This section provides instructions in determining the correct posted transaction dates for payments and/or credits that were submitted by the taxpayer or allowed by the IRS.

Credits are usually money amounts allowed on the taxpayer's return to reduce original or additional tax liability.

Payments are usually money amounts submitted by the taxpayer to satisfy tax liabilities on an original return or an amended return.

Some examples of credits/payments may be:

To deal with timeliness of credits/payments you need to refer to the following Internal Revenue Code (IRC) Sections and Internal Revenue Manuals (IRMs):

This section will help you determine when an amount is treated as paid or a taxpayer's credit elect is treated as being made under the IRC. When a payment is made with a tax return, it is considered to be made on the filing date of the return in accordance with the rules in IRM 25.6.2.4.15.

A Payment is Made With a Request for an Extension. A payment submitted with a request for an extension of time to file (e.g., a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Tax Return) is treated as a payment of estimated tax described in 3(b), below.

Advance Payments are considered to be paid as follows (under IRC § 6513):

Overpayment Credited to Next Period's Estimated Tax. When an overpayment is credited to the next tax period estimated tax pursuant to a taxpayer's request (on a tax return), it becomes an estimated tax payment treated as paid as provided in (3)(b) above. See IRC § 6402(b).

Overpayment Credited to Another Tax Period or Type of Tax.

Timely Release of Federal Tax Lien. See IRM 5.12.3.2.1(5), Liability is Satisfied regarding the necessity of a manual lien release. Employees of function with access to the Automated Lien System (ALS) will input lien release requests in these situations. For those functions that do not have access to ALS, determine the Centralized Lien Unit (CLU) lien release contact on the IRS intranet by going to:

Transfer credits to XSF, if less than one year after the IRS received date, if the payment was:

XSF: A file within IDRS containing all non-revenue receipt credits. You must apply all non-refundable payments and credits that are more than one year old to the XSF.

Before moving any credit or payment to XSF or URF, you are required to input a Transaction Code (TC) 971 Action Code (AC) 296 on the taxpayer's account to indicate all research action was completed. On large dollar credit module of $100,000.00, or more, you are required to use all internal IRS research and internet websites (i.e. Google, SEC, EDGAR, VIVISIMO, and SWITCHBOARD) tools in order to resolve the credit module. For Statute employees, you do not have to do the additional research if the statute of limitation has expired or on barred assessment cases. Also, on all large dollar credit modules of $100,000.00, or more, you must obtain managerial approval (originator's manager) on Form 8758 prior to the transfer of credit to XSF or URF.

For additional information, see IRM 3.17.220, Excess Collection File.

As soon as a record is added to the XSF, it is available for research at any IDRS terminal . Any function that establishes control bases on its cases and adds a credit to the XSF, may consult CC XSINQ to determine appropriate closure of its control base.

Use CC XSINQ to research XSF by amount of credit, name control or by DLN. You must input at least one of these elements. The search is narrowed by using as many of these pieces of information as possible. See IRM 3.17.220–9, CC XSINQ for further information.

Use Form 8765, IDRS Control File Credit Application, to transfer credits from the XSF. The credits that were previously sent to XSF needs to be return to the taxpayer's account before the processing of a return is completed, in order to prevent any balance due notices from being sent in error.

On claims for credit or refund after the RSED has expired, you must only bring back from XSF allowable credits or payments which will satisfy the balance due amount. To determine if an amount can be refunded or credited to another tax module after the RSED has expired, see IRM 25.6.6.6, Claims for Credit or Refund - General Time Period for Submitting a Claim. On balance due only accounts (no refund is involved), you must only bring back the credits or payments which will satisfy the account module balance.

The Statute Function will send Form 8765 to Accounting, if it determines a credit/payment must be transferred from the XSF. You must provide documentation to identify the credit and indicate its proper application. See IRM 3.17.220.2.11, Applying Amounts From XSF-General for further instructions.

Other functional areas must route Form 8765 and completed case files (includes research, returns, etc.) through the Statute function for their review to ensure the credit is not barred for refund or transfer.

If the credit/payment was sent to Excess Collection File by another Campus, the Statute function must prepare and clear the Form 8765 as required in the instructions for (3) above. The Form 8765 must be routed to the other Campus Accounting, without routing to the other Campus Statute function for clearing.

Research or realization that an error was made when adding a record to the XSF may require changing or debiting the record or voiding it completely from the XSF.

You may use a buckslip to make changes with supporting documentation to the Excess Collection function for action. See IRM 3.17.220, Excess Collection File for further information.

You must use Form 2424, Accounting Adjustment Voucher, to transfer credits to and from the URF.

Attach documentation providing the existence of the credit to be transferred, as well as, indicating the research performed prior to the transfer request.

Use TC 670/672 when applying subsequent payments to the URF on accounts reinstated from the Retention Register. (Do not use TC 820/700).

For additional information, see IRM 3.17.220, Excess Collection File.

The Statute function will review transcripts or original delinquent returns where an EIC has been allowed and computed on statute imminent or expired periods.

The taxpayer must file a return to receive the EIC. For married taxpayers, a joint return must be filed, but an abandoned spouse may qualify for the credit.

Allow EIC even when a taxpayer, other than making this claim, is not liable for a return and has no withholding credit. The credit is considered applied to the eligible taxpayer’s account on the due date or extended due date of the return.

For taxable years beginning before January 1, 2002, the amount of credit allowed, is reduced by the taxpayer’s liability for Alternative Minimum Tax.

You must transfer cases to the Adjustments/Correspondence Operation if:

Transfer non-refundable EIC to XSF if the RSED is expired.

See IRM 21.6.3, Credits for additional information.