25.12.1  Processing Refund Hold Program Inventory

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25.12.1.1  (11-24-2009)
Program Overview

  1. Purpose: This section of the IRM contains processing guidance for working Refund Hold inventory. Refund Hold (RH) inventory occurs when the Service holds individual income tax refunds and credit elects when a current or prior year refund return is filed and the taxpayer's account has at least one unfiled tax return within the five years prior to the current tax year. This includes modules where no Transaction Code (TC) 140 is present. Prior to October 1, 2008 current filing year refunds only were held for the program. This section of the IRM contains the delinquency criteria for holding a taxpayer's refund while the Service investigates the delinquent return(s) and the functional procedures for screening, working and monitoring these cases.

  2. Scope: The RH Program is under the direction of Wage and Investment (W&I) Filing and Payment Compliance. The program is consolidated at the Austin site for Compliance Services Collection Operation (CSCO) and is worked in collaboration with W&I and Small Business/Self Employed (SB/SE) Compliance Services Examination Operation (CSEO). The refund is used to offset any balance due on the delinquent return(s). If there is no balance due, or an amount remains after offsetting, the refund is released to the taxpayer.

  3. The Refund Hold Program is based on IRC Section 6402(a) which provides that the Secretary may, within the applicable period of limitations, credit the amount of any overpayment against any tax liability of the person who made the overpayment. IRC Section 6402(b), Authority to make credits or refunds - Credits against estimated tax,states, " The Secretary is authorized to prescribe regulations providing for the crediting against the estimated income tax for any taxable year of the amount determined by the taxpayer or the Secretary to be an overpayment of the income tax for a preceding taxable year."

  4. If after initial contact, the delinquent return(s) are not filed, a Statutory Notice of Deficiency may be issued. Once issued, the refund is transferred to the tax year of the proposed deficiency(ies). It will remain there until a return is filed or the Service imposes the proposed assessment after the appropriate suspense period. See IRM 5.18.1.7.11.37, Status 090: 90-Day Stat Notice Issued, for Automated Substitute for Return (ASFR) Statutory Notice of Deficiency time frames.

  5. A refund will be released if:

    1. The delinquent return(s) being filed reflects a refund or even balance and results in all delinquencies being resolved and there are no balances due related to this taxpayer.

      Note:

      Unless there is a Compliance select code present see IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold .

    2. There is no filing requirement for the delinquent year(s).

    3. The taxpayer establishes that an economic hardship exists. See IRM 25.12.1.9, Taxpayer Advocate Service (TAS) Consideration for guidelines on handling cases where the taxpayer has established that an economic hardship exists, or

    4. The taxpayer is in a declared disaster/emergency area and releasing the refund is appropriate at that time. See IRM 25.12.1.10, Guidelines for Taxpayers in Disaster and Emergency Areas .

  6. The following functions will have RH cases assigned in their inventory:

    • CSCO; this portion of the program is consolidated at the Austin Campus (AUSC) site.

    • Compliance Field Functions.

    • W&I and SB/SE CSEO.

  7. Each functional area that is assigned a RH case is responsible for monitoring its cases and ensuring disposition of the case is expeditious and timely. IRC Section 6611(e) provides that there is no interest if an overpayment is refunded within 45 days after the due date of the return, or in the case of a late filed return, within 45 days after the return is filed. If, however, the refund is not made within the 45 day period, interest must be paid from the date of overpayment. Thus, it is imperative RH cases be processed expeditiously and monitored for the most expeditious resolution possible to prevent additional cost to the Service while processing these cases.

25.12.1.2  (11-24-2009)
How to Identify Delinquent Return Refund Hold

  1. The Service holds individual income tax refunds and credit elects when a return is filed with the established refund amount and the account has at least one module within five years prior to the current year where IRPTR information exists, and no return has been filed. This includes modules where no Transaction Code (TC) 140 is present.

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  3. Per IRC Section 6532(a)(1) the Service has six months to review a claim for refund before a taxpayer can file a suit to recover the refund. If the refund is still held six (6) months after the claim for refund is filed, a taxpayer may file suit to recover the refund. For this reason, the Refund Hold period has been established at six (6) months. The six month period begins on April 15 of the current tax year or the date of filing, whichever is later. In addition, IRC Section 6611(e) provides that there is no interest if an overpayment is refunded within 45 days after the due date of the return, or in the case of a late filed return, within 45 days after the return is filed. If, however, the refund is not made within the 45 day period, interest must be paid from the date of the overpayment. Thus, it is imperative RH cases be processed expeditiously and monitored for the most expeditious resolution possible to prevent additional cost to the Service while processing these cases.

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  5. Refunds held by this program contain all of the following codes on IDRS:

    1. TC 570 with 999 in the Julian date field of the document locator number (DLN) (digits 6, 7 and 8).

    2. Reason code (RC) "RF" displayed on the Integrated Data Retrieval System (IDRS) on the module of the refund year.

    3. Freeze Code "-R" on the IDRS module for the year of the refund being held.

  6. Refund Hold modules allow for offset during the designated hold period see IRM 25.12.1.2(2), How to Identify Delinquent Return Refund Hold . Refund freezes will be released per IRM 25.12.1.14.1, Releasing the Refund Hold Freeze only.

25.12.1.3  (11-24-2009)
Refund Hold Research

  1. Research tools that will assist in resolving RH cases include, but are not limited to, the following systems, IRMs, LEMs and documents:

    • Integrated Data Retrieval System (IDRS)

    • Various IDRS Command Codes

    • Account Management Services (AMS), formerly known as DI (Desktop Integration)

    • Computer Files On Line (CFOL) Command Codes

    • Document 6209

    • Automated Substitute for Return system (ASFR)

    • Transcript Delivery System (TDS)

    • IRM 21.1, Accounts Management and Compliance Services Operations

    • IRM 21.3, Taxpayer Contacts

    • IRM 5.18.1, Automated Substitute for Return (ASFR) Program

    • IRM 5.19.2, Return Delinquency

    • LEM 5.19.2, Return Delinquency

    • IRM 2.3, IDRS Terminal Responses

    • IRM 2.4, IDRS Terminal Input

  2. When dealing with joint filing, research both spouse's accounts.

  3. The Transcript Delivery System (TDS) can be used to send Wage and Income Information Documents to the taxpayer, in lieu of any procedures throughout this IRM that state to send IRPTR or SUPOL supplements with the appropriate IRS letter. Care should be taken when using TDS to separate income information by tax year so taxpayers report it on the correct tax forms.

    Note:

    See IRM 21.2.3.4, Transcript Procedures, for procedures on using the Transcript Delivery System (TDS) for researching tax account and return information. TDS delivers tax account and return information to the user instantly along with an appropriate cover letter (when applicable). The IRM has been updated to include procedures for IRS employees using TDS.

25.12.1.4  (09-25-2008)
Refund Hold Coordinator (RHC) Roles And Responsibilities

  1. A Refund Hold Coordinator (RHC) must be established in the functional areas responsible for RH cases. The functional areas are Compliance Services Collection Operation (CSCO), Automated Substitute For Return (ASFR), Compliance Services Examination Operation (CSEO), and Compliance Field Operations.

  2. The Directors of Compliance within W&I and SB/SE are responsible for the cases assigned to each Business Operating Division (BOD) respectively. Each BOD has Program and Policy Analysts who coordinate and oversee the program.

  3. CSCO and CSEO must designate a RHC(s) who will:

    1. Communicate to Headquarters Policy/Program Analysts any systemic or technical problems or issues identified during case processing.

