25.6.1  Statute of Limitations Processes and Procedures

Manual Transmittal

September 10, 2013

Purpose

(1) This transmits a revision for IRM 25.6.1, Statute of Limitations Processes and Procedures.

Material Changes

(1) IPU 12U1915 issued 12-07-2012 Editorial changes made throughout the IRM.

(2) IRM 25.6.1.3, Statute of Limitation Research, Removed the reference to the obsoleted IRM 3.0.273, Administrative Reference Guide.

(3) IPU 13U0908 issued 05-10-2013 IRM 25.6.1.4.1(3) Responsibility of the Statute Function, Revised to include cases not worked by the statute employee.

(4) IPU 13U0908 issued 05-10-2013 IRM 25.6.1.5(1) Basic Guide for Processing Cases with Statute of Limitations Issues, Changed the words due date to received date.

(5) IRM 25.6.1.6.5, Chart of Expedited Statute processing, Updated for the current statute tax year return information.

(6) IRM 25.6.1.6.1, Taxpayer/Internally Generated Correspondence, Removed paragraph (19) reference to obsoleted IRM 3.0.273, Administrative Reference Guide.

(7) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.6.6(1), Transmitting/Transhipping Cases to Another Campus, Updated the primary and secondary assignment number for sending an International statute case through CIS.

(8) IPU 13U0348 issued 02-14-2013 IRM 25.6.1.6.6(1), Transmitting/Transhipping Cases to Another Campus, Revised the previous primary and secondary assignment number to the for sending an International statute case through CIS.

(9) IRM 25.6.1.6.11(2), Electronic Filing System (ELF), Removed the reference to IRM 3.0.273.21.3, Return Transaction File.

(10) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.7.3(1)(a), Excess Collection File(XSF) and Unidentified Remittance File (URF), Removed the statement for sending late filed payment with amended return to XSF.

(11) IPU 13U0004 issued 01-02-2013 IRM 25.6.1.7.3, Excess Collection File (XSF) and Unidentified Remittance File (URF), Revised the information for making telephone contact with the taxpayer prior to sending undeterminable credits to XSF.

(12) IPU 13U0004 issued 01-02-2013 IRM 25.6.1.7.3.1(2), Transferring Credits To XSF, Revised to include the word Statute Team in box 16 of Form 8758, when no contact with taxpayer is needed prior to sending credit or payment to XSF.

(13) IPU 12U1934 issued 12-13-2012 IRM 25.6.1.8.2(3) table, Original Delinquent Return Procedures, Revised the information for sending SBSE Exam cases to Brookhaven Campus.

(14) IPU 13U0348 issued 02-14-2013 IRM 25.6.1.8.2(3) table - Original Delinquent Return Procedures, Revised the previous information for sending SBSE Exam cases to Brookhaven Campus.

(15) IRM 25.6.1.8.2 (3) table, Original Delinquent return Procedures, Added second note to reference IRM 5.19.2.5.4.5.12(4)(c), IMF Response with original Return, for processing a SFR case containing or does not contain julian date 888 in the DLN.

(16) IPU 13U0819 issued 04-26-2013 IRM 25.6.1.8.2(4), Original Delinquent Return Procedures Table item 6, Revised the information for processing of an amended tax with a payment received after the ASED.

(17) IPU 12U1934 issued 12-13-2012 IRM 25.6.1.8.2.1, Procedures for Processing Non-resident/Non-filer Tax Returns, Added information for processing original and amended international tax returns.

(18) IPU 13U0452 issued 03-04-2013 IRM 25.6.1.8.2.1(2), Procedures for Processing Non-resident/Non-filer Tax Returns, Revised information for processing original and amended international tax returns.

(19) IRM 25.6.1.9.4.1, Valid Returns, Revised to incorporate new Service Policy Statement 3-5 (Formerly P-2-11), concerning the processing of unsigned tax returns.

(20) IPU 12U1718 issued 10-11-2012 IRM 25.6.1.9.9.1, Procedures for Expeditious Assessments, Revised paragraph (7)(b) to allow the refunding of the payment made with a late filed amended tax return.

(21) IPU 13U0819 issued 04-26-2013 IRM 25.6.1.9.9.1(4), Procedures for Expeditious Assessments, Revised to clarify the history item information on IDRS and AMS when inputting Form 2859, Request For Quick or Prompt Assessments.

(22) IRM 25.6.1.9.10.3(3), Excise Tax-Amended Form 720, Replaced Examination Operation with Excise Tax Program for requesting assistance on complex excise tax issues.

(23) IRM 25.6.1.9.12.2.3(1)(a), Unpostable Report (GUF 11–40), Revised to state statute will get the working copy from Control D.

(24) IRM 25.6.1.10.1 (1), Requests for Abatement, Changed the reference for the Post-Assessment Penalty Appeal process to IRM 8.11.4.1, Penalty Appeals (PENAP) Program..

(25) IPU 13U0819 issued 04-26-2013 IRM 25.6.1.10.2.5.1(2), Statute Year Amended Returns Requesting a Credit, Tax Decrease, or No Tax Change, Updated for the 2009 tax year returns and prior.

(26) IPU 12U1718 issued 10-11-2012 IRM 25.6.1.10.2.5.6.2, Claim for an Amount Paid After the ASED, Revised to allow the refunding of the payment with a late filed amended tax return.

(27) IRM 25.6.1.10.2.7.2.1(2), Example (b), Three-year Rule, Removed estimated income credit as part of the lookback refund period when the taxpayer has an extension of time to file.

(28) IPU 13U0908 issued 05-10-2013 IRM 25.6.1.10.2.12.7(3) Deposit Made Under IRC Section 6603, Revised to state the deposit is converted into a tax payment on the date the deposit is used to pay tax debt and the two year refund period starts from the date the deposit is converted into a tax payment.

(29) IRM 25.6.1.11.1.4.2.4, ST-04 (Duplicate Return), Added information to paragraphs (4) for closing the transcript when the case has been routed to another area for resolution.

(30) IPU 13U1248 issued 07-18-2013 IRM 25.6.1.11.1.4.2.4(5), ST-04 (Duplicate Return) Revised to add information on what to do with the various Identity Theft issues found while working a ST-04 transcript.

(31) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.11.1.4.2.4(7), ST-04 (Duplicate Return), Revised to add a link to IRM 21.2.4.3.18 for processing CI cases.

(32) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.11.1.4.2.7(6), ST-09 (Additional Liability Pending) and IRM 25.6.1.11.1.4.2.9, ST-11 (Advance Payment) Added 81 DLN for processing OVDI payments by Austin Submission Processing.

(33) IRM 25.6.1.11.1.4.2.9 (4), ST-11 (Advance Payment) Revised the if and then table, revised the information to refund payment received after the ASED for additional tax assessment if no other debts are owed.

(34) IPU 13U0848 issued 05-01-2013 IRM 25.6.1.11.1.4.2.10(9), ST-12 (Credit No Return), Added new paragraph (9) to provide procedures for processing a BMF Form 1065 and Form 1120 based on the filing requirement.

(35) IRM 25.6.1.12.1, Collection CSED Research, Added reference to IRM 5.16.1, Currently Not Collectible.

(36) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.13.2.8.3(3), Closing Cases Involving Expired Statute Returns, Revised to state to refund the taxpayer's late payment made with an amended return after the ASED.

(37) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.13.2.8.4(3), Statute Expiration Reporting Responsibilities and Procedures for SB/SE Campus Compliance Services, Revised to remove 2 days reporting requirement for barred statute cases to the Campus Compliance Director.

(38) IRM 25.6.1.13.2.9.1, Procedures for Submission of LB&I Statute of Expiration Reports, Removed references to Director Field Specialists.

(39) IPU 12U1915 issued 12-07-2012 IRM 25.6.1.13.2.9.3(3), Closing Cases Involving Expired Statute Returns, Revised to state to refund the taxpayer's late payment made with an amended return after the ASED.

(40) IRM 25.6.1.14.2.1.1(4), Credit of Foreign Taxes or State Death Tax Credit, Added information on IRC Section 2058(b) claim period for the deduction of state death taxes.

Effect on Other Documents

This material supersedes IRM 25.6.1, dated 8-24-2012. The following IRM Procedural Updates (IPU) issued from 10-11-2012 through 7-18-2013, have been incorporated into this IRM: 12U1718, 12U1915, 12U1934, 13U0004, 13U0348, 13U0452, 13U0819, 13U0848 and 13U1248.

Audience

The primary users of this IRM are employees who answer Statute Period issues.

Effective Date

(10-01-2013)


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

25.6.1.1  (10-01-2001)
Introduction Overview

  1. The Statute of Limitations Project identifies statute imminent/expired returns and payments, and determines the Assessment Statute Expiration Date (ASED), Refund Statute Expiration Date (RSED), and Collection Statute Expiration Date (CSED).

  2. This section provides an introduction to the establishment and awareness of Statute of Limitations.

  3. To respond to tax law inquiries, consult technical reference material.

25.6.1.2  (10-01-2001)
What is a Statute of Limitation

  1. A statute of limitation is a time period established by law to review, analyze and resolve taxpayer and/or IRS tax related issues.

  2. The Internal Revenue Code (IRC) requires that the Internal Revenue Service (IRS) will assess, refund, credit, and collect taxes within specific time limits. These limits are known as the Statutes of Limitations . When they expire, the IRS can no longer assess additional tax, allow a claim for refund by the taxpayer, or take collection action. The determination of Statute expiration differs for Assessment, Refund, and Collection.

25.6.1.2.1  (01-16-2009)
Overall Mission of the Statute Program

  1. The overall mission of the statute program is to:

    • Minimize barred assessments.

    • Provide adequate statute alerts and messages to all campus and field office personnel.

    • Provide maximum feedback to other areas not following prescribed guidelines (this also includes Quality Assurance).

    • Coordinate all open controls with the appropriate functions.

    • Minimize the volume of STxx (statute imminent transcript), STxx(f) (follow-up), and AM–X (statute expired) transcripts.

  2. The guidelines of the statute program are to:

    • Keep inventories to a minimum

    • Review and resolve statute transcript cases

    • Clear original delinquent returns for processing

    • Prepare, when needed barred statute reports

    • Maintain adequate staffing for timely resolution of cases assigned to the statute function (including imminent or expired unpostable cases)

25.6.1.2.2  (01-16-2009)
Statute Function Establishment

  1. The Statute Function was established to review statute imminent/expired original returns and payments and to determine the Assessment Statute Expiration Date (ASED), Refund Statute Expiration Date (RSED) and Collection Statute Expiration Date (CSED).

  2. The Statute Function also reviews amended returns for Accounts Management that reflect an increase in tax, documents that unpost or are rejected for statute imminent or expired periods, and Enterprise Computing Center at Martinsburg (ECC-MTB) transcripts that generate from the Accounts Maintenance/Statute Transcript Program.

25.6.1.3  (10-01-2013)
Statute of Limitations Research

  1. To handle statute imminent/expired cases, you need to refer to the following Internal Revenue Manuals (IRMs), as well as Internal Revenue Codes (IRCs) and other research:

    • IRM 3.11.3, Individual Income Tax Returns

    • IRM 3.12.32, General Unpostables

    • IRM 3.12.166, EPMF Unpostables

    • IRM 3.12.179, Individual Master File (IMF) Unpostable Resolution

    • IRM 3.12.278, Exempt Organization Unpostables Resolution

    • IRM 3.13.62, Media Transport and Control

    • IRM 3.13.222, BMF Entity Unpostable Correction Procedures

    • IRM 3.12.21, Credit and Account Transfers

    • IRM 3.17.79, Accounting Refund Transactions

    • IRM 3.17.220, Excess Collection File

    • IRM 3.17.243, Miscellaneous Accounting

    • IRM 2.3, IDRS Terminal Responses

    • IRM 2.4, IDRS Terminal Input

    • IRM 5.8, Offer In Compromise

    • IRM 5.9.4, Common Bankruptcy Issues

    • IRM 5.14, Installment Agreements

    • IRM 5.19.1, Balance Due

    • IRM 20.1, Penalty Handbook

    • IRM 20.2, Interest

    • IRM 21.2.4, Master File Accounts Maintenance

    • IRM 21.3.3, Incoming and Outgoing Correspondence/Letters

    • IRM 21.4.1, Refund Research

    • IRM 21.4.5, Erroneous Refunds

    • IRM 21.5.1, General Adjustments

    • IRM 21.5.2, Adjustment Guidelines

    • IRM 21.5.3, General Claims Procedures

    • IRM 21.5.6, Freeze Codes

    • IRM 21.5.9, Carrybacks

    • IRM 21.6.7, Adjusting Individual Tax Accounts

    • IRM 21.7, Business Tax Returns and Non-Master File Accounts

    • IRM 5.1.19, Collection Statute Expiration

    • IRM 21.8.1.6.10, Covering Over Net Collections of Tax When the period of Limitations Has Expired - U.S. Virgin Island

    • IRC Section 6404(a), Abatements

    • IRC Section 6501, Limitations on Assessment and Collection

    • IRC Section 6511, Limitations on Credit or Refund

    • IRC Section 6532(a), Suits by taxpayers for refund

  2. Refer to IRM 3.11.6, Data Processing (DP) Tax Adjustments and IRM 4.19.3.8, Adjustments to Income procedures for detailed instructions for adjusting accounts.

25.6.1.4  (10-01-2001)
Introduction Procedures

  1. The following subsections provide statute awareness relating only to "Introduction to Statutes" and not "Resolving Statute cases."

25.6.1.4.1  (05-10-2013)
Responsibility of The Statute Function

  1. The Statute Function is the technical operation used to identify, "clear" original delinquent returns for processing by Submission Processing (SP), and determine expired periods for assessment or refund/credit, on statute imminent or expired periods for Individual Master File (IMF), Business Master File (BMF) and Individual Retirement Account File (IRAF) accounts. This includes applying credits, and resolving unsettled tax modules and freezes that were not resolved as a result of the initial computer generated transcript and the statute date is within 180 days for transcript processing and 90 days for non-transcript type cases.

