section Due Date of Form 8928
    4980B or 4980D On or before the due date for the person's federal income tax return (single employer or other responsible person).
    On or before the last day of the seventh month following the end of the plan year (multi employer or multiple employer plans).
    4980E or 4980G On or before the 15th day of the fourth month following the calendar year in which the non-comparable contributions were made

    See IRM 3.17.46.5.42, Form 8928, Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code, for additional information.

  2. Forms 8928 are subject to late filing and late payment penalties. Refer to IRM 20.1.2.2, Failure to File a Tax Return or to Pay Tax - IRC 6651, for more information. An extension of time to file can be requested by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

  3. Forms 8928 are processed to NMF as:

    • MFT 41

    • Appropriate abstract numbers:

      Abstract Number Section
      126 4980B
      127 4980D
      128 4980E
      137 4980G

    • Doc. code 39

    • Tax class 6

    • Blocking Series (BS) 000–099 without remittance and BS 400-499 with remittance

  4. To amend a previously filed Form 8928, taxpayers can file a corrected return and write "Amended" at the top of the form. All amended returns, claims and correspondence are routed to the NMF team in Accounts Management. Normal NMF procedures must be followed for any adjustments required.

21.7.12.4.17  (01-27-2012)
Form 8876, Excise Tax on Structured Settlement Factoring Transactions

  1. Form 8876, Excise Tax on Structured Settlement Factoring Transactions, is used to report and pay 40% excise tax imposed under IRC Section 5891. The Excise tax is equal to 40% of the undiscounted amount of the payments being acquired, over the total amount actually paid to acquire them. The return is due by the 90th day following the receipt of structured settlement payment rights in a structured settlement factoring transaction. (A separate Form 8876 must be filed for each date on which you received structured settlement payment rights in one or more structured settlement factoring transactions.)

  2. Forms 8876 are subject to late filing and late payment penalties. Refer to IRM 20.1.2.2, Failure to File a Tax Return or to Pay Tax - IRC 6651, for more information. An extension of time to file can be requested by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

  3. Forms 8876 can be filed under either an EIN or SSN, depending on the type of entity filing the return. Returns are processed to NMF as follows:

    • MFT 27

    • Doc. code 21

    • Tax Class 6

    • Abstract number 234

    • Blocking Series (BS) 000-099 without remittance and BS 400-499 with remittance

    Follow normal NMF procedures for any adjustments required.

21.7.12.4.18  (10-01-2011)
Procedures for Individual Taxpayer NMF Accounts Of $1 Billion or More - Overview

  1. Due to IDRS/Master File limitations, Form 1040, U.S. Individual Income Tax Returns, with taxes or payments of $1 billion or more must be processed on ANMF. To provide this group of taxpayers the same level of service as other customers, a centralized team of contact representatives was established in the Philadelphia campus in November 2006. This team of representatives is considered the liaison for these taxpayers.

  2. If an inquiry is received from taxpayers with taxes or payments of $1 billion or more, provide the taxpayer with the telephone number and hours of the team (see paragraph 3 below) and complete Form 4442. Send Form 4442 to the Philadelphia campus at the address below:

    Internal Revenue Service
    2970 Market St.
    Drop Point: 3-L08.154 - TPR 503
    Philadelphia, PA 19104

  3. Taxpayers and/or their authorized representatives can contact 267-941-3681 (not toll-free) between 8:00 AM and 4:00 PM Eastern Standard Time, Monday through Friday to speak to one of the team members.

  4. Original returns, Form 1040X, Amended U.S. Income Tax Return, Form 8802, Application for United States Residency Certification, Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, and other related correspondence are received at the address above.

  5. This team conducts the following:

    • Locates and applies payments

    • Provides IRS communications

    • Secures taxpayer income verification

    • Secures transcripts of taxpayer accounts

    • Provides general guidance

    • Resolves account problems, and

    • Transfers payments between MF and NMF, etc.

    Caution:

    Joint Committee Cases (JCC) must be expedited to Examination due to interest consideration, if over $2,000,000.00 (aggregate).

21.7.12.4.18.1  (01-04-2007)
Types of Work Received - Paper

  1. Once mail is received in the Technical Unit, it is sorted by categories:

    • Original return without remittance

    • Original return with remittance

    • Amended return and/or Form 1040X without remittance

    • Amended return and/or Form 1040X with remittance

    • Form 8802, Application for United States Residency Certification, with remittance after November 1, 2006, postmark

  2. The types of work and instructions for these customer service representatives (CSRs) are provided in the following subsections.

