3.11.6  Data Processing (DP) Tax Adjustments

Manual Transmittal

October 22, 2014

Purpose

(1) This transmits revised IRM 3.11.6 Returns and Documents Analysis - Data Processing (DP) Tax Adjustments.

Material Changes

(1) Editorial (spacing, spelling, etc.) changes have been made through out this IRM.

(2) 2014 figures/tolerances added through out this IRM.

(3) IRM 3.11.6.1 Adding NOTE regarding xClaim. IPU 14U1182 issued 07-24-2014

(4) IRM 3.11.6.1.1 Delete reference to obsolete 1 column Form 1040X. IPU 14U1182 issued 07-24-2014

(5) IRM 3.11.6.1.1(13) Add link to Acronym Database. IPU 14U1375 issued 09-23-2014

(6) IRM 3.11.6.1.1.1 Direction when taxpayers has issues in addition to CP notices. IPU 14U1182 issued 07-24-2014

(7) IRM 3.11.6.1.2.1 Abbreviate and streamline IDRS controlling instructions. IPU 14U1182 issued 07-24-2014

(8) IRM 3.11.6.1.2.2 Direction on PII editing. IPU 14U1182 issued 07-24-2014

(9) IRM 3.11.6.1.3 Instruction on routing and associating documents with electronic returns. IPU 14U1182 issued 07-24-2014

(10) IRM 3.11.6.2.1 Clarify primary and secondary TIN and change IRM link. IPU 14U1182 issued 07-24-2014

(11) IRM 3.11.6.2.3 Remove reference to Cat A. IPU 14U1182 issued 07-24-2014

(12) IRM 3.11.6.2.5 Clarify processing instructions on PECF. IPU 14U1182 issued 07-24-2014

(13) IRM 3.11.6.2.5 Correct location codes e, f and g.

(14) IRM 3.11.6.3 Add to priority routing. IPU 14U1182 issued 07-24-2014

(15) IRM 3.11.6.3.1.1 Clarify carryback claim designation. IPU 14U1182 issued 07-24-2014

(16) IRM 3.11.6.3.1.2 Add link for fill-in paragraphs. IPU 14U1182 issued 07-24-2014

(17) IRM 3.11.6.3.1.2(2) correct letter paragraphs. IPU 14U1096 issued 07-02-2014

(18) IRM 3.11.6.3.1.2(2) b) Correct paragraphs used in the 916C letter. IPU 14U1127 issued 07-10-2014

(19) IRM 3.11.6.3.1.4 Clarify routing procedures. IPU 14U1182 issued 07-24-2014

(20) IRM 3.11.6.3.2 Clarification on identifying carryback claims. IPU 14U1182 issued 07-24-2014

(21) IRM 3.11.6.3.3 Clarification on statute criteria and routing. Reinforce ASED/RSED and postmark procedures. IPU 14U1182 issued 07-24-2014

(22) IRM 3.11.6.3.3 Corrected a paragraph and table. IPU 14U1192 issued 07-28-2014

(23) IRM 3.11.6.3.3(12) correct letter paragraphs. IPU 14U1096 issued 07-02-2014

(24) IRM 3.11.6.3.4 Deleted two parens . IPU 14U1273 issued 08-20-2014

(25) IRM 3.11.6.3.4 Changed title of section. IPU 14U1182 issued 07-24-2014

(26) IRM 3.11.6.3.5(9) Add link to CC DDBCK Decision Tree. IPU 14U1375 issued 09-23-2014

(27) IRM 3.11.6.3.5(9) Revised link for Partial Adjustment Decision Tree. IPU 14U1412 issued 10-02-2014

(28) IRM 3.11.6.3.5 Refining Cat A referral procedure. IPU 14U1182 issued 07-24-2014

(29) IRM 3.11.6.3.5.1 Link to Cat A criteria. Remove FTHBC reference. IPU 14U1182 issued 07-24-2014

(30) IRM 3.11.6.3.5.1 Clarify actively serving in a Combat Zone and Cat A criteria

(31) IRM 3.11.6.3.5.2 Made editorial corrections and added language to (5) regarding CC DDBCK. IPU 14U0340 issued 02-18-2014

(32) IRM 3.11.6.3.5.2 Clarify procedures on DDBCK and ITINs. IPU 14U1182 issued 07-24-2014

(33) IRM 3.11.6.3.5.2(2), (4), and (5) - Corrected IRM references and added hyper links. IPU 14U0478 issued 03-12-2014

(34) IRM 3.11.6.3.5.3 Clarify note under paragraph (2) and refine TARP procedures. IPU 14U1182 issued 07-24-2014

(35) IRM 3.11.6.3.5.4 TC 971 ac 013 clarification. IPU 14U1182 issued 07-24-2014

(36) IRM 3.11.6.3.7(6) Added Note regarding undeliverable returns. Change originally made with IPU 13U1719 issued 12-09-2013 IPU 14U0092 issued 01-10-2014

(37) IRM 3.11.6.3.7 Clarify identity Theft codes and routing instructions. IPU 14U1182 issued 07-24-2014

(38) IRM 3.11.6.3.8 Add IRM reference link. Added new chart on routing to AUR. IPU 14U1182 issued 07-24-2014

(39) IRM 3.11.6.3.9 Clarify CIS image procedures 3.11.6.3.14 Refine ITIN procedures. IPU 14U1182 issued 07-24-2014

(40) IRM 3.11.6.3.14(5) add instructions to allow standard deduction and disallow exemption. IPU 14U1096 issued 07-02-2014

(41) IRM 3.11.6.3.14(5) Added text and deleted bullet list in W-7 and ITIN Research subsection per SERP Feedback Control 201400173. IPU 14U0190 issued 01-27-2014

(42) IRM 3.11.6.3.16 Moved text from Note in (4) to (5) which caused remaining parens to renumber per SERP Feedback Control 201400019. IPU 14U0139 issued 01-17-2014

(43) IRM 3.11.6.3.16 Clarify SFR and NFR instruction. IPU 14U1182 issued 07-24-2014

(44) IRM 3.11.6.3.16(2) Corrected IRM reference per SERP Feedback Control 201400020. IPU 14U0139 issued 01-17-2014

(45) IRM 3.11.6.3.17 Update mailing address Form 8857. The IRS STOP NUMBER has been removed from the address as it was delaying the delivery process. IPU 14U1134 issued 07-11-2014

(46) IRM 3.11.6.3.17 Rearrange layout of Innocent Spouse Section. IPU 14U1182 issued 07-24-2014

(47) IRM 3.11.6.3.17(2)g) Revised address for CSPC. IPU 14U1219 issued 08-06-2014

(48) IRM 3.11.6.3.18 Rearrange Injured Spouse Section. IPU 14U1182 issued 07-24-2014

(49) IRM 3.11.6.3.19 Add new data on prisoner returns. IPU 14U1182 issued 07-24-2014

(50) IRM 3.11.6.3.20 Clarify actively serving in a Combat Zone and CZ indicators

(51) IRM 3.11.6.3.22 Update letter paragraphs. IPU 14U1182 issued 07-24-2014

(52) IRM 3.11.6.3.22(2) Revised hyperlink in Note IPU 14U0254 issued 02-03-2014

(53) IRM 3.11.6.3.23 Clarify cases open to M status in Accounting. IPU 14U1182 issued 07-24-2014

(54) IRM 3.11.6.3.23(3) add instruction to continue to process if the open base in "M" status is controlled to Accounting. IPU 14U1096 issued 07-02-2014

(55) IRM 3.11.6.3.24.1 add TC 971 AC 698 for Form 8938 Statement of Foreign Financial Assets

(56) IRM 3.11.6.3.24.1 Add link to action code 698. IPU 14U1182 issued 07-24-2014

(57) IRM 3.11.6.4 Rearrange and refine procedures for ISRP processing. IPU 14U1182 issued 07-24-2014

(58) IRM 3.11.6.5 Move ISRP procedures. IPU 14U1182 issued 07-24-2014

(59) IRM 3.11.6.5.1 Refine TC 150 research procedures. IPU 14U1182 issued 07-24-2014

(60) IRM 3.11.6.5.2 Revising letter when original return cannot be located. IPU 14U1182 issued 07-24-2014

(61) IRM 3.11.6.5.2(3) and (4) Change procedures when no TC 150 is found

(62) IRM 3.11.6.5.2(3) Revised text pertaining to Form 1040X with no Form 1040 attached per SERP Feedback Control 301400048. IPU 14U0139 issued 01-17-2014

(63) IRM 3.11.6.5.2(4) Added new table to provide instructions for completing Form 1040 and Form 6114. IPU 14U0478 issued 03-12-2014

(64) IRM 3.11.6.5.3 Editorial revisions in table. IPU 14U1182 issued 07-24-2014.

(65) IRM 3.11.6.5.3 (1) Correct hyperlink

(66) IRM 3.11.6.5.4 Direction on CC: ERIN. IPU 14U1182 issued 07-24-2014

(67) IRM 3.11.6.5.7 Add route out criteria. IPU 14U1182 issued 07-24-2014

(68) IRM 3.11.6.5.8 Form 8821 direction. IPU 14U1182 issued 07-24-2014

(69) IRM 3.11.6.6.1(1) Replaced the word the to any and added language per SERP Feedback Controls 201305585 and 201305587. Change originally made with IPU 13U1807 issued 12-24-2013 IPU 14U0092 issued 01-10-2014

(70) IRM 3.11.6.6.1 Name control directions and revision of address change table in care of. IPU 14U1182 issued 07-24-2014

(71) IRM 3.11.6.6.1(11) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(72) IRM 3.11.6.6.1.1 Add route out criteria and clarify DOMA references. IPU 14U1182 issued 07-24-2014

(73) IRM 3.11.6.6.3 Clarify and refine instruction. IPU 14U1182 issued 07-24-2014

(74) IRM 3.11.6.6.3(6) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(75) IRM 3.11.6.6.4 Clarify math verification. IPU 14U1182 issued 07-24-2014

(76) IRM 3.11.6.6.5 Update direction on setting math errors. IPU 14U1182 issued 07-24-2014

(77) IRM 3.11.6.6.5.1 Adjust math error response direction and revise If/Then Chart. IPU 14U1182 issued 07-24-2014

(78) IRM 3.11.6.6.7.1 Enter exception on using reason codes. IPU 14U1182 issued 07-24-2014

(79) IRM 3.11.6.6.7.3 Instruction on fuel tax credit and rearrange direction on priority codes. IPU 14U1182 issued 07-24-2014

(80) IRM 3.11.6.6.7.4 When the Category code needs to be changed to misc. IPU 14U1182 issued 07-24-2014

(81) IRM 3.11.6.6.8 Clarify use of TC 290 .00. IPU 14U1182 issued 07-24-2014

(82) IRM 3.11.6.7 Revise Instructions on CC: DUPED. IPU 14U1182 issued 07-24-2014

(83) IRM 3.11.6.7.1 Clarify instructions for DDBCK and revise table. IPU 14U1182 issued 07-24-2014

(84) IRM 3.11.6.7.1(2) NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(85) IRM 3.11.6.7.1(10) Add link to CC DDBCK Decision Tree. IPU 14U1375 issued 09-23-2014

(86) IRM 3.11.6.7.2.2 Revise instructions under change a record. IPU 14U1182 issued 07-24-2014

(87) IRM 3.11.6.7.2.3 Clarify instructions on various forms. IPU 14U1182 issued 07-24-2014

(88) IRM 3.11.6.6.7.3 Corrected hyperlink. IPU 14U0816 issued 05-05-2014

(89) IRM 3.11.6.8 Instruction xClaim and two adjustments. IPU 14U1182 issued 07-24-2014

(90) IRM 3.11.6.8.1 Remove instruction for unemployment compensation in tax year 2009. IPU 14U1182 issued 07-24-2014

(91) IRM 3.11.6.8.1.1(2) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(92) IRM 3.11.6.8.1.3 Change paragraphs in letter. IPU 14U1182 issued 07-24-2014

(93) IRM 3.11.6.8.1.4(5) and (6) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(94) IRM 3.11.6.8.1.5 Remove tax years 2010-2013 when referring to maximum. IPU 14U1182 issued 07-24-2014

(95) IRM 3.11.6.8.1.5(2) Revised tax years per SERP Feedback Control 201400856. IPU 14U0414 issued 03-03-2014

(96) IRM 3.11.6.8.2 Clarify Form 2106 and remove Schedule direction. IPU 14U1182 issued 07-24-2014

(97) IRM 3.11.6.8.2 Added new (10) to Standardized and Itemized Deductions subsection per SERP Feedback Control 201401299. IPU 14U0514 issued 03-18-2014

(98) IRM 3.11.6.8.2(2)&(3) 2nd NOTE Updated letter paragraphs . IPU 14U1291 issued 08-27-2014

(99) IRM 3.11.6.8.2(3) Clarify business expenses and Form 2106 on Schedule A

(100) IRM 3.11.6.8.2(8) Added 2013 data to Standard and Itemized Deductions subsection per SERP Feedback Control 201401080. IPU 14U0478 issued 03-12-2014

(101) IRM 3.11.6.8.3(4) Corrected IRM reference per SERP Feedback Control 201400852. IPU 14U0414 issued 03-03-2014

(102) IRM 3.11.6.8.3.1 Procedure when dependent is claimed in error. IPU 14U1182 issued 07-24-2014

(103) IRM 3.11.6.8.3.1(2) and (5) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(104) IRM 3.11.6.8.3.1.1(2)d Removed Blank Tag. IPU 14U1312 issued 09-02-2014

(105) IRM 3.11.6.8.3.1.1(3) Removed Caution Note. IPU 14U1312 issued 09-02-2014

(106) IRM 3.11.6.8.3.2(1) NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(107) IRM 3.11.6.8.6 Update link to math error. IPU 14U1182 issued 07-24-2014

(108) IRM 3.11.6.8.6(4) NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(109) IRM 3.11.6.8.6.1 Reword language on referral to Cat A. IPU 14U1182 issued 07-24-2014

(110) IRM 3.11.6.8.6.1(3) Added language regarding child tax credit for a dependent with an ITIN. IPU 14U0340 issued 02-18-2014

(111) IRM 3.11.6.8.6.1(6) Deleted erroneous words from Child Tax Credit subsection per SERP Feedback Control 201401300. IPU 14U0514 issued 03-18-2014