  2. The clearing of an original tax return by a statute employee is to make sure that the late filed tax return has not been previously processed by SP and it is able to pass all validation checks by our computer system. The clearing of an original tax return does not involve any IRS initiated adjustments. IRS-initiated adjustments include, but are not limited to:

    • Automated under-reporter assessments.

    • Combined Annual Wage Reporting/Federal Unemployment Tax Act (CAWR/FUTA).

    • Examination audit assessments.

  3. Statute employees must direct their primary attention to statute protection (tax assessment before the statute of limitation passes) and not general non-statute issues (refund claims or credits). "No other area should be clearing original return statute cases for processing by SP." The Statute Function must stamp "No Statute Issue (does not meet statute tax assessment criteria)" on all tax returns, transcripts, etc., which are not statute related. Cases involving refund claims, no tax changes and credit increase only are considered out of scope for the statute employee. Follow your work area specific IRM procedures for processing the return. The no statute issue case or other areas case work not worked by the statute employee must be routed back to the responsible function or originator, as applicable.

  4. Either a case history (action) sheet or statute transcript must be used to record the steps taken when resolving statute cases. The steps must be dated, legible, and listed in chronological order. Local management will decide the method used.

  5. Because of the special nature of problems involved with resolving statutes of limitations cases, only tax examiners assigned to the Accounts Management Statute Function should use the instructions and techniques provided in this section. All other areas should use the specific IRM written for the type of case they are working for processing case work that does not involve an original return but may have a statute implication.

  6. Many statute-related issues are complicated ones. The statute examiner must be able to use logic and judgment, when necessary, to resolve the case and/or determine a correct statute expiration date. The statute employee will:

    1. Identify/resolve statute of limitations issues on IMF, BMF, and IRAF accounts,

    2. Research specific issues using various sources of information including all IRMs relating to Statute Processing issues

    3. Identify critical statute (ASED, RSED and CSED) dates,

    4. Discuss statute related issues with other functional areas regarding Statute Processing

      Example:

      Criminal Investigation, Collection or Examination, Collection Advisory Insolvency & Quality (AIQ) Function in the Area Office (AO) as well as other functions in the AO, etc.,

    5. Provide training to employees in other areas regarding statute related issues,

    6. Identify and report systemic or operational problems in statute processing or ones which are causing an increase in statute issues,

    7. Review and prepare barred assessment reports, as necessary.

25.6.1.4.2  (09-09-2011)
The Statute Awareness Program

  1. Since Statute Awareness is a vital process to the performance of identifying statute cases in the Internal Revenue operations, each Statute Function must create a Statute Awareness Program to prevent barred assessments and erroneous abatements.

  2. At the beginning of each quarter starting in January, the Statute Function must display messages on bulletin boards, flyers, posters, Integrated Data Retrieval System (IDRS), and distribute Statute Circulars with statute periods that will expire within each month for all business operations. Statute imminent dates must be discussed prior to expiration dates in unit meetings, briefing and/or training classes for all business operations.

  3. Each campus Planning and Analysis Staff must submit a quarterly Statute Awareness Program report, to Headquarters by the 15th day of the month following the close of the quarter via secured email. The due date for the quarterly Statute Awareness Program reports are January 15, April 15, July 15 and October 15 of each year. If the 15th day of the month falls on a Saturday or Sunday, the report is to be sent on Monday, the next business day. The memorandum document must contain the electronic signature of the Campus AM Director.

  4. Include the total volume of barred cases and total tax dollar, broken down by tax, penalty, interest and lost revenue ( including grand total for your Campus). Also, list the type of case/condition causing the barred assessment and the specific Department where the barred case originated. This information can be obtained from Form 9355, Barred Statute Report prepared on barred cases. See IRM 25.6.1.13.2.4, Identifying Barred Cases for the criteria for barred cases.

  5. Do not submit attachments such as copies of minutes from meetings, local memoranda for statute preparedness, statute imminent bulletins, monthly statute alert posters, or copies of any public address announcements. These should be kept for your records.

  6. The proposed assessments in the Automated Underreporter Program (AUR), Combined Annual Wage Reporting (CAWR) and Federal Unemployment Tax Act (FUTA) programs provide additional statute consideration.

  7. Each functional area must ensure an adequate number of "Statute Specialists" are assigned to each operation.

  8. Each campus operation will establish a review of Form 3893, Re-Entry Document Control, or other document input with a different Document Locator Number (DLN), for all returns that have tax periods with assessment expiration dates of 6 months or less. This is to ensure returns are not being input to a statute imminent period or abated prior to the posting to the correct account, and are being routed to the Statute Function.

  9. Document 7368, Basic Guide for Processing Statute Cases, is available on the intranet.

25.6.1.4.3  (03-01-2006)
Necessity of Quality Review

  1. To ensure accuracy of adjustments that are completed within the Statute Function, management must:

    1. Review 100% of on-line and non on-line adjustments of new employees.

    2. Randomly review sample on-line/non on line adjustments after satisfactory performance of statute cases has been met.

  2. Management may delegate this review, but in no case may an employee conduct reviews of his/her own cases.

25.6.1.4.4  (10-01-2009)
Necessity of Managerial Review

  1. First line supervisors of personnel working statute cases will conduct periodic reviews of cases assigned to the employees. The purpose of the review process is to ensure that employees are processing cases properly and in a timely manner. Additional IDRS training, research guidance, or counseling may be warranted if deficiencies are noted.

  2. Management supervision includes, but is not limited to, product quality review of suspense files to ensure:

    1. Accuracy of work

    2. Necessary information is requested

    3. Open IDRS control base until condition is resolved

    4. Timeliness of follow-ups

    5. Timely and appropriate action on cases including working replies when received

    6. Replies are worked expeditiously

    7. Credit transfer cases returned to the Statute team from Accounting are controlled on IDRS and being expeditiously handled

    8. Unpostable records are controlled on IDRS

    9. Unpostable records for bankruptcy, intelligence, and statute periods are assigned and worked on a first priority basis.

    10. Repeat unpostables are identified and corrected

    11. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    12. Mis-routed and re-routed correspondence is monitored to determine the source of errors

    13. Direct feedback is provided to the functional area if significant volume changes occur

    14. Feedback is provided to the operation level when statute cases are received from Area/Field offices requiring assessment action and the statute period has expired.

    Note:

    The purpose of the feedback is to alert field office personnel of statute ramifications when personnel does not route a case timely because of lack of training, etc.

    • Special trained employees are assigned to work cases when additional documents are requested.

    • Every attempt is made to resolve these cases prior to requesting the document a second time.

25.6.1.5  (05-10-2013)
Basic Guide for Processing Cases with Statute of Limitations Issues

  1. The following is a basic guide for processing claims seeking credit or refund based on the statute of limitation:

    IF AND THEN
    The module is in zero balance (and claim for refund is filed within 3 years from the received date of the original return or if the claim is not filed within 3 years but within 2 years from the date tax, penalties and/or interest is paid) The look-back period is 3 years plus any extension of time to file or 2 years The maximum amount that can be refunded or offset cannot exceed the total of the credits, payments, or offsets cycle date payments made within the look-back period. Adjust the lesser of claim document amount or the total of credits or payment within the look-back period. (If your adjustment contains an increase in the amount of Withholding Tax (W/H), Earned Income Credit (EIC), or Advance Child Tax Credit (ACTC), make correction to these amounts before inputting any other tax decrease). The claim must be disallowed if there are no credits, payments or offset payments made within the look-back period. Do not adjust the module. Send a 105C disallowance letter.
    The module is in zero balance and the claim is not timely filed (within the 3 year or 2 year period identified above) No look-back period exists because the claim for credit or refund is not timely filed Disallow claim for credit or refund. Do not adjust the module. Input Transaction Code (TC) 290 for zero with blocking series 98/99 to indicate a full disallowance and send a 105C letter.
    The tax module is in balance due (and the claim is filed within 3 years from the received date of the original return or 2 years from the date tax, penalty, and/or interest is paid) The look back period is 3 years plus any extension of time or 2 years from the date of any payment The maximum amount that can be refunded or offset cannot exceed the total of the credits/payments or offset credit payment cycle date within the look-back period. The adjustment is the lesser of: a) the correct adjustment amount based on the claim document or b) the total of credits/ payments or offset cycle date payments within the look-back period plus the posted balance due on the module.
    The tax module is in balance due (and the claim is not filed timely within the 3 year or 2 year period identified above) No look-back period exists No amount can be refunded or offset. Apply the guidelines for a request for abatement to address the balance due. The adjustment is the lesser of : a) the adjustment amount based on the claim document or b) the balance due on the module. You must ensure that all documentation is complete and verified before taking any adjustment action or send to CAT/A if the claim meets CAT/A criteria. Send a 105C or 106C letter as required.
    If the claim is a request for an abatement (documentation is complete and verifiable) It meets CAT/A criteria (route to Exam on-site) Adjust the module based on the reply from CAT/A. If Exam does not accept the claim as filed or the claim will not be adjusted based on the document provided by the taxpayer, send the taxpayer a no consideration letter 916C. In the letter request payment of total amount due and ask the taxpayer to file a claim for refund.
    If the claim is a request for abatement with missing documentation or the documentation cannot be verified (request any missing documentation) The taxpayer provides documentation Follow procedures as stated above. If the taxpayer does not provide documentation, do not adjust the module. Notify the taxpayer to pay the total amount due and file a claim for refund.
    An original return is received timely It has not been processed within 33 months of original received date Prepare a Form 2859 to assess tax and allow refund. Input a TC 150 for zero amount and TC 290 for the tax. Do not bill taxpayer. Route to Accounting. Input a TC 29X to allow credit(s) and taxpayer refund when the dummy TC 150 posts if needed.

    Note:

    If the module credit created by the posting of the adjustment exceeds the amount of the credit that can be refunded or offset due to the recomputation of tax, penalties or interest, you must transfer the barred portion of the overpayment to Excess Collections File (XSF). A manual refund may be needed to allow the correct refund. Also, a 106 C letter must be sent if the refund created by the tax adjustment is not fully refundable.

  2. The following is a basic guide for reprocessing of a statute period return if the tax return is timely (i.e., filed within 3 years from received date of the original return or due date, whichever is later):

    IF THEN
    The ASED has expired Use TC 370/400 procedures. Do Not Abate the Tax. (IRM 25.6.1.9.9.3)
    The ASED is greater than 90 days Follow normal processing procedures. (90 days allows time for processing through the pipeline).
    The ASED will expire within 90 days Forward to the Statute team for possible quick assessment.
    The ASED is within the last 5 calendar days for assessments The manager of that function where case is in inventory will ensure that the Form 2859 for quick assessment is prepared.

  3. The following is a basic guide for processing statute period assessments if the tax return is timely (i.e., filed within 3 years from the received date of the original return or due date, whichever is later):

    IF AND THEN
    Return was timely filed but not timely processed There are no condition(s) which extend the ASED Do not assess the tax increase, forward case to the Statute team and do not send a 2765C letter.
    Return was timely filed and the ASED has not expired ASED is greater than 90 days Make the assessment on IDRS.
    Return was timely filed and the ASED has not expired ASED is less than 90 days Notate Statute Imminent and Expedite/ Hand carry to the Statute team.

    Note:

    If you cannot ascertain whether the ASED is extended refer the case to the Statute team.

    Note:

    An additional assessment such as a TC 290 or TC 300 does not extend the Assessment Statute Expiration Date. The ASED is determined by the received date or due date of the original return whichever is later.

    Exception:

    For Employment Taxes the ASED is 3 years from April 15 of the following year.

    Caution:

    If a TC 150 is manually assessed with a tax amount, any further tax increase must be manually assessed.

  4. The following are conditions which extend the Assessment Statute Expiration Date:

    • IRC Section 6501(c)(1), False Return

    • IRC Section 6501(c)(2), Willful Attempt to Evade Tax

    • IRC Section 6501(c)(3), No Return

    • IRC Section 6501(c)(4), Extension by Agreement

    • IRC Section 6501(c)(5), Tax Resulting From Changes in Certain Income or Estate Tax Credits

    • IRC Section 6501(c)(6), Termination of Private Foundation Status

    • IRC Section 6501(c)(7), Certain Amended Returns

    • IRC Section 6501(c)(8), Failure to Notify the Secretary of Certain Unreported Foreign Transfers

    • IRC Section 6013(b), Joint Return After Filing Separate Returns

    • IRC Section 6501(h), Net Operating Loss (NOL) or Capital Loss Carryback

    • IRC Section 6501(j), Credit Carryback (as defined in IRC Section 6511(d)(4)(c)

    • IRC Section 6501(i), Foreign Tax Carryback

    • IRC Section 6503(a), Statutory Notice of Deficiency

    • IRC Section 6503(c), Taxpayer Outside United States

    • IRC Section 6501 (e), 25% Omission

    • IRC Section 6501(f), 543(a) & 544, Personal Holding Company

    • IRC Section 6501(b)(3), Substitute for Return - SFR

    • IRC Section 6901, Transferees, & Transferors Transferred Assets

    • IRC Section 6229, Partnership Items

    • IRC Section 6503(h), Bankruptcy

    • IRC Section 6501(c)(4), Agreements that Extend the Time to Assess

    • Returns with Extension of Time to File

    • IRC Section 1033(a), Involuntary Conversion

    • IRC Section 6501(c)(9), Gift Tax (Form 709)

    • IRC Section 1314 (b), Mitigation

    • IRC Section 664, Charitable Remainder Trusts

    • IRC Section 6501 (e)(3), Excise Tax Substantial Omission

    • IRC Section 6501(c)(8), Failure to Notify the Secretary of Certain Unreported Foreign Transfers

    • IRC Section 6501(c)(10), Listed Transactions

    • IRC Section 6501(m), Certain Credits Elected

    • Some Forms 2290 (Amended)

    • Special Tax Stamp - each location established ASED (Form 11C)

    • IRC Sections 6503-6504, Other circumstances

      Note:

      If a timely filed IMF taxable amended return showing an increase in tax is received within 60 days of the ASED of the original return, the assessment of the amended return is extended for 60 days from the day the amended return was received on all subtitle A (Income) taxes. IRC Section 6501(c)(7).