21.7.12.4.18.1.1  (10-01-2013)
Original Return Without Remittance

  1. Take the following action on original return received without remittance:

    1. Date stamp the return.

    2. Update log to indicate name, SSN, tax year, etc., and make a copy of return.

    3. Open control base on 0537120020.

    4. Research IDRS for payments on MF and/or notices on primary and/or secondary SSNs.

    5. Input TC 594 closing code (cc) 84 on spousal MF.

    6. Input TC 971 action code (AC) 502 on CC ENMOD.

      Note:

      TC 971 action code (AC) 502 indicates a case of $100 million or more on NMF.

  2. Take the following action, if the return shows an overpayment:

    If Then
    Refund is requested Prepare Form 3753, Manual Refund Posting Voucher, with authorized signature.

    Note:

    If the 45-day interest-free period is in jeopardy, EXPEDITE to Cincinnati NMF if the overpayment to be refunded is $5,000 or more. Refunds of $100 million or more must have prior approval from Examination.

    Payment is located on Master File (MF) Prepare all documents needed to transfer payments, credit elects, etc., from MF to NMF accounts and input history on MF to show moving credit to NMF. Make a special note to NMF that all credits have been verified and credits are being transferred from MF. Annotate the account "Taxpayer is NOT to be billed."
    Credit elect is requested and under $100 million Prepare Form 3809, Miscellaneous Adjustment Voucher, to transfer from the current NMF to MF for the next year.
    Credit elect requested is $100 million or more Prepare Form 3809, Miscellaneous Adjustment Voucher, to transfer credit elect to NMF. Input history on MF to indicate credit elect on ANMF.

  3. If credit amounts are insufficient, indicate correct amount of bill to be issued to taxpayer.

  4. Complete Form 3210, Document Transmittal, for all original returns and overnight/express mail to Cincinnati ANMF.

21.7.12.4.18.1.2  (01-04-2007)
Original Return With Remittance

  1. Date stamp original return.

  2. Prepare Form 3210, Document Transmittal, and hand carry payment to Campus Support.

  3. Follow the same steps for original return without remittance as previously provided in IRM 21.7.12.4.18.1.1, Original Return Without Remittance.

21.7.12.4.18.1.3  (10-01-2008)
Amended Return Without Remittance on ANMF

  1. Amended return received without remittance. Take the following actions:

    1. Date stamp return.

    2. Log in request on High Profile Taxpayer data file.

    3. Check MF for any payments or balances.

    4. Check MF for TC 594 closing code (cc) 84 on spousal SSN.

    5. Check for TC 971 action code (AC) 502 on CC ENMOD.

    6. Open control base on CC ENMOD under 0537120020.

    7. Verify power of attorney (POA), if necessary.

    8. Prepare adjustment request.

    9. Transfer payment from MF and note "Bill to Taxpayer" , if the adjustment results in a balance due.

  2. If the adjustment results in an overpayment, see the table in IRM 21.7.12.4.18.1.1 (2).

21.7.12.4.18.1.4  (10-01-2008)
Amended Return with Remittance on ANMF

  1. Take the following action if the return is received with remittance:

    1. Date stamp return.

    2. Log in request on High Profile Taxpayer data file.

    3. Complete Form 3210, Document Transmittal, and hand carry payment to Campus Support.

    4. Check MF for any payments or open balances.

    5. Check MF for TC 594 closing code (cc) 84 on spousal SSN.

    6. Check for TC 971 action code (AC) 502 on CC ENMOD.

    7. Open control base on CC ENMOD under 0537120020.

    8. Verify power of attorney (POA), if necessary.

    9. Prepare adjustment request.

    10. Transfer payment from MF and note "Bill to Taxpayer" , if the adjustment results in a balance due.

  2. If the adjustment results in an overpayment, see the table in IRM 21.7.12.4.18.1.1 (2).

21.7.12.4.18.1.5  (10-01-2008)
Form 8802, Application for United States Residency Certification, with Remittance

  1. Take the following action when Form 8802, Application for United States Residency Certification, is received with remit:

    1. Date stamp form.

    2. Log in request to High Profile Taxpayer data file.

    3. Verify tax return was filed for Tax year (TXYR) requested.

    4. Obtain transcript from ANMF system.

    5. Make note on Form 8802 if return posted, but not on MF, return posted on MF, or return was not posted on either system.

