AccessibilitySkip to Top NavigationSkip to Main ContentHome  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

Part 3. Submission Processing

Chapter 14. Notice Review

Section 2. BMF Notice Review (Cont. 2)

3.14.2  BMF Notice Review (Cont. 2)

3.14.2.4 
Procedures

3.14.2.4.18  (01-01-2008)
Adjustment Notices

  1. Adjustment Notices are CP 210, CP 220, CP 225 and CP 260.

  2. Adjustment Notices generate to inform the taxpayer of adjustments or credit transfers made on the account. For example:

    • Examination (Doc Code 47)

    • Data Processing (DP) (Doc Code 54)

    • Changes to penalties, Failure to File (FTF -- TC 166/167), Failure to Pay -- decrease only (FTP -- TC 277), Failure to Deposit (FTD -- TC 186/187), Estimated Tax Penalty (ES -- TC 176/177)

    • Penalty assessed on an overpaid, non-math error return (CP 210 as first notice)

    • Credit transfer on Doc Code 34 with Correspondence Received Date entered on the credit side of FRM 34 (CP 225)

    • Credit reversal on an overpaid or even balance module resulting in a debit balance of ≡ ≡ ≡ or more (CP 260)

  3. An adjustment notice will not generate with posting of TC 290 .00 without a Credit Transaction Code.

  4. Notice Review Tax Examiners are responsible for determining the effects any adjustments or credit transfer will have on the module. Proper use of Hold Codes, Local Control File, TC 570, and unpostable bypass indicators is essential for preventing incorrect adjustment notices.

3.14.2.4.18.1  (01-01-2008)
CPs 210 and 220

  1. Notice Elements of CP 210 -- Account adjustment notice.

    1. The adjustment results in an overpayment, an even balance, or a balance due of less than ≡ ≡ (≡ ≡ ≡ ≡ for MFT 61), or the adjustment results in a balance due of ≡ ≡ ≡ or more (≡ ≡ for MFT 61), and the module was in TDA Status (22, 24, or 26) prior to the adjustment for the conditions listed in b.

    2. The adjustment is a change to tax (DP or Exam) or credits (TC's 637, 766, or TC 767), penalties (FTF, FTP (decrease only), FTD or ES), or Civil Penalty (TC 240 with Reference Numbers 680-682 for MFTs 05, 51, and 52).

    Reminder:

    When an account has quite few pending payments (such as TC's 610, 620, 640, 650, 660, 670, 700 or 710) that are resequencing or teping (TEP) or adjustment pending (AP) or corrected unpostable (CU) or pending transaction (PN), then label the notice with the appropriate label and mail out the notice.

  2. Notice Elements of CP 220 -- Account adjustment notice.

    1. The adjustment results in a balance due of ≡ ≡ or more (≡ ≡ ≡ for MFT 61) and the module was not in TDA Status (22, 24, or 26) prior to the adjustment for the conditions listed in (b).

    2. The adjustment is a change to tax (DP or Exam) or credits (TC's 637, 766, or 767), penalties (FTF, FTP (decrease only), FTD or ES), or Civil Penalty (TC 240 with Reference Numbers 680-682 for MFTs 05, 51, and 52)

      Note:

      There is no minimum money amount tolerance for the notices. If the balance due is less than ≡ ≡ ≡ , the balance due amount will print as none.

  3. An adjustment notice will have an original DLN if it generated for the recomputation of FTF (TC 166), FTP (TC 276 decrease only), ES (TC 176), or FTD (TC 186) penalties to a timely credit or extension posting after the notice module has settled or at settlement if the notice module is overpaid with no math error.

  4. The notice will have an adjustment DLN only if generated by a Doc Code 54 or 47 adjustment action. The 4th and 5th digits of the DLN will carry the Doc Code of the adjustment document. Doc Code 54 indicates an adjustment input on CC REQ54. Doc Code 47 indicates an adjustment input on CC REQ47 by Examination.