      Caution:

      An additional assessment on a module, such as a TC 290 or TC 300 DOES NOT extend the Assessment Statute Expiration Date (ASED). The ASED is determined only by the received date or the due date of the original return, unless any of the above conditions are met.

25.6.1.6  (01-01-2003)
General Information and Procedures

  1. The following subsections describe situations for handling general information and procedures.

25.6.1.6.1  (10-01-2013)
Taxpayer/Internally Generated Correspondence

  1. Taxpayer correspondence is usually initiated by the taxpayer or taxpayer representative.

  2. Internally generated correspondence is usually IRS initiated (i.e., transcripts, notice of adjustment).

  3. Follow guidelines for working taxpayer correspondence provided in IRM 21.3.3, Incoming and Outgoing Correspondence/Letters.

  4. Reply to correspondence, including claims with correspondence where the statute period is open, within 30 calendar days of the initial IRS received date (counting the day it is received). If it is not possible to conform with this time limitation, you must issue an interim letter within 30 calendar days of the IRS received date (counting the day it is received). Interims must contain the reason for the delay and a new response date.

  5. Examples of taxpayer or tax practitioner correspondence are:

    • Any note (even if accompanied by a tax return) which requests forms or information is considered taxpayer correspondence.

    • Inquiries and annotated notice responses that provide information to dispute or support a notice (Example: "I have paid this" ).

  6. Examples that are not taxpayer or Tax Practitioner correspondence are:

    • A tax return which shows a refund due is not considered correspondence even though the taxpayer is requesting a refund.

    • A tax return which shows a balance due is not considered correspondence even though the taxpayer is requesting a bill.

    Note:

    The proper designated office is listed on the tax form, but other offices may be authorized to receive hand-delivered or mailed tax returns (e.g., IRM 21.3.4.8, Receipt of Tax Returns provides that Field Assistance's Taxpayer Assistance Center employees may receive tax returns at the counter or by correspondence). See IRM 25.6.1.6.15, When a Document Is Treated As Filed Under the IRC for more information regarding the establishment of the Statute of Limitation Period.

  7. Any case forwarded to the Statute team to "clear" should have an interim reply before being transmitted. If not, the Statute team will generate the interim reply. The Statute Function Manager must advise operation if a significant increase of interim responses are not sent.

  8. Interim replies must indicate why the response is being delayed and when final action can be expected. Replies should include the employee control number and an explanation that if the taxpayer needs to contact the IRS, to return a copy of the letter, with his/her telephone number and best time to call, as indicated in (12) below.

  9. The Statute Function will answer all correspondence received from taxpayers; the answer must indicate: "This is in reply to your correspondence of (enter the correspondence date)" , and explain the action taken, even if the action taken was exactly what the taxpayer requested. However, DO NOT CORRESPOND to the taxpayer indicating we have received the requested information. Correspondence is only required to obtain information and to explain how the account was corrected.

  10. The Statute Function is responsible for corresponding for any documentation that is necessary in the resolution of all freeze conditions or potential statute problem cases.

  11. A follow-up request to a taxpayer may be required for additional information if the case file indicates "no reply" to previous correspondence from another source within the service campus (e.g., verify address for a later address than the address shown on the entity data). See IRM 25.6.1.6.2, Identifying Undeliverable Mail, for additional information.

  12. Inform the taxpayer a response is needed within 30 days when requesting additional information on all correspondence. Advise taxpayer of the action the IRS will take if a timely response is not received. Also, include a statement asking the taxpayer for a phone number along with the response "When you reply, please send us your telephone number and the most convenient time for us to call so we may contact you if we need more information." All correspondence should be purged 15 days after the date provided in the letter to the taxpayer.

  13. Use a C or pattern letter to correspond with taxpayers. If a C-NOTE or QUICK NOTE is used, be sure it clearly communicates the message in simple language.

  14. Notify the taxpayer of processing delay error(s) if a taxpayer caused or will cause a processing delay. Do this only if the other function did not correspond with the taxpayer.

  15. Check the Centralized Authorization File (CAF) prior to sending any correspondence to a third party to ensure a valid power of attorney is on file.

  16. Follow-up telephone calls with a letter as needed to confirm the conversation with the taxpayer (e.g., to obtain the taxpayers signature).

  17. Control all correspondence via IDRS if you are unable to respond to taxpayers within 14 days.

  18. IRM 21.3.3, Incoming and Outgoing Correspondence/Letter, should be available to all employees.

25.6.1.6.2  (03-10-2011)
Identifying Undeliverable Mail

  1. Use Command Code INOLE to research IDRS for another address on statute generated correspondence. In addition see IRM 21.2.4.3.6, Undeliverable Correspondence, paragraph (1) for additional areas of research. If one is available, reissue the letter. The Form 3552, Prompt Assessment Billing Assembly should not be destroyed. It should be associated with the assessed file case or document, per IRM 3.13.62, Media Transport and Control.

  2. If you have a return, check attached schedules or documents for an updated address. If it is more recent, add the updated information and determine whether you should reissue the correspondence and add the updated information.

  3. If a disallowance letter is undeliverable, resend the entire letter unchanged to the new address in another envelope, and do not issue a new letter. Do not issue a new letter because the taxpayer has two years from the date of the original disallowance letter to appeal the service decision to disallow a claim for credit or refund by filing a claim case in District Court.

25.6.1.6.3  (04-01-2007)
Normal and Restricted Interest Tax Modules

  1. The period of limitation under IRC Section 6511 applies if the taxpayer claims that he or she paid too much underpayment interest (under IRC Section 6601). Generally, the time for filing a claim for credit or refund of incorrectly computed interest paid on an underpayment of taxes is two years from the date of payment of tax for the tax period at issue or three years from the date the return is required to be filed (determined without regard to extensions). The amount to be credited or refunded under the two and three year rule is limited to the amount of tax paid within the two years or three years (plus the period of any extension), respectively, preceding the filing of the claim. For the purposes of IRC section 6511, payments of penalties and interest are treated as payment of tax.

  2. A claim for abatement of paid underpayment interest (under IRC section 6601) must be filed within the statutory period under IRC Section 6511. A claim for abatement of unpaid underpayment interest is not subject to the statutory period under IRC Section 6511.

  3. A taxpayer must file suit for the payment of additional overpayment interest (under IRC section 6611) within six years of the date on which the overpayment was scheduled. See 28 USC Section 2401(a) (district courts) and 28 USC Section 2501 (U.S. Court of Federal Claims).

  4. Refer to IRM 20.2, Interest, for additional information on interest computation dates.

25.6.1.6.4  (08-24-2012)
Statute of Limitations Chart for Tax Returns

  1. The Statutory Period of Limitations Chart below shows the due date of the various tax returns (under section 6501 of Internal Revenue Code of 1986). The information is displayed by the Form Number, MFT Code, Type of Tax return, Period Covered, Due Date and Statutory Period of Limitations.

    Form Number Master File Tax (MFT) Code Type of Return Period Covered Due Date Statutory Periods of Limitations
    1040, 1040A, 1040EZ 30 Individual Income Calendar or Fiscal Year 3-1/2 Months after end of taxable year (calendar year April 15th) 3 years after the due date of the return, or 3 years after the date the return was actually filed, whichever is later.
    1040C 30 U.S. Departing alien individual Prior to departure Tentative return Statute begins with received date of 1040 or 1040NR when filed.
    1040NR 30 U.S. Non-resident alien individual Same as 1040 See notes 2 and 3 See note 1
    1040PR 30 Self-employment tax return (Puerto Rico) Same as 1040 Same as 1040, see note 3 See note 1
    1040ES 30 Self-employment tax return (Virgin Islands, Guam, American Samoa) Same as 1040 Same as 1040, see note 3 See note 1
    1042 12 Annual return of income paid at the source Calendar March 15 See note 3
    CT-1 09 Railroad Retirement Calendar On or before the last day of February following the end of the calendar year. See IRM 25.6.1.9.10.5, Railroad Retirement Board
    706 52 Estate Filed Due the 9 months after date of death See note 1
    Form Number MFT Code Type of Return Period Covered Due Date Statutory Periods of Limitations
    706A 53 Heir's estate tax return Filed Due the 6th month after taxable disposition or cessation of the qualified use (unless extended) See note 1 and 5
    706NA 52 U.S. non-resident alien estate tax Filed Same as 706 See note 1 and 5
    709 51 Gift 1-1-77 thru 12-31-78 quarterly 15th day of the second month following the end of the quarter See note 1 and 6
    709 51 Gift 1-1-79 thru 12-31-81 quarterly; 1) 1st, 2nd, 3rd quarter returns 15th day of the second month following the end of the quarter See note 1 and 6
    709 51 Gift 1-1-79 thru 12-31-81 quarterly; 2) 4th quarter 15th day of the 4th month following the end of the quarter See note 1 and 6
    709 51 Gift 1-1-82 and later calendar year 3-1/2 months after the end of the taxable year (April 15th). If donor died during calendar year, the earlier of above date, or the due date of estate tax return (including extension). See note 6 and 10 for additional information See note 1
    Form Number MFT Code Type of Return Period Covered Due Date Statutory Period of Limitations
    720 03 Excise Quarterly Last day of month following the end of quarter (April 30, July 31, October 31, and January 31) See note 1
    730 64 Wagering   Last day of the month following the month in which the wages are accepted. See note 1
    940 10 FUTA Calendar Year Last day of the month following the end of the calendar year (January 31) See note 1
    941 01 WT and FICA Quarterly Last day of the month following the end of quarter (April 30, July 31, October 31, and January 31) 3 years from April 15 of the year following the year for which the return was due or 3 years after the date the return was actually filed, whichever is later.
    FORM NUMBER MFT CODE TYPE OF RETURN PERIOD COVERED DUE DATE STATUTORY PERIOD OF LIMITATIONS
    943 11 Agricultural Withholding and FICA Calendar Year Last day of the month following the end of the calendar year (January 31) 3 years from April 15 of the year following the year for which the return was due, or 3 years after the date the return was actually filed, whichever is later
    944 14 WT and FICA Annual for tax periods beginning 200612 Same as 943 above Same as 943
    945 16 Annual Return of Withheld Federal Income Tax Calendar Year January 31 Same as 943
    990 67 Return of organization exempt from income tax Calendar Year See note 7 See note 1
    1120C (Formerly 990C) 33 Exempt Cooperative Association income tax return Calendar or Fiscal Year See note 7 See note 1
    990PF 44 Return of Private Foundation Exempt from Income Tax return Same as 990 See note 7  
    990T (corp) 34 Exempt Organization Business Income Tax Same as 990 See note 7  
    1041 05 Fiduciary Same as 1040 Same as 1040  
    1041S 05 Fiduciary Short Form Same as 1040 Same as 1040  
    1041A 36 U.S. Information Return Trusts Fiscal Year See note 7 No tax involved but can be charged penalties
    FORM NUMBER MFT CODE TYPE OF RETURN PERIOD COVERED DUE DATE STATUTORY PERIOD OF LIMITATIONS
    1041PF 37 Chapter 42 tax Fiscal Year Same as 1040 See note 1
    1065 06 Partnership Same as 1040 Same as 1040 No tax involved but can be charged penalties
    1066 07 Mortgage Investment Conduit Income Calendar April 15th See note 1
    1120 02 Corporation Income Same as 1040 2 1/2 months after the end of taxable year (calendar year March 15th) See note 1, 3, & 4
    2290 60 Highway Use Tax Month first used to June 30 of the following year. Yearly thereafter July 1 thru June 30. If first used after July, the last day of the next month first used in a given tax period, otherwise on 8/31 See note 1
    4720 50 Return of certain excise taxes on charities and other persons under Chapter 41 and 42 of IRC Calendar or Fiscal Year See note 7 See note 1
    5227 37 Split-interest Trust-Information Return Calendar or Fiscal Year See note 7 See note 1
    5329 29 Individual Retirement Arrangement Same as 1040 Same as 1040 See note 1
    FORM NUMBER MFT CODE TYPE OF RETURN PERIOD COVERED DUE DATE STATUTORY PERIOD OF LIMITATIONS
    5330 76 Excise Taxes Related to Employee Benefit Plan Calendar or Fiscal Year See note 8. Last day of the 7th month after end of taxable year of the employer or person who must file Form 5330 The filing of the Form 5330 starts the running of the statute of limitations, except for the section 4975 excise tax, the filing of the Form 5500 starts the running of statute of limitations for section 4975 excise tax. It is 3 years if the information is disclosed and 6 years if it is not disclosed on the applicable form.
    5500 74 Annual Return/Report to Employee Benefit plan (100 or More participants) Calendar or Fiscal Year Last day of the 7th month following plan year See note 9
    5500EZ 74 Annual Return/ of One-Participant Pension Benefit Plan Calendar or Fiscal Year Last day of the 7th month following plan year See note 9
    8038-CP 46 Return for Credit Payment to Issuers of Qualified Bonds Fiscal year 15th day of the second month following the tax period for Variable Interest Bonds and 15th day of the 2nd month before the interest payment date on Fixed Interest Bonds 3 years from the tax period
  2. The following contains the list of the ten notes referenced above in paragraph 1:

    Note:

    (1) Three years after the due date of the return, or three years after the return was actually filed, whichever is later. For decedents dying after December 31, 2009 and before December 17, 2010, the due date for Form 706 is September 19, 2011.

    Note:

    (2) Form 1040NR has the same due date as Form 1040 if wages are subject to withholding of U.S. Income Tax. Otherwise, the due date would be the 15th day of the 6th month (June 15th for the calendar year filer).

    Note:

    (3) Form 1042 is processed at the Ogden Submission Processing Campus, 1040-NR, 1040-PR, and 1040-SS are processed at the Austin Submission Processing Campus. Form 1120-F has a due date of June 15th if the corporation does not maintain a corporate office within the U.S., otherwise the due date will be two and one-half months after the end of the taxable year.

    Note:

    (4) Form 1120 filed as a result of the Form 990 filer being converted by Exam to a taxable entity will carry the statute limitation/expiration as determined by the original Form 990 filing.