    6. Add "High Profile Taxpayer" on the bottom of page 1 on Form 8802.

    7. Make a copy of Form 8802.

    8. Prepare Form 3210, Document Transmittal, and hand carry both copies of Form 8802 along with any supporting documents/information, to U.S. Certs Team Clerical Manager for transfer of check to lockbox.

21.7.12.4.18.1.6  (10-01-2009)
Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return)

  1. If Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, is received:

    • Date stamp form.

    • Input TC 460 on MF using Command Code REQ77 to indicate an extension was received. See IDRS Command Codes Job Aid for proper input of the transaction code, extension date, transaction date, and DLN code.

21.7.12.4.18.1.7  (10-01-2008)
Other Correspondence

  1. Take the following action for other correspondence:

    1. Date stamp correspondence.

    2. Open control base on CC ENMOD under 0531720020.

    3. Check POA, if necessary.

    4. Review for issues, then phone/write and make appropriate adjustments.

    5. Check MF for open balances or payments and check ANMF for same.

    6. Check for open control bases on MF.

    7. Check for TC 594 closing code (cc) 84 on spousal SSN.

    8. Check for TC 971 action code (AC) 502 on CC ENMOD.

    9. Prepare Form 4442, Inquiry Referral, to refer to Cincinnati ANMF (if needed).

21.7.12.4.18.1.8  (10-01-2009)
Taxpayer Advocate Service (TAS) Cases Operations Assistance Request(OAR)

  1. Take the following action on an OAR received from TAS:

    1. Date stamp OAR.

    2. Log in request for TAS database and High Profile Taxpayer data file.

    3. Review for issues.

    4. Adjust account/phone taxpayer or POA, etc.

    5. Open control base on CC ENMOD under 0531720020.

    6. Check for payments or balance dues under MF and ANMF.

    7. Check for TC 594 closing code (CC) 84 on spousal SSN.

    8. Check for TC 971 action code (AC) 502 on CC ENMOD.

    9. Return OAR to TAS.

    10. Prepare Form 4442, Inquiry Referral, to Cincinnati ANMF, if needed, and log out of TAS database when completed.

      Note:

      If sending Form 4442 to Cincinnati ANMF, inform TAS on the OAR of action taken.

21.7.12.4.18.2  (01-04-2007)
Types of Work Received - Telephone

  1. If telephone calls are received from taxpayers with accounts over $100 million on NMF, follow the procedures in the following subsections.

21.7.12.4.18.2.1  (10-01-2009)
Telephone Calls from Power of Attorney (POA) or Taxpayer

  1. Take the following action on calls received from POA or taxpayer:

    1. Verify POA on IDRS.

    2. Review issue/request transcript from ANMF.

    3. Review MF for issue and check for TC 594 closing code (CC) 84 on spousal SSN.

    4. Check for TC 971 action code (AC) 502 on ENMOD.

    5. Complete Form 4442, Inquiry Referral, if needed, to refer to Philadelphia ANMF.

21.7.12.4.18.2.2  (01-04-2007)
Telephone Calls to POA or Taxpayer

  1. Take the following action on calls to POA and taxpayer:

    1. Verify the POA on IDRS using command code (CC) CFINK.

    2. Make two (2) attempts to reach caller.

    3. Follow the IRM 21.3.10.7, Returning Calls to Practitioners, guidelines.

21.7.12.5  (10-01-2013)
Fiduciary Filed Form 1040NR , U.S. Nonresident Alien Income Tax Return

  1. If the Form 1040NR is being filed by an estate or trust, the fiduciary is responsible for filing the Form 1040NR on behalf of the estate or trust.

  2. Fiduciary filed Form 1040NR returns will have some or all of the following characteristics:

    • Name Line(s) may consist of numbers or a combination of letters and numbers

    • Account, Trust Grantor or Nominee may be indicated

    • Name line(s) may indicate Estate of

    • No exemptions may be shown

    • The return may have an Employer Identification Number (EIN) instead of a Social Security Number (SSN)

    • The box for Estate or Trust at the top of the form is checked

    • The trust will show deductions for distributions made to U.S. or foreign beneficiaries.

