Refer to IRM 25.15.3.6.6 for additional information on de minimus tax liability.

Notate Activity Record, "Received additional information, changing determination to A6015(?) or P6015(?)" .

Send second preliminary determination letter to the RS, NRS, and current POA, if applicable.

Explain relief was allowed or partially allowed based on the additional information.

If a refund is due, put case in appropriate folder.

Prepare amended work papers and Form 3465, Adjustment Request.

Refer to IRM 25.15.15.3.5, Relief Disallowed, for closing instructions on mirrored modules. Refer to IRM 25.15.9.1.6, Partially Allowed Requests - Full Scope Examiners, and IRM 25.15.9.1.7, Allowed Requests - Financial Specialists, for closing instructions on non-mirrored modules.

Update IDRS control base with the new purge date.

Update ISTS and the ISTSR Input Record to Stage 25 (with the activity date immediately preceding the new Stage 11 activity date) and then Stage 11. Enter the new 30 day purge date.

Suspend the case for 45 days waiting for appeal.

Notate Activity Record, "Received additional information with a new reason for disallowing."

Send second preliminary letters to RS, NRS, and current POA, if applicable. Explain that you reconsidered the claim based on the information submitted but the determination has not changed, only the reason changed. Advise the reason for your decision.

Prepare amended work papers.

Update IDRS control base with the new purge date.

Update ISTS and the ISTSR Input Record to Stage 25 (with the activity date immediately preceding the new Stage 11 activity date) and then Stage 11. Enter the 30 day purge date.

Suspend the case for 45 days waiting for appeal.

Notate Activity Record, "Received additional information, no change in determination" .

If time to appeal has expired, issue the final determination letter.

If time to appeal has not expired, contact the RS and advise him/her there is no change in our determination and remind him/her of when the appeal rights will expire. Refile on 30–day wall. Update IDRS control base back to the original purge date.

Notate Activity Record "Received additional information, no change in determination."

Prepare Form 3198, Special Handling Notice for Examination Case Processing, for Letter 4144C with the standard no change in determination paragraph.

IRM 25.15.7.11.11., Appeals Procedures, for procedures on forwarding cases to Appeals.

See IRM 25.15.17, Reconsiderations .

Once the final determination letter (90 day letter) has been issued, neither the RS nor the NRS can appeal.

Review the information submitted. If it meets the guidelines for issuing a second final determination letter, process the request per the procedures. IRM 25.15.7.11.10., Rework.

If the request does not meet the guidelines for issuing a second final determination letter, send Letter 4144C explaining that the time to Appeal has expired. Advise the RS that she may petition the Tax Court unless that time has also expired.

Each case must have:

Update ISTS and the ISTSR Input Record to Stage 07 APPLXXX (X is P for primary, S is for secondary, B is for both taxpayers, this indicates who has filed the appeal followed by the two digit Appeals Office Code).

Update ISTS history item "Send to Appeals" .

Send Letter 4144C to RS and NRS. . Do not prepare send Letter 4144C on a docketed case.

Close IDRS control base.

If the taxpayer has a question regarding his/her open case in Appeals or the question can only be answered by Appeals, you may contact an Appeals Account Resolution Specialist in Fresno at (559) 456–5931 to determine who worked the case.

If a taxpayer petitions the Tax Court, it should be identified through Docket Information Management System (DIMS) research. It may also be identified through a phone call or a fax from Appeals requesting the case.

If claim was disallowed for no verification, the final determination letter was issued, the questionnaire was not received timely and the case has now been docketed, the Financial Technician will:

The Closing Examiner will:

Bankruptcy is identified by Transaction Code (TC) 520 for either the RS, NRS, or both. Once a determination is reached, fax (refer to campus directions for the fax number) the result to the appropriate office. Hold for 24 hours, then process the case.

Update History Sheet.

IRM 25.15.7.6.8.1., Liens, for information on claims where Liens are involved.