    Note:

    (5) Form 706-A is filed under each heir's Social Security Number (SSN), benefiting from the sale of assets from the estate and is processed to Non-Master File under the beneficiary's SSN. Each Form 706-A filed starts its own statute expiration date regardless of when the decedent Form 706 was received.

    Note:

    (6) Form 709--For gifts made after 12-31-76, the law changed the due date of a quarterly return. As of 1-1-77, a return must be filed by the 15th day of the 2nd month following the first calendar quarter that taxable gifts for the year were more then $25,000. After that, a return must be filed by 15th day of the 2nd month after any later quarter that the cumulative unreported gifts again were more than $25,000. From 1-1-82 through 12-31-2001, a return must be filed yearly, April 15th, for gifts made in excess of $10,000.00, for 2002 – 2005 the amount is excess of $11,000, for 2006 – 2008 the amount is excess of $12,000 and $13,000 for gifts in 2009, for 2010- 2012 the amount is excess of $13,000.

    • If gifts for the year were $25,000 or less, only a fourth quarter return was required. This return could contain gifts made in all 4 calendar quarters.

    • From 1-1-77 through 12-31-78, all quarterly returns filed were due one and one-half months after the quarter ended. Beginning with 1-1-79 through 12-31-81, a 4th quarter return was due to be filed within three and one-half months after the quarter ended (4-15).

      Note:

      (7) Due dates of Exempt Organization Returns are as shown on table below.

      ACCOUNTING PERIOD MONTH (for example) PERIOD ENDING (A) 990T (trust) (B) 5227, 1041A, 4720, 990T (C) 990PF, 990T, 990, 4720 (D) 990T (corp)
      01 1/31 4/15 5/15 6/15 7/15
      06 6/30 9/15 11/15 11/15 12/15
      12 12/31 3/15 4/15 5/15 6/15
      Months   (2-1/2) (3-1/2) (4-1/2) (5-1/2)

    1. Form 4720 filed by a disqualified person shall be filed on or before the due date of the organization's return if their tax years are the same, otherwise the 15th day of the 5th month following the close of such disqualified person(s) tax year and not the foundation tax year.

    2. Form 990T dates are as follows: 1. Column A applies to U.S. address corporations for tax periods beginning before November 11, 1978 (usually tax periods ending 7910 and before). 2. Column B applies to U.S. address and foreign address trusts for tax periods beginning before November 11, 1978 (usually tax periods ending 7910 and before) and also to U.S. address Section 401(a) trusts for all tax periods. 3. Column C applies to U.S. address and foreign address trusts (except for Section 401(a) trust) and Corporations for tax periods ending after November 11, 1978 (usually tax periods ending 7911 and later). 4. Column D applies to foreign address trusts and corporations for tax periods beginning after November 11, 1979 (usually tax periods ending 7910 and after) and also to Foreign address Section 401(a) trusts for all tax periods.

    3. Form 4720 has the same due date as the Form 990PF, 990 or 5227 filed by the same organizations.

    Note:

    (8) Form 5330, Return of Excise Taxes Related to Employee Benefit Plans.

    1. For those who are filing to report tax due under IRC 4977, the due date is the last day of the seventh month following the end of the calendar year in which the excess fringe benefits were paid to your employees.

    2. For those who are filing a report tax due under IRC 4980, the due date is the last day of the month following the month in which the revision occurred.

    3. For those who are filing to report tax due under IRC 4965, the due date is the 15th day of the 5th month following the close of the entity manager’s tax year during which the tax-exempt entity becomes a party to the transaction.

    4. For those who are filing to report tax due under IRC 4971, IRC 4971(f), IRC 4971(g)(2). IRC 4971(g)(3) and IRC 4971(g)(4), the due date is the last day of the 7th month after the end of the employer’s tax year or 8-1/2 months after the last day of the plan year that ends with or within the filer’s tax year.

    5. For those who are filing to report tax due under IRC 4979, the due date is the last day of the 15th month after the close of the plan year to which the excess contributions or excess aggregate contributions relate.

    6. For those who are filing to report tax due under IRC 4980F, the due date is the last day of the month following the month in which the failure occurred.

    7. For those who are filing to report all other taxes, the due date is the last day of the seventh month after the end of the taxable year of the employer or other person(s) required to file Form 5330 return.

    Note:

    (9) Tax is not assessed on the employee benefit plan. Tax can be assessed on the employee benefit trust. The statutory period of limitations of assessment of tax on the employee benefit trust generally expires three years from the later of due date or filing date of Form 5500 series return.

    Note:

    (10) Beginning January 1, 2009, a return (Form 709) must be filed yearly, April 15th, for gifts made in excess of $13,000.

25.6.1.6.5  (10-01-2013)
Chart of Expedited Statute Processing

  1. The following tables provides a chart showing the statute expiration date of various types of tax returns and the day to begin expedited statute processing for the year 2010.

    Type of Tax Period Statute Expiration Date Begin Expedite Process
    1040 (all) 201012 15 Apr. 2014 15 Jan. 2014
    1040 (all) 201101 15 May 2014 17 Feb. 2014
    1040 (all) 201102 16 Jun. 2014 17 Mar. 2014
    1040 (all) 201103 15 Jul. 2014 15 Apr. 2015
    1040 (all) 201104 15 Aug. 2014 15 May 2014
    1040 (all) 201105 15 Sep. 2014 16 June 2014
    1040 (all) 201106 15 Oct. 2014 15 Jul. 2014
    1040 (all) 201107 17 Nov. 2014 15 Aug. 2014
    1040 (all) 201108 15 Dec. 2014 16 Sep. 2014
    1040 (all) 201109 15 Jan. 2015 15 Oct. 2014
    1040 (all) 201110 16 Feb. 2015 17 Nov. 2014
    1040 (all) 201111 16 Mar. 2015 15 Dec. 2014
    1040 (all) 201112 15 Apr. 2015 15 Jan. 2015
    1041, 1041A Same as 1040 Same as Form 1040  
    1120 (all except 1120-C) 201112 17 Mar. 2014 16 Dec. 2013
    1120 (all except 1120-C) 201101 15 Apr. 2014 15 Jan. 2014
    1120 (all except 1120-C) 201102 15 May 2014 17 Feb 2014
    1120 (all except 1120-C) 201103 16 Jun. 2014 17 Mar. 2014
    1120 (all except 1120-C) 201104 15 Jul. 2014 15 Apr. 2014
    1120 (all except 1120-C) 201105 15 Aug. 2014 15 May 2014
    1120 (all except 1120-C) 201106 15 Sep. 2014 16 Jun. 2014
    1120 (all except 1120-C) 201107 15 Oct. 2014 15 Jul. 2014
    1120 (all except 1120-C) 201108 17 Nov. 2014 15 Aug. 2014
    1120 (all except 1120-C) 201109 15 Dec. 2014 15 Sep. 2014
    1120 (all except 1120-C) 201110 15 Jan. 2015 15 Oct. 2014
    1120 (all except 1120-C) 201111 16 Feb. 2015 17 Nov. 2014
    1120 (all except 1120-C) 201112 16 Mar. 2015 15 Dec. 2014

    TYPE OF TAX PERIOD STATUTE EXP. DATE BEGIN EXP. PROCESS
    940 201012 31 Jan. 2014 31 Oct. 2013
    941 (All quarters) 201012 15 Apr. 2014 15 Jan. 2014
    943, 945 (same as 941 above) 201012 15 Apr. 2014 15 Jan. 2014
    944 201012 15 Apr. 2014 15 Jan. 2014
    990 201012 15 May 2014 17 Feb. 2014
    990 201101 16 Jun. 2014 17 Mar. 2014
    990 201102 15 Jul. 2014 15 Apr. 2014
    990 201103 15 Aug. 2014 15 May 2014
    990 201104 15 Sep. 2014 16 June 2014
    990 201005 15 Oct. 2014 15 Jul. 2014
    990 201106 17 Nov. 2014 15 Aug. 2014
    990 201107 15 Dec. 2014 15 Sep. 2014
    990 201108 15 Jan. 2015 15 Oct. 2014
    990 201109 16 Feb. 2015 17 Nov. 2014
    990 201110 16 Mar. 2015 15 Dec. 2014
    990 201111 15 Apr. 2015 15 Jan. 2015
    990 201112 15 May 2015 16 Feb. 2015
    990PF, 990-T CORP, 990-T FOREIGN, 990-T TRUST, 4720, 4720A, 5527 Use the same date As the 990 above  
    CT-1 201012 28 Feb. 2014 02 Dec. 2013
    CT-2 201112 02 Mar. 2015 01 Dec. 2014

    TYPE OF TAX PERIOD STATUTE EXP. DATE BEGIN EXP. PROCESS
    706 3 years from the due date or 3 years from the date the return was filed, Whichever is later.
    709 201012 15 Apr. 2014 15 Jan. 2014
    709 201112 15 Apr. 2015 15 Jan. 2015
    720 201103 30 Apr. 2014 31 Jan. 2014
    720 201106 31 Jul. 2014 30 Apr. 2014
    720 201109 31 Oct. 2014 31 Jul. 2014
    720 201112 02 Feb. 2015 31 Oct. 2014
    730 (monthly return due date is the last day of the month following the month in which wages are accepted)   3 years from the due date or 3 years from the date the return was actually filed, whichever is later. 90 days prior to the 3 year statue period expiration.
    1065 201012 15 Apr. 2014 No tax Involved
    2290 07/31/2010 02 Sep. 2014 02 Jun. 2014
    1120-C 07/31/2010 15 Apr. 2014 15 Jan. 2014
    1120-C 08/31/2010 15 May 2014 17 Feb. 2014
    1120-C 09/30/2010 16 Jun. 2014 17 Mar. 2014
    1120-C 10/31/2010 15 Jul. 2014 15 Apr. 2014
    1120-C 11/30/2010 15 Aug. 2014 15 May 2014
    1120-C 12/31/2010 15 Sep. 2014 16 Jun. 2014
    1120-C 01/31/2011 15 Oct. 2014 15 Jul. 2014
    1120-C 02/28/2011 17 Nov. 2014 15 Aug. 2014
    1120-C 03/31/2011 15 Dec. 2014 15 Sep. 2014
    1120-C 04/30/2011 15 Jan. 2015 15 Oct. 2014
    1120-C 05/31/2011 16 Feb. 2015 17 Nov. 2014
    1120-C 06/30/2011 16 Mar. 2015 15 Dec. 2014
    1120-C 07/31/2011 15 Apr. 2015 15 Jan. 2015

    Note:

    For the 2006 calendar year and later, Form 990-C has been replaced by Form 1120-C, U.S. Income Tax Return for Cooperative Associations.

  2. Other service campus areas must route tax returns to the Statute function beginning with the expedited processing dates shown in the tables above.

  3. You must route returns discovered with 90 days or less remaining until the Assessment Statute Expiration Date (ASED) to the Statute function. The 90 day period allows the Statute function time to secure any additional information required to "clear" the return or resolve an issue.

    Exception:

    This does not include returns withdrawn from processing in the Receipt and Control or Batching functions. These areas will follow the instructions in the IRMs applicable to their functions.

  4. Do not use Form 3893, Re-Entry Document Control to route returns within 180 days of the ASED (if re-inputting) and within 90 days of the ASED (if re-processing) to the Statute function for clearance. If re-inputting a return within 180 days of the ASED, route the return to Statute team along with any documentation stating the need for re-input. If you are reprocessing a return within 90 days of the ASED, you must expedite/hand carry the complete case to the Statute team. Do not zero out the tax with a TC 291. The Statute function will either clear the return and send to Submission Processing for input or input a quick assessment to process the return to the correct account before the ASED expires.

    Note:

    Any functional area must not input an on-line tax assessment adjustments when the normal statute or extended statute is 90 days or less.

25.6.1.6.6  (02-14-2013)
Transmitting/Transshipping Cases To Another Campus

  1. Do not transfer/transship statute imminent/expired cases (transcript/non transcript) to another Campus/Field Office.

    Exception:

    International Amended tax returns received by the Austin Statute Team will be sent to the Image Control Team (ICT) for uploading into Correspondence Imaging System (CIS). International Statute imminent cases (less than 90 days old) must be sent to CIS with a cover sheet stating that it is an International case and the assigned to employee number 0532505745 (Primary) or 0533238003 (Backup). If the International case is statute imminent (less than 5 days before the ASED) requiring a quick assessment input, the case must be faxed directly to Philadelphia Statute Unit, Attention - Vanessa Kennelly, Manager at Fax number 267–941–1011. For cases less than 5 days before the ASED expires, you must also email account information and date faxed to Philadelphia's Planning and Analysis Chief with a copy to the Statute Planning & Analysis Analyst and the Statute Manager.

25.6.1.6.7  (01-01-2003)
Case/Transcript for U.S. Departing Alien Income Tax Return (Form 1040-C)

  1. Some aliens must obtain a Certificate of Compliance (also known as an exit or sailing permit) before permanently departing the U.S. or any U.S. Possession. This is obtained by filing Form 2063, (U.S. Departing Alien Income Tax Statement) or Form 1040-C, (U.S. Departing Income Tax Return). A Certificate of Compliance is made when the Director or delegate signs the certificate.

  2. Form 2063 is not processed, does not involve a tax computation, and is only required by:

    • Aliens without taxable income

    • Resident Aliens having taxable income intending to return to the U.S.

  3. Aliens not required to file sailing permits are:

    • Representatives of foreign government with diplomatic passports

    • Employees of foreign government and international organizations

    • Students on F Visas not receiving income

    • Industrial trainees on H–3 visas

    • Other aliens cited in Publication 519, U.S. Tax Guide for Aliens

  4. Form 1040-C is used to report all income received and expected to be received during the tax year and up to the departure date.

  5. Form 1040-C is not a final return as the taxpayer must file Form 1040 or Form 1040-NR at the close of the tax year.

  6. Taxpayers who must file Form 1040-C are:

    • Nonresidents having taxable income

    • Residents having taxable income not intending to return to the U.S.