  5. CP 210 and CP 220 Review Procedures

    1. Review Adjustment Notices on IDRS to accurately determine notice disposition. Ensure the action creating the adjustment notice:
      • Is not a duplicate of a previously posted credit or adjustment
      • Is a valid credit and has not unposted on the debit side of the credit transfer

    2. Reviewing a notice generated by a Doc Code 47 or 54

      CP 210/220 Decision Table

      If Then
      The validity of the assessment or abatement is an unreasonable amount or a duplicate Compare the adjustment item with the source document. Verify the adjustment was input correctly.
      The adjustment appears to be incorrect Contact the originator (lead or manager if originator cannot be contacted) for advice in taking corrective action such as notice disposition or deleting refund.
      The originator or lead or manager cannot be contacted Take case to Notice Review lead to determine possible corrective action.

      Note:

      Verification of the adjustment action is required only if the source document is provided with the NRPS package.

    3. If the notice module has a TC 300 .00 adjustment, look for a refunding TC 640 (advance payment of determined deficiency) on the module. If the TC 640 is refunding, check the Disposal Code on CC AMDISA

      AMDISA Disposal Codes

      If Then
      Disposal Code is 01 or 02 Allow the refund and mail the notice.
      Disposal Code is other than 01 or 02 Delete the refund and contact Exam for notice disposition.

  6. CP 210 and CP 220 Notice Disposition for Doc Code 47 or 54 Transactions .

    1. Notice disposition for pending Doc Code 47 or 54 tax decrease or credit increase transaction:

      Decision Table

      IF THE PENDING IS A TAX DECREASE OR CREDIT INCREASE Then
      Input with Hold Code 0 or Hold Code 1 A subsequent notice will generate. Apply label #1.
      Input with Hold Code 2 and Doc Code 24 or 34 will post in the same cycle A subsequent notice will generate. Apply label # 1.
      Input with Hold Code 2 (no Doc Code 24 or 34 transfer) or Hold Code 4 A subsequent notice is suppressed and credit is held. Print the notice.
      Input with Hold Code 3 A subsequent notice is suppressed. Apply label:
      • # 3 if the balance due will be reduced
      • # 4 if the notice module is not refunding but the pending will create an overpayment or refund
      • #17 if the notice module is refunding and the pending will create an additional refund

    2. Notice disposition for pending Doc Code 47 or 54 tax increase or credit decrease transaction: (See table below)

      Pending Doc Code 47 or 54 Transactions

      IF THE PENDING IS A TAX INCREASE OR CREDIT DECREASE THEN
      Input with Hold Code 0 or
      Input with Hold Code 1 or
      Input with Hold Code 2 and
      Doc Code 24 or 34 will post in the same cycle.       		A subsequent notice will generate
      If the account is Then
      Refunding (the pending transaction will reduce the refund) 1. Delete the refund.
      2. Mark Notice Disposition L Return to me.
      3. Request the subsequent notice on LCF.
      4. After TC 841 posts, retype the combined information on appropriate adjustment notice.
      5. Void the other notice.
      Not refunding Apply Label #1 to the selected notice.
      Input with Hold Code 2 and
      Doc Code 24 or 34 will not post in the same cycle or
      Input with Hold Code 3 or
      Input with Hold Code 4       		A subsequent notice will not generate
      If the account is Then
      Refunding Delete the refund. After the TC 841 posts, retype the notice to reflect the correct module information.
      Not refunding ( regardless of module balance) Retype the notice to reflect the correct module balance.

    3. Notice disposition for Resequencing (RS) and Unpostable (UP) Doc Code 47 or 54 transaction.

      RS and UP Doc Code 47 or 54 Transactions

      If Then
      The transaction is resequencing (RS) The transaction will post unless conditions on the module or the transaction data will cause it to unpost. Determine notice disposition based on Hold Code per previous chart.
      The transaction is unpostable (UP) Determine if transaction will post. If determination cannot be made, print the notice. If determination is made that transaction will post, determine notice disposition based on the Hold Code input per "b" above.

      Example:

      A Doc Code 47 or 54 pending transaction with an "L" Freeze on the module will unpost without priority code 1.