(112) IRM 3.11.6.8.6.1(3) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(113) IRM 3.11.6.8.6.1(7) Added instructions when taxpayer marks "no" to Part 1, Schedule 8812 per SERP Feedback Control 201305586. Change originally made with IPU 13U1807 issued 12-24-2013 IPU 14U0092 issued 01-10-2014

(114) IRM 3.11.6.8.6.2 Clarify correspondence procedures for Form 2441. IPU 14U1182 issued 07-24-2014

(115) IRM 3.11.6.8.6.2(1) Note update paragraphs and letter fill-in. IPU 14U1192 issued 07-28-2014

(116) IRM 3.11.6.8.6.2(3), (7), and (8) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(117) IRM 3.11.6.8.6.3 Update year to 2014 3.11.6.8.6.4 Update math error link. IPU 14U1182 issued 07-24-2014

(118) IRM 3.11.6.8.6.3 Form 5695 residential credits. Add instructions for credit amount for TY 2013. IPU 14U0816 issued 05-05-2014

(119) IRM 3.11.6.8.6.3(5) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(120) IRM 3.11.6.8.6.4(3) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(121) IRM 3.11.6.8.6.6(1) Clarify the maximum education credits and address refundable and non-refundable credits. IPU 14U0816 issued 05-05-2014

(122) IRM 3.11.6.8.6.6(8), (10), (13), and (14) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(123) IRM 3.11.6.8.6.6(14) Added language to Form 8863 subsection. IPU 14U0478 issued 03-12-2014

(124) IRM 3.11.6.8.6.7(1) and (3) Added tax years per SERP Feedback Control 201400018. IPU 14U0139 issued 01-17-2014

(125) IRM 3.11.6.8.6.7(2) Correct paragraphs used in the 916C letter. IPU 14U1127 issued 07-10-2014

(126) IRM 3.11.6.8.6.7(2) correct letter paragraphs and (6) (b) correct address. IPU 14U1096 issued 07-02-2014

(127) IRM 3.11.6.8.6.7(2) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(128) IRM 3.11.6.8.6.8(2) Form 8880 dollar amounts for TY 2013. IPU 14U0816 issued 05-05-2014

(129) IRM 3.11.6.8.6.8(5) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(130) IRM 3.11.6.8.6.9(3) 2nd NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(131) IRM 3.11.6.8.6.10 Verify credit claimed part III Form 3800 and update SERP link. IPU 14U1182 issued 07-24-2014

(132) IRM 3.11.6.8.6.10(2) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(133) IRM 3.11.6.8.6.10.1 Clarify documentation requirements on Form 8936

(134) IRM 3.11.6.8.6.10.1(4) and (5) Revised text and deleted (6) and (7). IPU 14U0368 issued 02-24-2014

(135) IRM 3.11.6.8.6.10.1(5) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(136) IRM 3.11.6.8.6.10.1(8) add verbiage when requesting certification for Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit. IPU 14U1096 issued 07-02-2014

(137) IRM 3.11.6.8.7 Add new Form 8960. IPU 14U1182 issued 07-24-2014

(138) IRM 3.11.6.8.7(2) Added Form 8959, Additional Medicare Tax per SERP Feedback Control 201400854. IPU 14U0414 issued 03-03-2014

(139) IRM 3.11.6.8.7.1 Add information and direction on the Pension Protection Act of 2006. IPU 14U1182 issued 07-24-2014

(140) IRM 3.11.6.8.7.2 Instructions when taxpayer reports SE income but does not address SE Tax and fill-in for correspondence when it cannot be determined which spouse is to be assessed. IPU 14U1182 issued 07-24-2014

(141) IRM 3.11.6.8.7.2(6) questionable SE change to Cat A referral. IPU 14U1096 issued 07-02-2014

(142) IRM 3.11.6.8.7.2(6) Deleted text in Self-Employment Tax subsection per SERP Feedback Control 201400169. IPU 14U0190 issued 01-27-2014

(143) IRM 3.11.6.8.7.2.2 Remove 2009 for maximum social security amount. IPU 14U1182 issued 07-24-2014

(144) IRM 3.11.6.8.7.2.2(5) Removed Blank Tag. IPU 14U1312 issued 09-02-2014

(145) IRM 3.11.6.8.9 Procedure when withholding is being claimed On Schedule K-1. IPU 14U1182 issued 07-24-2014

(146) IRM 3.11.6.8.9(4) and (5) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(147) IRM 3.11.6.8.9.1 Delete tax year 2010. IPU 14U1182 issued 07-24-2014

(148) IRM 3.11.6.8.9.1(2) identify box number on W-2 Form for social security wages. IPU 14U1096 issued 07-02-2014

(149) IRM 3.11.6.8.9.1(2) Add maximum SS and Tier 1 of $7,049.40. IPU 14U0816 issued 05-05-2014

(150) IRM 3.11.6.8.10.1 Clarify estimated tax penalty is based on the original return. IPU 14U1182 issued 07-24-2014

(151) IRM 3.11.6.8.10.1 (1) Completely remove note regarding the penalty being based on the amended return

(152) IRM 3.11.6.8.10.1(6) (a) and (b) Changed tolerance amount. IPU 14U1375 issued 09-23-2014

(153) IRM 3.11.6.8.11.1 Delete tax year 2009 and 2010. IPU 14U1182 issued 07-24-2014

(154) IRM 3.11.6.8.11.1(1) and (6) Added figures for 2013 to EIC Eligibility Criteria subsection per SERP Feedback Control 201401083. IPU 14U0478 issued 03-12-2014

(155) IRM 3.11.6.8.11.2 Corrected spelling. IPU 14U1182 issued 07-24-2014

(156) IRM 3.11.6.8.11.3(1) and (2) NOTES Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(157) IRM 3.11.6.8.11.3(4) Revised text in Adjusting EIC Account subsection per SERP Feedback Control 201400175. IPU 14U0190 issued 01-27-2014

(158) IRM 3.11.6.8.11.4 Provide instructions when the 2D-Barcode cannot be read on CP notices and no other identifying information is available. IPU 14U0816 issued 05-05-2014

(159) IRM 3.11.6.8.11.4(1) NOTE Editorial change. IPU 14U1312 issued 09-02-2014

(160) IRM 3.11.6.8.11.4(7) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(161) IRM 3.11.6.8.11.5(1) Provide instructions when the 2D-Barcode cannot be read on CP notices and no other identifying information is available. IPU 14U0816 issued 05-05-2014

(162) IRM 3.11.6.8.11.5(1) NOTE Editorial change. IPU 14U1312 issued 09-02-2014

(163) IRM 3.11.6.8.11.5(6) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(164) IRM 3.11.6.8.12 Remove prisoner instructions as it is in its own section. Correct column references Schedule E. IPU 14U1182 issued 07-24-2014

(165) IRM 3.11.6.8.12.1(1) Bullet List added 2013 dollar amount and corrected 2011 dollar amount. IPU 14U1312 issued 09-02-2014

(166) IRM 3.11.6.8.13 Direction and IRM reference on claiming a non-refundable credit. IPU 14U1182 issued 07-24-2014

(167) IRM 3.11.6.8.13.1(2) NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(168) IRM 3.11.6.8.13.2(1) NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(169) IRM 3.11.6.8.13.3(2) Deleted erroneous words from Child Tax Credit subsection per SERP Feedback Control 201401300. IPU 14U0514 issued 03-18-2014

(170) IRM 3.11.6.8.13.3(6) NOTE Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(171) IRM 3.11.6.8.13.3.1 Provide instructions when the 2D-Barcode cannot be read on CP notices and no other identifying information is available. IPU 14U0816 issued 05-05-2014

(172) IRM 3.11.6.8.13.3.1(1) NOTE Editorial change. IPU 14U1312 issued 09-02-2014

(173) IRM 3.11.6.8.13.3.1(8) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(174) IRM 3.11.6.8.13.4(5) Revised text under Form 5405 instructions. IPU 14U0368 issued 02-24-2014

(175) IRM 3.11.6.8.13.5(3) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(176) IRM 3.11.6.8.14 Direction on erroneous credit elect requests. IPU 14U1182 issued 07-24-2014

(177) IRM 3.11.6.8.14(2) Revised Note in Credit Elect subsection per SERP Feedback Control 201400022. IPU 14U0190 issued 01-27-2014

(178) IRM 3.11.6.8.14(5) Revised text in Then column. IPU 14U0254 issued 02-03-2014

(179) IRM 3.11.6.8.14(10) Revised dates in Credit Elect subsection. IPU 14U0368 issued 02-24-2014

(180) IRM 3.11.6.9 Directions on corresponding when forms can be dummied. IPU 14U1182 issued 07-24-2014

(181) IRM 3.11.6.9(12) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(182) IRM 3.11.6.9.1 Corresponding on a net balance due claim directions. IPU 14U1182 issued 07-24-2014

(183) IRM 3.11.6.9.1 Revised text and deleted parens in Corresponding on Net Balance Due Returns. IPU 14U0368 issued 02-24-2014

(184) IRM 3.11.6.9.1(2) Revised verbiage regarding case controls on the 324C per SERP Feedback Control 201305602. Change originally made with IPU 13U1807 issued 12-24-2013 IPU 14U0092 issued 01-10-2014

(185) IRM 3.11.6.9.2 Corresponding on net refund and zero balance due claims. IPU 14U1182 issued 07-24-2014

(186) IRM 3.11.6.9.2(4) Correct paragraphs used in the 916C letter. IPU 14U1127 issued 07-10-2014

(187) IRM 3.11.6.9.2(4) (5) correct letter paragraphs. IPU 14U1096 issued 07-02-2014

(188) IRM 3.11.6.9.2(5) Correct paragraphs used in the 916C letter. IPU 14U1127 issued 07-10-2014

(189) IRM 3.11.6.9.2(4) and (5) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(190) IRM 3.11.6.9.3 Using different paragraph numbers 105C/106C. IPU 14U1182 issued 07-24-2014

(191) IRM 3.11.6.9.3(1) and (2) Removed instructions to use specific paragraphs within the Correspondex letter. IPU 14U0488 issued 03-13-2014

(192) IRM 3.11.6.9.4 4364C letter using Y in enclosure field. IPU 14U1182 issued 07-24-2014

(193) IRM 3.11.6.9.8 When to input a subsequent TC 971 action code 270. IPU 14U1182 issued 07-24-2014

(194) IRM 3.11.6.9.9(1) Removed paragraph identifiers as a result of SERP Feedback Control 201400853. IPU 14U0414 issued 03-03-2014

(195) IRM 3.11.6.9.10(2) Correct paragraphs used in the 916C letter. IPU 14U1127 issued 07-10-2014

(196) IRM 3.11.6.9.10(2) correct letter paragraphs. IPU 14U1096 issued 07-02-2014

(197) IRM 3.11.6.9.10(2) Updated letter paragraphs. IPU 14U1291 issued 08-27-2014

(198) IRM 3.11.6.10 Letter paragraph changes. IPU 14U1192 issued 07-28-2014

(199) IRM 3.11.6.10(1) and Lines 7, 13, and 43 of Table Updated letter paragraphs and renumbered table. IPU 14U1291 issued 08-27-2014

(200) IRM 3.11.6.10(1) Add paragraph to 324C letter. IPU 14U1375 issued 09-23-2014

(201) IRM 3.11.6.11 Add T- freeze. IPU 14U1182 issued 07-24-2014

(202) IRM 3.11.6.11 Add instructions for disposition of Form 8938 and input of TC 971 AC 698

(203) IRM 3.11.6.11 Add Form 8960 Net Investment Income Tax to 1040X routing guide

(204) IRM 3.11.6.11 Clarify routing of IRC 131 and certain payments to individual care providers. IPU 14U0816 issued 05-05-2014

(205) IRM 3.11.6.11(3) Added verbiage to Veteran's Disability Compensation. Change originally made with IPU 13U1807 issued 12-24-2013 IPU 14U0092 issued 01-10-2014

(206) IRM 3.11.6.11(3) Added Household Employee Income and instructions to route to CIS/AM. IPU 14U0414 issued 03-03-2014

(207) IRM 3.11.6.11(3) Added Form 8959, Additional Medicare Tax, and instructions to route to CIS/AM per SERP Feedback Control 201400854. IPU 14U0414 issued 03-03-2014

(208) IRM 3.11.6.11(3)(C) Deleted CP2057. IPU 14U0340 issued 02-18-2014.

(209) IRM 3.11.6.11(3)(I) Added Claim Condition for IRC131 to Routing Guide. IPU 14U0340 issued 02-18-2014

Effect on Other Documents

IRM 3.11.6, Data Processing (DP) Tax Adjustments, dated October 16, 2012 (effective January 1, 2013), is superseded. This IRM incorporates the following IRM Procedural Updates (IPUs), issued between October 14, 2013 through October 2, 2014: 13U1498, 13U1545, 14U0092, 14U0139, 14U0190, 14U0254, 14U0340, 14U0368, 14U0414, 14U0478, 14U0488, 14U0514, 14U0816, 14U0850, 14U0872, 14U0937, 14U1096, 14U1127, 14U1134, 14U1182, 14U1192, 14U1219, 14U1273, 14U1291, 14U1312, 14U1375, and14U1412

Audience

Wage and Investment Submission Processing Tax Examiners

Effective Date

(01-01-2015)


Paul J. Mamo
Director, Submission Processing
Wage and Investment

3.11.6.1  (07-24-2014)
Submission Processing (SP) Returns and Document Analysis Overview

  1. Internal Revenue Manual (IRM) 3.11.6 covers Form 1040X, CP 08, 09 and CP 27 processing procedures for Integrated Data Retrieval System (IDRS) and Integrated Submission and Remittance Processing (ISRP) input by Submission Processing (SP).

  2. This section provides instructions for:

    • Form 1040X, Amended U.S. Individual Income Tax Return

    • Computer Paragraph (CP) 08, CP 09 and CP 27 Notices

  3. The following subsections cover:

    • General Information for Submission Processing Returns and Document Analysis Overview

    • Controlling of 1040X cases on IDRS and input of the TC 971 action code 120

    • Preliminary Review of Form 1040X

    • Sorting, Routing, and Priority Processing

    • Screening Criteria for Processable Return

    • Form 1040X Processed through ISRP Input

    • Processing Form 1040X Using IDRS for Input of Adjustment

    • Command Codes DUPED and DDBCK

    • Specific Individual Master File (IMF) Adjustments

    • Correspondence Procedures

    • CP Notices

  4. References to the Integrated Automation Technologies (IAT) xClaim tool functionality are not intended to be exhaustive or complete. Refer to xClaim training and local procedures for more complete information about the functionality and use of this tool.