    2. Review and take action on all cases listed on the LE62741 CSCO and LE62740 CSEO weekly listings.

    3. Ensure timely implementation and oversight in their area.

  4. All other functional areas must designate RHCs who will:

    1. Establish an inventory control system to identify the location and status of active RH accounts.

  5. The Examination RHC is responsible for contacting the Office of Appeals or Area Counsel to determine the status and history of a RH case in Appeals or Litigation. In coordination with these offices, make a decision immediately whether to release the freeze.

  6. All RHCs must process the RH program cases within their assigned area of responsibility and will:

    1. Ensure timely movement of cases between functions with assigned refund hold Taxpayer Delinquency Investigation (TDI).

    2. Act as a liaison between functions within and between area offices.

    3. CSEO only will review accounts when approval has been given to continue the RH beyond the designated hold period.

      Note:

      Cases assigned to ASFR cannot be held beyond the designated hold period.

25.12.1.4.1  (11-24-2009)
Holding a Refund Beyond the Designated Hold Period

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  2. In some instances, based on individual case facts and circumstances, it may be appropriate to hold the refund beyond the designated hold period when one of the following situations exists:

    • The taxpayer requests an Appeals conference

    • The taxpayer claims the reported income is invalid and third party verification is required

    • The taxpayer requests more time to gather records or prepare the delinquent return(s)

    • Processing delays consumed most of the designated hold period and you believe it is highly likely a liability will exist when processing is completed

    • When 60 days or less remain. Make a decision whether to issue a Statutory Notice of Deficiency (SNOD), release the refund, ask the taxpayer to sign an extension, or request approval to hold the refund beyond the designated hold period

    • There is substantial income requiring additional case development to support a statutory notice of deficiency

      Note:

      Compliance Service Collection Operation/Automated Substitute for Return (CSCO/ASFR) Refund Holds cannot be held beyond the designated hold period.

  3. If it is determined more time is needed and there is a compelling reason to continue the Refund Hold, prepare a memorandum justifying the need and set a target date for resolution of the hold for management approval. Retain a copy of the REFUND HOLD JUSTIFICATION MEMO in the case file.

    Note:

    If the Director or Territory Manager does not approve the Justification Memorandum, allow the refund to systemically release.

  4. The CSEO RHC should take the following action on the Refund Hold where the refund will be held beyond the six-month period:

    1. Input TC 290 for $.00, Blocking Series 18, Hold Code 4.

    2. Use the Justification Memorandum as the Source Document.

    3. Establish an IDRS control base showing the release date per the Justification Memorandum or taxpayer agreement.

25.12.1.5  (11-24-2009)
LE627 Refund Hold Listings

  1. During weekly analysis, all modules meeting RH criteria are extracted from Master File and created on IDRS. Refund Hold modules are identified on IDRS See IRM 25.12.1.2. A program is run weekly that identifies all RH modules currently on IDRS and generates the LE6274XZ listings. The LE62741Z (CSCO) and LE62740Z (CSEO) are the tools the RHC uses to identify and if necessary, move the delinquency into the correct functional area's inventory.

  2. An electronic version of the LE6274XZ listings is accessible on Control-D. All RHC should have access to Control-D. A 5081 is required for access to Control-D. The Control-D website is located at http://mtbcontrold.enterprise.irs.gov/bmc-ctd-wa-cgi.exe?RequestType=LoginWindow . The RHC may print the LE6274XZ from Control-D.

    The CSEO LE62740Z contains the following information:

    • IRS Received Date

    • 420 File Location Code from the DLN

    • Taxpayer Identification Number (TIN)

    • Name Control

    • RH Tax Period

    • Collection Assignment

    • Action Date

    • Category Code

    • Assignee

    • Freeze Codes

    • Return Cycle

    • Module Balance

  3. The CSCO LE62741Z is divided into three sections; ASFR 8000 assignments, Collection Field function (CFf) 1000-6900, and all other assignments.

    Each section of the LE62741Z contains the following information:

    • Return Cycle of Refund Hold Year

    • TIN

    • Name Control

    • Tax Period

    • Collection Assignment

    • Category Code

    • Assignee

    • Module Balance

    • Freeze Codes

25.12.1.6  (11-24-2009)
Taxpayer Notification of Refund Hold

  1. When a return is filed which meets the RH criteria, the taxpayer is notified by:

    • CP (Computer Paragraph) Letter CP 63, Refund Hold(Field, and CSCO) which contains the toll-free number 1-866-897-3315, or

    • CP 88, Taxpayer Delinquent Investigation (TDI) Refund Hold (CSEO) . For toll-free numbers, See IRM 21.3.3.4.2.4, Toll-Free Telephone Numbers , paragraph (3) for programs or functions that don't have their own specific toll-free number.

  2. These letters inform the taxpayer the refund is being held because there are delinquent return(s). The letters direct the taxpayer to file the delinquent return(s) or explain why there is no filing requirement on his/her account. In addition, the letters advise the taxpayer that if a return(s) is not filed, the Service will file the delinquent return(s) for the taxpayer.

25.12.1.6.1  (11-24-2009)
Undeliverable Notification Letters

  1. If systemically generated CP 63 and CP 88 are returned as undeliverable, they are returned to the function that generated the letter for research on both primary and secondary Social Security Numbers (SSN) for a current address.

    IF THEN
    A new address is found, Readdress and issue Correspondex Letter 2825C.
    No new address is found, Initiate Address Research (ADR) on the case.

    Note:

    DO NOT release the freeze if the notification letter is undeliverable.

  2. Utilize IDRS to generate 2825C letters.

    Note:

    Do Not attempt to generate the 2825C letter via the ASFR system.

25.12.1.7  (09-25-2008)
Functional Processing

  1. This section provides instructions for functional processing of RH cases. When an account is selected for RH, the functional area to which the account is assigned will be responsible for working the RH case.

  2. Modules not assigned to ASFR, CFf, or Examination are reviewed and the modules are either referred to ASFR or Examination or closed.

  3. While RH accounts must be worked quickly, guard against asserting potential liabilities without adequate case development and always consider information taxpayers wish to provide.

  4. This section explains the urgency of working RH cases quickly and with sensitivity. While it is important to ensure filing and payment compliance, it is also important to exercise good judgment and reasonableness in special situations.

  5. The RH program only applies to delinquent return modules which are already assigned to Collection or Examination. The assigned function is notified of the RH freeze being set within one week through generation of the LE627XZ listings which ensures the case is quickly identified and receives priority attention.

  6. There may be instances when a refund meets the RH criteria but the case requires special consideration. If a special situation applies, be sensitive to the facts and decide if releasing the freeze is appropriate.

  7. This IRM also includes information for:

    • RH cases with prior years in Appeals.

    • TAS Consideration.

    • Guidelines for Taxpayers in Disaster and Emergency Areas.

    • Situations when Injured Spouse allocations are filed.

    • How to process RH accounts which are also in the Earned Income Tax Credit (EITC) Unallowable program.

  8. The assigned function or employee must work RH accounts expeditiously to:

    • Minimize taxpayer burden while ensuring they comply with filing requirements;

    • Limit credit interest paid to the taxpayer; and

    • Satisfy the intent of Congress that refunds be made as expeditiously as possible.

  9. Within the designated hold period from the filing of the claim for refund, these refunds must be:

    1. Offset to liabilities, or

    2. Applied to the tax year(s) of the proposed deficiency(ies) when the Statutory Notice of Deficiency is issued, or

    3. Authorized to be held beyond the designated hold period while completing case actions, or

    4. Released to the taxpayer.

25.12.1.8  (09-25-2008)
CSCO Incoming Cases

  1. Each week review all new RH cases included on the LE62740Z and LE62741Z. The RHC will notify Field Collection of new cases assigned to those inventories. Each function is responsible for reviewing the LE6274XZ list cases assigned to their functional area and determining whether the freeze should be released or the refund applied to the tax year of a proposed liability.