  7. Reviewing CP 210 and CP 220 with a Pending Credit or Debit Transaction.

    1. If review of the module indicates pending credits or debits will post to the module, the transaction may result in systemic recomputation of penalty and/or interest. Recomputation of interest (TC 196) does not generate an adjustment notice. Recomputation of penalty will result in the issuance of a CP 210 or 220:

      CP 210/220 with Pending Credit or Debit

      If Then
      TC 166 (FTF Penalty) CC PIFTF recomputes
      TC 176 (ES Penalty) CC PIEST recomputes
      TC 186 (FTD Penalty) CC PIFTD recomputes
      TC 276 (Paying Late) CC INTST decrease only

      Note:

      CC INTST does not provide correct computation of FTP or Interest if pending payment on IDRS is Unpostable (UP), Resequencing (RS), or Tepping (TP).

    2. The penalty period for FTP (TC 276) is calculated from the date the penalty period begins (the Return Due Date) to the same date in each following month. TC 276 will not recompute if the payment is late and dated within the same monthly period as the 23C Date of the notice. If the return is due the 15th of the month, the penalty will not recompute until the 15th of the month after the 23C Date of the notice.

      Note:

      If the payment is timely (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ), the FTP will recompute and generate an adjustment notice even if the payment is dated within the same monthly period as the 23C Date of the notice.

    3. If timely credit is removed from a module, an FTF or FTD penalty may assess on the module.

      Decision Table

      If Then
      CC FTDPN indicates penalty TC 186 will assess and an adjustment notice will generate.
      CC PIFTF indicates penalty TC 166 will assess and an adjustment notice will generate.

  8. CP 210 and CP 220 Notice Disposition for Pending Credit Transactions.

    1. Notice disposition for pending (PN, RS, TP or UP) credit transactions such as TC's 610, 640, 650, 660, 670, 700 or 710:

      Notice Disposition

      If Then
      The notice module is overpaid, a refund will issue, and no subsequent notice will generate Apply label #6.
      The notice module is balance due, the balance due will be reduced, and no subsequent notice will generate Apply label #3. See caution below.
      The notice module is balance due, changes to overpaid, and no subsequent notice will generate Apply label #4. See caution below.
      A subsequent notice will generate due to recomputation of penalty (FTF - TC 166, ES - TC 176, FTD - TC 186, or FTD - TC 276 (decrease only) Apply label #2.

      Caution:

      INTST does not reflect recomputation of CCs PIFTD, PIFTF, or PIEST. If FTD penalty (TC 186), FTF (TC 166), or ES penalty (TC 176) is on the module and timely credits are applied, CC INTST will not reflect any changes to the penalties in the balance due amount.

    2. Multiple pending credit transactions on the notice module may post in different cycles. Determine the cycle the credit will post and complete notice disposition:

      Notice Disposition

      If Then
      A subsequent notice will generate Apply Label #2; Address only the pending credits that will be reflected in the adjustment on the subsequent notice. Use LCF to request subsequent notice and label with applicable label.
      A subsequent notice will not generate Apply applicable label per instructions in "(8)a" above. Address all pending credits.

      Note:

      Check CC BMFOLT for posting of credits in the subsequent cycle. The cycle indicated on the pending transaction on CC TXMOD is not always the cycle the credit posts in. The credit frequently posts in an earlier cycle.

    3. If credit is unpostable, determine if the credit will post. If determination cannot be made, do not reflect the credit on the notice.

    4. If the PN (pending), RS (resequencing) or TP (tepping) credit is listed on the NRPS contents page but not on BMFOLT or TXMOD, determine if the credit will post to the module. If determination cannot be made, do not reflect the credit on the module.

      Note:

      DLN of payment will indicate campus location of payment.

    5. CC INTST does not compute correct module information if the pending transaction is a RS, TP or UP. If the payment belongs on the module and a correct balance is required on the label:

      Decision Table

      If Then
      Payment is RS or TP and reflected on CC BMFOLT RECON module to IDRS and CC INTST for correct module balance.
      Payment is RS or TP but not reflected on CC BMFOLT Compute correct balance using CCs COMPA and COMPAF.
      Payment is UP and belongs on the module Compute correct balance using CCs COMPA and COMPAF.

    6. Ensure the transaction creating the adjustment notice is correct and valid. The credit transfer may be a duplicate transaction. If TC 700 or 710, ensure the debit side of the transfer is not unpostable and the credit is available for transfer.