IRM 25.15.7.6.8.2., Automated Collection System (ACS) Tax Levy, for information on claims where Levies are involved.

If the RS has requested relief for a year where there is no joint return but the RS filed a married filing separate return, check to see if the RS lived in a community property state. See http://win.web.irs.gov/innocentspouse/innocent_documents.htm for a list of community property states.

A community property issue can also exist if the RS filed as single or head of household and their correspondence indicates community income was reported on the return. Do not consider community property if a joint return was filed.

Community property cases will be referred as a technical referral.

If statements of the NRS and RS contradict each other and there is no other information within the case file to make a determination, reassign the case to the Financial Specialist for assistance.

Consistent treatment of all innocent spouse claims involving adjustments to partnership item is critical. All Tax Equity Fiscal Responsibility Act (TEFRA) cases are to be reassigned to the Financial Specialist.

TEFRA cases are identified by Transaction Code (TC) 420/424 with employer identification number (EIN) information. Another indication of TEFRA is Source Code (SC) 17, 23, or 39 on TXMOD or AMDISA.

There are a number of factors to consider in order to determine if Innocent Spouse claims involving adjustment to partnership items qualify for relief. No one factor is determinative of whether or not relief will be granted. Instead the Service takes into account all the facts and circumstances in determining whether relief is appropriate. These facts include but are not limited to:

See http://win.web.irs.gov/innocentspouse/innocent_documents.htm for explanations to use.

Instructions to work erroneous refunds can be found in IRM 21.4.5, Erroneous Refunds.

An erroneous refund is the receipt of money from the IRS to which the recipient is not entitled. This applies even if the erroneous refund involves the taxpayer's own money. Refer any erroneous refund as a technical referral. Examples of erroneous refunds are:

If you are unable to secure the administrative file, even after requesting a special search, and you can't work the claim without the return, reassign the case file to the Financial Specialist.

When the CSED was expired when Form 8857, Request for Innocent Spouse Relief, was received, but not closed as non-qualifying in First Read:

The most common conditions that could extend the CSED are:

See IRM 5.1.19.3, Transactions Codes That Carry Their Own CSED, for a complete list of transaction codes that extend the CSED.

If payments are made by the RS (verify the payments were made by the RS through researching the Remittance Transaction Record) and Refund Statute Expiration Date (RSED) is open, a determination must be made. If the RSED is closed, use the standard explanation for RSED expired per IRC 6511(a): "We can’t allow a claim for credit or refund if you file the claim more than 3 years after you file the return, or more than two years after you pay the tax, whichever is later. "

Send Letter 4475C to the RS, and Letter 3323C NRS, and if applicable, send to current POA.

Update ISTS and the ISTSR Input Record through Stage 12 with reason code "P" and 30. See IRM 25.15.14.4.1, Stage Definitions and Activity, for ISTS information.

Update IDRS control.

If a deficiency assessment was made to a joint account based on the signature of one spouse on a waiver of assessment, the assessment is not a valid assessment with respect to the non-signing spouse and deficiency procedures must be continued for the non-signing spouse. Similarly, if an amended return (Form 1040-X, Amended U.S. Individual Income Tax Return) was processed with only the NRS’s signature, the amended return may only be processed for the signing spouse. Refer to IRM 25.15.1.2.9, Joint Assessment/One Signature, for additional information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

If the RS is the non-signing spouse and the module has been mirrored refer to IRM 25.15.15.3.6, Barred Statute One Signature (BSOS), if the module has not been mirrored refer to IRM 25.15.9.1.4, Barred Statute One Signature (BSOS), for closing instructions.

Identify payments. If refunds are involved, place in appropriate folder and have the Lead initial.