  2. All cases not assigned to CSCO, Field Compliance functions or CSEO will be reviewed by the ASFR/RHC and either transferred to the appropriate inventory or closed by releasing the freeze.

25.12.1.8.1  (09-25-2008)
CSCO RH Case Screening/List Processing

  1. The RHC(s) will use the LE62740Z for CSEO and LE62741Z for CSCO Listing to screen new RH accounts.

  2. Review new receipts to determine where the account is assigned.

    IF THEN
    A -L Freeze is present on the TDI module,
    • Input a TC 595, AC 88 on the TDI module

    • Refer to Examination function using local procedures

    DO NOT release the freeze.
    The TDI module is assigned to a revenue officer, If available, update Integrated Collection System (ICS) with information that the account is a RH case. If not available, notify the revenue officer by telephone or by sending Form 4442, Inquiry Referral .
    The TDI or RH module has a control base other than ASFR, Contact the employee with the control to determine if there is information needed to resolve the case.
    The TDI is assigned to 8000, Verify that the module is on ASFR. If not, Notice Code T the module: ASIGN with T in the column marked CCD.
    The account is not assigned to 8000, Examination or the Field,
    • Ensure that the module fully exists on TDINQ. If not, establish the module using Command Code (CC) TDIRQ.

    • If the TDI is closed but the RH is not satisfied, re-open the TDI.

    • Assign the account to 8000 by inputting Notice Code T.

    Account is in status 02, 03 or 04, Follow LEM 5.19.2.6.4.3, IMF Automated Substitute for Return Program (ASFR) Referrals.
    If not liable, refund or even balance is determined, Release the freeze per IRM 25.12.1.14.1, Releasing the Refund Hold Freeze.
  3. The goal of LE62741Z CSCO list processing is to ensure RH modules are analyzed to determine liability, closed or accelerated to ASFR. The LE62741Z CSCO List should be reviewed weekly and the following actions taken:

    1. Delinquencies that have 8000 as the Collection Assignment Code, should be on the ASFR database. The ASFR RHC should verify that all cases assigned to 8000 are on the ASFR database. If the delinquency is not on the ASFR database, the ASFR RHC must Notice Code T the module. The following week the ASFR RHC must verify the module is now on the ASFR database.

    2. Utilize IMFOLI to determine which delinquencies need to be addressed. Research IMFOLI and review for modules in statuses 02, 03 ,04 , 06, or never created (Missing TY in module list).

    3. Utilizing command code (CC) TDINQ verify the TDI Status code is equal to 1. Look for assignment number (last four digits). If the TDI Status code is not equal to one (1) this indicates the account is not complete on IDRS or nothing is open in TDI Status.

    4. Research the module on IDRS for pending transactions. Determine if pending transactions are going to satisfy any Refund Hold delinquencies. If TC 599 or TC 590 is present, no action is required. If TC 594 is on the module and all delinquencies are resolved, release the freeze per IRM 25.12.1.14.1, Releasing the Refund Hold Freeze .

    5. If no satisfying conditions are present using command code (CC) TDINQ verify TIF32 data is present. If present accelerate to TDI Status 03. If TIF32 data is not present utilize command code (CC) TDIRQC to pull TIF32 data onto the account. This action will initiate TDI processing.

    6. Accelerate Status 02 and 04 cases by inputting TC 590 with closing code (CC) 19 via FRM49 and TC 592. Both actions can be completed in the same cycle. Two cycles later the case should go into Status 02. Accelerate to Status 03 if the module has not progressed to Status 03 automatically.

    7. For Status 03 modules not assigned 8000 and the assignment on TDINQ is less than 1000 or equal to 7000 ASIGN 8000.

25.12.1.8.1.1  (11-24-2009)
ASFR Case Processing

  1. ASFR may already be assigned on a delinquent return account prior to the RH.

  2. A weekly file of all RH cases assigned to 8000 is run. The file is run against the existing ASFR inventory and the RH indicator is turned on for Refund Hold modules on the ASFR system. Additionally, new TDI modules assigned to 8000 are loaded. Modules in 8000 that are not on the system are also identified. The RHC is responsible for taking actions to ensure those accounts listed are moved onto the ASFR system.

  3. ASFR systemically:

    1. Places a special indicator "REFUND FREEZE " on the TDI and on the identity record.

    2. Generates ASFR 40X Refund Hold Lists.

  4. The ASFR system analyzes where the module is in the process and:

    IF THEN
    The module(s) is unstarted and is in workable status, ASFR systemically moves the module into 031, 035 and then 030.
    The module(s) is in unworkable status, ASFR will generate the ASFR 408 list that includes a list of modules in error status needing manual update or resolution.

  5. For any module in a status where the ASFR system cannot determine the next correct action take the following actions:

    IF THEN
    ASFR can work the modules and the designated hold period has not expired, Ensure the CP 63 letter has been issued and move the module(s) into the next appropriate ASFR status.
    ASFR cannot resolve the module, but IRP exists that shows a potential liability, or if a Statutory Notice of Deficiency cannot be issued within the designated hold period, If a return or response is received, process the return or response and determine if the freeze should be released. If no response is received, let the refund systemically release at the end of the designated hold period.

  6. ASFR employees working RH cases are notified of the status of the account by various reports and listings.

  7. Austin RHC should ensure ASFR 40X lists are processed at the Austin site weekly.

  8. ASFR generates 3 lists to facilitate prompt resolution of RH cases.

    1. ASFR 405 List, Refund Hold Research List, generates for new Refund Hold accounts assigned to 8000 where the ASFR module is in the following statuses: 015, 016, 089, 762, 107, 109, 062, 010, or 011 and for modules not on the ASFR database. Research this list for modules not on the ASFR database. If no modules are found on ASFR and there is an open TDI(s) on IDRS, Notice Code T the module(s) to systemically load to ASFR.

    2. The ASFR 407 List generates when a RH case moves into status 090. The ASFR 407 list, Refund Hold Money Transfer List, is no longer systemically processed by the ASFR system. A Generalized IDRS Interface (GII) process is used to transfer the money systemically by Austin campus employees. If it is noticed that refunds are not systemically offset as appropriate, complete manual offset transactions on the case and notify HQ analyst immediately.

      Note:

      When manually transferring the refund, move the entire refund amount to the earliest 90-day statutory module or the first module in status 090. Be sure to input TC 570 with the credit transfer.

  9. The ASFR 408 List, Refund Hold-Expiration Alert,generates weekly. This list identifies all RH cases currently on the system by SSN, tax year, ASFR status, and Campus. Use this list to determine where the module is in ASFR processing and if the module will reach status 090 before the designated hold period expires. Contact HQ analysts if modules remain in status 031 for more than 3 weeks.

    1. Resolve all failed conditions on this list per IRM 5.18.1.8.3, ASFR Lists. Research failed modules and resolve any other condition(s) which may subsequently cause them to error out. Failed conditions include ASFR status 005, 007, 038, 039, 089, 097, 099, 107, 380, 381, 385, and 762. Additional instructions can be found in IRM 5.18.1.7.11, ASFR Statuses .

      Note:

      Refund Hold modules in status 762 with the statement "excessive minors" should be updated to status 771 so that income information is identified and added.

    2. Research modules in suspense status 010, 011, 012, 051, 056, 080, 081, and 093 bi-weekly to ensure they are being properly addressed.