    7. If the transaction has unposted on the debit side do not reverse the transaction. Unpostables will reverse the credit side of the transaction in a future cycle. Void the adjustment notice and request and void any subsequent notice utilizing LCF.

      Example:

      TC 710 posts to the notice module but has unposted on the debit side. Unpostables will reverse the TC 710 in a future cycle. Any previous penalty decrease will reverse and generate a subsequent notice.

  9. CP 210 and CP 220 Notice Disposition for Pending Debit Transactions

    1. Notice disposition for pending (PN, RS, TP or UP) debit transactions such as TC's 612, 642, 652, 662, 672, 701 or 702):

      Notice Disposition

      If Then
      The notice module is overpaid and a subsequent notice will generate and the module balance changes to balance due. 1. Delete the refund if applicable.
      2. Request the subsequent notice using LCF.
      3. Retype the subsequent notice to combine the information on one notice after all transactions have posted (including TC 841).
      4. Void the other adjustment notice.
      The notice module is overpaid and a subsequent notice will not generate and the balance will change to balance due. 1. Delete the refund if applicable.
      2. Retype the notice after all transactions have posted.
      The notice module is overpaid and the module balance will remain in credit or even balance. 1. Delete the refund if applicable.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.

      Note:

      Void the notice (rather than label) if the pending transactions is a reversal of the transaction that generated the adjustment notice. Pull and void the subsequent notice.

      The notice module is balance due and a subsequent notice will generate. 1. Request subsequent notice utilizing LCF.
      2. Retype the subsequent notice to combine the information on one notice.
      3. Void the other notice.
      The notice module is balance due and a subsequent notice will not generate. Retype the notice.
      A subsequent notice will generate and the notice is reviewed after LCF cutoff and the notice requires retyping (per above procedures). 1. Delete the refund if applicable.
      2. Retype the notice after all transactions have posted.
      3. Apply label #13.
      The pending transaction will transfer the credit to another EIN. Follow applicable instructions above, except in all instances, retype (do not label) the notice.

    2. Notice Disposition for Pending Debit Transactions -- (PN, RS, or UP) TC 820 or 830. If the pending transaction is a TC 820 or TC 830, the transaction will unpost if the overpayment is refunding or the module balance is less than the transaction amount (since the credit is not available to be transferred).

      Notice Disposition

      If Then
      TC 820 or TC 830 is in error or pending on a debit module. Take no action. Print the notice.
      TC 820 or TC 830 is correct and is pending on an overpaid, non-refunding module and the full credit is available. 1. Apply Label #7.
      2. Retype to remove credit interest included on the notice if applicable.
      3. If credit will remain on the account after the TC 820/830 posts, release the -R Freeze with TC 571 or TC 290 .00 Hold Code 3.

      Note:

      If the full amount of credit is not available, the transaction will unpost.
      TC 820 or TC 830 transaction must be reinput and the module is refunding.

      Note:

      The unpostable condition will be corrected by the Unpostable Function.

      		 1. Delete the refund.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.

      Reminder:

      Notice Review Tax Examiner is responsible for notices generating on the credit side of the transactions.


      4. Close case control.

      Note:

      Do not input 290 .00 on account. Doc Code 24/48 will release the P- Freeze when the transaction posts.
      TC 820 or TC 830 is incorrect due to insufficient credit available Follow above instructions as applicable and reinput transaction with correct amount.

      Note:

      It may be necessary to contact the originating tax examiner to determine the correctness of the transaction.

  10. Review all aspects of the CP 210 and CP 220 notice module before voiding. CP 210 or CP 220 can only be voided if:

    1. The original notice was voided (returning to taxpayer's figures)

    2. The original notice was retyped to reflect the information on the adjustment notice or the information on the adjustment notice was previously communicated to the taxpayer

    3. An adjustment notice reflecting the correct module information will be retyped in a subsequent cycle

    4. The Doc Code 47 or 54 is incorrect and subsequent pending transaction will correct the module

    5. The credit transaction that created the notice is invalid and will unpost in a subsequent cycle

    6. A pending transaction on the notice module is a reversal of the adjustment action that created the adjustment notice

      Note:

      If subsequent notice generates, request the notice on LCF and void or retype to exclude incorrect transaction as applicable.