    Note:

    IRM instructions will take precedence over any instructions/direction xclaim provides, such as red boxes,

  5. All references to line numbers are for the current revision of the form or schedule unless otherwise specified.

  6. The specific section instructions take precedence over any general instruction.

3.11.6.1.1  (09-23-2014)
General Form 1040X Information

  1. An individual taxpayer may file an Amended US Individual Income Tax Return to correct Forms 1040, 1040A, 1040EZ or a 1040-N. Taxpayers may add, delete, update, or change tax information reported on their original tax return or amounts previously adjusted by the IRS.

  2. When present on Form 1040X, Column A is used to report amounts originally claimed by the taxpayer, amounts adjusted by the IRS (math error on original return), or amounts adjusted from a previously filed Form 1040X for the same tax period.

  3. When present on Form 1040X, Column B, is used to report the amount of change (increase or decrease) for each line the taxpayer is changing. Taxpayers are instructed to show decreases in parenthesis, explain each change in the Explanation of Changes, of the Form 1040X or attached statement, and attach any schedule and/or form related to the change.

  4. The Correct Amount column of the Form 1040X, Column C, is used to show amended figures or to figure the amounts reported in Columns A and B when these columns are present:

    1. Adding increases in Column B to Column A.

    2. Subtracting decreases in Column B from Column A.

    3. No change, entering the amount from Column A.

  5. The operational instructions in this IRM will determine if the adjustment request can be made in Submission Processing or if it must be routed to another area or function. Returns which can be adjusted in Submission Processing (commonly referred to as "workable " ) are either input on-line using IDRS or sent to ISRP for input.

  6. The general sequence you will follow is:

    1. Determine if route out criteria is met.

    2. Determine if the claim is complete.

    3. Determine if the claim is allowable

    4. Determine if the claim is processable.

  7. If a taxpayer files an amended Form 1040 series, Individual Income Tax Return, in lieu of a Form 1040X, you must determine if it is an original, duplicate, or amended return. If an original return, route to Receipt and Control for processing under the correct Program Code. Refer to IRM 3.11.6.5.5 for duplicate or IRM 3.11.6.5.4" amended" procedures.

  8. Form 1040X and CP notices are to be processed within 12 calendar days from the IRS received date (day one) to the date the document is delivered to the CIS (Corresponding Imaging System) Unit (ending day) or input of a TC 29X. See IRM 3.30.123, Processing Timeliness: Cycles, Criteria, and Critical Dates. During the peak period the 12 day time frame will be expanded to 20 days. Peak period is defined as March 1st through June 30th.

  9. Occasionally multiple Forms 1040/A/EZ/X are attached. For example:

    • Two or more returns from the same taxpayer are mailed in the same envelope

    • Two or more family members' returns are mailed by the tax preparer in the same envelope

    • Two or more unrelated returns are mailed by the tax preparer in the same envelope

      Note:

      Detach the returns leaving an action trail on each document, then sort, work or route the returns as appropriate.

      Exception:

      For transactions that require routing to another function, if two or more returns are for the same taxpayer keep all tax years together.

  10. The correspondence procedures throughout the IRM do not address every scenario. Use of Correspondex , available on Servicewide Electronic Research Program (SERP), is helpful in accommodating different scenarios that may occur. If unable to determine the correct correspondence procedure consult your manager or lead.

  11. Once a return that has been suspended is returned to be processed close any open controls you have to yourself before routing, corresponding, or inputting the adjustment.

    Caution:

    Do not close a control base open to an area other than Form 1040X. If a control base to another area is closed in error it must be reopened before taking the appropriate action.

  12. Do not input an adjustment on REQ54 or ENREQ for an account that will be routed or when returning the claim to the taxpayer unless otherwise instructed by a specific section.

  13. The following link will take you to a list of acronyms and their definitions; Acronym Database

3.11.6.1.1.1  (07-24-2014)
CP Notices

  1. Beginning January 2012 certain CP notices mailed to taxpayers will contain 2D bar codes. Some of the notices will display the entire Social Security Number (SSN) while some will have the SSN masked (e.g. XXX-XX-1234). This will apply to CP 08, 09 and 27 notices. Hand held scanners will be available for reading the barcode. If the hand held scanner is unable to read the bar code Command Code (CC) TPIIP must be used to determine the SSN. For additional information on CC: TPIIP refer to IDRS Command Code Job Aid located on the Servicewide Electronic Research Program (SERP) under IRM Supplements.

    Note:

    Take care not to write, mark or stamp over the bar code as this could make it unreadable.

  2. Generally, a completed CP notice is considered an informal claim. However, if the taxpayer returns the CP notice indicating he/she is not eligible for the specific credit (no other issues involved), a reply is not necessary. Destroy as classified waste per local procedures. Form 1040X procedures are to be applied to CP 08, 09, and 27 notices, as they are considered a Form 1040X.

    Exception:

    If some of the children qualify for the credit but others do not then process the CP notice for the qualifying child(ren).

  3. If the taxpayer attached the CP 08, 09, or 27 notice to Form 1040X and there are additional issues, convert the credit to the attached Form 1040X and process the Form 1040X. "X" the CP notice and staple behind the Form 1040X.

    Note:

    If the taxpayer has additional issues in addition to the CP notice and does not provide Form 1040X process the CP notice and correspond for a 1040X for the other issues.

  4. If the taxpayer attached the CP 08, 09, or 27 notice to Form 1040X and there are no additional issues, process the CP notice. "X" the Form 1040X and staple behind the CP notice.

  5. Taxpayers must return the completed and signed (both Primary and Secondary if FS2, Married Filing Joint) CP notice, if qualified. If the CP notice is incomplete, return to the taxpayer using the check boxes on the Form 8009-A pertaining to the CP notices.

    Note:

    If the taxpayer's response to Form 8009-A is still incomplete send the 916C letter refer to IRM 3.11.6.9.10

  6. When sending a C letter do not include an amended claims date on the adjustment.

  7. If the pre-printed AGI and/or EI on a CP notice does not match IDRS use the AGI and EI from the Per Computer Column of CC RTVUE.

  8. If the taxpayer alters the address on a CP notice and an address change can be made per IRM 3.11.6.6.1 then use CC INCHG to update the taxpayer's address.

  9. If there is a previously posted adjustment on IDRS review the adjustment to determine if the CP notice issue has already been adjusted for, see IRM 3.11.6.4.5.5. If the CP notice has already been adjusted for treat the CP notice as classified waste per local management. Otherwise, continue to process the CP notice.

3.11.6.1.2  (01-01-2014)
General Instructions

  1. Use an erasable red pen for any editing markings.

  2. Edit your Tax Examiner (TE) number in the top left margin of Form 1040X or CP 08, 09 and 27, or follow any local procedures that ensure the integrity of the batch for routing to Files (e.g. number returns, enter IDRS employee number, and date)

  3. Follow local procedures for routing to other functions.

3.11.6.1.2.1  (07-24-2014)
Controlling Cases on IDRS

  1. Submission Processing will control ALL amended returns received in the 1040X teams on IDRS within 5 days of receipt. The purpose of this initiative is to enhance the tracking and recording of inventory within Submission Processing. This will also allow the Corporate inventory of Form 1040X to be tracked and analyzed from the enterprise level.

    Exception:

    CP Notices and Form W-7 returns do not have to be controlled on IDRS.

  2. An IDRS control base and a TC 971 action code 120 are required to be input to further identify which processing area has the case in possession. If the control base and/ or 971-120 is not input correctly by xClaim, then the TE should manually input for the current return.

    Note:

    Action Code 120 allows Taxpayers to find the status of their amended return using the Where's My Amended Return (WMAR) program.

  3. The process of controlling 1040X cases and the ensuing TC 971 AC 120 will be accomplished with these methods:

    1. SP clerical function using a GII Batch Control Tool (IAT) will control cases on IDRS. The IDRS numbers used will be group/team IDRS numbers followed by 00000 (see paragraph 5). In addition to the control base the tool will input a TC 971 action code 120. The Category will be "XRET" and the Activity will read "SPX-00005" the number 00005 standing for the SP batch number.

    2. In the event the SP tax examiner receives an uncontrolled case, the tax examiner will process the case and the ensuing adjustment action will open and close an IDRS control base under the TE’s IDRS number with a Category of “XRET”. The xClaim tool will input a TC 971 action code 120 as part of the process.

    3. In the event the SP tax examiner receives an uncontrolled case and determines it needs to be returned to the taxpayer or to go to another area. Using xClaim the TE will have the tool open a control case Category "XRET" and close a control base changing the Category to "MISC" and the tax examiner should input a TC 971 action code 120 on the account. The tax examiner will route as normal.

    4. SP tax examiner receives a case controlled to a group number (06XXX00000) and determines it is SP criteria. xClaim will take over the control base under the TE’s IDRS number. TE will process case which will open/close a control base with a Category "XRET" . The Activity will state "SP-X-00005."

    5. SP tax examiner receives a case controlled to a group number (06XXX00000) and determines it is NOT SP criteria or needs to be returned to the taxpayer. xClaim will take over the control base under TE's IDRS number and will close the control base changing Category to "MISC"

    6. On cases that need to be suspended, the tax examiner will re-assign the open control from the suspense queue to their IDRS number and change the activity as appropriate based on the type of suspense.

    7. If the case is determined to be classified waste and is uncontrolled. Treat as classified waste and do not open and close a control base or input an TC 971/120.

    8. When inputting a partial adjustment on a return that will be routed, the xClaim tool will close the open control to XRET. It is not necessary to open and close a control to MISC before routing.

    Note:

    When routing is required the Category of the case needs to be changed to "MISC" in order to prevent IDRS from recording the case as a closure.

    Note:

    If the case is controlled to the wrong taxpayer, MFT or tax year then close the incorrect base to "MISC" and work the case as uncontrolled. Correct other case control input errors using IAT ACTON before completing your case action. This would include incorrect IRS Received Dates and incorrect service center IDRS numbers.

  4. The group/teams numbers used by the SP clerical staff to control 1040X cases on IDRS are listed below:

    Campus IDRS Group/Team Numbers
    Austin 06224, 06233, 06238
    Fresno 10215, 10216, 10217
    Kansas City 09215, 09216, 09217

    Note:

    As these are group numbers the claims have not been assigned to a specific tax examiner in Submission Processing. These are 1040X claims controlled to the 1040X area in SP. Routes or Form 4442 will not be accepted from other areas for either controlled group numbers as well as specific tax examiner IDRS numbers. A disclaimer to this effect is on IDRS Message under the group numbers. If you do receive phone calls from other areas concerning controlled cases the caller should be referred to the headquarter 1040X analyst.

3.11.6.1.2.2  (07-24-2014)
When a Working Trail is Required

  1. Leave a working/action trail in the left margin of Form 1040X when:

    1. You detach a form, schedule, or notice per IRM instruction (i.e., Form 2848 POA, or a Form 8821 (TIA to CAF)

    2. You prepare a form.

      Example:

      Form 4442, payment plan request, Presidential Election Campaign Fund (PECF) dummy return

    3. Routing Form 1040X as instructed per local procedures (CB/CF, CIS, etc.)

    4. Any action trail required by local procedures.

  2. Edit the following on the Form 1040X:

    1. Detached item description - (i.e. Detached Form 2848)

    2. Routing destination

    3. Date or action trail if required by local procedures.

  3. Edit the following on the detached form, schedule, or notice, if the information is not present on the document:

    1. Taxpayer's name

    2. Taxpayer's address

    3. Taxpayer Identification Number (TIN), (e.g., SSN, IRSN, ITIN)

    4. Received Date

    5. Tax Year

    6. Form 1040X

    7. TE stamp

    8. Any action trail required by local procedures

      Exception:

      Do not edit Personally Identifiable Information (PII) on forms being detached, which belong to different taxpayers.

3.11.6.1.2.3  (01-01-2014)
Reversing an Erroneous Adjustment

  1. These manual instructions are intended for work leaders. xClaim has the capability of performing this same operation. The reversal button on the xClaim tool is not available until the tax adjustment is input and posted to the tax account. Once the adjustment posts the reversal button becomes active.

  2. In the course of an internal quality review occasions will arise where erroneous adjustments are identified. If the tax adjustment cannot be deleted a reversal of the adjustment must be made by the quality reviewer, lead or designated tax examiner. If the erroneous adjustment will generate an incorrect TC 846 the Lead or Manager should initiate a Refund Intercept when possible using IDRS Command Code (CC) NOREF to stop the refund. See Refund Intercept CC NOREF (IRM 3.11.6.1.2.4) for time frames and time constraints.

    Exception:

    Do not input a corrective adjustment for changes to reason codes, received date, or amended claims date.

    Exception:

    It is not necessary to input CC NOREF if a TC 846 is not generated or the TC 846 is for the correct amount. In these cases only input the corrective adjustment.

    Note:

    Correspond using a 324C letter if there is a missing signature, form/schedule/ or other issue. Suspend the return waiting for the reply. Input CC NOREF at the same time as issuing the correspondence, if necessary.

  3. When an account needs to be reversed, take the following actions to back out the erroneous adjustment.

    1. As a result of the incorrect adjustment reverse the affected portion of the tax, adjusted gross income, taxable income, self-employment tax, any credits, exemptions and federal withholding. Below is a listing of the appropriate transaction and reference codes.

    • Adjusted Gross Income will be reversed with a Reference Code 888.

    • Taxable Income will be reversed with a Reference Code 886.

    • Tax will be reversed with a Transaction Code (TC) 29X. (Opposite of erroneous TC 29X)

    • Exemptions will be reversed with a Reference Code 887.

    • Withholding will be reversed with a Reference Code 806 or 807. Depending on the error to withholding.

    • Primary self-employment income will be reversed with Reference Code 878

    • Secondary self-employment income will be reversed with Reference Code 879

    • Self-employment tax will be reversed with Reference Code 889 in conjunction with the TC 29X.

    • Self-employment tax will be reversed with Reference Code 889 in conjunction with the TC 29X.

    • Include any necessary priority codes on the corrective adjustment. See IRM 3.11.6.6.7.3

    Note:

    Whenever reversing an adjustment on an account some of the transaction codes and the reference codes cited above will have a minus behind the money amounts. The Reference Code for Exemptions will have a minus behind the exemption number. 291 and 807 are the reversal codes. For other reversal codes especially credits see Document 6209 as they also have specific reversal codes.