If the statute of limitations on assessment has expired for the non-signing spouse, prepare the "Barred Statute Memo" , see http://win.web.irs.gov/innocentspouse/innocent_documents.htm . After the manager signs the "Barred Statute Memo" and returns the case to you, send Letter 3657C to the RS and current POA, if applicable. Advise the RS, "Our records indicate you did not sign the consent to assess and collect the proposed tax, penalties, and interest. Therefore you are no longer liable for the additional assessment." Send Letter 3323C to the NRS and current POA, if applicable. Advise the NRS, "Our records indicate you signed the consent to assess and collect the proposed tax, penalties, and interest on date. There is no record of RS's name signing a consent to assess and collect the liability. The statute of limitations has expired to assess and collect it from him/her. Therefore, you are solely liable for the additional assessment. "

Update ISTS and the ISTSR Input Record to Stage 29 with Activity Description "BSOS" . Then update to Stage 27 when sending the case to the Processing Team.

Update IDRS control.

If a lien was filed, follow lien procedures to remove the non-signing spouse’s name from the lien. IRM 25.15.7.6.8.1., Liens.

When the RS or Financial Technician (FT) identifies a complex account problem and there is no innocent spouse issue refer as a technical referral.

Each complex account problem referred as a technical referral shall include:

Place case in appropriate folder.

Refer back to Full Scope Technician to correct the account problem.

Control or re-control TXMOD with activity "ACCTPROB" using the Form 8857, Request for Innocent Spouse Relief, received date.

Input a comment entry on ISTS stating "Account Problem " .

If the RS requests an abatement of penalties (e.g., the failure to file, failure to pay, estimated tax, accuracy related and fraud penalties), or interest, and there is no innocent spouse issue, forward the request to Accounts Management function that processed the taxpayer's return (the file location of the Document Locator Number (DLN) identifies the campus that processed the return) and request they process as a Form 843, Claim For Refund and Request for Abatement. If the request involved other penalties, refer the case to the Lead FT. Send appropriate letter advising the RS and current POA, if applicable, that the case was transferred. Update ISTS and the ISTSR Input Record to Stage 29 with Activity Description ACTP and Stage 30 ACCTCORR. Issue Letter 86C.

When processing an innocent spouse relief request and there is an account problem:

If RS alleges forgery, look for a statement from the RS addressing the forgery issue.

The burden of proof is on the taxpayer to prove forgery and no intent to file a joint return. Compare the signature on the return or assessment document with the signature on Form 8857, Request for Innocent Spouse Relief. If it is an electronic signature you will not be able to compare signatures but you should consider "tacit consent" factors. If it appears that the RS signed the return or assessment document, or if the taxpayer intended (tacit consent) to file a joint return advise the RS and continue processing the Form 8857, Request for Innocent Spouse Relief.

If unable to determine there was "tacit consent" , reassign the case to the Financial Specialist. Notate history on ISTS, Forgery.

If you determine forgery does apply, correct the account.

If the NRS is the person claiming forgery input Transaction Code (TC) 971 Action Code (AC) 065 and TC 971 AC 131(PDC1) on the NRS's MFT 31

If the original return was valid but the amended return (TC 977/976) is the forged return:

If the original return was forged and the TC 977/976 is the valid separate return for the RS:

There are three types of invalid joint returns:

When it has been determined that the joint election was invalid, e.g., taxpayers were not married, determine each taxpayer's separate liability. See IRM 21.6.1.4.7(1) and (2) and IRM 21.6.1.4.5 (3). See Pub 17, Your Federal Income Tax (For Individuals), to determine the correct filing status, exemptions, tax, etc. Any items removed such as a dependent exemption must be documented and based on tax law. If the RS has a filing requirement, advise the RS to file a return and send it to you within 30 days. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A refund will only be issued if the payments were made by the RS and the Refund Statute Expiration Date (RSED) has not expired or if the taxpayer files an amended return.

Input Transaction Code (TC) 972 Action Code (AC) 110 to stop the mirroring of payments.

Prepare Form 3465, Adjustment Request, to remove the RS’s name from the account and change to the appropriate filing status. Abate the tax on the account attributable to the RS’s income.

Input TC 972 AC 065 using the same date as TC 971 AC (AC) 065.