    3. Resolve modules in status 040 and 342 (address research) each week. ASFR will not forward Refund Hold modules to the ADR (Address Research) system for research.

      IF THEN
      An ASFR 30-day letter was sent and a new address can be found on IDRS, Update the address on ASFR and re-issue the 30-day letter.
      An ASFR 90-day letter was sent and a new address can be found on IDRS, Update the address on ASFR and re-issue the 90-day letter.
      An ASFR 30-day letter was sent and no new address can be found on IDRS, Update ASFR to status 030 with the appropriate follow-up date. Care must be taken to allow the appropriate amount of time before the next letter is issued.
      An ASFR 90-day letter was sent and no new address can be found on IDRS, Update ASFR to status 090 with the appropriate follow-up date. Care must be taken to allow the appropriate amount of time before the default occurs.

25.12.1.8.1.2  (09-25-2008)
Taxpayer Responses

  1. Employees in area offices, toll-free sites, and campuses may be contacted by taxpayers regarding their Return Delinquency Refund Hold cases. DO NOT RELEASE FREEZES - CONTACT THE APPROPRIATE ASSIGNED FUNCTION.

    Note:

    Taxpayers may make contact by visiting an IRS Field Assistance site or call the IRS toll-free lines regarding a RH prior to receiving CP 63 or CP 88. If the taxpayer filed electronically, they may receive notification their request for direct deposit is denied. Employees must first determine the reason for the RH. See IRM 25.12.1.2. , How to Identify Delinquent Return Refund Hold , for information to identify refunds held by this program.

  2. Address all situations requiring special handling.

    IF THEN
    The taxpayer claims the RH meets TAS referral criteria, See IRM 25.12.1.9, Taxpayer Advocate Service (TAS) Consideration
    The taxpayer lives in a disaster or emergency area, IRM 25.12.1.10, Guidelines for Taxpayers in Disaster and Emergency Areas.

  3. Check IDRS to determine if the case is assigned to ASFR, Examination, or AO Collection.

    IF THEN
    The account is assigned to ASFR (TSIGN 8000), Toll-Free: Provide the RH toll-free number 18668973315. Field Assistance: See IRM 25.12.1.8.1.4, Taxpayer Files Return(s) . Forward ASFR returns to the appropriate ASFR site.
    The account is assigned to Examination (-L Freeze or TC 424), Toll-Free and Field Assistance: Complete Form 4442, Inquiry Referral , and route to Examination per organization code on the Audit Inventory Management System (AIMS). Route to Examination.
    The account is assigned to Area Office Collection, Toll-Free and Field Assistance: Complete Form 4442, Inquiry Referral , and route to Area Office.

    Note:

    Update ICS, if available.

    There is no assignment, Toll-free: Refer the taxpayer to the toll-free number 1-866-897-3315. Field Assistance: Follow IRM 25.12.1.8.1.4, Taxpayer Files Return(s).

25.12.1.8.1.3  (11-24-2009)
Taxpayer Written Responses

  1. When responding to taxpayers in RH ensure you Warn Of Enforcement Action (WOEA) as follows:

    • The IRS has the authority to prepare the taxpayer's return (IRC Section 6020(a) and 6020(b); however, a return under IRC Section 6020(b) is prepared using a marital status of single or married filing separately and only one personal exemption with no business expenses or itemized deductions, potentially resulting in a greater balance due than if the taxpayer was to file the return.

    • If a return is requested, and the module is on ASFR, advise the taxpayer the ASFR will continue (and the IRS will eventually prepare a return) if no reply is received within the required time frame.

    • If a telephone number is available, and telephone contact will resolve or expedite processing the case, you must attempt to contact the taxpayer via the telephone at least 2 times prior to corresponding with the taxpayer.

  2. For taxpayer correspondence inquiry, utilize the appropriate IDRS letter and do the following:

    IF THEN
    Taxpayer states the return(s) was previously filed under a different name or SSN and filing is verified, Close delinquency appropriately per Document 6209, Section 11, TDI Closing Codes and follow IRM 25.12.1.14.1, Releasing the Refund Hold Freeze.
    Taxpayer states filed with spouse and filing is verified and there are no other balance due conditions related to this taxpayer, Close delinquency appropriately per Document 6209, Section 11, TDI Closing Codes and follow IRM 25.12.1.14.1, Releasing the Refund Hold Freeze.
    Taxpayer indicates the need for income information for the delinquency(ies) causing the RH, Provide the information via Transcript Delivery System if available or send IRPTRW for the tax period(s).
    Taxpayer needs forms, Provide them with: www.irs.gov, http://www.irs.gov/formspubs/index.html?portlet=3 for Internet access to forms or with the forms toll-free number: 1-800-829-3676.
    Taxpayer does not understand the notice, Advise the taxpayer the refund will not be released until the delinquent return(s) are filed. If they have modules on ASFR, WOEA.
    Taxpayer states not liable, Verify via SUPOL and IRPTR if income warrants filing. Advise the taxpayer accordingly and take appropriate IDRS actions.
    Taxpayer is deceased, Follow IRM 5.19.2.6.4.5.6, IMF Response Taxpayer Deceased.
    Taxpayer is not at this address, Research for correct address and issue 2825C letter if found. If no new address is found, initiate ADR on the account.
    Requests additional time to file, Advise the taxpayer the refund will not be released until the delinquency(ies) is resolved. WOEA for possible ASFR.
    States not their income or they have no knowledge of income, Many times payor information is not specific to the employee's specific place of employment. Have the taxpayer verify his/her employment for the delinquent year in question. If the income appears to be in question follow Third Party Contact procedures. See IRM 5.18.1.10.2.3.11, Third Party Contact . Contact payor to verify income. Send 1901C letter.
    Identity Theft - Do not confuse with no knowledge of income, The following documentation is required for a victim to substantiate identity theft. See IRM 10.5.3.2.2, Identity Theft and Substantiation Documentation for additional information on reporting Identity Theft:
    • Authentication of Identity - a copy of a valid U.S. federal or state government issued form of identification (Example: drivers license, state identification card, social security card, passport); and

    • Evidence of Identity Theft - a copy of a police report or completed IRS Identity Theft Affidavit, Form 14039, Identity Theft Affidavit .

    • If the taxpayer claims he or she is a victim of Identity Theft, confirm whether documentation has already been received. If TC 971 with action code (AC) 501 is present on CC ENMOD for the tax year in question , do not request further documentation.

    1901C Response from payer, Determine correct action based upon employer verification of taxpayer income. Advise the taxpayer of actions taken with appropriate IDRS letter.
    Identity Theft documentation is received from the taxpayer,
    • Input TC 971 with AC 501 on CC ENMOD for the tax year(s) indicated

    • Forward the documentation to the AUSC RHC per the list of RHCs on Servicewide Electronic Research Program (SERP) website, under the Who/Where tab.

    Identity Theft verification documents received and taxpayer disputes all or part of the income reported for their social security number (SSN),
    • Conduct liability determination excluding Identity Theft amount(s). Close if appropriate per Document 6209, Section 11, TDI Closing Codes.

    • Follow IRM 25.12.1.14.1, Releasing the Refund Hold Freeze if release of the refund is appropriate.

    • Check for TC 971, AC 501 on CC ENMOD and input if necessary

    • Correct the taxpayer's records by preparing Form 9409, IRS/SSA Wages Worksheet, for any income that doesn't belong to the taxpayer. Mail Form 9409 to the Social Security Administration (SSA) at the following address: Social Security Administration, 300 N. Greene Street, Baltimore, MD 21201 ATTN: DCC

    Note:

    Document AMS history to show that Form 9409 was mailed to SSA.