    Example:


    •887 .02- (Deleting 2 exemptions)
    •888 28,467.00- (Reducing AGI)
    •886 7,654.00- (Reducing taxable income)

    Caution:

    Always verify the erroneous adjustment did NOT create an unpostable condition before reversing an adjustment. If an unpostable condition was created monitor the account until the adjustment unposts, then input the correct adjustment. Hold the return until the Form 4251 return Charge-out is received and match the return with the Form 4251.

    Note:

    Use Hold Code 4 to prevent incorrect refunds or notices from being issued. In certain cases the Hold Code 4 will not stop the refund and/or the notice, but should be input on all reversals regardless.

3.11.6.1.2.4  (01-01-2014)
Refund Intercept CC NOREF

  1. Effective January 1, 2012, with the implementation of CADE 2 processing for all IMF accounts, only CC NOREF, definer "P" can be used by authorized employees to stop a refund. See the charts below for CC NOREFP input time frames. Refunds on original returns can also be stopped by using CC NOREFP prior to the posting of the return on IDRS.

    Caution:

    If a TC 846 is showing on CC TXMOD/IMFOLT, the refund record has already been sent to Financial Management Services (FMS), and the refund cannot be stopped.

  2. CC NOREFP will resequence for 14 days for daily IMF accounts and, depending on the day of input, up to 20 days for weekly IMF accounts. Each day, CC NOREFP will look for a matching refund and, when a match is found, will stop the refund. If no match is found within these time frames, the CC NOREFP will be dropped from IMF processing.

  3. While an IDRS control base needs to be established for CC NOREFP, no systemic updates are received to indicate whether or not the input was successful at stopping the refund. Since the TC 846 will post on the module up to 5 business days before the TC 841, the account must be monitored for the TC 841 posting to determine if CC NOREFP was successful.

  4. The following chart is provided to clarify when CC NOREFP can be used to intercept a refund that will result from an adjustment input before 5:00 PM CT on an IMF WEEKLY account:

    Note:

    Most accounts worked in SP will be designated as WEEKLY accounts. See Exhibit 2.3.51-12, Command Code IMFOL Output Display - Entity, Line 14, for more information about the position of the Daily Eligible Indicator. The literals "00" indicate an account is not eligible for daily processing; "01-99" indicates an account is eligible for daily processing. Any TC 29X input with a money amount will cause the account to become weekly; whereas a TC 290 .00 will not change the existing status.

    Transaction Input TERUP Review CCs Available From 5:00 AM CT on the following: NOREFP (until 9:00 PM CT) on the following: Adjustment Posts to MF on the following:
    Friday (Day 1) Friday (Day 1) Monday and until 5:00 PM CT Tuesday Thursday, week 1 (4 days after input of adjustment) Friday, week 1 (5 days after input)
    Monday (Day 2) Monday (Day 2) Tuesday and until 5:00 PM CT Wednesday Thursday, week 1 (3 days after input of Friday, week 1 (4 days after input)
    Tuesday (Day 3) Tuesday (Day 3) Wednesday and until 5:00 PM CT Thursday Thursday, week 2 (7 days after input of adjustment) Friday, week 2 (8 days after input of adjustment)
    Wednesday (Day 4) Wednesday (Day 4) Thursday and until 5:00 PM CT Friday Thursday, week 2 (6 days after input of adjustment) Friday, week 2 (7 days after input of adjustment)
    Thursday (Day 5) Thursday (Day 5) Friday and until 5:00 PM CT Monday Thursday, week 2 (5 days after input of adjustment) Friday, week 2 (6 days after input of adjustment)

    Example:

    If an adjustment is input on Friday, the adjustment can be deleted by CC TERUP until 5:00 PM CT. After that, REVIEW command codes can be used to review/delete the adjustment starting at 5:00 AM CT on Monday and ending at 5:00 PM CT on Tuesday. After 5:00 PM CT on Tuesday and until 9:00 PM CT on Thursday, CC NOREFP can be used to stop a refund. After 9:00 PM CT on Thursday the refund can no longer be stopped.

  5. The following chart is provided to clarify when CC NOREFP can be used to stop a refund resulting from a transaction (e.g., TC 290 .00, TC 571, etc.) input before 5:00 PM CT on an IMF DAILY account:

    Transaction Input TERUP Review CCs Available From 5:00 AM CT on the following: NOREFP (until 8 PM CT) on the following: Transaction posts to IMF on the following
    Friday Friday Monday and until 5:00 PM CT Tuesday Wednesday Thursday
    Monday Monday Tuesday and until 5:00 PM CT Wednesday Thursday

    Exception:

    available until 9:00 PM CT

    Friday
    Tuesday Tuesday Wednesday and until 5:00 PM CT Friday Monday
    Wednesday Wednesday Thursday and until 5:00 PM CT Friday Monday Tuesday
    Thursday Thursday Friday and until 5:00 PM CT Monday Tuesday Wednesday
  6. With Taxpayer Information File (TIF) centralization, it is no longer necessary to contact the issuing center or your local Notice Review to stop the refund. Input of CC NOREFP will stop a refund regardless of the Campus and will be evident when viewing the account. Use the Command Code (CC) NOREFP to intercept erroneous refunds and update the Refund Information File (RFIF). Refer to IRM 2.4.37, Command Code NOREF Overview for a complete description and input requirements.

  7. Employees stopping the refund will maintain an open control on all cases where a CC NOREF is input. The employee places the open control in B or M status (monitoring). The case can be closed when confirmation is received that the refund has been stopped.

  8. The controlling employee must monitor for the TC 841. When the TC 841 posts to the account, take the necessary action to release the P Freeze and close the control base. A P freeze will be released by the input of a TC 29X.

    Exception:

    If the adjustment cannot be processed by SP, such as a manual refund, then close the open control and forward the case to the appropriate area. Leave an ACTON history on TXMOD.

  9. If the TC 841 does not post within 4-6 cycles research for other adjustments, unpostable condition or erroneous refund. If an erroneous refund has been generated forward to CIS/AM.

  10. If CC NOREFP is being used, Form 12783 Request for Notice Pulls/Voids: Master File or IDRS must be hand walked to Notice Review to stop the generated notice to the taxpayer. This must be done by Thursday, 8:00 PM CT in the same cycle of the NOREFP.

3.11.6.1.3  (07-24-2014)
Blocking Series/Routing to Files

  1. Code and Edit processes Form 1040X and CP Notice adjustments in a unique blocking series based on the nature of the claim. Use blocking series 05 for processable Forms 1040X and CP Notices unless otherwise directed.

  2. The Control Unit is charged with the responsibility of associating IDRS Source Documents with their related IDRS Transaction Records (ADJ54 adjustments) that were input on taxpayer accounts. It is vital for the unit to receive source documents in a timely manner. Follow local procedures for routing the source documents to Files within the guidelines in IRM 3.5.61, Files Management and Services.

  3. When routing a document to files that will not be associated with a previously posted adjustment and no adjustment is being made to the taxpayer's account, input a TC 290 .00 with no reason codes

  4. When routing a document to be associated with a previously posted adjustment or the original filing, use Form 9856 or follow local procedures.

    Note:

    Documents can not be associated with an electronic DLN. Research CC: IMFOLI or TRDBV to determine if the original return was filed electronically. See Document 6209 for service center codes. If there is an electronic DLN input a TC 290 .00.

3.11.6.1.4  (08-06-2013)
Related IRMs

  1. Additional information regarding amended returns may be found in the following IRMs.

    • IRM 3.10.72, Extracting, Sorting, and Numbering

    • IRM 3.11.3, Individual Income Tax Returns

    • IRM 3.24.3, Individual Income Tax Returns ISRP System

    • IRM 21, Customer Account Services

    • IRM 2.4.1 IDRS Terminal Input

    • IRM 3.13.5 IMF Account Numbers

    • IRM 3.12.37.23 Correspondence Manual

  2. The operational guidance in this IRM takes precedence over any conflicting operational procedures in other IRMs. Contact your manager if you have any questions about operational guidance and for clarification between operational issues and statutory requirements.

  3. Document 6209, IRS Processing Codes and Information, 1040 attachment guide, Tax Form and Instructions (accessible through the IRS Home Page), and Publication 17 are valuable resources for obtaining additional information and resolving questions.

  4. General SERP alerts issued for IRM 3.11.6 are additions to the IRM instruction and are to be followed as part of IRM 3.11.6.

3.11.6.1.5  (01-01-2014)
Inquiries from IRS Employees

  1. IRS employees are taxpayers and are entitled to the same security measures to their tax account information in the same manner as other taxpayers who call, write, or visit us.

  2. There are special procedures that you must follow to protect the "taxpayer employee" , as well as to protect yourself. If you receive or initiate telephone contact, or are assigned a case of an IRS employee, take the following actions:

    1. If you do not know the employee, work the case and complete Form 11377.

      Note:

      Completing the Form 11377, Taxpayer Data Access, is voluntary and should be done at the discretion of the employee. The purpose of the form is to document the reason(s) tax return and/or information was accessed by you when the taxpayers case was not assigned directly to you.

    2. If you know the employee, refer the case to your manager.

  3. If your unit has a designated employee who handles all cases from IRS employees, refer these cases to that employee.

  4. IRS Employees can be identified from the IRS-EMP-CD on TXMOD and on IMFOLT.

    • IRS EMPLOYEE:P - Primary taxpayer.

    • IRS EMPLOYEE:S - Secondary taxpayer.

    • IRS EMPLOYEE:B - Both taxpayers.

3.11.6.2  (08-06-2013)
Preliminary Review of Form 1040X/Amended Return

  1. Before an adjustment can be input or routed to another function, check the return for the following elements:

    • Taxpayer Identification Number

    • Tax Period

    • Received Date

    • PECF Requests

    • Discovered Remittance

    • TC 150 posted

3.11.6.2.1  (07-24-2014)
Taxpayer Identification Number

  1. In order to process a return, you must have the TIN. The TIN is the Social Security Number (SSN) or IRS Individual Taxpayer Identification Number (ITIN) for IMF accounts.

  2. An ITIN is a nine-digit number issued by the IRS to individuals who are required for U.S. tax purposes to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a SSN issued by the Social Security Administration (SSA). The ITIN will be in the format of a SSN and begin with the number 9. The fourth and fifth numbers will range from:

    • 70-88

    • 90–92

    • 94-99

      Note:

      89 and 93 are NOT used as fourth and fifth numbers for ITINs but are reserved for other programs.

  3. The ITIN is only for federal tax purposes. The ITIN does not:

    • Qualify the applicant for Earned Income Tax Credit (EITC)

    • Make inference to the applicant's immigration status

    • Qualify the applicants right to work in the United States

  4. If the Primary TIN (P-TIN) is missing, incorrect, or illegible or secondary TIN (S-TIN) on a joint return, research IDRS (Command Code NAMEI or NAMES), attached correspondence, cross reference with the spouse (Command Code INOLE) and/or dependents using DUPED or DDBKD. If you have exhausted all resources and are still unable to determine the P-TIN and/or S-TIN, correspond per IRM 3.11.6.9 using Form 8009-A, box 11 (do not input TC 971 with AC 270 if unable to determine primary TIN) for all claims.

    Note:

    If found edit to the appropriate field on the Form 1040X or Form 1040 series.

    Note:

    See IRM 3.11.6.5.1 for researching to find the P-TIN.

  5. If the taxpayer files an amended return and the primary's or secondary's account is set up on the invalid segment of Master File (which requires an asterisk after the TIN (000-00-0000*)), refer as CIS/AM.

    Exception:

    If the filing status is FS 3, the spouse's TIN may show an asterisk after the TIN. This should not be considered an invalid TIN and can be worked as normal.

  6. Refer to CIS/AM if the case involves a merging or re-sequencing of accounts.

    Example:


    (a) If the primary or secondary taxpayer is changing from an ITIN/IRSN to a SSN then attach an IMFOLT print showing the taxpayer filed under a different TIN.
    (b) Filing status change to MFJ where both taxpayers have already filed.

  7. If the taxpayer is filing MFJ and there is no TC 150 posted for the primary's TIN research the secondary's TIN for a TC 150. TC 594 may be present. See IRM 3.11.6.5.1

  8. Refer to CIS/AM if the account has been merged/resequenced and an update to DDBCK is required.

3.11.6.2.2  (08-06-2013)
Tax Period

  1. Amended returns must be for a specific tax period. When the tax period is missing, and you cannot determine from return information or attachments, research IDRS (Command Code IMFOL or RTVUE) for matching tax data.

  2. If the tax period can be determined, edit the tax period on the front of the return above the Entity section in YYMM or YYYYMM format or mark the appropriate box, even when routing document to another function.

  3. If you cannot determine the tax period through IDRS research, correspond unless return is being routed to another function. Correspond per IRM 3.11.6.9 using Form 8009-A, box 10.

    Note:

    Do not input TC 971 AC 270.

  4. If the taxpayer tries to submit an amended return for multiple tax periods on a single amended return, send the return back to the taxpayer. Use Form 8009-A box 3 to inform the taxpayer they must submit a separate amended return for each specific tax period that they are trying to amend.

3.11.6.2.3  (07-24-2014)
Superseding Returns

  1. The due date of a calendar year individual income tax return is April 15. A fiscal year individual income tax return is due the fifteenth day of the fourth month following the close of the fiscal year.

    1. An amended (Form 1040X) or corrected (duplicate) return filed before the due date or the extended due date is a superseding return.

    2. Correspondence postmarked on or before the due date or extended due date, requesting changes to tax returns, is processed as superseding information.

    Note:

    These amended returns are processed as any other amended return is processed.

  2. Certain information concerning Superseding returns:

    • Changes in irrevocable elections (i.e., Section 179, Joint to Separate)

      Note:

      A return filed after the original due date but on or before the extended due date does not constitute a superseding return in this situation.

3.11.6.2.4  (09-18-2013)
Received Date

  1. Every Form 1040X should be stamped with a processing center Received Date stamp. If the Received Date stamp is missing, or illegible, but is found elsewhere in the return packet, edit the date to the front of the return in MMDDYY or MMDDYYYY format in the blank space above Line 1.

    Note:

    Other areas within the IRS may date stamp the return to indicate when the return arrived in that area (e.g. Statute, Adjustments, etc.), do not use that date stamp as the Received Date.

  2. Beginning April 23, 2014, honor received dates that are edited in green ink on current year Forms 1040X received with payments as the return received date to be used for processing.

  3. If the Received Date stamp is not found or is obviously incorrect, edit the Received Date based on the order of precedence below in the same format and location as stated in (1) above.