  11. CP 210 and CP 220 cannot be voided if:

    1. The taxpayer has not previously received the information and will not receive the information on a subsequent notice

    2. If the original Balance Due Notice was voided in error and the subsequent CP 210/220 is selected, release the CP 210/220 with the current notice module information. If the taxpayer contacts Customer Service to inquire why a previous notice was not sent, the Customer Service Representative will be able to read the account history and explain the account activity to the taxpayer.

3.14.2.4.18.2  (01-01-2008)
CP 225 — Notice of Credit Transfer

  1. CP 225 is issued to inform the taxpayer that a missing payment(s) inquired about either through correspondence or telephone, has been located and applied. It generates if the CORRESP-DT field on FRM 34 is overlaid with a correspondence received date and will not be voided.

    1. There are four versions of CP 225:

      There are four versions of CP 225:
      Complete CP 225 — balance due Generates if no other notice of demand is generated in the same cycle (a CP 210/220).
      Informs taxpayer of payment(s) located and applied to the requested tax module.
      Fully explains the balance due (including tax data and penalty information)
      Partial CP 225:
      No return filed
      Overpayment
      Even Balance       		No return filed — Informs taxpayer that payment(s) was located and applied.
      Overpayment — Informs taxpayer that payment(s) was located, applied and the resulting overpayment amount.
      Even Balance — Informs the taxpayer that payment(s) was located, applied and account is full paid.

    2. The partial CP 225 and the CP's 210/220 generate in the same cycle.

    3. Use the NRPS package and IDRS to review a partial or a complete CP 225. Ensure the credit transfer creating the CP 225 is valid.

      Note:

      If both CP 225 and CP 210 are selected for review, both notices are to be reviewed. Verify tax period, all credits, tax assessed, prepayments, penalty and interest amounts. Verify balance due, even and overpayment amounts.

    4. Review the CP 225 for accuracy :

      If the CP 225 is Then
      Even balance Verify the validity of the action that settled the account.
      Overpaid Verify that the action is valid and the refund must not be intercepted.
      Balance Due Verify that the action is valid; search for remaining claimed credit(s) that match the balance due. If found, transfer in.

      Note:

      If the credit transfer that settled the account is being removed from the account with a pending TC 652, or the validity of the transfer is questioned, mail the notice. Another CP 225 will generate after the pending transactions posts.

    5. Review the NRPS package and IDRS for any AP, PN, or RS transaction that affect the notice module. For complete balance due CP 225 notices:

      Decision Table for Complete Balance Due CP 225

      IF AND THEN
      Credit(s) are pending (AP, PN, or RS) Penalties will recompute Mail the CP 225 with Label #2
      Penalties will not recompute Mail the CP 225 with Label #3 or #4
      A TC 29X or 30X is pending A subsequent notice will generate Mail the CP 225 with Label #1.
      A credit balance is refunding 1. A debit transaction is pending that will decrease the refund 1. Delete the refund. Mail CP 225 with Label #7 or #14.
      2. The overpayment is the result of a duplicate credit transfer 2. Delete the refund and retype the notice.

      Note:

      Follow procedures in IRM 3.14.2.4.27— Notice Disposition of Adjustment Notices for any other condition.

    6. Review a partial CP 225 to ensure the credit transfer is valid. If valid, mail the notice.

    7. Since the partial CP 225 is verification to the taxpayer of the payment transfer, do not label to reflect other transactions pending on the module. An additional CP 225 will generate in subsequent cycles for pending Doc Code 34 credit transfers, if correspondence received dates were input. The CP 210/220 generating in the same cycle as the CP 225 will be labeled or retyped with any changes affecting the notice module. The partial CP 225 must be mailed.

3.14.2.4.18.3  (01-01-2008)
CP 260 — Credit Reversal Adjustment Notice

  1. CP 260 is generated to inform the taxpayer of a credit reversal on the tax module. The notice generates under the following conditions:

    1. A credit reversal transaction (TC's 612, 642, 652, 662 and 672) posts without a secondary TC 570 and the notice module is zero or credit balance

    2. The resulting module balance is a debt of ≡ ≡ ≡ ≡ or more

      Reminder:

      When an account has quite few pending payments (such as TC's 610, 620, 640, 650, 660, 670, 700 or 710) that are resequencing or teping (TEP) or adjustment pending (AP) or corrected unpostable (CU) or pending transaction (PN) then label the notice with the appropriate label and mail out the notice.