25.12.1.8.1.4  (11-24-2009)
Taxpayer Files Return(s)

  1. Process RH Returns received as follows:

    1. Date stamp all returns received and ensure they are worked in a First In/ First Out basis according to IRS received date in order to ensure timely processing. Returns will be considered aged if not worked within seven (7) days from receipt at the site.

      Note:

      Field Assistance only will follow b) below, then immediately forward returns for screening and input of the return to the Refund Hold Coordinator at PO Box 149338, Stop 5501 AUSC, Austin, TX 78714-9338

    2. If all delinquencies are resolved and no balance due exists for the taxpayer, release the freeze per IRM 25.12.1.14.1, Releasing the Refund Hold Freeze.

      Note:

      If an ASFR 90-day letter has been issued, and the taxpayer's refund was transferred to the delinquent year, do not transfer it back to the original year. Once the refund is moved to the delinquent year it becomes a payment on that module and should be allowed to refund from that year. The one exception is when a taxpayer provides proof of Identity Theft, and the delinquency (TDI) is closed with no assessment.

    3. Research all returns received on the ASFR system to determine if the RH return is an ASFR case. If ASFR returns indicate Even or Refund and there are no other obligations, release the freeze per (b). If there is an account on ASFR or there has been an ASFR 30-day or 90-day letter issued on the tax year of the return, forward to ASFR for processing. Research of RH returns on ASFR and appropriate module update will reduce CP 36 and default generation. ASFR will input the return and research the account for resolution of all delinquencies. ASFR returns received with the RH alert on the ASFR module must be processed within seven (7) days of receipt at the CSCO site or at TC dummy 150 posting if not present and a 30 day letter has been issued. See IRM 5.18.1.10.2.1.1.1 , Refund Hold Responses.

    4. Forward ASFR cases on the Brookhaven Service Center (BSC) database immediately to PO BOX 9013 Holtsville, NY 11742-9013

    5. W&I ASFR cases will remain in and be processed at the ASFR site where received.

    IF AND THEN
    The case is not on ASFR, is a Refund or Even Balance return,
    • Verify via IDRS if this resolves all delinquencies and no other balance due is present.

    • Input appropriate TDI Closing Transaction per Document 6209, Section 11,TDI Closing Codes.

    • Release the freeze per IRM 25.12.1.14.1, Releasing the Refund Hold Freeze

    • Verify Entity information is correct.

    • Forward the return to Submission Processing.

    If the case is not on ASFR and, is a Balance Due Return,
    • Input appropriate TDI Closing Transaction per the Document 6209, Section 11, TDI Closing Codes.

    • Verify Entity information is correct.

    • Forward the return to Submission Processing.

  2. Expeditious processing of balance due returns and subsequent posting of the TC 150 will resolve the delinquency condition and systemically release the RH freeze resulting in refund issuance.

    Note:

    DO NOT release the freeze on balance due returns.

25.12.1.8.1.5  (09-25-2008)
CSCO Refund Hold Taxpayer Toll-free Contact

  1. Incoming calls to the RH toll-free number, 1-866-897-3315, should be based on the RH account identification per IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold .

  2. This section addresses specific taxpayer issues which may be encountered while taking toll free calls in addition to issues listed in IRM 25.12.1.8.1.3, Taxpayer Written Responses .

  3. Follow established procedures in IRM 21.1, Accounts Management and Compliance Services Operations and IRM 21.3, Taxpayer Contacts while talking to the taxpayer.

  4. Make every attempt to update the taxpayer's account while you have the taxpayer on the phone. Make the taxpayer aware of your actions by stating, "I would like to take a few minutes to complete the actions on your account. Do you mind holding?" If the taxpayer says yes, do not put the taxpayer on hold.

  5. There are specific standards to which ASFR/RH toll-free employees must adhere. The first is to be knowledgeable about the case on which you are speaking with the taxpayer. Appropriately research the account, determine the objectives of the call, and prepare to listen and control the course of the conversation. While protecting the rights of the taxpayer, you must not be intimidating, but respond to the taxpayer's issues calmly and politely. Surnames must be used when identifying yourself and when addressing the taxpayer. To prevent misunderstandings, IRS jargon must be avoided when communicating with the public. Finally, the conversations must be clear, concise, and controlled. Ensure all the taxpayer's questions have been resolved prior to ending the call.

  6. Do not disclose restricted RH criteria provided in IRM 25.12.1 Delinquent Return Refund Hold Program, Processing Refund Hold Inventory, when explaining required actions to resolve the account to the taxpayer.

  7. In addition to direction provided in IRM 25.12.1.8.1.3, Taxpayer Written Responses,for taxpayer inquiry, do the following:

    IF THEN
    The taxpayer is in RH and has a module on ASFR, Advise the taxpayer to file the delinquent returns in order to resolve the RH and ASFR issue. Refer to IRM 5.18.1.10.1, Taxpayer Telephone Inquires, to address specific ASFR call issues. WOEA per IRM 25.12.8.1.3, Taxpayer Written Inquiries.
    Third Party Contact, Follow guidelines provided in IRM 21.1.3.3, Third Party (POA/TIA/F706) Authentication and IRM 21.1.3.4, Other Third Party Inquiries. If the third party cannot provide the required documents and the taxpayer is not present to provide third party authorization, do not access the account. Explain the letter in general terms. At the call's end, access the taxpayer's account to input notes regarding the contact.
    The taxpayer wants to fax the delinquent return(s), Remind the taxpayer to sign the return(s). Follow IRM 25.12.1.8.1.4, Taxpayer Files Return(s) when processing faxed returns.
    The taxpayer has other questions unrelated to ASFR or RH, Refer to irs.gov , http://www.irs.gov/, for individuals with Internet access, or provide the appropriate toll-free number listed at www.irs.gov, Contact IRS (top of screen).
    The taxpayer wants to know where to file, If the case is only RH related, provide: PO Box 149338, Stop 5501, Austin TX 78714-9338. For ASFR related modules provide the appropriate ASFR site address based on which ASFR database the case resides.

25.12.1.9  (09-15-2008)
Taxpayer Advocate Service (TAS) Consideration

  1. The Service recognizes taxpayers may experience problems associated with the holding of the refund that may meet TAS criteria. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria for information on case criteria that qualifies taxpayers for TAS assistance.

  2. If the case can be resolved or steps taken to resolve the case within 24 hours, then do not forward the case to TAS unless the taxpayer asks to be referred to TAS.

  3. TAS does not have the authority to release refunds when there is a -R freeze RH on the account, regardless of the amount of the refund. In situations where TAS determines a freeze release may be appropriate, TAS will request release of the freeze through the Operations Assistance Request (OAR) process in accordance with the TAS/W&I Service Level Agreement.

  4. To prevent delay in systemic release of refunds for taxpayers meeting the criteria in IRM 25.12.1.14.1, Releasing the Refund Hold Freeze , TAS caseworkers should only establish control in "B" status when an IDRS control base is required on RH cases.

  5. In cases where TAS determines a manual refund is needed to relieve a taxpayer's economic hardship, TAS will include economic hardship documentation with the OAR to support the request. If the economic hardship amount is less than the expected refund, a manual refund should be made for the verified economic hardship amount only.

    Example:

    A taxpayer's refund has been held. The taxpayer contacts IRS and states he is delinquent in his rent payments and has received an eviction notice. Even though the refund is for $3,000, only $1,200 is needed to avoid eviction. The employee will recommend a manual refund of $1,200.