    1. Latest postmark or designated private delivery service mark on the envelope

    2. IRS Scamps date

    3. IRS field office date stamp

    4. IRS field office with a handwritten Received Date on a secured return. Must have "received" and a date with a signature and title of the authoring employee.

    5. Signature Date (only if the return was signed in the current year)

    6. Current Date

  4. Use the following chart when there are multiple received dates stamped and/or edited on the return:

    If And Then
    Inputting an adjustment or routing a return Refund or Net Zero Return Circle all but the latest received date.

    Example:

    The original received date is March 5, 2014, and the latest received date is April 4, 2014. Edit 040414 as the received date. Circle March 5, 2014.

    Inputting an adjustment or routing a return Balance Due Return Circle all but the earliest received date.

    Example:

    One received date is March 5, 2014, the other received date is April 4, 2014. Circle April 4, 2014.

    Corresponding on a Refund or Net Zero Return Circle all received dates.
    Corresponding on a Balance Due Return Circle all but the earliest received dates.
  5. Input the received date of Form 1040X as the received date on IDRS.

    Exception:

    See IRM 3.11.6.3.3 for statute returns.

  6. For W-7 cases, enter the date from Form 3471, if attached, as the Amended Claims date.

3.11.6.2.5  (07-24-2014)
Processing PECF Requests

  1. The taxpayer may request that $3 go to the Presidential Election Campaign Fund (PECF) by checking one or both boxes on Page 2 of Form 1040X.

  2. A PECF request can only be processed for the current tax year and one tax year prior; and if there is a tax change on Line 10 of Form 1040X.

    Exception:

    Do not process a PECF request on any return that is being routed out.

  3. If the return meets correspondence criteria and an adjustment will not be input, do NOT process the PECF request. Correspond as required.

  4. To process a PECF request, edit the following items to a blank Form 1040X as a "Dummy PECF" return.

    1. "Dummy PECF" in the top margin

    2. Tax period

    3. Primary name control

    4. Primary SSN and Secondary SSN

    5. Filing Status Code box checked

    6. "5" to the right of filing status just above column C if one PECF box is checked

    7. "6" to the right of filing status just above column C if two PECF boxes are checked

    8. Received date in MMDDYY format in the center portion

    9. "O/S" on the signature line to indicate the original Form 1040X was signed

    10. Your employee number/stamp in the upper left margin (if required by local procedure)

  5. Edit "PECF Prep" in the left margin of Form 1040X then continue processing the return.

  6. Route "Dummy PECF" to Batching/ISRP per local procedures.

3.11.6.2.6  (01-01-2014)
Discovered Remittances

  1. A discovered remittance is any form of payment (cash, check, money order, stamp, jewelry, etc.) other than credit card that the taxpayer may send in.

    Note:

    When a US Treasury check is returned to the IRS, it is not considered a discovered remittance. Edit "Void" onto the check if it does not already have it. Forward the check and a copy of the return to the Refund Inquiry unit and continue processing the return.

    Exception:

    If the US Treasury check is made payable to the IRS this should be returned to Receipt and Control for proper disposition.

  2. When a remittance is discovered, immediately turn the remittance over to your Manager or Lead.

    Note:

    If your unit has a designated employee who handles all discovered remittances, refer to the designated employee.

    1. If a Form 1040-V, Payment Voucher is attached, only turn in the voucher and the remittance. Edit your TE number on the voucher and continue processing the return.

    2. If a payment voucher is not attached, turn in a copy of the front page of the return with the remittance.

    3. If a "loose" remittance is discovered (not associated with a return), complete Form 3244. Turn in the remittance with Form 3244 and continue processing the return.

  3. Edit the Received Date if missing onto either the discovered remittance, Form 1040-V, or the return.

  4. If the taxpayer sends in a credit card or credit card information, refer the case to the Manager or Lead for a formal 3956C disallowance letter to be issued.

  5. For additional information on discovered remittances, see IRM 3.8.46, Discovered Remittances.

3.11.6.3  (07-24-2014)
Sorting, Routing, and Priority Processing

  1. During the course of processing cases the tax examiner will identify all documents for "route-out" criteria by reviewing the return for attachments, issues, correspondence required, Statute, and researching IDRS for transactions that require routing to another function. Sorting into current and prior years is not necessary. Keep all related tax years together if possible. Notate on Form 1040X any action taken, such as routing to Statute, detached Form 2848 to Centralized Authorization File (CAF), etc.

  2. Identify all possible route out criteria, then route to the highest priority as stated in paragraph 3 below.

  3. The priority order for routing is as follows unless a specific IRM reference provides an exception:

    1. Disaster Claims

    2. Carryback or Carryforward Claims (CIS/AM)

    3. Statute

    4. Taxpayer Advocate Service (TAS)

    5. Open AIMS Cases/Exam

    6. Scheme Development Center/Frivolous

    7. Category A (CAT A)/First Time Home Buyers credit meeting Cat A criteria

    8. Underreporter (AUR/URP)

    9. Adjustment Function Criteria (CIS/AM)

    10. Cases controlled to accounts management route to local CIS/AM

    11. Open cases (open to an employee other than an area listed above)

    12. All other claims

      Exception:

      Follow Troubled Asset Relief Program, TARP, procedures prior to routing to areas other than Exam/Cat-A.

  4. If the TC 150 has not posted suspend return. Do not route until a TC 150 is posted. See IRM 3.11.6.5.2 If the taxpayer submits a Form 1040 series return with no Form 1040X attached and there is no TC 150, see IRM 3.11.6.5.4.

  5. The tax examiners will screen for cases meeting Category A (Cat A) criteria for the examination department. See IRM 3.11.6.3.5

  6. See IRM 3.11.6.3.24.1 for TC 971 and Action Codes and routing destination for specific items. Leave a working trail in the left margin indicating the destination or detached item as an audit/working trail, such as "To Statute" , "Form 2848 detached" , etc. See IRM 3.11.6.1.2.2. Follow local procedures.

  7. See IRM 3.11.6.2.5 for editing instructions for ISRP input of "Dummy PECF" instructions.

  8. Always "Hand carry" statute returns to the area following local procedures.

  9. Follow IDRS screening procedures for sorting and routing returns or correspondence to another function. For Carryback/Carryforward claims, Disaster Claims, Injured Spouse, Innocent Spouse, Statute returns, etc., follow local agreements for routing to CIS/AM (e.g. if manual input of TC 971 and additional Action Codes, Category Codes, etc. is required).

3.11.6.3.1  (09-19-2013)
Disaster Claims

  1. Taxpayers who live in an area for which the President issues a "Declaration of Emergency or Major disaster" may file disaster claims. The IRS may place a -O/-S freeze on the module for the zip codes of the affected areas to indicate the taxpayer resides in a disaster area. The -O/-S freeze is only an indicator that the taxpayer resides in a disaster area and does not necessarily mean the taxpayer is filing a disaster claim.

    Note:

    The names and locations of the designated Disaster areas are posted on SERP under the "Who/Where" tab, then the "Disaster Declarations/FEMA" link.

  2. A disaster claim is filed using Form 4684, Casualty and Theft Loss, and is reported in addition to the standard deduction or on Schedule A. A disaster claim can be identified by an amount on line 17 of Form 4684.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    If processing a Disaster claim and Priority Code 8 is required, expedite to CIS/AM.

  3. Taxpayers who cite Publ 109-7 Proper Tax Treatment of Certain Disaster Mitigation Payments enacted on April 15, 2005, for grant payments under the Flood Mitigation Assistance Program (FMA), the Pre-Disaster Mitigation Program (PDM), or the Hazard Mitigation Grant Program (HMGP) which are grants used to elevate structures located on flood-prone properties owned by individuals and business exempt from tax.

    Note:

    This is sometimes referred to as HR-1134.

    Taxpayers who paid taxes on these payments are eligible to claim a refund. Process these returns using RC 032

3.11.6.3.1.1  (07-24-2014)
Disaster Expedite

  1. All documents that meet the specified criteria to be routed or forwarded to another function to work (i.e. Cat A, Statutes, Underreporter, CIS/AM, etc.) need to remain separate for each area under a routing sheet indicating "Disaster -- Expedite Processing" . Expedite routing, hand walking whenever possible, to the forwarding area. Follow local procedures.

  2. If there are additional prior year Forms 1040X claiming the carryback loss from the casualty, expedite all returns to CIS/AM.

    Note:

    This is not a carryback/carry forward claim issue.

3.11.6.3.1.2  (07-24-2014)
Disaster Correspondence

  1. Do not correspond for missing forms or schedules on Disaster claims, unless there is not an explanation for a substantial amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . If unsure about the claim, consult your Manager or Lead.

    Note:

    If the amended return has disaster freeze codes present, but the Form 1040X is not claiming a disaster loss you may correspond if additional information is required to process the claim following normal correspondence procedures.

  2. If a Disaster claim is missing a signature (refund or balance due return), correspond using a 324C letter. Do not mail the return back to the taxpayer. Suspend the return until you secure a signature only on refund returns.

    1. If a reply is received within 45 days, continue processing the return and input under Blocking Series 05.

    2. If no reply is received after 45 days, return the entire claim to the taxpayer using a 916C letter, paragraphs B, F, Q, R , X, 5. See IRM 3.11.6.9.10 for fill in paragraphs. Essentially this tells the taxpayer we cannot process the claim and they will now be required to file a new claim with the required information.

3.11.6.3.1.3  (09-23-2013)
When a Disaster Claim Can Be Filed

  1. Taxpayers may file a disaster claim in either:

    • The same year that the disaster occurred or

    • The year immediately preceding the year in which the disaster occurred

  2. To file a disaster claim in the preceding tax year in which the disaster occurred the claim must be filed by the later of the following due dates shown in the Disaster Timeliness Chart below.

    1040X Filed For Disaster Occurred Processable If Received By
        Normal Due Date w/Extension (TC 460)
    2013 2014 04-15-2015 10-15-2015
      2013 04-15-2017  
    2012 2013 04-15-2014 10-15-2014
    2012 04-15-2016
    2011 2012 04-15-2013 10-15-2013
    2011 04-15-2015
    2010 2011 Disaster CIS/AM Disaster CIS/AM
    2010 04-15-2014

    Example:

    A disaster loss that occurred in 2013 that is being claimed on a 2012 return has until April 15, 2014 (without an extension) or October 15, 2014 (with an extension) to be considered timely filed.

  3. If the claim is filed late, expedite to CIS/AM.

3.11.6.3.1.4  (07-24-2014)
Processing a Disaster Claim (-O/-S Freeze)

  1. To process a Disaster claim, check TXMOD for a TC 150 and -O/-S Freeze on the account. If there is:

    1. A -O/-S Freeze: Continue processing using Blocking Series 05.

      Note:

      If it is a refund return and the refund is to be issued to a name and/or address other than the one shown on Masterfile (e.g. temporary address, taxpayer representative, prior name, in care of name and address), do not continue processing. Keep separate under routing sheet indicating "Disaster" and expedite routing to CIS unit.

    2. No TC 150 posted: Expedite routing to CIS per local procedure.

    3. No -O/-S Freeze (Balance Due Only): Expedite routing to CIS per local procedure. Refund returns do not require a -O/-S Freeze to process the return.

    4. No -O/-S Freeze (Refund return): Continue processing the return. Use Blocking Series 05 when inputting the adjustment.

      Note:

      If processing a Disaster claim and Priority Code 8 is required, expedite to CIS/AM.

  2. A new –S freeze has been added to IMF and BMF Master File processing for taxpayer accounts in Presidentially declared disaster areas. The new –S freeze will perform the same functions as the –O freeze for systemic penalty and interest relief. It will not provide compliance relief.

  3. An –S freeze may be systemically set on taxpayer’s accounts whose address of record is in the covered disaster area (set on IDRS by zip code with a TC 971 AC 688 and includes the Federal Emergency Management Agency (FEMA) Emergency Declaration Number).

  4. Affected taxpayers located outside the covered disaster area will be advised to call the toll free number 1-866-562-5227 to self identify for disaster relief.

    Reminder:

    Taxpayers will no longer self identify for disaster relief by writing a disaster designation in red at the top of their tax return.

  5. The –S freeze will ensure that interest and penalties are properly waived if the taxpayer files and/or pays within the prescribed time frame.

  6. The –S freeze is released when the current date is beyond the secondary date (disaster ending date) of the TC 971 AC 688.

3.11.6.3.2  (07-24-2014)
Carryback/Carryforward

  1. A Net Operating Loss (NOL) is created when certain deductions exceed income from all sources. These deductions must relate to a trade or business, work as an employee, or casualty or theft. A taxpayer who has an overpayment of tax as a result of a NOL, Net Capital Loss (NCL), Unused Credits, or a Claim-of-Right adjustment can file an application or claim for adjustment or refund. Any loss remaining after applying the NOL to preceding years lowers taxes in a later year.

  2. ALL Carryback/Carryforward (CB/CF) claims are to be expedited to AM. Follow any local procedures for separating CB/CF claims from other CIS/AM issues.

  3. The taxpayer may elect to forgo the carryback period for any tax year and carry the entire NOL forward. Route all elections to forgo the carryback period to CB/CF unless the election has already been made. (Check TRDBV for efiled returns.)

  4. Do not treat the following claims as CB/CF claims:

    • The terms “carryforward” and “carryback” can be used when identifying certain credits that can apply on different tax years. Since these are not NOLs being applied to a gain year they are NOT CB/CF claims.

    • Schedule D loss that exceeds the $3,000 loss limit. Taxpayers are entitled to “roll-over” or “carryforward” any Schedule D loss that is greater than $3,000. Process these cases with RC 013.

    • Carryover of an IRA.

    • Schedule A with an entry on Line 18 “Carryover from prior year” for Gifts to Charity.

    • Credits do not constitute a carryback claim.

  5. Indications that a taxpayer is trying to take a loss are as follows:

    • An attached 1040 has a change on Line 21 related to a NOL.

    • Net Section 1256 contract losses carried back. Treat these as a carryback claim if the taxpayer attaches Form 6781 with box D checked or if there is any mention these losses are being carried back.

    • IRC 1341(b)(1) or attaches a worksheet, which mentions Regulation 5.6.411.1(d)

      Note:

      A Claim of Right Adjustment can be entered on line 2 or line 14 of the 1040X or line 28 of Schedule A

    • Form 1045 and/or supporting schedules (Schedule A-NOL, Schedule BNOL Carryover, or Schedule D) are attached.

    • Taxpayer checks the carryback box of Form 1040X or notates NOL, Carryback, Carryforward, or Carryover on the return in the Form 1040X, Explanation of Changes.