    3. The credit reversal does not cause a recomputation or assessment of penalties resulting in the generation of CP 210 or 220 adjustment notice (FTF, FTD, ES or decreased FTP penalties).

      Note:

      TC 570 on the debit side of a credit transfer suppresses the CP 260 but does not suppress a CP 210 or CP 220. Hold Code 3 input on CC REQ54 does not suppress CP 260.

  2. Use the NRPS package and IDRS to review CP 260 for possible resolution of the debit balance.

    1. Check all other tax modules for a credit claimed on the notice module. If located and available for transfer, process the credit transfer. Check NRPS and the tax module on IDRS for pending (AP, PN, RS, UP, and TP ) transactions.

      Decision Table

      IF THEN
      The credit will satisfy the debit balance (overpay, even balance, or balance due less than ≡ ≡ ≡ ≡ ≡ ) Void the notice. Input CC STAUP for 9 cycles. (STAUP is not required if the credit is posted on CC BMFOL).
      The credit will not satisfy the entire debit balance, and penalties will not recompute Label the notice with Label #3. Input CC STAUP if necessary.
      The credit will not satisfy the entire debit balance but penalties will recompute (TC's 166, 186, 176 or decrease TC 276) Void the CP 260 and allow the adjustment notice to mail to the taxpayer. Input CC STAUP if necessary.
      If the credit is unpostable on the notice module or another module Input CC STAUP for 9 cycles. Notify Unpostables by utilizing CCs UPTIN, UPDIS, and UPCASZ. Follow the above for correct notice disposition.

    2. Check the tax module on NRPS and IDRS to determine if the credit needed has offset (TC 826/706)

      Decision Table

      IF THEN
      TC 826 generated from another module in the notice cycle 1. Reverse enough of the offset to cover the debit balance (if available)
      2. Transfer the credit to the notice module.
      3. Void, retype or label the CP 260, as applicable.
      4. Void CP 138. (Retype if only part of the offset was reversed). Pull and void or retype CP 128 if it generates.
      TC 826 offset in a prior cycle from the notice module or from another module Do not reverse the offset unless the credit is refunding or available for reversal, since the taxpayer has previously received the CP 138 (notification of the offset)
      TC 856 (offset of generated interest) and TC 776 (generated interest) are present and the offset is reversed. Use CC ADD24 to reverse TC 856 with TC's 731/851. Then use CC REQ54 to reverse TC 776 with TC 772 (Hold Code 3)

    3. Check the tax module for a prior cycle refund.

      Decision Table

      IF THEN
      The refund was deleted and the TC 841 will satisfy the debit balance Void the CP 260 and input CC STAUP for 9 cycles. (STAUP is not required if TC 841 has posted on CC BMFOL).
      The refund was deleted but the TC 841 will not completely satisfy the debit balance AND THEN
      A notice or a refund previously generated Retype the CP 260 with the current account information.
      A notice or a refund did not previously generate Retype the CP 260 to the appropriate settlement notice.
      The case control history shows an TC 841 with a category 3913 Void or retype the CP 260 using the above criteria. Input CC STAUP for 9 cycles.
      The refund (TC 846 was not deleted and a category 3913 is not present). Mail the CP 260.

      Note:

      Use CC COMPA to compute penalties and interest when CP 260 retype is required. Input CC STAUP for 9 cycles.

    4. Check the module for a pending tax adjustment:

      Pending Tax Adjustment

      If Then
      The adjustment contains:
      1. No Hold Code
      2. Hold Code 1 or
      3. Hold Code 2, with a pending Doc Code 24/34 credit transfer       		Void CP 260.
      The adjustment contains:
      1. A Hold Code 2, with no pending Doc Code 24/34 credit transfer
      2. Hold Code 3
      3. Hold Code 4       		And if Then
      The module balance will be full paid or credit Void CP 260.
      The module will remain in balance due Retype CP 260 with the correct balance due.

  3. If the payment was transferred to a module for another taxpayer, (different TIN), mail CP 260.