  6. Examples of economic hardship include but are not limited to:

    1. Foreclosure or eviction notice.

    2. Financial information showing the taxpayer is unable to meet basic living expenses.

    3. A statement from a health care provider stating that services are necessary and will not be provided without prepayment.

  7. In certain circumstances, either due to the urgency or the nature of the taxpayers economic hardship, oral or written testimony explaining the hardship may be accepted.

    1. Example:

      Example: The hardship is validated by contacting a third party (e.g., a landlord or utility company) to verify the existence of the economic hardship.

      Example:

      Example: The hardship is validated by contacting a homeless shelter to verify the taxpayer does not have housing.

  8. A RH freeze may only be released under certain circumstances. See IRM 25.12.1.1 for criteria for releasing the RH freeze. Separate requirements must be met to justify a manual refund, see IRM 25.12.1.14.1, Releasing the Refund Hold Freeze.

    1. Refund Holds and Delinquent Returns. The TAS case advocate will advise the taxpayer that filing delinquent return(s) will speed up the release of the refund. Once a balance due return is processed and the TC 150 posts, the refund hold will systemically release. TAS will send all delinquent balance due returns directly to Submission Processing. TAS should send all Refund and Even Balance returns to Compliance on an OAR if this resolves all the taxpayers delinquencies causing the Refund Hold. If Compliance receives a balance due return with an OAR, Compliance will send the return to Submission Processing, and when the TC 150 posts, the RH freeze will systemically release.

    2. Refund Holds and Refund Anticipation Loans (RAL). The taxpayer indicates he has entered into a RAL. The acceptance of the RAL can be verified through the use of Command Code TRDBV, "REFUND ANTICIPATION LOAN CODE" on the last page, last position of Form 1040, U.S. Individual Income Tax Return , document. It is a 1 digit code input by the return preparer when the electronic Form 1040 is submitted. The codes are:
      0 - The refund is a non bank product.
      1 - The refund is a pre-refund product such as a RAL (loan product).
      2 - The refund is a post-refund product such as a RAC (refund anticipated check/non-loan product).

      Note:

      The "BANK ACCT NUM" field may have a RAL indicator with the taxpayer's social security number in place of the account number. Absence of the RAL indicator in the "BANK ACCT NUM" field does not indicate no RAL was sent. Refer to the "REFUND ANTICIPATION LOAN CODE" .

      Presence of a RAL indicator does not mean the taxpayer can demonstrate economic hardship, or that the RAL was approved. Once the taxpayer's return is electronically filed, the IRS provides information about possible offsets via the e-file acknowledgement file. The Debt Indicator is included in the acknowledgement file for each accepted e-filed return and provides information as to whether the taxpayer has any outstanding IRS or Financial Management Service (FMS) debts. A RAL application is rejected by the lender when the Debt Indicator indicates the IRS will withhold part or all of the refund. In situations when the RAL application is rejected by the lender (i.e., the taxpayer has not received the RAL proceeds), if the taxpayer can demonstrate economic hardship, then release of the freeze may be necessary. If TAS determines a manual refund may be appropriate, TAS will request actions on the refund through issuance of an OAR documenting the economic hardship.

    3. If TAS determines the taxpayer is not required to file a return for the delinquent period(s), TAS will submit supporting documentation with an OAR to ask Compliance to release the RH freeze and close the delinquent return case.

25.12.1.10  (09-25-2008)
Guidelines for Taxpayers in Disaster and Emergency Areas

  1. Refunds are held on modules with -O freezes. Relief is granted by releasing the RH freeze if the taxpayer makes contact and indicates an impact by the disaster. See IRM 25.12.1.14.1, Releasing the Refund Hold Freeze.

    Note:

    Although a freeze may be released because of extenuating circumstances, the delinquency causing the RH remains open and assigned. It should be worked according to current IRM guidelines for delinquent returns.

  2. IRM 25.16, Disaster Assistance and Emergency Relief , provides complete background and multifunctional operating procedures.

25.12.1.11  (09-25-2008)
Examination RH Case Processing

  1. Each week CSEO receives notification of Examination RH cases via the LE62740Z report. RH cases are processed in the same manner as other Campus Exam cases; however, they require expedited tax deficiency assessments to meet the time periods established to offset the held refunds.

  2. Within five business days of receiving the LE62740Z listing, CSEO RHC will:

    • Download and sort listing by BOD and TC 420 DLN to identify its campus inventory.

    • Review its assigned cases and provide listing to management of specific TINs.

      Note:

      If the account is assigned to another campus than the original TC 420 DLN, communicate RH module to assigned campus RHC.

    • Monitor to ensure cases are expedited to assessment or closure.

  3. See current year Operating Guidelines for inventory information such as Project/Source/Organization Function Program (OFP) codes.

  4. CP 88 notices are issued to taxpayers when RH exists and there is a related module open on AIMS. A CP 88 notifies a taxpayer that a refund is being held and provides a local contact name, phone number, hours of operation and the toll-free phone number for Examination.

  5. The CSEO RHC must establish an inventory control system to ensure the timely and expeditious resolution of the RH.

25.12.1.11.1  (09-25-2008)
Examination RH Cases with Prior Years in Appeals

  1. Cases in Appeals can be identified on Master File by a TC 300 for $.00, a disposal code of 7, 11, or 12 and an Appeals office code. See Document 6209 (IRS Processing Codes and Information) for identifying Appeals office codes and statuses.

  2. The Examination RHC is responsible for contacting the Office of Appeals or Area Counsel to determine the status and history of a RH case in Appeals or Litigation. In coordination with these offices, make a decision immediately whether to release the freeze.

  3. The Examination RHC must work with Appeals to determine whether the refund should be held beyond the designated hold period per IRM 25.12.1.4.1, Holding a Refund Beyond the Designated Hold Period .

  4. The Examination RHC is responsible for determining if the refund should be held on cases being appealed. The taxpayer appeal should be reviewed by the examiner and discussed with the Examination RHC to determine the appropriate action.

25.12.1.11.1.1  (11-24-2009)
CSEO Discretionary RH Case Processing

  1. Assigned employees shall:

    1. Establish a system for control and follow up on the refund years to ensure the account is resolved within the designated hold period. See IRM 25.12.1.2, How to Identify Delinquent Return refund Hold, for information on time sensitivity.

    2. Review to determine what actions can be taken in the time remaining in the designated hold period. See IRM 25.12.1.4.1 Holding a Refund Beyond the Designated Hold Period

    3. Research IDRS for pending transactions to ensure the RH is valid.

    4. If RH freeze is not valid, input TC 290 for $.00 with Priority Code (PC) 08, and RC 085 to the RH module to release the refund.