    • Aliens involved in situations requiring a tax year termination

  7. If Form 1040-C returns are received, follow normal assessments requirements. See IRM 25.6.1.9 , Assessments.

  8. See IRM 21.6.6, Specific Claims and Other Issues, for additional information.

25.6.1.6.8  (10-01-2010)
Making Entity Changes

  1. The Statute Function must make entity changes on statute cases when recognized.

    Exception:

    Do not make an address change if TC 740 (S- Freeze) is on the tax module. Coordinate the change with the "Undeliverable Refund Function." Do not input BMF address changes on subsidiary accounts.

  2. You must coordinate all first name line changes for BMF/exempt organization with the Entity Control Function.

  3. Treas. Reg. Section 301.6212–2(a) defines Last Known Address (LKA) as the address that appears on the most recently filed and properly processed Federal tax return, unless the Service is given clear and concise notification of another address. The regulations also provide that notice to a third party is not clear and concise notice to the Service. See Treas. Reg. Section 301.6212–2(b)(1) (although such information should relate to the history). Treas. Reg. Section 301. 6212–2(b)(2), however, provides an exception to this general rule by authorizing the Service to update taxpayer addresses by referring to data accumulated and maintained in the United States Postal Service National Change of Address (NCOA) database. The new address obtained from the NCOA database will be the taxpayer's LKA, unless the Service is given clear and concise notification of a different address. Rev. Proc. 2010-16, 2010-19 I.R.B. 664, establishes procedures for taxpayers to notify the Service of a change of address, and requires clear and concise notification. Clear and concise written notification is established when it includes:

    1. The taxpayer’s full name, old and new address;

    2. The taxpayer’s signature (both signatures in the case of a joint return) or signature of an authorized representative;

    3. The Social Security Number or Individual Taxpayer Identification Number (joint filers must provide names, TIN’s and signatures of both taxpayers);

    4. Changes of last names (e.g., marriage) and must provide previous and new last name;

  4. Clear and concise notification may be provided electronically through www.irs.gov.

  5. Clear and concise notification includes a response to the taxpayer's correspondence that has corrections to the taxpayer's address information.

  6. Clear and concise notification may be oral. See IRM 3.13.5.27, Entity Changes from Oral Statements, for more information.

  7. Form 8822, Change of Address, is also available for taxpayers to furnish acceptable notification.

    Note:

    The Statute Function will update entity changes on all statute related cases.

  8. Taxpayers must complete two separate forms when changing both their home and business address. Use IRM 3.13.2.3, BMF Addresses or IRM 3.13.5.48 (IMF), Form 8822, IMF Change of Address Request, as a guide for entity changes.

  9. If a document containing a name or address change is received which does not meet the specific requirements of Rev. Proc. 2010-16, the information should still be added to the file. If a notice is returned, the Service is required to use due diligence in locating the taxpayer. Due diligence includes a search of existing records to locate any updated information supplied by the taxpayer and reissuing the notice to any address so found.

25.6.1.6.9  (03-01-2006)
Input of Posting Delay Codes

  1. You must input a Posting Delay Code (range 1–6) when adjusting statute related accounts that require multiple transactions.

  2. See IRM 21.5.2.4.17, Posting Delay Code for additional information.

25.6.1.6.10  (01-01-2003)
Manual Refund Processing

  1. Statute management will review 100% of manual refunds prepared by statute employees.

  2. The Statute Function will review manual refunds from other functional areas only if there is any doubt regarding the statute expiration of a credit for refund.

  3. See IRM 21.4.4, Manual Refunds and IRM 3.17.79, Accounting Refund Transactions for additional information on issuing and monitoring manual refunds.

25.6.1.6.11  (10-01-2013)
Electronic Filing System (ELF)

  1. Electronically Filed returns are processed at the Cincinnati, Andover, Austin, Memphis, and Ogden IRS Campuses.

  2. Use CC TRDBV, ESTAB or ELFRQ on IDRS to request return information on statute cases that involve electronically filed returns. Use Command Code (CC) TRPRT to request a graphic print of an electronically filed return for tax year 1998 and subsequent. Also, refer to IRM 21.5.2.4.22, Blocking Series (BS), for additional information on blocking series used for adjustments. The ELF unit will service return requests and forward them to Files for distribution. Refer to IRM 2.3.73, Command Code TRDBV, TRERS, TRPRT and R8453, for additional information on using Command Code TRDBV. Use CC IMFOB for Electronic Filing information.

  3. See IRM 21.2.1, Systems for further information on ELF.

25.6.1.6.12  (03-01-2006)
Criteria For Removal of Accounts To Retention Register

  1. Generally, tax modules are removed to various levels of the MF after they have been inactive for 27 months. Credit balance modules are retained for 36 months.

  2. Entity modules are retained for an additional 24 months after the last tax module has been removed to the appropriate levels.

  3. You must request all accounts to be brought back from the Retention Register before adjusting statute year periods. If the account is on the current retention register, you may input CC IMFOLB/BMFOLB to bring the account back to master file. Otherwise, you must follow the instructions below.

  4. You must take the following actions before adjusting an account moved to retention:

    1. Obtain the necessary documentation (i.e., retention register transcript) for the module to be reinstated.

    2. Prepare a Form 5248, Transfer Request, to request the transfer-in of the module on retention.

    3. Forward the request and the retention register documentation to the Accounting function. Accounting will return a copy of the Transfer Request document indicating the cycle the module will be reinstated. Based on this information, cycle your transaction for processing.

  5. Refer to IRM 3.17.21.7, Reestablishment of Retention Register Accounts, for specific instructions.

  6. Refer to IRM 21.2.2.5.8, Microfilm Retention Register, for more information.

25.6.1.6.13  (02-11-2011)
Determining the Received Date

  1. You must establish an IRS received date on a return if the face of the return does not contain a valid date stamp (e.g., TAS date stamp) or does not contain a hand-written IRS received date entry. Determine a date in the priority below:

    1. Latest postmark on the envelope or latest date from a private delivery service mark. (See Figure 3.11.3–6a. in IRM 3.11.3.5.2, Determining the Received Date).

      Note:

      When the envelope or label is not attached, use the postmark date stamped or hand-written on the return to determine the received date.

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Latest date by the taxpayer's signature(s). See IRM 3.11.26.3.10, Received Date, for additional information on determining the IRS received date.

    4. Julian date minus 10 days in the DLN.

    5. Today's date minus 10 days.

  2. The rules above should be used to estimate the IRS Received Date when one was not stamped or hand written on an incoming document during the extraction process. In some instances, the IRC does not use the Received Date as the date of filing of a return or a claim. See IRM 25.6.1.6.15, When a Document Is Treated As Filed Under the IRC, to determine when a return is filed for purposes of the IRC.

25.6.1.6.14  (08-24-2012)
Criteria for Establishing a Statute of Limitations Period

  1. The Received Date does not necessarily establish the filing date. The filing date is established after applying IRC rules. See IRM 25.6.1.6.15, When a Document Is Treated As Filed Under the IRC, for rules which may override the Received Date. If a return is received by the Service with insufficient information, the Service might determine it does not constitute a valid return. The criteria for determining whether a return is valid are as follows:

    • There must be sufficient data to calculate the tax liability shown on the return (supporting schedules and/or forms)

    • The document must claim to be a return (name, address, TIN)

    • An honest and reasonable attempt is made to satisfy requirements of the tax law

    • Must be executed under penalties of perjury

    • See Beard v. Commissioner, 82 T.C. 766, 777 (1984), aff'd 793 F.2d 139 (6th Cir, 1986)

  2. The taxpayer must sign the return under penalties of perjury. If a return is received unsigned, the Statute of Limitations on Assessment (ASED) does not start until a signed return is received. You must continue to process the unsigned return. Do not send the unsigned return back to the taxpayer. You must correct the original ASED posted on the taxpayer's account by inputting Transaction Code 560, when the signed return or document is received after the due date of the return.

    Note:

    Unsigned income tax returns will not be accepted for original processing. An unsigned tax return is not a valid tax return. The unsigned tax return will be returned to the taxpayer requesting that the taxpayer sign the return and resubmit for processing. This decision is reflected in Policy Statement P-3-5 (Approved 07-26-2011), in IRM 1.2.12.1.16.

  3. There are two main types of Identity Theft:

    1. Substantiated Income Identity (ID) Theft- Is when the taxpayer files a return reporting income from a verifiable income source and the return meets the" valid return " criteria stated above in paragraph (1), but the TIN used for the tax return does not belong to the taxpayer. The ASED for this type of return is still valid. If the statute of limitation for assessment is about to expire or is expired for the reprocessing of the ID theft tax return, you should reprocess the ID theft tax return using the procedures stated in IRM 21.5.2.4.23.4, Statute Imminent Documents.

    2. Unsubstantiated Income Identity (ID) Theft - Is when the taxpayer files a tax return under someone else's identity reporting false income from an unverifiable source in order to get a false refund. The income tax return in question does not meet the "valid return" criteria stated above in paragraph (1). The ASED shown on that tax return is not valid. The Statute of Limitations on Assessment (ASED) does not apply on this type of ID theft case. The procedures stated in IRM 25.25.4.8, Identity Theft CAT 7 Bad Return Posted/ Good Return Posted- Lost Refund Process, must be used when you have both good and bad taxpayers returns or just the bad taxpayer's return that needs correcting. Also, you must disregard any instructions for EFDS STARS or IRS Number used in reprocessing a tax return that is stated in these procedures.

      Note:

      Do not forward any Unsubstantiated Income Identity (ID) Theft cases to the statute team.

25.6.1.6.15  (10-01-2012)
When a Document Is Treated As Filed Under the IRC

  1. In general, a document is filed on the date that it is received at the place designated for filing by the Service. See below for exceptions to this general rule.

    Note:

    A taxpayer is not considered to have filed a tax return (which begins the period of limitations on assessment) until the taxpayer files a valid tax return. A valid return is described above.

    Note:

    Leap Year, the term "calendar year" means a 12-month period regardless of whether it contains 365 or 366 days unless some other meaning is clearly indicated. For example, a claim for refund filed on February 29 (leap year), for a tax deficiency paid on February 28, (two years earlier) will be considered filed within the 2-year period of limitations prescribed by IRC § 6511(a). See Rev. Rul. 72-42, 1972-1C.B. 398.

    1. Early-filed Tax return. A tax return that is filed before the due date (determined without regard to any extension of time for filing) is considered filed on the due date.

      Note:

      This rule does not apply to returns concerning (1) the withholding tax on nonresident aliens and foreign corporations, (2) the Federal Insurance Contributions Act, and (3) the Collection of Income Tax at Source on Wages. The returns for (2) and (3) for any period within a calendar year are treated as filed on April 15 following the end of the calendar year. IRC § 6501(b)(2).

    2. Extended Due Date. An extended due date is not treated like the regular due date. The filing is not considered early when the taxpayer does not use the full extension period. A timely return received before the end of the extension period (including postponement for disaster relief and combat zone) is considered filed on the received date, not on the extended due date.

  2. Timely Mailing Rule.

    1. In general, an original tax return or a claim that is received after a due date (including an extended due date), but that is postmarked (or that is marked by a designated Private Delivery Service (PDS)) on or before the due date is deemed to be filed on the date of the postmark (or designated PDS mark). A document filed with an authorized electronic return transmitter is deemed to be filed on the date of the electronic postmark given by the electronic return transmitter per Treas. Reg § 301.7502–1(d).

      Note:

      The Service updates the list of designated PDS's as needed (e.g., Notice 2004-83, 2004-2 C.B. 1030, is effective from January 01, 2005).

    2. Privately metered mail. Mail that is privately metered qualifies for the timely mailing rule if the meter date is timely and if the document is delivered within the time ordinarily required for the delivery of a document properly mailed and postmarked at the same point of origin by the United States Postal Service. See Treas. Reg. § 301.7502-1(c)(1)(iii)(B)(1)

    3. Foreign postmark. A document officially postmarked in a foreign country (or marked by an international designated PDS) may be accepted if postmarked on or before the last day for filing. See Rev. Rul. 2002–23, 2002–1 C.B.811.

  3. Saturday, Sunday, or Legal Holiday (SSLH) Rule.

    1. In general, when the last day for filing falls on a Saturday, Sunday or legal holiday and the taxpayer actually filed on the next succeeding day, the tax return or claim is considered to be timely filed on that next succeeding day. Section 7503 does not deem the filing to be made on the prescribed due date when it is actually received on the next succeeding day. For example, a Form 1040 received on Monday, April 16 (a legal holiday day) is considered filed on April 15 (is the received date). See Rev. Rul. 81-269, 1981–2 C.B. 243 (at Situation 2).

    2. Early filed return. IRC § 7503 does not change the date prescribed for filing to the next succeeding day. For example, a Form 1040 received on Friday, April 13 is deemed filed on Sunday, April 15 (under the early-filed tax return rule, above). See Rev. Rul. 81-269 (Situation 1).

    3. Coordination of Timely Mailing Rule and the SSLH Rule. A document postmarked on the business day succeeding a Saturday, Sunday or Monday (legal holiday) itself is treated as filed under the timely mailing rule and the SSLH rule on that succeeding day.

      Example:

      A return postmarked on Tuesday, April 17 (a business day) and received on Wednesday, April 18 (a business day) is deemed filed on April 15, because Monday, April 16 is considered a legal holiday in Washington DC.

      A return postmarked on or before the regular due date (April 15) and received after that due date is deemed filed on the regular due date under the timely mailing rule (and possibly the early-filed tax return rule). For example, a return postmarked on Saturday, April 14 and received on Monday, April 16 (a legal state holiday ) is deemed filed on April 15.

    4. Legal Holiday includes a Statewide Legal Holiday. Whether a taxpayer is covered by the SSLH rule regarding a statewide legal holiday depends on where the taxpayer is directed to file or pay and not on whether or not the taxpayer is a resident of that state. See Rev. Rul. 90–5, 1990–1 C.B. 189, concerning Patriots Day in Massachusetts. See IRM 25.6.1.6.18(3) for more information.