If the account is not mirrored, adjust the MFT 30 and remove the spouse's name, if they are the secondary.

Refer to IRM 25.15.7.4., Automated Underreporter (AUR) or Compliance Campus Examination Operations (CCEO) - Overview.

The fact the NRS is deceased affects fact gathering. You may not get the other side of the story, so proving knowledge may be more difficult. IRM 25.15.7.2.1(4) for information on addressing letters to the deceased NRS.

When determining if it is inequitable for holding the RS liable, a deceased NRS could impact the significant benefit factor and should be considered e.g., whether the RS inherited property from the estate of the NRS.

Verify whether there is an estate. If there is an estate, is it still open?

Ask for a copy of the will. Look for assets the RS may have received.

If the RS did receive a benefit from the estate and is being granted full or partial relief, he/she should be advised they could still be held liable under other provisions of the law.

If a revenue officer was actively collecting (Collection Status 26 prior to the date the Form 8857, Request for Innocent Spouse Relief, was filed), notify the revenue officer if there was any property transferred to the RS.

If a module is going to be mirrored there only needs to be one month left on the CSED. If a module is going to be transferred to NMF there must be at least 10 months remaining on the CSED.

IRM 25.15.7.5.2.4., IDRS Research, paragraph (1)(d) for additional information on CSEDs.

If an appeal is requested, follow Appeals procedures. IRM 25.15.7.11.11., Appeals Procedures.

If case is partially or fully allowed, after purge, the closing examiner will send the case to the Processing Team. Update IDRS controls. Do not reverse Transaction Code (TC) 971 Action Code (AC) 065.

Disallowed cases can be updated to Stage 30 and closed to Files. Reverse TC 971 AC 065.

Reverse TC 130. See IRM 25.15.2.4.3, TC 130 Entire Account Frozen From Refunding.

If you are contacted by a taxpayer or family member advising the taxpayer is in a combat zone, ask for the date of deployment and input Transaction Code (TC) 500 Closing Code (CC) 56 on the account to cease enforcement activity. If this happens, suspend the claim until the taxpayer returns . Since both taxpayers have appeal rights, do not make determinations or send preliminary/final determination letters if one or both are overseas and can not act upon their rights. Send Letter 2761C to the taxpayer requesting the combat zone exit date if TC 500 CC 53, CC 55, or CC 57 is not present. Send Letter 3659C to the RS if they are not the deployed taxpayer. See IRM 5.19.1.4.10.8, Combat Zone Computation of Suspense Period, for additional information.

Update your claim to Stage 26 using Activity "COMB" and input a history item to indicate "Combat Zone RS or NRS" .

For those cases in which a preliminary or final determination letter was issued prior to 4/1/03, suspend action if the deployed taxpayer is the RS. If the deployed taxpayer is the NRS, continue processing.

If the preliminary determination letter was issued after 4/1/03, suspend any further action until the taxpayer has returned. Contact both spouses to advise them the case has been suspended. Every six months, contact should be made with the deployed taxpayer to determine if the case can be resolved.

Once the exit date is provided, input the date using REQ77 TC 500 with appropriate closing code releasing combat zone freeze code. See IRM 5.19.1.4.10.5, Combat Zone IMF Procedures, for appropriate code.

When a taxpayer disagrees with the understatement because they claim their identity was stolen, coordinate with the function that proposed the deficiency, i.e., Automated Underreporters (AUR) or Exam. They will determine the appropriate action to take regarding the identity theft. Suspend the Innocent Spouse determination until the Identity Theft issue is resolved. For additional information see IRM 4.19.13.25, Identity Theft and IRM 4.19.3.20.1.23, Stolen Identity.

Update the Innocent Spouse Tracking System (ISTS) to Stage 06.

If they determine the taxpayer is not liable for the deficiency because of identity theft, it may resolved the Innocent Spouse claim.

Once the identity theft issue is resolved, work the cases per existing procedures.