    5. Work each case expeditiously to ensure time periods are met.

    6. Ensure Project Codes are updated per current year Operating Guidelines for each module in the account.

    7. Provide feedback to RHC.

  2. Valid RH cases and responses to the CP 88 should be researched to determine what actions should be taken in the time remaining in the designated hold period (see IRM 25.12.1.2 How to Identify Delinquent Return Refund Hold ) as follows:

    IF THEN
    Taxpayer agrees to file, Instruct him/her to file the return by a specific date. Include WOEA
    Delinquent return is received, Close or resolve the delinquency case per regular IRM guidelines. Ensure release of the RH if appropriate.
    If the taxpayer needs additional time to gather records and cannot file the returns within the designated hold period, Consider securing a taxpayer agreement to continue the RH past the designated hold period.
    If, after contact with the taxpayer or through research you determine the taxpayer is not liable, has previously filed, would be due a refund, or would have a liability less than the required criteria, Release the refund freeze. Prepare Form 3198, Special Handling Notice for Examination Case Processing , and annotate in red - RH - Requires Release.
    If, after contact with the taxpayer or through research you determine the taxpayer is liable for a balance due return greater than the required criteria, A Statutory Notice of Deficiency must be issued.
    If taxpayer cannot be located, Consider the case circumstances and determine if a Statutory Notice of Deficiency should be issued to allow the refund to offset the liability. It is prudent to make a valid assessment and apply the refund to the balance due.
    If assessment is not required because the taxpayer has no liability, Release the freeze.
    If the taxpayer cannot be contacted, is uncooperative or refuses to file, and there is no indication of a greater income level in the case file, Issue a Statutory Notice of Deficiency if there will be a balance due.
    If there are indications of a greater income level and additional case development is necessary, Request approval to continue the RH past the designated hold period.
    Statutory Notice of Deficiency should be issued or taxpayer does not respond to the 30-Day letter, Issue a Statutory Notice of Deficiency and transfer RH credit to the deficiency module per regular IRM guidance.
    Enough time remains within the designated hold period to allow for default and assessment and current year refund is less than the tax, penalties, and interest on the Statutory Notice of Deficiency year(s), The computer will transfer the money to the delinquent year upon assessment.
    Not enough time remains within the refund hold time period to allow for default and assessment and current year refund is less than the tax, penalties, and interest on the Statutory Notice of Deficiency year(s), Secure taxpayer Statement or Justification Memo to continue RH until the assessment is posted and offset takes place. Prepare Form 3198, Special Handling Notice for Examination Case Processing , to have credit transferred and route to Case Processing. Request transfer of the entire refund held by the TC 570/999 to the earliest tax period and request input of TC 570 to the Statutory Notice of Deficiency year.
    Current year refund is more than the tax, penalties, and interest of the Statutory Notice of Deficiency year(s), Prepare Form 3198, Special Handling Notice for Examination Case Processing , to request transfer of an amount equal to the tax, penalty, and interest to each Statutory Notice of Deficiency year. Request input of TC 570 to that tax period and input TC 290 for $.00 with PC 08 and RC 085 to the RH year.

  3. When 60 days or less remain in the designated hold period, make a decision whether to:

    1. Issue a statutory notice of deficiency and transfer credit.

    2. Release the freeze, or

    3. Request approval to hold the refund beyond the designated time period.

      Note:

      If the refund needs to be held longer, -L freeze should be established on RH year and a TC 290 input per instructions in IRM 25.12.1.4.1, Holding a Refund Beyond the Designated Hold Period .

  4. For Statutory Notice of Deficiency Cases:

    IF THEN
    Statutory Notice of Deficiency should be issued,
    1. Prepare the report and issue the 30-day letter.

    2. Prepare and process an SFR.

    Taxpayer does not respond to the 30-day letter, Issue a Statutory Notice of Deficiency and transfer RH credit to the TDI module.
    Enough time remains within the designated hold period to allow for default and assessment, The computer will transfer the money to the delinquent year upon assessment.

25.12.1.11.1.1.1  (09-25-2008)
CSEO Revenue Protection Strategy RH Case Processing

  1. The Revenue Protection Strategy (RPS) Program includes cases where the Earned lncome Tax Credit (EITC) claimed by a taxpayer is being held by a TC 576, Unallowable Tax Hold, coupled with TC 768, Earned Income Credit Tax Credit, in the current year. These cases are worked by Examination, Accounts Management and/or Criminal Investigation. Cases with TC 420 indicate AIMS control has been assigned to Correspondence Examination. The EITC Program takes precedence in holding current year refunds. If there is sufficient additional refund beyond that being held by the EITC program, the taxpayer will also be included in the RH program. Notification from each program will be issued separately to the taxpayer.

  2. When the RHC or an assigned employee/function identifies that a taxpayer with a RH is also being worked in the RPS, contact the RPS Coordinator in CSEO immediately to coordinate processing.

  3. RH and RPS cases are combined and worked In CSEO/Correspondence Examination.

    Note:

    EITC should not release the freeze or remaining refund when they are done if there is another year with an L freeze or TDI.

25.12.1.12  (11-24-2009)
Accounts Management Correspondence and Claims

  1. Accounts Management (AM) will have minimal interaction with RH because the accounts are assigned to Collection or Examination. The notices issued in relation to RH do not contain AM toll-free numbers.

  2. Refund Hold referral to 1-866-897-3315 should be based on the RH account identification per IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold . DO NOT refer taxpayers wishing to inquire regarding the STATUS of their refund. Follow the normal refund inquiry procedures for your function if there is no evidence of a Delinquent Return Refund Hold on the account. See IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold.

  3. When correspondence or claims are received for a RH account, it must be given priority attention, and referred to the appropriate RH coordinator:

    IF AND THEN
    Response is received on a RH case via written correspondence,   DO NOT RELEASE REFUND. Route response to the Refund Hold Coordinator: AUSC, PO Box 149338, Stop 5501, Austin TX 78714-9338. Advise the taxpayer to file all delinquent returns to resolve the freeze situation. If further assistance is required provide the toll-free number 1-866-897-3315. DO NOT prepare Form 4442, Inquiry Referral . DO NOTadvise the taxpayer his/her refund will be released by calling this number.
    Amended return is received Refund is less than IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold , and all payments belong (TC 610) to the refund year. Process the amended return.
    Amended return is received Refund is more than IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold , and/or all payments do not belong (TC 610) to the refund year. Contact the RHC in Austin. See Who/Where on SERP, to determine the RHC at the AUSC site.
    Amended return is received Refund is more than IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold , and all payments belong (TC 610) to the refund year and TC 570, Julian date 999 is present on the module. Process amended return using Hold Code 2 to hold the notice and refund. Issue the taxpayer 288C letter advising them their refund is being held until all delinquent returns are filed and to contact 1-866-897-3315 if further assistance is needed.
    Delinquent returns or copies of a filed return(s)   Follow IRM 5.19.2.6.4.5.12, IMF Response with Original Return(s) for processing returns received.
    Injured Spouse Allocation is received One or both spouses owe child support or other federal debt. Refer to IRM 25.12.1.12.2, Processing Injured Spouse Allocations.
    Taxpayer indicates an economic hardship   In order to determine if referral to TAS is appropriate see IRM 25.12.1.9, Taxpayer Advocate Service (TAS) Consideration

25.12.1.12.1  (09-25-2008)
Handling Delinquent Return Refund Hold Freeze Toll-free Contacts

  1. Once it is determined the toll-free contact involves RH see IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold DO NOT address the case in any way. Advise the taxpayer to call 1-866-897-3315. This is the number provided on the CP 63 letter the taxpayer will receive or has already received.

    Note:

    If the taxpayer has filed electronically he/she may be calling prior to the CP 63 or CP 88 having been issued.

  2. If the taxpayer has not received the letter yet, advise the taxpayer he/she will be receiving a CP 63 letter and the number to contact is 1-866-897-3315 in order to resolve the RH freeze.

  3. DO NOT address the delinquency(ies) that caused the RH freeze. Refer the taxpayer to 1-866-897-3315.

  4. DO NOT attempt to release Delinquent Return RH freezes when taxpayers make toll-free contact to AM toll-free lines. Provide the taxpayer in RH with the toll-free number 1-866-897-3315.

  5. The RH toll-free assistors can advise the taxpayer in this situation what returns are required to be filed or resolve the delinquency(ies) in order for the taxpayer's current year refund to be released.

    Note:

    See IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold.