  4. Place Prescribed for Filing or Payment. In general, a document or a payment sent to a place or hand-delivered to a person not designated to receive documents or payments is not considered filed or paid until it is forwarded and received by the designated function or person. For example, a tax return given to a revenue agent is not considered filed. The informal claim doctrine discussed in IRM 25.6.1.10.2.6, Claims for Credit or Refund- Form and Content, however, may treat certain correspondence or documents other than those designated by the Service as valid claims.

  5. Identifying the Tax Return That Starts the Period of Limitations. In some situations there may be a question concerning the type of return that starts the period of limitations.

    1. Partnership's or S Corporation's Items of Income, Deduction, Loss and Credit flowing through to partners or shareholders.

    2. Entity Not Subject to the Tax Equity and Fiscal Responsibility Act (TEFRA) Procedures. The return at issue for items of income, deduction, loss and credit from a partnership or S corporation that flow through to partners or shareholders is the return of a partner or shareholder. See the last sentence of IRC 6501(a) which codifies the result in Bufferd v. Commissioner, 506 U.S. 523 (1993).

    3. Entity Subject to the TEFRA Procedures (IRC §§ 6221–6234). TEFRA items may require a referral to a TEFRA specialist.

    4. Excise Tax under IRC § 4971. For purposes of the excise tax under IRC § 4971 (on a failure to satisfy the minimum funding standards of IRC § 412), the filing of Form 5330, Return of Excise Taxes Related to Employee Benefits Plans, starts the period of limitations on assessment.

25.6.1.6.16  (10-01-2010)
Processable - Unprocessable Returns

  1. In processing returns, a tax examiner may informally use the term unprocessable to indicate the return cannot be entered in the computer. Overpayment interest does not begin to run on an unprocessable return. See IRC § 6611(g)(1). For example, a submission of a tax return showing withholding tax without a Form W-2 may be entered in the computer, but it is not processable for the purpose of accruing overpayment interest. A return that begins the period of limitations is termed a valid return. See IRM 25.6.1.6.14, Criteria for Establishing a Statute of Limitation Period, for the test for determining the validity of a return.

  2. The test for whether a return is processable for the purposes of accruing overpayment interest is set forth in IRC § 6611(g)(2). Both a valid return and a processable return must have sufficient data to calculate the tax liability shown on the return, but processability also takes into account the Service's processing tasks. Therefore, it requires the taxpayer to be in compliance with the Service processing tasks. For example, a return will be valid even though it is missing Form W-2 or Schedule D, but it will not be processable because the calculations are not verifiable.

  3. If an original timely return is filed but is not processable and the taxpayer does not timely provide the requested information, follow the Claim Disallowance procedures and issue a letter of claim disallowance. After which, the taxpayer has two years to file suit. If the taxpayer subsequently submits the information requesting a refund and the two year period for filing suit has not expired, you may consider the claim to save all parties the time and expense of litigating the matter. If you do not allow the claim, do not issue a second disallowance letter. Instead, notify the taxpayer by letter, that the refund/credit will not be allowed and inform the taxpayer that he or she must file suit within the two year period that started with the mailing of the disallowance letter sent previously.

  4. If a processable return (original and timely) is received reporting tax data and indicates an overpayment and IRS processed the return with incorrect data (e.g. no tax data or withholding credit and zero tax liability), the taxpayer is entitled to a refund with interest even though the RSED may be expired because the taxpayer filed a timely claim and the Service did not send a notice of claim disallowance.

  5. Effective January 1, 1990, Integrated Data Retrieval System (IDRS) allows the on-line input of the Return Processable Date (RTPRDT) to reflect the correct received date. (Not valid for MFT's 13 and 29). The action releases "I-" freeze and allows credit interest to generate on subsequent refunds with the new date. See IRM 2.4, IDRS Terminal Input, for additional information.

  6. Manual computation and allowance of interest must be made using the correct RTPRDT for adjustment made to the account prior to RTPRDT. Interest due the taxpayer on refunds issued prior to the release of the erroneous "I-" freeze will be manually computed and allowed with Transaction Code (TC) 770. Refer to IRM 20.2, Interest, for additional information.

    Note:

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

25.6.1.6.17  (05-16-2012)
CP Notice 81/081

  1. CP 81 (IMF) and CP 081 (BMF) are generated when the RSED is within six months of expiration and a return has not been filed. The notice coincides with annual news and press releases to remind taxpayers that:

    • A return has not been filed

    • The time to claim an overpayment/credit is about to expire and;

    • A return/claim must be filed to claim the overpayment before the RSED.

    Note:

    CP 81 (IMF) notices printed after July 01, 2012 will have the SSN redacted/masked (e.g., XXX-XX-0123) to help safeguard against possible ID theft. In order to identify the account, a hand held barcode scanner must be used to read the taxpayer account information. If the scanner cannot read the barcode, Command Code (CC) TPIIP can be used to get taxpayer account information. For more information on the CC, refer to IDRS Command Code Job Aid located on Servicewide Electronic Research (SERP) under IRM Supplements.

  2. Follow normal statute procedures in IRM 25.6 when responses to the notices are received.

    Note:

    See IRM 25.6.1.6.1, Taxpayer/Internally Generated Correspondence, for addressing most responses.

25.6.1.6.18  (10-01-2010)
List of Legal Holidays

  1. The term "legal holiday" means a legal holiday in the District of Columbia and in the case of any return, statement, or other document required to be filed or any act required under authority of the law to be performed at any office of the U.S. or agency located outside the District of Columbia, the term "legal holiday" also means a statewide legal holiday in the state where such office is located. See IRC § 7503 for more information on this issue.

  2. The legal holidays in the District of Columbia are:

    • January 1—New Year’s Day

    • 3rd Monday in January—Martin Luther King Jr. Day

    • January 20—Inauguration Day (every 4th year)

    • 3rd Monday in February—Washington’s Birthday

    • April 16 - Emancipation Day in Washington D.C.

    • Last Monday in May—Memorial Day

    • July 4—Independence Day

    • First Monday in September—Labor Day

    • Second Monday in October—Columbus Day

    • November 11—Veterans Day

    • 4th Thursday in November—Thanksgiving Day

    • December 25—Christmas Day

    Note:

    If a federal holiday is declared (IRS offices are closed by the President or the Congress of the United States) due to the death of a former President, the next business day will be considered timely for the Assessment Statute Expiration Date (ASED) and Refund Statute Expiration date (RSED).

  3. When April 15 falls on a Monday, it is considered Patriots' Day Holiday (a legal statewide holiday celebrated in the state of Massachusetts and Maine). However, the Andover Submission Processing Campus located in the state of Massachusetts has been ramped down. The Andover Campus does not have a Submission Processing Center any more. All taxpayers who previously filed their tax return at the Andover Campus must now file their tax return with the Kansas City Submission Processing Campus located in Kansas City, Missouri. The Kansas City Campus does not observe the Patriots' Day Holiday. Therefore, those taxpayers who previously file a tax return at the Andover Campus, no longer get the extra day to file their tax return due to the Patriots' Day Holiday.

    Note:

    The Patriots' Day holiday would apply only if: the Internal Revenue Service directed a taxpayer to submit a return to Andover for processing; or, a taxpayer hand-carried a return to a person authorized to receive hand-carried return in a State where Patriot's Day is a Statewide legal holiday. See IRC Section 7503; Treas. Reg. Section 1.6091–2(d).

    Example:

    If the taxpayer hand-carried a return to a Taxpayer Assistance Center in Maine or Massachusetts on a Tuesday April 17 or April 18 following the Monday Patriot's Day holiday, the taxpayer return is considered timely filed by the due date. If the taxpayer mails the return to the Andover Campus on Tuesday April 17 or April 18, following the Monday Patriot's Day holiday, then the tax return is considered not timely filed.

  4. When April 15 falls on a Sunday, the following Monday is generally the day on which returns are timely filed; however, in Washington D.C., April 16 is Emancipation Day, a legal holiday. All taxpayers throughout the United States have until Tuesday April 17 to file a timely return. When April 16 falls on a Saturday, Friday April 15 is considered the holiday. All taxpayers throughout the United States have until Monday April 18 to file a timely return due to the Emancipation Day holiday.

25.6.1.7  (04-01-2007)
Credits and Payments

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

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

  3. Some examples of credits/payments may be:

    • Earned Income Credit (EIC)

    • Child and Dependent Care Credit

    • Child Tax Credit

    • Credit from prior year

    • Withholding Tax

    • Federal Tax Deposit (FTD)

    • Estimated Tax Payments

    • Subsequent Payments

25.6.1.7.1  (04-01-2007)
Credits/Payments Research

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

    • IRC Section 6407, Date Of Allowance Of Refund or Credit

    • IRC Section 6511, Limitations On Credit or Refund

    • IRC Section 6513(a), Time Return Deemed Filed and Tax Considered Paid

    • IRC Section 6513(b), Time Return Deemed Filed and Tax Considered Paid

    • IRC Section 7502, Timely Mailing Treated As Timely Filing and Paying

    • IRC Section 7503, Time for Performance of Acts Where Last Day Falls on Saturday, Sunday, or Legal Holiday

    • IRM 3.17.220, Excess Collections File

    • See IRM 25.6.1.7.2 Time When Payments and Credits are Considered to be Made

    • See IRM 25.6.1.10.2.5.5, Reconsideration of a Disallowed Claim

25.6.1.7.2  (10-01-2012)
Time When Payments and Credits Are Considered to be Made

  1. This section will help you determine when an amount is treated as paid or a taxpayer's credit election 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. See IRM 25.6.1.6.15, When a Document is Treated As Filed Under the IRC.

  2. 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 Income Tax Return) is treated as a payment of estimated tax described in 3(b), below.

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

    1. Income Tax Withheld At the Source: Withholding made during any calendar year is deemed to have been paid by an employee on the 15th day of the fourth month following the close of the taxable year (i.e., the Return Due Date for a calendar year taxpayer). See IRC Section 6513(b)(1) Income tax withheld from nonresident aliens and foreign corporations (under Chapter 3 of the IRC) are deemed paid on the Return Due Date (determined without regard to any extension of time for filing) IRC Section 6513(b)(3).

    2. Estimated Taxes: Estimated taxes are deemed paid on the Return Due Date (determined without regard to any extension of time for filing), IRC Section 6513(b)(2).

    3. Employment Tax:-FUTA: Any payment of FUTA tax, for a calendar year or a period within that year (e.g. a calendar quarter under section 6157), that is made before the last date prescribed for filing the return for the calendar year (determined without regard to any extension of time for filing) shall be considered made on the last day. See IRC Section 6513(e) .

    4. Employment Tax- FICA: Any payment of FICA tax made with respect to remuneration or other amount paid during any period ending with or within a calendar year paid before April 15 of the succeeding calendar year is deemed paid on April 15 of the succeeding calendar year. See IRC Section 6513(c)(2).

  4. 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 Section 6402(b) .

    Note:

    The amount ceases to be a payment for the year of the tax return and can no longer be claimed for credit or refund for that period.

  5. Overpayment Credited to Another Tax Period or Type of Tax:

    1. An overpayment, including any interest allowed on the credit by the Service (using the authority in IRC Section 6402(a)) credited to an underpayment of another year or to another type of tax (e.g., income tax overpayment applied to an excise tax underpayment) constitutes a payment on the date the credit is allowed.

      Note:

      In general, each type of tax (Income Tax, Estate & Gift Tax, Employment Tax and Excise Tax) and each tax period of the taxpayer are treated separately; however, the Service's authority to credit an overpayment against a timely assessed tax is not limited by tax types or tax periods.

    2. IRC Section 6402 does not specify the date that an amount is considered paid, but that date is provided under IRC Section 7422(d) regarding payment dates for civil refund actions. The Service should not ; however, automatically conclude that a payment is untimely based on a cycle date without determining the actual date on which the credit was allowed. A credit is allowed on the date on which the Secretary first authorizes the scheduling of an overassessment in respect of any internal revenue tax. IRC Section 6047, and Rev. Rul. 2001–40, 2001–2 C.B. 276 provides that the certifying officer authorizes a credit or refund by signing a schedule of overassessments identifying the taxpayer and the amount of the overassessment.

      Note:

      The Service must allow the credit before the CSED. To determine if a credit was allowed timely, the cycle date of the credit generally may be used. The Service should not ; however, automatically conclude that a payments based on a cycle date, appear to be untimely and not allowable without determining the actual date on which the credit was allowed.

  6. 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 functions 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:

    • IRS Homepage;

    • SERP;

    • Who/Where;

    • Advisory Unit Contact List.

      An internal use only telephone number is also provided along with the contact information on the CLU website. Ensure all email communications regarding liens are via secure email.

25.6.1.7.3  (01-02-2013)
Excess Collection File (XSF) and Unidentified Remittance File (URF)

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

    1. Received with a Form 1040X or other amended return filed timely, but due to IRS employee error, assessment or additional liability was not made before expiration of the statute of limitations for assessment. The history item on Form 8758 must be "barred assessment—IRS error" and in box 16 of the form enter "Statute Team" . No additional research is required

    2. For additional liability timely determined by the Examination function, but due to an IRS employee error, assessment of additional liability was not made before expiration of the statute of limitations for assessment. The History item on Form 8758 must be "barred assessment—IRS error " .

  2. 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.

  3. Before moving any undeterminable 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 all undeterminable credit modules you are required to make telephone contact with the taxpayer. If a phone number cannot be located, you are required to use all internal IRS research and internet web sites (i.e. Google, SEC, EDGAR, VIVISIMO, and SWITCHBOARD) tools to find a telephone number for the taxpayer to resolve the credit module. If no phone number is found, you must clearly state it on the Form 8758 or the form will be rejected back to you by the Excess Collection employee. If a phone number is found, you must state the result of the contact on the form. Also, on all large dollar credit modules of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , you must obtain managerial approval (originator's manager) on Form 8758 prior to the transfer of credit to XSF or URF. Any large dollar case sent to XSF will be rejected by XSF employee back to the originator for a manager's signature on the large dollar case if the manager's signature is not present on Form 8758, as required. For additional information, see IRM 3.17.220.2.1.2, Form 8758 Reason for Rejection.