      Note:

      Do not treat as a CB/CF return unless the conditions in (1) are met. (e.g. The taxpayer may mark the carryback box of Form 1040X in error.)

    • Schedules K-1 from a partnership, S corporation, estate, trust, or similar wording is attached for either:
      - The year of the loss
      - Credit that contributed to the loss

      Reminder:

      If none of the CB/CF issues are changing do NOT route to CB/CF. (e.g. A NOL is indicated on Line 21 of Form 1040, but is not changing.)

3.11.6.3.3  (01-01-2015)
Statute Cases

  1. Submission Processing will process 1040X statute year claims. These will consist of tax decreases/credit increases meeting SP's 1040X criteria.

    Note:

    Command Code DDBCK can only be used on current year returns and on returns for the previous two years . . Continue to process the return.

  2. Statute year cases will be identified in Receipt and Control and routed to the Statute teams in Accounts Management. The Statute teams will identify tax decreases/credit increases and route to the 1040X teams to be processed. Due to different local configurations at the 3 sites the cases coming from Statute will be routed per local agreement for distribution to the 1040X area. Use the following guidelines when processing a statute year case:

    1. If the case is not stamped with an indication it has been reviewed in the Statute area it should be returned to the Statute Team to be reviewed. The stamp could read statute cleared, no statute issues, campus name followed by statute, etc. and is not limited to the examples provided.

      Note:

      The stamp must have the date it was reviewed and should be within 60 days of the date you are processing the claim, otherwise return the claim to the statute team.

    2. Open cases with a Category Code of ST04 or -X04 meeting SP processing criteria should be worked by putting the statute control base in B status and upon completion putting the statute control base back in A status.

    3. If instructions are provided by the statute unit, refer the claim to your lead for guidance in processing the claim.

    4. Statute cases not meeting Submission Processing criteria should be expedited routed to the appropriate function.

      Example:

      The statute of limitations has expired and the taxpayer is claiming a Rollover of Airline Payments to a traditional IRA. This does not meet Submission Processing criteria and should be routed to CIS/AM.

      Note:

      Follow normal priority order in 3.11.6.3(3), unless an exception is otherwise provided.

  3. An ASED is the Assessment Statute Expiration date on which the time allowed for assessing tax expires. The ASED expires 3 years from the due date or received date of the original return, whichever is later.

  4. An RSED is the Refund Statute Expiration Date. When the statute of limitations for a refund expires, the IRS can no longer allow a claim for refund by the taxpayer. The RSED expires 3 years from the original due date or 2 years from the date the tax was paid, whichever is later. See explanation of 2 year/3 year period below:

    1. In the case of a claim filed within the 3 year period, the amount to be credited or refunded is limited to the tax paid during the 3 years preceding the claim, plus the period of any extension of time to file.

    2. In the case of a claim filed within the 2 year period, the amount is limited to the portion of tax paid during the 2 years immediately preceding the filing of the claim.

    3. The filing of a claim for refund keeps the statute open only with respect to the item(s) described in the claim. A subsequent claim filed after the expiration of the statute that requires the investigation of facts or legal positions that would not have been disclosed by the investigation of the original claim are generally considered an untimely new claim and are officially disallowed.

    Note:

    Always verify the RSED and ASED which can be found on IMFOLT or TXMOD.

    Exception:

    The statute period has been extended for some military reservists. See Military Family Relief Act, IRM 3.11.6.8.1.2 for processing instructions.

  5. The 23C Date is the date an assessment is posted to the Master File as indicated by the TC 150. If no tax is assessed the TC 150 will be for .00. It is also the date the first master file notice is sent on a balance due document and is commonly referred to as the notice date or assessment date. Also shown as Settlement Date.

  6. See IRM 3.11.6.3.16 if the case is a Substitute for Return (SFR).

  7. Route returns discovered with 90 days or less remaining until the ASED with no indication it has been reviewed by the Statute Team to the Statute function. The 90 day period allows the Statute function time to secure any additional information required to clear the return or resolve an issue

    Caution:

    If the ASED is within 17 calendar days, all potential statute cases must be expedited/hand walked to the Statute function.

  8. Send any returns with a total tax increase or refundable credit decrease that are within 90 days of the ASED (or if the ASED is expired) to the Statute Team regardless of any indication that the return has already been cleared by Statute:

    • Input a TC 971 with AC 014.

    • Keep all related statute tax years together just as you keep non-statute years together.

    • If the case is within 17 days of the ASED it needs to be expedited/hand walked to the Statute area.

      Exception:

      A claim to decrease withholding tax is not considered a credit decrease and can be processed without statute involvement.

      Exception:

      Route to CIS/AM any case regardless of any tax increase/credit decrease involving any of the following:

    • A signed consent or request to extend the statute of limitations.

    • Filing status changes to MFJ.

    • Any case requiring a transfer to Excess Collections or requiring a manual refund

    • If an individual is "financially disabled" , this means being unable to manage financial affairs. The inability must be due to a medically determinable mental or physical impairment.

  9. If a Form 1040 is received in the 1040X unit and the Form 1040 is stamped "Statute Cleared" , research IDRS for a TC 150. If a TC 150 has posted, determine if it is a duplicate return or an amended return. If the return is a duplicate follow IRM 3.11.6.5.4 and if it is amended process per normal statute procedures.

  10. When there is no TC 150 posted on the account for a statute year return follow the procedures in the table below:

      If And Then
    1 Statute year 1040 with no 1040X attached No TC 150 posted Route to Statute Unit for Clearance. Input TC 971/014.

    Exception:

    If the return is stamped "statute cleared " send to Receipt and Control to be processed as an original. See IRM 3.11.6.5.4(2)a

    2 Statute year 1040X , an original Form 1040 and an "As Amended" Form 1040 are attached No TC 150 posted Follow the procedures in IRM 3.11.6.5.3 paragraph (5) except route to Statute Unit for Clearance. Input TC 971/014.

    Exception:

    If the return is stamped "statute cleared" send to Receipt and Control to be processed as an original.

    3 Statute year 1040X No TC 150 posted Send to Statute Unit for clearance. IRM 3.11.6.5.3 Convert Form 1040X to a Form 1040 or 6114. Input TC 971/014 and ACTON history of "X21502STAT."

    Exception:

    If the return is stamped "statute cleared " send to Receipt and Control to be processed as an original.

  11. If the conditions above are not met, follow the procedures below in order from top to bottom of the chart:

    • If inputting a timely received return after April 15th, input an "S " in the Override Indicator field.

    • See the table in (12) below for instructions on inputting the received and amended claims dates.

      If And Then
    1) The Tax Account for the year you are working has moved to the Retention Register It is a workable case meeting submission processing criteria Use IDRS Command Code IMFOLBxxx-xx-xxxx. to recover the tax module from the retention register. If systemically the case does not move from the retention register to IDRS then route to CIS/AM. Once it is recovered MFREQC or MFREQD the account and take account action. This action has to be taken whether adjusting the account or generating correspondence.
    2) The returns meets CB/CF criteria The case is within 60 days of the ASED 1. Prepare Form 3210 and notate "CB/CF/Statute Imminent" in the remarks area.
    2. Place an ACTON history item "Statute Imminent or SI" on TXMOD.
    3. Expedite / hand walk to CIS/AM per IRM 3.11.6.3.2
    3) There is a total tax decrease or refundable credit increase of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and specific Cat-A criteria does not already exist for the issue The IRS received date on the 1040X is within 60 days of the ASED

    Note:

    When ASED is expired and 1040X is timely filed process the claim

    Route to CAT-A

    Note:

    If specific CAT-A criteria exist see IRM 3.11.6.3.5.1 If the CAT-A criteria is not met, continue to the next box.

    Exception:

    Do not refer Schedule K-1 changes regardless of the ASED

    4) You are making an adjustment to the account with a TC 290 .00 and adjusting credit reference numbers that will not result in a credit or tax change.

    Example:

    Changing SE tax from primary to secondary taxpayer. No tax change and no credit change.

    Regardless of ASED Process using blocking series 05. Do not use priority code 9.
    5) Total tax decrease and/or refundable credit increase resulting in a refund is received before the RSED Claim is incomplete and additional information is required to process the case. 1. Suspend the case for 45 days and request the missing information.

    2. Correspond with the taxpayer using a 916C letter paragraphs B, E, I, Q, R, X. In the enclosure field use "N."

    - In paragraph Q use specific verbiage requesting required information from Form 8009-A or from the IRM 3.11.6 subsection related to the missing information.

    -In paragraph R use "Please send us the information requested within 30 days from the date of this letter. If we do not hear from you within 30 days we will not be able to allow your claim if the statute of limitations has expired. Generally the Refund Statute expires 3 years from the original due date or 2 years from the date the tax was paid, whichever is later. "

    Exception:

    If the signature is missing on the claim use the 324C letter paragraphs AOUX4a. For the fill-in paragraph U use "Please send us the information requested within 30 days from the date of this letter. If we do not hear from you within 30 days we will not be able to allow your claim if the statute of limitations has expired. Generally the Refund Statute expires 3 years from the original due date or 2 years from the date the tax was paid, whichever is later" .



    3. When the taxpayer responds to the letter or the 45 days has expired and:

    -The response is received after the RSED ( no more than 60 days ) but within 45 days of the IRS request (date the letter was done) then allow the claim.

    -The time frames are not met or the taxpayer did not provide a complete as requested then send 105C letter disallowing claim. Use paragraphs A, R, 4, 5, 6 and e. Follow IRM 3.11.6.9.3
    6) If the RSED is expired and there is a math error on the original return The only change on the 1040X is a correction to the math error from the original return Continue to process the 1040X per IRM 3.11.6.6.5.1

    Note:

    Input the received date of the original return in the "RFSCDT" field.

    Exception:

    If the original return was not timely filed (after the RSED) route to CIS/AM

    7) If the RSED is expired and there is a math error on the original return The change on the 1040X is NOT a correction to the math error from the original return and/or also claiming additional changes Route to CIS/AM
    8) The RSED is expired on a Balance Due Module and the Module is not Full Paid.

    Exception:

    See boxes above to address math error corrections

      Route to CIS/AM
    9) The RSED is expired on a Full Paid Module

    Exception:

    See boxes above to address math error corrections

    There are payments, credits, or offsets posted within the last two years of the module of the return you are working Route to CIS/AM
    10) The ASED is greater than 90 days and the RSED is expired. 1. The return is a tax increase and/or credit decrease


    2. The return has either a tax increase with a credit increase, or a credit decrease with a tax decrease
    1. Process as normal


    2. Route to CIS/AM





    11) The RSED is expired on a Full Paid Module There are no payments, credits, or offsets within the last two years of the module of the return you are working and no other route out criteria exists. Send 105C letter disallowing claim. Use paragraphs A, R, 4, 5, 6 and e. Follow IRM 3.11.6.9.3
    12) Total tax decrease and/or refundable credit increase, resulting in a refund on a timely filed amended return, or net zero tax change

    No other route out criteria exists. Process 1040X using instructions in the note below.

    Note:

    Verify postmark date when determining timeliness.

    Note:

    If inputting a timely received return after April 15th, input an S in the Override Indicator field and complete the RFSCDT as indicated in the table below:

    Reminder:

    Always verify the RSED and ASED dates on TXMOD.

  12. Follow the procedures and examples below for inputting the received date and amended claims date.

    If And Then

    Received date is after the RSED

    Example:

    The received date is 4-20- 20XX

    Postmark shows the claim is timely filed

    Example:

    The RSED is 4-15-20XX, and the postmark date is 4-15-20XX

    Example:

    The RSED is 10-15-20XX, and the postmark date is 10-15-20XX

    Use the received date as normal, use the postmark date as the amended claims date and as the RFSCDT.

    Example:

    nput 4-15-20XX as the RFSCDT and the amended claims date.

    Example:

    Input 10-15-20XX as the amended claims date and RFSCDT.

    The received date is prior to the RSED

    Example:

    The received date is 3-30-20XX

    You are processing the claim after the RSED

    Example:

    Postmark date is 3-28- 20XX and the return is received in the 1040X unit to be processed 6-05-20XX

    Use the received date as normal and as the amended claims date and RFSCDT.

    Example:

    Input 3-30-20XX as the amended claims date and the RFSCDT.

    Received date is prior to the RSED

    Example:

    The received date is 6-01-20XX and the RSED/ASED is 10-15-20XX.

    You are processing the claim prior to the RSED.

    Example:

    The claim is processed 6-20-20XX

    Process the return following standard 1040X procedures
    Claim is timely received

    Example:

    The received date is 4-15- 20XX

    The claim is incomplete and correspondence is required per (11)Box 5. Response is received after the RSED, but within the timeframes in (11)Box 5.

    Example:

    Correspondence was sent, and the reply was received 6-1-20XX.

    Use the original received date as the received date and RFSCDT. Use the response date as the amended claims date.

    Example:

    Use the original received date as the received date and RFSCDT. Use the response date as the amended claims date.

    No envelope/postmark is present, or the postmark is illegibleThe received date is 4-15- 20XX Received date is no later than 5 days after the RSED

    Example:

    The return was received by or before 4-20-20XX, the RSED is 4-15-20XX

    Use the RSED date as the received date, amended claims date, and RFSCDT. Edit the RSED date onto the return and circle any other received date stamps.

    Example:

    Input 4-15-20XX as the received date, amended claims date, and RFSCDT.

    Note:

    If inputting a timely received return after RSED, input an S in the Override Indicator field.

3.11.6.3.4  (08-20-2014)
CI Scheme Development Center and Integrity and Verification Operation (IVO) Guidance

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

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

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "

    Exception:

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

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡

    Note:

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

  5. If a claim is returned from CI or IVO without any specific processing instructions or words that state "No CI Potential" or similar language and the claim still appears to be suspicious then elevate to your Lead or Manager. The Lead or Manager then needs to check with their local P&A Analyst to see if there are any treatment streams for these types of cases.