    • Check IDRS for the filing of Form 3520 or Form 3520-A filed with the trusts name

    • Trust may state that it is a grantor trust of a foreign owner

  3. Every nonresident alien having fiduciary income, either effectively or not effectively connected with a trade or business in the United States, must file Form 1040NR. Forms 1040NR filed by individuals are processed on Master File. See IRM 21.8.1, IMF International Adjustments, for additional information.

    1. Effectively connected income is all income, gain , or loss that is derived in connection with the conduct of a trade or business within the United States. See IRM 21.8.1.11.11, Effectively Connected Income, for additional information.

    2. Non-effectively connected income is income not effectively connected with a trade or business in the United States. See IRM 21.8.1.11.12, "Non-Effectively Conntected Income" , for additional information.

  4. These forms are handled as Business Master File (BMF)/NMF.

  5. Fiduciary filed Forms 1040NR are processed to Non-Master File under Master File Tax (MFT) 20 tax class 2.

    1. Returns reflecting only income that is not effectively connected with a U.S. trade or business are processed with Document Code 72 and have a due date is 5 1/2 months after the end of the taxable year.

    2. Returns reflecting income that is effectively connected with a U.S. trade or business are processed with Document Code 73 and have a due date is 3 1/2 months after the end of the taxable year.

    3. The statute of limitations period is 3 years after the due date of the return or 3 years after the IRS received date, whichever is later.

21.7.12.5.1  (10-01-2013)
Adjusting Fiduciary Filed Form 1040NR

  1. Process amended returns or claims filed for fiduciary filed Form 1040NR as follows:

    1. Request a transcript of the account from ANMF.

    2. Request the original return.

    3. Review the amended return or claim for CAT A criteria and route as appropriate. See IRM 21.8.2.1.13, Examination Criteria for a listing of BMF International CAT A criteria.

    4. Immediately prepare and forward a paper Form 3177 with Transaction Code (TC) 470 to notify Accounting to stop notices. Refer to IRM 21.7.12.4.5, Stopping NMF Notices.

    5. Prepare Form 1331-B, Notice of Adjustment, to decrease tax, penalty and/or interest. Route the completed Form 1331-B to Accounting for input.

    6. Prepare Form 5734, Non-Master File Assessment Voucher to assess tax, penalty and interest. Route completed form to Accounting for input.

    7. Review the account for any outstanding balance due issues on both NMF and MF. See IRM 21.4.4.3.2, Outstanding Balances/Duplicate Refunds, for additional information.

    8. Prepare Form 3809, Miscellaneous Adjustment Voucher, or Form 2424, Account Adjustment Voucher, whichever is appropriate, to transfer any payments not correctly posted to the account.

    9. Prepare Form 3753, Manual Refund Posting Voucher, if the amended return or claim results in a refund. See IRM 21.4.4.4.2, Preparation of the Form 3753, Manual Refund Posting Voucher, for additional information.

    10. For name and/or address changes, prepare Form 2363, Master File Entity Change. Attach current Integrated Data Retrieval System (IDRS) and Automated Non-Master File (ANMF) transcripts and route to Accounting.

21.7.12.5.1.1  (10-01-2013)
Form 1040NR Claims for Abatement of Penalty and Interest

  1. Claims for abatement of penalty and/or interest are usually requested when the taxpayer's income was incorrectly classified and/or reported as effectively connected.

  2. Process cases where the taxpayer adequately substantiates this claim as follows:

    1. Request transcript of account from ANMF.

    2. Request original return.

    3. Verify the tax computation on page 4, Form 1040NR.

    4. Prepare Form 1331-B, Notice of Adjustment, to adjust penalties and interest as appropriate.

      Note:

      You must enter the Taxpayer Identification Number (TIN) on the Form 1331-B and the business operating division (BOD) code from Command Code (CC) TXMOD on all NMF documents.

21.7.12.5.1.2  (10-01-2013)
Form 1040NR Returns Incorrectly Processed to IMF

  1. If NMF Form 1040NR is processed incorrectly as an Individual Master File (IMF) 1040NR under an invalid Social Security Number (SSN), transfer the account from Master File (MF) to NMF using the following procedures:

    1. Request original return or have the taxpayer provide a copy.

    2. Abate the incorrect Master File tax, if necessary. Use hold code 4, source code 1, reason code 99 and the appropriate blocking series (BS) to freeze credits and notices.