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

25.6.1.7.3.1  (01-02-2013)
Transferring Credit To XSF

  1. Use Form 8758, Excess Collection File Addition, to transfer payments and credits to the XSF.

  2. Attach documentation providing existence of the credit (current TXMODA print or print of the transcript showing the credit) as well as the research performed prior to transferring to XSF. If any other IDRS command codes are researched, list the command codes used and state the analysis of your finding for each code. If no additional research is required, you must state on the Form 8758 that no additional research was required on the barred credit and enter "Statute Team" in box 16 of the form. If a payment is not received with the late filed amended tax return no letter is sent to the taxpayer. If the taxpayer files a timely amended tax return with payment and the IRS employee fails to assess the tax prior to the ASED passing, no letter is sent to the taxpayer. Failure to provide proper audit trail of the barred assessment document on the Form 8758 will be rejected by XSF employee back to the originator.

  3. See IRM 3.17.220.2.1.1, Preparation of Form 8758, for instructions in the preparation of Form 8758. See IRM 3.17.220.1.9, Trace ID Number for Tracking Credits, when completing box 21 of Form 8758.

  4. Use a separate Form 8758 for each credit which is to be applied to the XSF. You must input TC 570 on all Forms 8758 (Box 8 to prevent credits from releasing for refund or offset when credits are transferred to XSF) when multiple credits are being applied.

  5. Statute employees must check box 16 of Form 8758 with the appropriate statement below when adding credits to XSF:

    • Unassessable Credit—Assessment Barred

    • Assessment of Tax Barred

    • Unassessable Credit—Barred Advance Credit

    • Only the Statute team Can Restore This Credit To Master File

    • Barred Assessment—Voluntary Payment

    • Barred Assessment—IRS Error

    • Non Refundable Credit—RSED Expired

  6. Use the Return Due Date (RDD) for TC 806 when transferring credits to XSF. Use the actual date(s) of payments reflected on the tax module and the DLNs of the payments when transferring estimated tax payments, subsequent payments, federal tax deposits, or credit elect. Credits and payments often applied to XSF are:

    • TC 806 (Credit for Withheld Tax and Excess FICA)

    • TC 710 (Overpayment Credit Applied from Prior Tax Period)

    • TC 716 (Generated Overpayment Credit Applied from Prior Tax Period)

    • TC 660 (Estimated Tax Payment—Applicable to Forms 990C, 990T, 990PF, 1041, 1040 and 1120) IMF/BMF

    • TC 660 (Federal Tax Deposit)-Applicable to Master File Tax Code (MFTs 02, 05, 33, 34 and 44). BMF

    • TC 764 (Earned Income Credit)

    • TC 768 (Generated Earned Income Credit)

    • TC 650 (Federal Tax Deposit)-Applicable to MFT’s 01, 03, 09, 10, 11 and 12.

    • TC 766 (Generated Refundable Credit Allowance)

    • TC 670 (Subsequent Payment—Only if Payment Received on or before RDD).

  7. Exercise caution when resolving statute cases. Multiple tax modules may be involved in multi-function action and tax assessments may/may not have been made. Examples of "refund/credit statute" cases requiring further research and possible action are:

    1. Credits from tax module represents a type of return which the taxpayer has never previously filed and paid.

    2. Credits represent an advance payment of deficiency or designated payment of interest, and examination action is complete/ not complete, but additional assessment is less than amount of advance payment or payment of designated interest.

    3. Credits are from secondary taxpayer’s module for which return was not received, but a joint return was filed for the same period. The credit must be applied to the joint liability although source documents indicate it was intended for payment of this type of tax for this period.

    4. Credits or payments posted to a tax module and the liability was paid by moving credits from other tax periods or type of tax.

  8. See IRM 3.17.220, Excess Collections File, for additional instructions for preparing Form 8758.

25.6.1.7.3.2  (03-01-2006)
Researching The XSF

  1. 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.

  2. 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.

    Note:

    An inquiry by credit amount produces a display of only the name control and control number. Further inquiry is necessary to display the complete XSF record.

25.6.1.7.3.3  (02-02-2009)
Transferring Credits From the XSF

  1. Use Form 8765, IDRS Control File Credit Application, to transfer credits from the XSF. The credits that were previously sent to XSF need to be returned 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.

  2. 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. Determine if an amount can be refunded or credited to another tax module after the RSED has expired. See IRM 25.6.1.10.2.7, 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.

  3. 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.

  4. 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.

    1. The Statute function will place the "Statute Cleared" stamp in the "Remarks" section of Form 8765 and forward to Accounting if the credit/payment is not barred.

    2. You must follow instructions in (4)(a) above except, write or stamp "reject" in the "Remarks" section if credit/payment is barred, do not forward to Accounting, instead return Form 8765 to the originator.

  5. If the credit/payment was sent to Excess Collection File by another Campus, the area requesting the credit/payment to be posted back to the account must prepare Form 8765 and route to Statute function to clear the Form 8765 as required in the instructions for (3) above. The Statute function will route the cleared Form 8765 to the other Campus Accounting, without routing it to the other Campus Statute function for clearing.

25.6.1.7.3.4  (10-01-2001)
Changing the XSF Record

  1. 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.

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

25.6.1.7.3.5  (10-01-2001)
Transferring Credits To And From The URF

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

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

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

  4. For additional information, see IRM 3.17.220, Excess Collections File.

25.6.1.7.4  (04-01-2007)
Earned Income Credit (EIC)

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

  2. 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.

  3. 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.

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

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

    1. An IRC provision extends this type of adjustment.

    2. The Refund Statute Expiration Date has not expired.

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

  7. See IRM 21.6.3, Credits, for additional information.

25.6.1.8  (10-01-2007)
Original Delinquent Returns

  1. Original delinquent returns are returns received after the required and prescribed due date or extended due date and the taxpayer's account does not contain a TC 150 for zero or any other amount. Original delinquent returns which are 2 years and 9 months old or older (based on the return due date) must be cleared by the Statute function before going to Submission Processing.

  2. Original delinquent returns received more than three years after the due date or extended due date may have Refund Statute Expiration Date (RSED) implications.

25.6.1.8.1  (12-09-2009)
Original Delinquent Returns Research

  1. To determine if a return is delinquent, you must check:

    • Integrated Data Retrieval System (IDRS)

    • Master File (MF)

  2. If a Transaction Code (TC) 140 is on the taxpayer’s account without a TC 150 present (IMF account) or current Status Code 02 or 03 (IMF/BMF account), you must input a TC 599 with a Closing Code 18. If you are reprocessing a return as an original, to a module on which a TC 150 has not posted, you must input a TC 971 Action Code (AC) 017, on the tax period the return is to post. See IRM 21.5.2.4.23.8, IDRS Account Action, for more information.

25.6.1.8.2  (10-01-2013)
Original Delinquent Return Procedures

  1. The Statute function's primary responsibility in processing "Newly Received Returns" is to determine if the return is an original delinquent or an amended return.

  2. The Statute function will "clear" for processing tax returns with potential statute criteria, regardless of tax class. This process does not apply to returns submitted by the taxpayer as part of Automated Substitute For Return (ASFR) Compliance Program or SFR Examination Program that contain a dummy TC 150 for zero already on the tax module.

  3. Check IDRS or MF to see if a TC 150 is posted. If there is no record of a TC 150, check CC NAMEI and CC NAMEB for an invalid, temporary and/or spouse’s SSN. Also, check for a different taxpayer identification number.

    Note:

    Use CC INOLE to research for the validity of a TIN or name control. You must use these command codes when IDRS input response indicates an entity problem.

    If a TC 150 for .00 with a Tax class and Document code of 210 in the DLN, and the literal "SFR" to the right of the TC 150, posted to MF and/or IDRS, do not route the return to SP for processing. Route the return as follows:

    IF Then
    There is no TC 290 and no TC 420 posted to the tax module and the TC 150 DLN begins with 19210 Route all returns to the Brookhaven Campus, PO Box 9013, Stop 654, Holtsville, NY 11742-9013.
    There is no TC 290 and no TC 420 posted to the tax module and the TC 150 DLN begins with 18210 Route to the Austin Compliance Services, PO Box 149338, Stop 5501, Austin, TX 78714-9338.
    There is no TC 290 and no TC 420 posted to the tax module and the TC 150 DLN begins with 89210 Route to the Fresno Compliance Services, PO Box 24015, Stop 81304, Fresno, CA 93779-4015.
    There is a TC 290 posted to the tax module, and there is a Schedule C, Schedule E, Schedule F or Form 2106 attached to the return, or the return is an International return Route to the Brookhaven Campus, ASFR Unit Stop 654 PO Box 9013, Holtsville, NY 11742- 9013.
    There is a TC 290 posted and there is no Schedule C, Schedule E, Schedule F or Form 2106 attached to the return, and the return is not an International return Route to the Fresno Campus M/S 81304 PO Box 24015 Fresno, CA 93779.
    There is an open TC 420 and AIMS Status 08 or below or closed TC 421 and AIMS Status 90 with any Non-Examined Disposal Code 20–99 Route to appropriate Account Management site per IRM 21.5.3.4.10.1, Non-Filer Reject Returns.
    There is an open TC 420 AIMS Status above 08 Route to the appropriate Exam Campus based on the TC 420 DLN or the AIMS organizational code found on Command Code AMDISA.
    There is a TC 300 posted to the tax module Route to the BOD that assessed the tax. SBSE cases should be routed to the Brookhaven Campus Exam Operation, PO Box 9005, Stop 614, Holtsville, NY 11742–9005. Atlanta, Andover, and Kansas City campuses should route all returns to Fresno ASFR, P.O. Box 24015, Stop 81304, Fresno, CA 93779–4015 or Austin ASFR, P.O. Box 149338, Stop 5501, Austin, TX 78714–9338

    Note:

    When processing a SFR return containing or does not contain julian date DLN of 888 in the DLN, see IRM 5.19.2.5.4.5.12(4)(c), IMF Response with Original Return, for information on where these returns should be routed.

    Note:

    When processing ASFR International Returns with Form 2555, see IRM 4.13.7-1, ASFR Reconsideration Returns- Centralized processing Site, for information on where to route these cases.

  4. The following will help you determine if your "Newly Received Return" is an original delinquent or amended return and how it should be processed.

    IF AND THEN
    A TC 150 is posted with a tax amount The return in hand is a duplicate of the original (TC976/977) Input a TC 290 for zero and close your control base.
    A TC 150 is not posted or pending to post The IRS received date on the return is not more than 33 months old Stamp return for clearance and forward for normal processing.
    A TC 150 is not posted or pending to post The IRS received date on the return is more than 33 months old (ASED has not expired) Manually assess tax if today's date is within 60 days of the ASED (computed based on the IRS received date shown on the unprocessed return).
    A TC 150 is not posted or pending to post The original return is received timely but unprocessed (and it is now more than 36 months from the IRS received date shown on the return) Work as a barred assessment. (Stamp the return statute expired). Input TC 290 blocking series 300-309 after send a dummy return to processing for input of a dummy TC 150 for zero. After the dummy return is processed, allow any tax credit amount minus the tax owed amount found on the original timely return. Also, allow any refund or offset of overpayment indicated on the original return.
    A TC 150 is posted A tax return showing an additional tax increase or EIC/ ACTC decrease is received before the ASED expired but is not assessed before the ASED expired (without conditions to extend the ASED) Work as a barred assessment. (stamp the return statute expired). Transfer any credits to XSF. TC 290 blocking series 300-309.
    A TC 150 is posted A tax return is received showing an additional tax increase or EIC / ACTC decrease after the ASED has expired (without conditions to extend the ASED) Do not assess tax. (stamp the return statute expired). If payment was received with the amended return, refund the taxpayer's payment and send the 2765 C letter stating their payment will be return in a separate letter if they do not owe any other debts. Input TC 290 for zero and blocking series for the type return received.
    A TC 150 is posted A tax return is received after the ASED has expired showing an additional tax increase (with conditions that extend the ASED) Forward to the Statute team for a manual assessment.

  5. An original return indicating a balance due may be an overpaid return. Check the W–2(s) for withholding amounts. Check CC RTVUE & IMFOL before requesting MFTRA for estimated tax payments or other credits. A refund/offset of prepaid credits is allowed if an original return is postmarked within three years of the Return Due Date (RDD) (plus extensions), IRC Section 6511 (b)(2)(A).

  6. If an original return is received more than three years after the RDD, a refund/offset is limited to tax paid within three years immediately preceding filing of the return plus extensions.

  7. Contact taxpayers when you are unable to locate a TC 150 and your "New Return" indicates it is amended. Request a signed copy of the original return with all schedules, attachments and a copy of canceled checks (front and back) from the taxpayer.

  8. Process a "New Return" as a "Delinquent Original" if research reveals no TC 150 posted and you do not receive a response from the taxpayer.

  9. "New Returns" are considered Amended Returns if a TC 150 has posted. These can either be for a tax increase, with or without remittance or a tax decrease.

25.6.1.8.2.1  (03-04-2013)
Procedures for Processing Non-resident/Non-filer Tax Returns

  1. The Non-resident/Non-filer original return is a new international return project for Large Business and International (LB&I) work group. The non-resident/non-filer taxpayer is required to file a tax return for the last three years starting September 2012. These original international tax returns are processed by Austin Submission Processing. LB&I has requested that we are to keep all three tax returns together as filed by the taxpayer. If one or more of these original returns need to be cleared by the statute team, all three tax return will be sent to the statute team for clearance. The statute team employee will clear the return(s) as needed and forward all three returns to SP together for processing.

  2. If one or more of the returns is an amended tax return and the amended tax return requires an immediate tax assessment, the statute employee will forward the entire tax returns package to the Correspondence Imaging System (CIS) with a cover sheet instructing them to scan only the amended tax return needing an assessment. The amended tax return(s) will be scanned into CIS and forwarded to Philadelphia statute team via CIS as stated in IRM 25.6.1.6.6, Transmitting/Transshipping Cases To Another Campus. The statute employee will not need to make a copy of the amended return(s) prior to sending to CIS. After the CIS employee has completed their process, entire tax return package including the amended tax return(s) and original tax return(s) will be forwarded to SP by the CIS employee.