  6. IDRS Command Code FTBOL definer P has been programmed in xClaim to run in the background. This Command Code provides information as to whether a taxpayer is or has been incarcerated (prisoner) and release date if appropriate. The Command Code is running so that tax examiners are aware they are processing a prisoner’s return. Prisoners have the same rights as law abiding taxpayers when it comes to income tax. However many schemes and fraudulent returns originate from prisoner populations and tax examiners need to be aware when they are working a prisoner claim in order to identify any irregularity. The Command Code is definitely for informational purposes. IRM 3.11.6.8.12

3.11.6.3.5  (10-02-2014)
Examination Category A/Technical Assistance Requests/Voluntary Disclosure Off Shore Cases/Claim Processing with Exam Involvement

  1. Review all claims and amended returns for Examination involvement. This may include:

    1. Returns with an open TC 420 or -L freeze see IRM 3.11.6.3.5.2

    2. Returns meeting Category A criteria IRM 3.11.6.3.5.1

  2. Do not refer incomplete returns to CAT-A or EXAM. Correspond for signatures and all missing forms or schedules needed to support the changes being requested. Do NOT input a partial adjustment until a reply is received.

  3. If a dependent on the account previously had an ITIN and now has a valid SSN, DDBCK must be used to update the exemption to the SSN. If DDBCK is unavailable for current year, use DUPEDD to delete the ITIN and DUPEDA to add SSN. Send a Form 4442 to the Austin ITIN Unit to have the ITIN revoked. Annotate both TIN's on the Form 4442 referral and specify which TIN should be revoked. The reason for revoking the ITIN is the dependent now has a valid SSN per IRM 3.11.6.8.3(4)

  4. If the case has a -W freeze which is set by the TC 520 this will take priority and the case should be routed to CIS/AM as a -W freeze.

  5. A partial adjustment is required when a CAT A or Exam case involves tax increases/ credit decreases.

    Exception:

    Certain adjustments are not processable based on SP criteria. Route any returns needing a partial adjustment that do not meet SP criteria to CIS/AM.

  6. Follow the instructions below for inputting a partial adjustment on cases that are being forwarded to Examination or CAT A.

    1. Input any tax increase or credit decrease.

    2. When adjusting for the tax increase/credit decrease, include any updates to AGI, TXI, and other applicable reference numbers.

    3. Use the appropriate blocking series and priority codes as necessary.

    4. Input the adjustment with a hold code 4 and a TC 470. Use CC REQ77 to input TC 470 and use the current date in the TRANS-DT field.

      Note:

      Use a posting delay code on the input of the TC 470 to delay by one cycle.

    5. Include source document N.

      Note:

      When inputting a partial adjustment update the DUPOL database for all issues related to the 1040X including any items not adjusted during the partial adjustment per IRM 3.11.6.7. (When DDBCK is unavailable use DUPED on current year returns only.)

  7. See following table for more detailed instructions for inputting partial adjustments as described above.

    Lines 11 – 14 Column B (Separate Credits on Line 14):  
    Any lines decrease Input TC/RN/CRN = XXXX.00- for only the credits that are decreasing (See Changes to lines 1-10 below for TC 29X input)
    Increase or no change Do not adjust (See Changes to lines 1-10 below for TC 29X input)
    Changes to lines 1 – 10
       
    IF Line 10 AND THEN
    Increases   Adjust lines 1 – 9 excluding increases to line 7
    No Change/Decreases
    1. Line 6B Increases
    Adjust lines 1-5 and include any increases to line 9 only.
    No Change/Decreases Line 6B no change or decrease Input TC 290 for .00 if there is a decrease to lines 11-14. (See 6 below) Otherwise, do not input an adjustment.
  8. Use the chart below if all of the following conditions apply:

    • There is a decrease to lines 11-14 and

    • Lines 6B and 10B are either decreasing or not changing and

    • There is a filing status change


    If And ThenHEN
    TP is claiming a Standard Deduction
    1. FS1/4 to FS 2/5

    Allow the standard deduction change and 1 exemption for Spouse only (FS 5 allow exemption for dependent).
    - Input TC 29X for the recomputed amount based on the new filing status.
    - Include PC 1 if this results in a tax decrease.
    TP is claiming a Standard Deduction
    2. FS 4/5 to FS 1

    Allow the standard deduction and remove the exemptions indicated.
    - . Input TC 29X for the recomputed amount based on the new filing status.
    - Include PC 1 if this results in a tax decrease.
    TP is claiming a Standard Deduction FS 1 to FS 4
    Allow the standard deduction change and do NOT adjust for the increase to exemption.
    Input TC 29X for the recomputed amount based on the new filing status.
    - Include PC 1 if this results in a tax decrease.
    TP is claiming itemized deductions FS1/4 to FS2/5
    Allow 1 exemption for Spouse only (FS 5 allow exemption for dependent). Do NOT adjust for line 2.
    - Input TC 29X for the recomputed amount based on the new filing status.
    - Include PC 1 if this results in a tax decrease.
    TP is claiming itemized deductions FS 4/5 to FS 1
    Remove the exemptions indicated. Do NOT adjust line 2.
    - Input TC 29X for the recomputed amount based on the new filing status.
    - Include PC 1 if this results in a tax decrease.
    TP is claiming itemized deductions FS 1 to FS 4
    Input TC 290 for .00
    - Do not adjust for lines 1 – 9.
  9. The following link will take you to an aid for determining partial adjustments; Partial Adjustment Decision Tree

  10. Refer Forms 1040X to the Lead, Manager, and Planning Analysis Analyst, if necessary, for any of the following reasons, provided the case does not meet Cat A criteria and is not open in AIMS:

    1. There is a technical issue

    2. There is a questionable issue

    3. You need a legal interpretation

  11. The lead will forward the case to Examination Classification function for technical assistance, use a CAT-A cover sheet, marking the Other box. The Examination Classification function should respond within 3 days. Do not input TC 971.

    1. Clearly state the question or problem on the CAT-A cover sheet.

    2. Attach any pertinent background information or research.

3.11.6.3.5.1  (07-24-2014)
Category A criteria

  1. To determine whether a return meets Cat-A criteria see Examination Criteria (CAT-A) – General and see Examination Criteria Cat A - credits.

    Note:

    Unless otherwise specified, the dollar amounts cited refer to the amount of the total tax decrease or credit increase whether or not the claim results in a refund or a decrease to the balance due.

  2. Do not apply CAT A criteria to Combat Zone returns when the TP is actively serving in a Combat Zone. Taxpayer's status is found on IMFOLE line 11, CZ indicator "1" indicates taxpayer is actively serving in a Combat Zone. CZ indicator "2" means taxpayer is not actively serving in a Combat Zone. (Refer to IRM 3.11.6.3.20

  3. For CC DDBCK Cat-A criteria see IRM 3.11.6.7.1

  4. When EIC is increasing and Schedule C meets Cat A criteria input CC DDBCK prior to referring the case to Cat A. If the DDBCK validation results screen shows the case as "Selected" refer the case to Exam using the "Selected" cover sheet. Otherwise refer the case as Cat Afor the Schedule C.

  5. If the case is being forwarded to Cat-A:

    • A partial adjustment may be required, see IRM 3.11.6.3.5

    • Do not input a TC 971 AC 013.

  6. Once identified these cases will be placed in a special sort identified as Cat A and the issue will be identified by checking a box as to its category on a summary sheet. This will be expedited to CIS/AM for disposition to exam.

3.11.6.3.5.2  (07-24-2014)
Exam/-L Freeze Claim Processing

  1. Accounts with a –L freeze indicate they have been selected for potential audit.

  2. If an –L freeze is present use CC AMDISA to determine the AIMS status. The AIMS status will determine the current status of the potential audit; therefore, processing procedures differ based on the AIMS status.

    Note:

    If there is an open IDRS control base to CI-SDC continue to follow processing procedures outlined in IRM 3.11.6.3.4.

  3. For accounts with a –L freeze and the AIMS status is 08 or less:

    • If the claim does NOT meet CAT-A criteria, process the claim following normal processing procedures. (Ensure the -L freeze / TC 420 was not generated by DDBCK prior to processing.)

    • Include PC 1 to prevent an unpostable condition (automatically input by xClaim).

    • Do NOT forward the case to Exam.

    Reminder:

    If both a priority code 8 and priority code 1 are needed on an adjustment use priority code 1.

    Exception:

    A TC 290 for zero without credit reference number 766 or 806 will post without a priority code.

  4. For accounts with a –L freeze and the AIMS status is greater than 08:

    • Route based on the Exam Employee Group Code (EGC) identified on AIMS. See link to the EGC which is located on SERP under Who/Where Exam Employee Group Code.

    • Follow local procedures for routing, see IRM 3.11.6.3.5 .

    Exception:

    If the AIMS status is 90 indicating a closed audit or there is a pending TC 300 - 361 refer the case to CIS/AM so they can make the determination if the 1040X is an audit reconsideration.

  5. If the case is being forwarded to Exam:

    • A partial adjustment may be required, see IRM 3.11.6.3.5.

    • Input a TC 971, AC 013. Use the received date of the amended return for the transaction date.

    Exception:

    On CC DDBCK "Selected" cases IDRS will automatically input the TC 971 / 013 when a TC 971, 010 is not present on the account.

3.11.6.3.5.3  (07-24-2014)
Taxable Amended Return Program

  1. Examination started an initiative related to taxpayers filing amended returns with income "increases" .

  2. Examination wants to review amended returns meeting the following criteria:

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    The amended return criteria is based on gross income changes, for example line 7 of the Schedule C, without regard to any related deductions, offsets, or the amount of change in any tax or credits.

  3. Accounts Management and Submission Processing will continue to process the amended returns following normal procedures. CAT-A criteria still applies. If the account already has Exam involvement, refer to IRM 3.11.6.3.5.2, Processing Amended Returns With Examination Involvement and IRM 3.11.6.3.5.3 Claim Processing for additional details.

    Example:

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

  4. Follow TARP procedures prior to routing to areas other than Exam / Cat-A.

  5. Upon completion, a copy of the amended return should be forwarded to Examination for inclusion in the program.

    Note:

    Do not input a Transaction Code 971 Action Code 013 when forwarding this copy to Examination.

  6. Processing the 1040X:

    • Complete all necessary case actions.

    • Fax a copy of the amended return to the Taxable Amended Return Program The fax number is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and is for internal use only.

      Note:

      The faxing of these documents can be assigned to the clerical function depending on local procedures. The copy produced by the fax machine should be destroyed as classified waste after the fax transmission is confirmed.

    Note:

    Only the first 10 pages of the amended return need to be faxed on large documents.

    • Forward the closed case to files following normal procedures.

3.11.6.3.5.4  (07-24-2014)
Voluntary Disclosure

  1. Voluntary Disclosure cases refer to amended returns reporting "Off Shore" income that had previously not been reported.

  2. Route all Voluntary Disclosure claims to:
    LB and I, Austin Campus
    Offshore Voluntary Disclosure Initiative
    Mail Stop: 4301 AUSC
    Austin, Texas 73301

    Note:

    Do NOT input the TC 971 action code 013 on Voluntary Disclosure claims.

  3. Some cases will not meet voluntary disclosure criteria. These will be returned/routed to us on a routing slip with the Remarks: "This tax return does not meet OVDI criteria. OK to process"

    Caution:

    Normal criteria and verification procedures still have to be followed.

3.11.6.3.6  (08-06-2013)
Processing of Form 1040X Returns submitted under the Streamlined Program

  1. 1040X returns submitted under the Streamlined program need to be processed by Philadelphia Accounts Management (AM) as they are considered International returns. However, Large Business and International (LB and I) is requesting that all refunds be frozen until classification is performed by LB and I. These submissions will consist of original returns as well as Form 1040X/Amended Returns.

  2. LB and I will be reviewing these returns/claims to see if they qualify for the streamlined program. They are also requesting that original returns and amended returns from the same taxpayer be maintained as a package. If a 1040X meets the criteria of the streamlined program it will be sent to the Austin Submission Processing 1040X area along with any related original returns to have a TC 290 .00 input for the Form 1040X. There are different processes depending on whether or not the 1040X is alone or is accompanied by a 1040:

    1. If the 1040X returns need a TC 290 .00 as determined by LB and I as a notation on the route slip the 1040X area will input the TC 290 .00 and the 1040X will go to files if no original 1040 is attached.

    2. If the package is mixed Forms 1040X and 1040s, the package will be kept together. The 1040X will have the TC 290.00 input by the 1040X area indicating “NSD” (No Source Document) on the input and the 1040Xs will then accompany the original 1040(s) to pipeline for processing. The entire package will be sent to PIN Unit.

3.11.6.3.7  (07-24-2014)
Identity Theft

  1. The IRS will track identity ID) theft or data loss incidents using service wide indicators on the IMF. Specifically, these codes will be placed on the IMF as Transaction Code (TC) 971 with an Action Code (AC) of 501, 504, 505, 506, 522, 523 or 524. The ID Theft literal in ENMOD or IMFOLE should not be used as an ID Theft indicator, use only the Action Codes above.

    Note:

    TC 971 AC 134 on account Indicates IVO or criminal investigation, -R freeze and indication of Letter 4464C sent.

  2. Identifying and discovering Identity Theft is everybody's responsibility. This is not a straight forward or clear cut process, however, there are certain indicators that will suggest possible identity theft. Please see the list in IRM 3.11.6.5.4 This list is used in the section covering amended Form 1040 with no 1040X attached/True Duplicates, but applies to Form 1040X as well.

  3. If the taxpayer indicates in the Explanation of Changes section of Form 1040X that they were a victim of identity theft or on a separate note, treat as an identity theft case.

  4. Form 14039, Identity Theft Affidavit, is completed by taxpayers and sent to the IRS to identify themselves as victims of ID Theft. Some of these forms involve tax related issues. Taxpayers send this form in by itself or attached to a letter or notice. They also will send them in attached to Form 1040 series returns. Returns with Form 14039 attached should be treated as identity theft cases. This would apply to loose forms as well as forms attached to a letter or notice.

  5. Once an amended 1040X is identified as being an ID Theft return, route to CIS/AM, notating "ID Theft"

  6. Once a Form 1040 series is identified as being an ID theft return it needs to be routed to batching. In the upper left hand corner of the return notate PAO (Process as Original).

    Note:

    Circle out any notation that suggests the return was previously filed prior to routing.

    Note:

    These returns may or may not have a TC 150 posted.

    Note:

    If the return is undeliverable it should be routed to Entity for further address research. If Entity cannot find a better address the return will go to files to be Alpha Filed.

3.11.6.3.8  (07-24-2014)
Underreporter Function Cases

  1. All correspondence and Forms 1040X must be reviewed for a change to AUR criteria. Referrals to AUR should only be for AUR criteria which involve verifiable information. Verifiable information is any information that can be verified on IRPTR by AUR (i.e income, withholding, mortgage interest). Verifiable information does not include changes to filing status, dependents, exemptions or correcting a math error. AUR will return all Forms 1040X and correspondence if it does not meet their criteria.