25.12.1.12.2  (09-25-2008)
Processing Injured Spouse Allocations

  1. AM may receive Form 8379, Injured Spouse Allocation , attached to an original or amended return. These allocations must be expedited if the account contains a RH TC 570/999.

  2. Determine who is responsible for the delinquent module(s) and contact the appropriate RHC to discuss. This is determined by the assignment code, or org code on AIMS.

  3. If there is an open TC 570/999 on the account:

    1. Verify that the allocation is complete.

    2. Compute the injured spouse refund.

    3. Disallow or reject the allocation when necessary.

    4. Where no Treasury Offset Program (TOP)/ IRS liability exists, close your control base.

    5. Contact the assigned employee/function to discuss the case circumstances and determine if a refund should be issued to the injured spouse.

  4. If approved, issue the manual refund for the allocated amount.

    1. Note in remarks section on Form 5792, Request for IDRS Generated Refund (IGR) , "Injured spouse allocation, spouse not liable for TDI" .

    2. Close your control base.

    3. Do not attempt to release or transfer any remaining credit. Credit in excess of the manual refund will be held on the account pending release of the RH freeze or credit transfer. Under no circumstances should a RH freeze be released without CSCO or CSEO concurrence.

  5. If disapproved:

    1. Reassign/transfer the case to the assigned function.

    2. Send a letter to the taxpayer advising that you are forwarding the case to that function and advise them to respond to the CP 63 letter. (Include the letter date from TXMOD).

25.12.1.13  (09-25-2008)
Area Office Collection

  1. Attempt to contact the taxpayer within 10 days of receiving notification.

    IF THEN
    Your function is unable to resolve the taxpayer's problem and the taxpayer's response meets TAS referral criteria, Follow procedures in IRM 25.12.1.9, Taxpayer Advocate Service (TAS) Consideration.
    The taxpayer is affected by a natural disaster or emergency, Follow procedures in IRM 25.12.1.10, Guidelines for Taxpayers in Disaster and Emergency Areas.
    There is a filing requirement, Set a date for filing.
    The taxpayer agrees to file within 30 days, Document the case history for a 45-day follow up.
    The return is received within the 30 days, Attach Form 13133, Expedite Processing Cycle , or mark the return in red with "Expedite Processing-Refund Hold."
    The return is not received by the follow-up date, Consider referring the case to ASFR or Examination.
    The taxpayer agrees to file on a date beyond the referral deadline, Advise the taxpayer that you will document the commitment to file in the case notes but, because it will not be filed by the referral deadline, the case has to be transferred to ASFR/Examination for further review and follow up. ASFR and Examination referrals must be made in sufficient time to issue a Statutory Notice of Deficiency within the designated hold period. If sufficient time does not exist, referral is not warranted.
    The taxpayer previously filed, Follow current IRM guidelines for closing the TDI.
    The taxpayer is not required to file,
    The delinquent return would probably yield a refund,
    The liability would be less than LEM 5.19.2.6.4.5.3, IMF Little or No Tax Due.
    The taxpayer refuses to file or the taxpayer cannot be located or contacted, Consider referring to ASFR or Examination.
    A referral is not appropriate or is not accepted, Consider using the remaining time to pursue resolution (extending beyond the designated hold period if warranted).
    All efforts to resolve the Refund Hold are exhausted, Allow the refund to systemically release after the designated hold period has expired.

25.12.1.14  (11-24-2009)
Handling the Refund Overview

  1. This section provides information on disposition of the refund: how and when to release it and how to continue to hold it if more time is needed.

  2. This section describes options to continue holding the refund with the taxpayer's agreement or with managerial approval (absent the taxpayers agreement).

  3. If the taxpayer does not voluntarily file the delinquent return(s) and you anticipate a liability. See IRM 25.12.1.2, How to Identify Delinquent Return Refund Hold , issue a Statutory Notice of Deficiency. Once a Statutory Notice of Deficiency (90-day letter) is issued for a year, the proposed refund can be transferred to that deficiency year. It will remain there until a return is filed or the Service imposes the proposed assessment after the appropriate suspense period. See LEM 5.18.1.10.2.2.3, Undelivered 90-day Letter (Statutory Notice of Deficiency) for ASFR Statutory Notice of Deficiency time frames.

25.12.1.14.1  (11-24-2009)
Releasing the Refund Hold Freeze

  1. The assigned area, CSCO OR CSEO, is responsible for ensuring the RH is properly and timely resolved prior to release.

  2. Refunds are released systemically by Master File or by request through IDRS. Master File release takes place when:

    1. The designated hold period expires. A TC 571 is used with 998 in the Julian date. The six-month period begins April 15 for the current year or from the date of filing, whichever is later

    2. A TC 290 or TC 300 coupled with a TC 599 posts to the SFR/ASFR delinquency(ies). A TC 571 is used with 999 in the Julian date

    3. A TC 590, 591, or 593 post to the delinquency(ies)

    4. A freeze restriction becomes present (-C, -V, -W, -Z, or Z-)

    Caution:

    Input of a TC 571 will not release the RH freeze.

  3. Manual release of the freeze takes place by input on IDRS of a TC 290 for $.00 with Priority Code (PC) 08, and Reason Code (RC) 085 to the Refund Hold module (TY of refund being held) when one of the following criteria is met:

    1. Liability determination has been made on all delinquency(ies) related to the taxpayer and there are no balance due modules unless there are Compliance select codes present

    2. All delinquent return(s) are submitted and there are no balance due conditions

    3. The taxpayer is experiencing an economic hardship and supporting documentation has been provided by Taxpayer Advocate Service (TAS) on the Operations Assistance Request (OAR)

    4. The taxpayer is in a declared disaster area and has self identified as an affected taxpayer

    5. The taxpayer filed with spouse and it has been verified there are no balance due conditions related to the taxpayer

    6. The taxpayer is deceased

    7. The taxpayer is in bankruptcy

    8. The taxpayer is in a combat zone and there is no exit date present on CC IMFOL with an E definer

    9. The taxpayer is under criminal investigation

  4. Due to the high potential for duplicate/erroneous refunds being issued when a RH freeze is released and manual refunds input, manual refunds generated for Delinquent Return Refund Hold are restricted to taxpayers meeting economic hardship criteria and only when the refund amount is less than the amount being held. Release of the RH freeze if the entire RH amount is to be issued to the taxpayer is just as timely as a manual refund would be.

  5. The assigned area is responsible for releasing the freeze when appropriate. If a taxpayer contacts a non-assigned employee about a RH release, the non-assigned employee should refer the taxpayer to the functional area for action. Refer to SERP Who/Where for RHC contact information.

  6. Release of the refund proceeds manually will only be completed with approval of CSCO caseworkers assigned to work TAS Operations Assistance Requests (OARs) when the taxpayer has documented an economic hardship per IRM 25.12.1.9, Taxpayer Advocate Service (TAS) Consideration or is in a federally declared disaster area per IRM 25.12.1.10, Guidelines for Taxpayers in Disaster and Emergency Areas .

  7. If all efforts to resolve the RH are exhausted, ensure the taxpayer received the CP 63 letter and allow the refund to release systemically at the end of the designated hold period.

25.12.1.14.1.1  (09-25-2008)
Holding a Refund Beyond the Designated Hold Period

  1. Only CSEO may consider holding a refund beyond the designated hold period. See IRM 25.12.1.4.1, Holding a Refund Beyond the Designated Hold Period for criteria and procedures.

25.12.1.15  (09-25-2008)
Additional Information

  1. Enterprise Learning Management System (ELMS) Training Module 18666, Correspondence Examination Procedural Module - Refund Hold contains training guidance for Campus Examination operations.


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