    3. Code the return for reprocessing by lining through the Document Locator Number (DLN), entering the TIN followed by the letter "N" in brown pencil, and correcting the Entity portion. "X" out multiple stamped received dates, other than the original IRS received date.

      Reminder:

      Attach prints of the Master File adjustment.

    4. Route the return to the Cincinnati Submission Processing Center Receipt and Control area for batching and numbering. Indicate on the routing slip that the return was incorrectly processed as Master File, and process as NMF (MFT 20).

    5. Monitor for the posting of the NMF return if credits must be transferred from MF to NMF.

      Note:

      Do not transfer credits until the return posts on NMF. If the account shows payments or credits, transfer them using Form 2424, Account Adjustment Voucher.

  2. Process cases where payments were misapplied, and the taxpayer provided a copy of the front and back of the cancelled check or money order, using payment tracer procedures in IRM 21.5.7, Payment Tracers.

    If... Then...
    Payment is located on MF and it posted as TC 610, 640, 660/430, or 670 Prepare Form 2424 to debit MF and use corresponding credit transaction to credit NMF.
    Payment on MF posted as TC 700, 710, 716, or 706 Prepare Form 3809, MIscellaneous Adjustment Voucher, to debit MF and use TC 820 to credit NMF.

21.7.12.5.1.3  (10-01-2013)
IRC 663(b) Elections

  1. The executor of an estate or trust must submit a written election to treat any amount paid or credited to a beneficiary within 65 days following the close of the tax year as being paid or credited on the last day of the tax year.

  2. The election is not valid if filed after the due date (or extended due date) of the Form 1040NR Fiduciary.

    Caution:

    See IRM 21.7.12.5(2) to determine the due date of the return.

  3. Once the election is made it is irrevocable.

  4. If the election is timely filed, complete Form 9856, Attachment Alert, to attach the election to the last filed Form 1040NR Fiduciary return.

  5. If the election is not filed by the due date or extended due date of the Form 1040NR Fiduciary return, issue a Letter 105C to inform the taxpayer that the election was not timely filed and provide information on how to file a timely election for future reference.

21.7.12.6  (10-01-2013)
Substantiation of Unapplied Credits

  1. For cases where the taxpayer sends in Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, Form 8288-A ,Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests, or Form 1042-SForeign Person's U.S. Source Income Subject to Withholding to substantiate unapplied credits:

    1. Access the INTL WEBAPPS database to verify the credit amounts claimed on Form 8805 and Form 8288-A.

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Allow credits that can be verified using CC IRPTR without further research. Do not allow a credit if the Form 8805 or Form 8288-A amounts cannot be verified. The taxpayer must submit the Form 8805 in order to receive the credit.

    3. Verify Form 1042-S, using the withholding agent's EIN to confirm that a Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, was filed under MFT 12 for the applicable year and that the amounts claimed on Form 1042-S were actually deposited. If you cannot verify that the related Form 1042 was filed, do not allow the credit. Notify the taxpayer their credit cannot be allowed.

    4. Once verified, prepare Form 3809 for the appropriate amount. The debit portion references the "6550 ACCOUNT" and no TC is needed. Credit the taxpayer's account using TC 800, and identify the source of credit in the "Remarks" section of the Form 3809 (i.e., Form 1042-S, Form 8805) and identify filing location code (FLC) 18, 20, 21, 28, 29, 60, 66, 78, or 98 as appropriate.

    5. If the credit transfer results in an overpayment, Form 3753 must be prepared for a manual refund, unless the taxpayer requests a credit elect to the next tax year or has an outstanding liability on another account (MF or NMF). See IRM 21.4.4.4.2, Preparation of Form 3753, Manual Refund Posting Voucher, for additional information.

  2. When the adjustment results in a refund that will include interest, manually compute interest using CC COMPAC for computing credit interest before January 1, 1999 and COMPA for interest beginning on or after January 1, 1999.

    Note:

    On January 1, 1999, the overpayment and underpayment interest rates for non-corporate taxpayers were equalized.

  3. For corporate overpayment interest rules, see IRM 20.2.4.9, Special Credit Interest Rules for Corporations. The currently supported interest software are Integrated Data Retrieval System (IDRS) CCs (e.g., COMPA) and Automated Computational Tool (ACT/DMI) InterestNet by Decision Modeling, Inc. See IRM 20.2.6.4,Interest Computation Tools.