25.6.1.8.3  (01-16-2009)
Virgin Island Returns

  1. The Statute Function will "clear" for processing tax returns from the Virgin Islands where the return was timely filed but the Virgin Islands were late in forwarding the return to the IRS. The Foreign Investment Real Property Tax Act (FIRPTA) Unit will hand-carry Virgin Island returns to the Statute function. All Virgin Islands List Return DLN’s must be posted to the MF for further action by the FIRPTA Unit. (Austin Service Center only). See IRM 21.8.1.6, U.S. Virgin Islands for more information on this issue.

25.6.1.8.4  (04-27-2010)
Processing Original Delinquent Returns

  1. Once a "New Return" is determined to be an "Original Delinquent" , and it indicates a tax assessment, you must stamp "Cleared for Assessment," Cleared by Statute or Delinquent Return Cleared and the date of clearance on the return. Enter your employee number and current date. Place the stamp in the area of the upper left margin. The stamp is valid for 90 calendar days. The Statute function must clear the return again if the assessment has not been made within 90 calendar days of the clearance.

  2. Before you send the cleared return for processing, check the postmark date stamped on the return by Receipt and Control or the attached taxpayer's envelope against the IRS received date stamped on the return. If the postmark date will make the return timely for refund, you must circle or X out the IRS received date using red ink and input the postmark date as the new IRS receive date in red ink on IMF returns. On BMF tax return, use green ink to circle out or X out the IRS received date and input the postmark date as the new IRS received date. This will help to reduce the generation of STEX or STEX-XSF Transcripts due to the processing of an original delinquent return.

  3. Statutes will not clear "dummy returns" with no money amounts, which are prepared by Examination and Collection Operations in the "Substitute for Return" program. If the taxpayer submits a return for an account that already contains a dummy TC 150 posted, it also does not require clearance by Statute. The return must be routed to the area stated above. See IRM 25.6.1.8.2, Original Delinquent Return Procedures.

  4. Certain Forms 1120S have tax to be assessed because the corporations are liable for tax. All functional areas must route Form 1120S to the Statute function for clearance if the return is received within the statute imminent period and contains an entry on the "Tax Due" line along with tax computations and tax credit lines. Functional areas will route Non-taxable Forms 1120S to the Statute function on an as needed basis; e.g., if it is determined during processing that it contains information which will result in an assessment of tax. The following are items assessed at the entity level of the flow-through entity:

    • Built-in gains (IRC 1374) (Line 22b of Form 1120-S for 2003),

    • Excessive passive investment (IRC 1375) (Line 22a of Form 1120-S for 2003),

    • Investment credit recapture (IRC 1371(d) (Line 22c of Form 1120-S for 2003), and

    • LIFO recapture (IRC 1363(d) (Line 22c of Form 1120-S for 2003).

  5. Tax on flow-through amounts to partners or S corporation shareholders generally is controlled by the statute on the partner's or shareholder's return; i.e., generally tax on those amounts must be assessed within three years from the date the partner or shareholder filed his return. Some partnerships (and some S corporations), however, may be subject to the TEFRA partnership procedures, which require a unified examination of partnership items (or subchapter S items) and provide a minimum period of limitations for assessing a tax attributable to any partnership items (or subchapter S items) and other special TEFRA items. See IRC Sections 6221–6234; Treas. Reg. Section 301.6241–1T.

  6. The Statute function must research a tax year or quarter in question to determine whether any payments and/or credits had posted and were transferred to Excess Collection. If yes, and the taxpayer is entitled to the payment and/or credit, then transfer the entire credit/s back to the account before clearing the return for processing

  7. Before processing an original delinquent return, determine if Criminal Investigation (CI) has requested the Service Campus to control the taxpayer’s account, or any account associated with the return.

  8. Refer cases to CI control function for processing instructions if:

    1. A TC 914 or TC 916 ("Z" freeze) is posted to the tax module or ;

    2. A TC 918 is posted to the entity module, and the case file does not include CI approval for continued processing.

  9. If an original delinquent return is received showing an overpayment, it is a claim for refund and you must process it quickly because of the 45-days interest-free period. The limitation period for claims for refund is applicable.

  10. Always apply credit elect and withholding credit(s) first to tax liability.

  11. Apply payments by earliest received date. Any overpayment is then refunded, offset, or applied to XSF, as appropriate.

  12. To "clear" a return, you must take the following steps:

    1. Ensure that the date of clearance for the tax return is not more than 33 months old from the received date on the tax return. If so, use manual processing method. This tax return should not be cleared. If it has not been more than 33 months from the received date of the tax return, then, you should continue to clear the tax return for processing.

    2. Stamp the return as stated in paragraph (1) above after all necessary research has been performed. Enter your employee number and current date in the upper left hand margin.

    3. Release the return(s) to the batching/numbering unit for normal processing through the system.

      Note:

      Route all original delinquent returns with "KITA" written on the return to the KITA (Killed In Terrorist Attack) Function after clearance. Do not input these returns through normal processing.

25.6.1.8.5  (04-01-2007)
Processing Original Delinquent Returns Claiming An Overpayment

  1. The IRS accepts the U.S. Mail Service postmark date for establishing the filing date of an original return claiming a refund. If the date of the postmark on the envelope is within the period that is three years (plus the period of any extension of time to file) from the day the tax is paid or considered paid (e.g., a calendar year taxpayer's prepaid credits are considered paid on April 15) but the claim for credit or refund is delivered after this three year period, the claim will be treated as timely as long as the document was properly addressed and postage was prepaid.

  2. The postmark date will be treated as the filing date of any payment or document mailed and delivered in an envelope bearing a postmark date after January 11, 2001. See Treas. Reg. Section 301.7502–1(g)(1). This also applies to claims made on an original delinquent return except claims for credit or refund which were otherwise barred as of January 11, 2001 by either:

    1. Expiration of the two-year period for filing suit that began after the issuance of a notice of claim disallowance, or

    2. The operation of any other law or rule of law (including res judicata).

  3. Review all newly received original delinquent returns claiming an overpayment.

  4. Review taxpayer's account to determine credit/payment received dates.

  5. Check the postmark date for a possible timely filed claim for refund.

  6. Allow a postmark date and edit this date as the return received date if:

    1. The return claims an overpayment.

    2. The postmark date would make the return a timely filed claim for refund.

      Note:

      An original delinquent return claiming an overpayment is a claim for refund. A taxpayer is entitled to a credit/refund for any payment paid within three years from the received date of an original delinquent return, including extensions. Also, the postmark date will establish the start date for the Assessment Statute Expiration Date (ASED)

  7. A postmark date is extended to the next business day if the normal RSED falls on a weekend or holiday. If this is the case, you must edit the return received date with the normal RSED. See IRM 25.6.1.6.15, When a Document Is Treated As Filed Under the IRC for editing postmark criteria.

    Example:

    A taxpayer's original return for 2002 was postmarked 04/17/2006. The normal RSED was 04/15/2006. Since 04/15/2006 was a Saturday, the taxpayer was entitled to the next business day for a timely filed claim. You must edit the return received date as 04/15/2006 and not 04/17/2006.

    Note:

    If a late-filed return does not have an envelope attached and the return is received (IRS Received) within 7 days from the normal RSED, then consider the return as timely filed by the RSED.

25.6.1.8.6  (03-01-2006)
Processing Delinquent NMF Returns

  1. The refund or credit claimed on any Pre-Automatic Data Processing (ADP) return filed are barred, unless payment of the tax was within 2 years of the date the claim was filed.

  2. Code and Edit must flag Delinquent NMF returns to Accounting to alert them of statute conditions. A "Statute Specialist" in NMF Accounting must research the return for any previous assessments involving the same tax year and tax period. The specialist will research the Automated NMF, Unit Ledger Card (ULC) and the Index Cards maintained by the Returns Files area. After all necessary research is performed, the Statute specialist will expeditiously route the return to the Statute Limitations Unit for statute clearance via a Form 3210 transmittal.

  3. The Accounting "statute specialist" must attach all necessary research for the statute examiner to review before they "clear" the return.

  4. The Statute function will verify the transmittal with taxpayer’s name control, TIN, type of tax, tax period, and Area Office for each item and attachments being transmitted. (If any item or attachment is missing, the Statute function will not accept the case. Indicate this action on the transmittal).

  5. Sign a copy of Form 3210 and return one copy to the originator and retain one signed copy in the statute area.

  6. Code and Edit must also flag amended returns (NMF) to Accounting on which the statute is imminent (120 days or less) to alert them of statute conditions. (These are assessed in the NMF Accounting Branch with a 23C Date on or before the statute expiration date).

  7. The Statute function will examine the cases to determine the correct statute expiration date. Request a MFTRA transcript if no transcript was attached by the accounting function or the transcript request date is more than 30 days old when received in the Statute team.

  8. The statute examiner will determine if a credit entered on the return is barred by the statute of limitations. If all or part of the credit is barred, place an "X" immediately before the line entry. If part of the credit or adjustment is allowable, enter such amount to the left of the "X" . (The NMF accounting function, is responsible for initiating correspondence to notify the taxpayer of the disallowance).

  9. Indicate the correct expiration date on the body of the return and stamp as stated in (1) above. Show the date cleared and your employee number on those documents on which the statute will NOT EXPIRE within 120 days.

  10. Statutes must route the case back to NMF accounting via a Form 3210 transmittal (see (2) above), retaining a receipted copy after the procedures above have been completed.

  11. The NMF Accounting Operation will process statute cases in accordance with instructions in IRM 3.17.46 , Automated Non-Master File Accounting and IRM 21.7.12, Non-Master File (NMF) Adjustments.

25.6.1.9  (03-01-2006)
Assessments

  1. Assessments are tax increases that post to either IMF, BMF, IRAF and NMF taxpayer accounts. Assessments may be the result of:

    • Original Returns

    • Amended Returns

    • Math errors on returns

    • Substitute For Return (SFR)

    • Claims for credit, refund , or abatement

    • Tax Audits

    • Tax Reconsiderations (e.g, after a request from the taxpayer after an audit or from a collection function)

25.6.1.9.1  (10-01-2009)
Assessments Research

  1. To process tax assessments, you need to reference other Internal Revenue Manuals (IRMs) and Internal Revenue Code (IRC) Sections such as:

    • IRM 3.17.243, Miscellaneous Accounting

    • IRM 21.5.1, General Adjustments

    • IRM 21.5.9, Carrybacks

    • IRM 21.6.1, Filing Status and Exemption Adjustments

    • IRM 21.7.1, BMF/NMF Miscellaneous Information

    • IRM 21.7.8, Excise Taxes

    • IRM 20.2, Interest

    • IRM 25.6.1, Statute Of Limitations

    • IRC Section 6013, Joint Returns of Income Tax by Husband and Wife

    • IRC Section 6201, Assessment Authority

    • IRC Section 6501, Limitations on Assessment and Collection

    • IRC Section 6503, Suspension of Running of Period of Limitation

25.6.1.9.2  (11-01-2004)
General Assessment Period

  1. The general rule is that the assessment of tax must be made within three years after the return is filed. See IRC § 6501(a).

25.6.1.9.3  (03-01-2006)
Received Date

  1. The Received Date does not necessarily establish the filing date. The filing date is established after applying IRC rules. See IRM 25.6.1.6.15, When a Document Is Treated As Filed Under the IRC, for rules which may override the Received Date. The most commonly applied filing date rules are:

    1. Early return. A return submitted before the original due date is considered to be filed on the due date. IRC § 6501(b)(1).

      Note:

      A return submitted before an extended due date is not subject to this rule, and is considered filed on the date received.

    2. Employment tax return. Form 941, 943 or 945 for any period ending with or within a calendar year that is submitted before April 15 of the succeeding year, is considered filed on April 15 of that succeeding year. IRC Section 6501(b)(2).

    3. The Timely Mailing Equals Timely Filing Rule. IRC Section 7502.

    4. Saturday, Sunday, or Legal Holiday Rule. See IRC Section 7503.

25.6.1.9.4  (11-01-2004)
Returns That Begin the Period of Limitations

  1. The following subsection describes when the period of limitations begins for a tax return.

25.6.1.9.4.1  (10-01-2013)
Valid Return

  1. A taxpayer is not considered to have filed a tax return (which begins the period of limitations on assessment) until the taxpayer files a valid tax return. See IRM 25.6.1.6.14, Criteria for Establishing a Statute of Limitation Period, for valid return criteria. In general, a tax return is considered sufficient for establishing a statute of limitations period if it meets the following criteria:

    1. It has sufficient data to calculate a tax liability,

    2. It purports to be a tax return,

    3. It is an honest and reasonable attempt to satisfy the requirements of the tax law, and

    4. It is signed under penalties of perjury.

      Note:

      Unsigned income tax returns will not be accepted for processing. An unsigned tax return is not a valid tax return. This business decision is reflected in Policy Statement 3-5 (Formerly P-2-11), in IRM 1.2.12.1.5. The Service policy is not to accept an unsigned income tax return for processing, although these returns may constitute informal claims for refund or credit if the taxpayer report overpayments of tax on the tax return. The Service will return unsigned income tax returns to the taxpayers requesting that the taxpayer sign the tax returns and resubmit them for processing.

  2. A return filed on the wrong form may be a valid return for the purpose of starting the period of limitations if it provides sufficient data to calculate a tax liability.

    1. Federal Insurance Contributions Act (FICA) form instead of Railroad Retirement Tax Act (RRTA) form. A FICA return did not start the period of limitations on an employer's RRTA tax liability because the FICA return did not include all the information necessary to compute the RRTA tax. See Atlantic Land & Improv. Co. v. United States, 790 F.2d 853, 860 (11th Cir. 1986).

    2. RRTA form instead of FICA form. It appears that a RRTA return filed for a FICA tax liability might be sufficient to start the period of limitations on that liability. See the suggestion in Atlantic Land & Improv. Co., 790 F.2d at 860 n. 10.

  3. See IRM 25.6.1.9.9.3, Correct Records On Expired Statute Periods, for information on how to correct timely original returns that were processed under an incorrect tax period/account.


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