    1. Determine the correct tax rate and amount of tax to be withheld per Internal Revenue Code - IRC 1441, or the applicable tax treaty rate in Publication 901, U.S. Tax Treaties, or Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.

    2. Prepare four-part Form 5205, Information About Your Income Tax Refund.

    3. Prepare Form 1042-S.

    4. Prepare two Form 3809 documents. The first Form 3809 must credit the taxpayer's Non-Master File (NMF) account for the amount of interest paid using a TC 770 and debit (TC not necessary) the 6520 account. The second Form 3809 must debit the taxpayer's NMF account for the amount of interest withheld using a TC 772 and credit the 4610 account using TC 700 transferring tax withheld on interest.

      Note:

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

    5. Follow the chart below for determining overpayment interest.

    If Computing Credit Interest Then Utilize
    Before 01/01/1999 for a Non-Corporate taxpayer COMPAC
    On or after 01/01/1999 for a Non-Corporate taxpayer COMPA
    Before 01/01/1995 for a Corporate taxpayer, regardless of the overpayment amount (see IRM 20.2.4.9, Special Credit Interest Rules for Corporations, for the definition of "Corporate" taxpayer.) COMPAC
    On or after 01/01/1995 for a Corporate taxpayer and the overpayment amount is less than or equal to $10,000

    Caution:

    If the GATT threshold has been met, the overpayment will be computed at the GATT interest rate (COMPAG), regardless of the overpayment amount. See IRM 20.2.4.9.2, Determining the GATT Threshold.)

    COMPAC
    Credit interest after 12/31/1994 for a Corporate taxpayer and the overpayment amount is greater than $10,000, or the GATT threshold has previously been met (See IRM 20.2.4.9.2, Determining the GATT threshold.) COMPAG (GATT)

    Note:

    Add the COMPAC (first $10,000) with the GATT interest (over $10,000) for the total interest allowed.

  4. Prepare the Form 3753, Manual Refund Posting Document.

    1. The overpayment amount must be the amount of the available credit.

    2. The TC 770 amount is the net interest (after the withholding is computed).

    3. The TC 840 is the total of these two amounts.

  5. Submit the refund document and related forms, along with the case itself, to the manager for review. After managerial review, forward Form 1331-B, Form 5205, Form 1042-S, the refund document, both Form 3809 documents, and a copy of (interest computation) COMPAC or COMPAD/COMPAG to Accounting.

    Caution:

    All adjustment work sent to Accounting must have a current ANMF transcript and the correct BOD code entered on the NMF documents.

21.7.12.7  (10-01-2013)
IRC 1161 of the Taxpayer Relief Act of 1997

  1. Per IRC 1161 of the Taxpayer Relief Act (TRA) of 1997, a trust that was in existence on August 20, 1996, and was treated as a domestic trust (Form 1041 Filer) on August 19, 1996, may elect to continue treatment as a domestic trust by attaching a statement to the Form 1041 filed for either the 1997 or 1998 taxable years.

  2. It is unlikely that returns will any longer be filed that are subject to the instructions in IRC 1161. However, it is important to acknowledge that certain trusts that do not meet the definition of a U.S. person under IRC 7701(a)(30)(E) can still be treated as a domestic trust, if an election was properly made.

21.7.12.8  (10-01-2013)
Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation

  1. Form 926 is a return that is filed to report certain transfers of tangible and intangible property to a foreign corporation when required by IRC 6038B. Form 926 is processed under MFT 81.

  2. In the past, taxpayers making a transfer to a foreign trust, estate, or partnership also used Form 926 to report the transfer. However, IRC 1491 was repealed with respect to transfers to foreign partnerships after August 4, 1997. New forms have been developed for transfers to foreign trusts or estates, and foreign partnerships.

  3. Taxpayers making a transfer to a foreign trust, or taxpayers receiving certain large gifts or bequests from certain foreign persons, must file Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.

  4. Taxpayers making a transfer to a foreign partnership may be required to file Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships

  5. Due to their potential use in classifying Form 1040NR, route all Form 926 to:
    Philadelphia Service Center
    Examination CF&S Unit 4.E08.141
    2970 Market Street
    Philadelphia, PA 19104


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