    1. When the taxpayer is NOT changing verifiable information, process the return without regard to AUR. Do NOT route cases to AUR that do not address or do not request reconsideration of a previous AUR adjustment.

      Note:

      Do not reverse an AUR adjustment. See IRM 3.11.6.6.5 if a corrected adjustment is required.

    2. If there is reasonable doubt as to whether the change is AUR criteria or not, refer to your workleader or manager for determination. If additional assistance is required, contact the appropriate Automated Underreporter (AUR) Coordinator. A listing is provided under the http://serp.enterprise.irs.gov/databases/who-where.dr/aur-coordinators.htm on the Servicewide Electronic Research Program (SERP) home page. Do not share the telephone contact information with the taxpayer.

  2. If it is determined that AUR criteria has been met, check TXMOD/IMFOL for a TC 922 on the module. Identify the Underreporter Process Code associated with the TC 922. The last process code (2 – digit) shown beside the TC 922 will determine its status. Use the chart below when determining the course of action to be taken.

    Note:

    Please route and notate the appropriate AUR stop number to prevent the mail function from identifying the route as a 1040X. The case needs to go directly to the respective AUR team. See for a list of AUR stop numbers.

    If Then
    TC 922 and the last process code is 09, 30, 34, 54, 55, 57-60, 75, 77-79, 81, 95, 97-99 Case is open in Underreporter:
    Route Form 1040X to the campus where the case is assigned. First two digits of the TC 922 DLN identifies where the case is assigned.

    Note:

    Input TC 971 AC 015.

    TC 922 and the last process code is 18 Refer to local KITA Coordinator.
    TC 922 and the last process code is 25, 46 or 65 Continue to process the Form 1040X unless there is a Z freeze on the module. If Z freeze is present, refer to Criminal Investigation (CI) Fraud Detection. See IRM 3.11.6.3.5 Note under paragraph 1.
    TC 922 and the last process code is 35, 36, 38, 44, 62-64, 66, 72, 80 or 82-86 Route to exam. Input TC 971 013.
    TC 922 and the last process code is 20, 53, 67, 68, 87, 88, 90, or 94 The AUR issue or case was closed. AUR reconsideration cases are routed to AUR. Please see paragraph (4) below for identifying and routing AUR reconsideration claims.

    Note:

    If you are unable to determine if the claim is related to the AUR issue continue to process the Form 1040X.

  3. The only process codes listed on the chart above are the codes submission processing needs to route to other areas. For a complete listing refer to Chapter 8, Section 19 of Document 6209.

  4. Many times a Form 1040X will be filed as an AUR reconsideration case. Form 1040X should be considered an AUR reconsideration case if AUR criteria as stated in paragraph (1) above and the following additional criteria are met:

    • TC 922 for the referenced tax period

    • TC 29X (subsequent to the TC 922) with any of the following blocking series:
      050-070, 500-519, 550-589, 600-619, 650-679, 980-999

    Note:

    xClaim will issue a caution with the same instructions for AUR reconsideration as above.

  5. Use the following chart for routing AUR cases based on the first two digits of the TC 922 DLN.

    FLC Campus Stop Number Reconsideration Cases
    18 Austin 6692-AUSC 6692-AUSC
    07 Atlanta 45A-ATSC 84-ATSC
    08 Andover 860-ANSC 860-ANSC
    19 Brookhaven 620-BSC 622-BSC
    89 Fresno 86106-FSC 86106-FSC
    29 Ogden 6653-OSC 6652-OSC
    28 Philadelphia 5-E08.113-PSC 5-EO8.113-PSC

    Note:

    Cases meeting the above criteria should be routed directly to the controlling AUR site based on the location code of the TC 922 DLN. See Who/Where on SERP When routing input a TC 971 / AC 015 to indicate case referral to AUR. Follow local procedures for routing.

3.11.6.3.9  (07-24-2014)
Accounts Management Cases

  1. Cases are referred to Accounts Management (AM) based on the issue, the dollar tolerance, computer program capabilities (e.g. Blocking Series), and other various reasons. Refer to the specific IRM instruction or the 1040X Routing Guide see IRM 3.11.6.12. Also see IRM 3.11.6.3.4 on screening and sorting Cat A criteria.

  2. Route all AM returns to Correspondence Imaging System (CIS) to be scanned. Follow any local procedure for separating the "Carryback/Carryforward" , "Disaster Claims" , etc. that require special handling.

    Note:

    In the history section of IDRS a CIS number will identify a case that has been CIS imaged. There can be multiple CIS cases. The number will consist of "CIS and 7 numbers/letters"

  3. If a return has an open case to CIS/AM see IRM 3.11.6.3.23.

  4. If a return is a CIS image then refer to CIS/AM.

    Exception:

    If a CIS imaged return is stamped/edited "Process as Original " or similar verbiage and there is no TC 150 posted/pending then route the document to Receipt and Control to be processed as an original. When feasible use Prior Year and Conversion Form 1040 Edit Sheet for Tax Year YYYY. If it is current year and the conversion form is not available then "dummy" a current year Form 1040 for processing.

  5. A return must have a TC 150 posted before routing. See IRM 3.11.6.5.2

3.11.6.3.10  (01-01-2014)
Affordable Care Act and Possible Health Professional Claims

  1. The Affordable Care Act enacted April 2010 expanded tax benefits for health professionals working in under served communities. Health care professionals who received student loan relief under various state programs and work in under served communities may qualify for refunds on their 2009 federal income tax returns. If you receive the Form 1040X, Amended U.S. Individual Income Tax Return, referencing the “Excluded student loan amount under 2010 Health Care Act ”, “Affordable Care Act” or “Student Loan Forgiveness”, please route the claim to CIS/AM as they will be processing these claims.

3.11.6.3.11  (01-01-2014)
Taxpayer Advocate Service Cases (TAS)

  1. When a taxpayer asks to be referred to TAS or the taxpayer meets TAS criteria (listed below), refer the case to the unit manager. Review all attachments for taxpayer notations/correspondence to determine whether the taxpayer meets TAS case criteria or requests TAS assistance.

    • Taxpayer is experiencing economic harm or is about to suffer economic harm .

    • The taxpayer is facing an immediate threat of adverse action.

    • The taxpayer will incur significant costs, if relief is not granted (including fees for professional representation)

    • The taxpayer will suffer irreparable injury to, or long term adverse impact if relief is not granted.

    • The taxpayer has experienced a delay of more than 30 calendar days to resolve a tax account problem.

    • The taxpayer has not received a response or resolution to their problem or inquiry by the date promised.

    • A system(s) or procedure(s) has either failed to operate as intended or failed to resolve the taxpayers problem or dispute within the IRS.

  2. If the taxpayer's issue cannot be completely resolved within 24 hours, but steps are taken to begin resolving the taxpayers issues within 24 hours, then do not forward Form 911 unless the taxpayer asks to be referred to TAS. The unit manager will ensure that a Form 911, Application for Taxpayer Advocate Assistance Order (ATAO), is timely forwarded to the local TAS office when necessary. (For additional information see IRM 13.1.7.4)

  3. Follow local procedures for routing to TAS.

    Note:

    Open controls to TAS can be identified by Control Category of ATAO or the Assigned to Employee IDRS number starts with 63.

3.11.6.3.12  (02-01-2013)
Identifying Frivolous Claims

  1. The IRS is faced with a growing number of individuals who file frivolous tax returns based upon tax avoidance arguments that are not supported by law. Internal Revenue Code (IRC) Section 6702 (a) provides for the assessment of penalties for filing frivolous tax returns.

  2. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by both individuals and businesses are included, but are not limited to, a list in Exhibit 3.11.6-4 Frivolous Claims.

  3. Effective January 1, 2010, a new action code, TC 971 AC 089, was implemented to indicate to IDRS users that a frivolous return has been received. An F- freeze is generated on all tax periods and a CP 72 is issued to the taxpayer. The TC 971 AC 089 will freeze the entire account. Adjustments should not be made to accounts showing an F- freeze.

  4. Route any "suspicious" return to the designated boxes in Submission Processing as well as claims with an F- freeze. The same boxes can be used for original returns, as well as claims (e.g. Forms 1040X) identified as "frivolous claims" , or follow the most efficient local procedure. The Frivolous Return Programmer (FRP) Coordinator will review any return which the taxpayer:

    1. Argues for any reason for filing a tax return or the paying of taxes.

    2. Uses one of the frivolous arguments or statements in Exhibit 3.11.6-4 Exhibit, Frivolous Claims.

    3. Marks out or alters in any manner, the penalty or perjury statement (i.e. the jurat) in the signature area.

    4. Input TC 971 with Action Code 013. Enter "Sent to FRP" in the remarks area.

  5. If a non-frivolous claim is received and CC TXMOD shows an open control base to an employee in the FRP (Unit Numbers: 04690, 04691, 04692, 04693 or 04694, route to FRP.
    IRS Frivolous Return Program
    1973 N Rulon White Blvd
    Mail Stop 4390
    Ogden, UT 84404

3.11.6.3.13  (01-01-2014)
International Returns

  1. Route all International returns to CIS so they can be scanned and shipped electronically to the International Department Accounts Management in Philadelphia. The public is instructed to send international Forms 1040X to Austin so they can be scanned into CIS. Philadelphia does not have a scanning operation.

    Note:

    A list of the International claims is included in Exhibit 3.11.6-5 PSPC International Returns. Common indicators of claims or forms to be routed are Foreign Addresses and Dual Status.

  2. Do not process any Form 1040X if all the Forms W-2, and Forms 1099 attached are from the Virgin Islands (regardless of the address). Pull these returns and transship to the following address:
    Virgin Islands Bureau of Internal Revenue
    9601 Estate Thomas
    Charlotte Amalle
    St. Thomas, U.S. Virgin Islands 00802

  3. Route to CIS/AM if dual status is indicated by the following conditions on an "amended" Form 1040:

    Form 1040 Revision is: Filing Status Line is checked and Line is blank or zero
    2006 and subsequent Other than 3 39b 40
  4. Do not True Dupe International returns.

3.11.6.3.14  (07-24-2014)
Form W-7 and ITIN Research (Austin Only)

  1. Form 1040/A/EZ/NR/X that have a red W-7 stamped in the bottom left corner of the return have been received from an ITIN Unit. IDRS research is needed to determine whether there is a TC 150 posted on the TIN provided or under a different TIN.

    • If the primary and/or secondary taxpayers have a newly issued ITIN, follow the instructions below in addition to normal processing procedures

    • If only the dependents have a newly issued ITIN, follow normal 1040X procedures. (If the dependent has “ITIN REJECT” stamped in the TIN area of the form, see the instructions per IRM 3.11.6.6.5

      Exception:

      If a return is received from the ITIN department that is a duplicate of the original and no credits or tax change will be allowed, input a 290 for .00 with no reason code.

      .

  2. W-7 returns that meets CIS/AM criteria should be placed on the CIS/AM cart. When a W-7 return is a duplicate, "TRUE DUPE" , research IDRS for ANY changes. If there are NO changes, treat as classified waste.

    Exception:

    If attaching an IMFOLR screen print per instructions below, route to CIS/AM using the current ITIN/IRSN DUPS cover sheet.

  3. Research IDRS (e.g., CC NAME, INOLE, DUPED and DDBKD, etc.) for a TC 150 under the primary (and secondary) taxpayer(s) for multiple issued TIN’s and route according to the chart below.

    If And Then
    A TC 150 is posted The return is a TRUE DUPE Treat as Classified Waste
    A TC 150 is posted The return is NOT a TRUE DUPE Continue to research Primary (and Secondary) TIN for multiple TIN(s)
    A TC 150 is posted The Primary (or Secondary) TIN is different than found on the return Attach an IMFOLR screen print (for each TIN, if more than one) to the return and route to CIS/AM
    A TC 150 is posted The Primary (or Secondary) TIN is the same, but other issues Process the return as a Form 1040X
    No TC 150 is posted There is more than one TIN for the taxpayer Route to Receipt & Control to be processed as an original return, using the ITIN
    No TC 150 is posted The return contains an IRSN for the primary taxpayer, but an ITIN/SSN is found Circle the primary taxpayer’s IRSN, edit the ITIN/SSN to the return, and route to Receipt & Control to be processed as an original return
    No TC 150 is posted The return contains both an ITIN and SSN are found for the primary taxpayer Circle the primary taxpayer’s ITIN, edit the SSN and route to Receipt & Control to be processed as an original return

    Note:

    When performing your research on IDRS for a TC 150, use Primary, Secondary and Dependent information from the return and IDRS to exhaust all filings from the taxpayer, remembering that different Command Codes have different information:

    • CC NAME gives many names that the taxpayer may be using; therefore, when a last name has multiple names, it is necessary to use all names – by themselves and together – to ensure correct research. Do NOT let address differences get in the way of correct TIN determination.

    • CC INOLE gives all associated TINs under which the taxpayer filed returns.

    • CC DUPED and DDBKD for each of the dependents, if any, may help determine a correct TIN for the primary taxpayer.

  4. When “ITIN REJECT” is stamped in the primary taxpayer’s SSN box and:

    • You cannot locate a TIN after researching IDRS, route the return to Entity using local procedures.

    • You locate the correct TIN, circle “ITIN REJECT”, editing the correct TIN, and follow the chart in paragraph (3) above.

  5. When “ITIN REJECT” is stamped in the secondary taxpayer’s SSN box and:

    If And Then
    You cannot locate a TIN after researching IDRS Income subject to SE tax is being reported for the secondary taxpayer Route the return to Entity using local procedures.
    You cannot locate a TIN after researching IDRS A math error already exists for the secondary TIN Route to CIS/AM
    You cannot locate a TIN after researching IDRS Neither condition previously listed applies Correspond and set a math error per IRM 3.11.6.6.5 Allow the standard deduction and disallow exemption.
    You locate a TIN after researching IDRS   Continue to process per the chart in paragraph 3 above
  6. For W-7 cases, enter the date from Form 3471, if attached, as the Amended Claims date.

3.11.6.3.15  (01-01-2014)
Killed in Terrorist Action (KITA)

  1. Route all claims identified as "Killed in Terrorist Action (KITA)" , "Killed in Action (KIA)" to the KITA Coordinator in Accounts Management for processing.

    Note:

    A list of current KITA/KIA Coordinators can be found at the SERP homepage under the "Who/Where" tab. Do not input a TC 971. Place an ACTON history item "TO KITA" on TXMOD.

  2. If "KITA" is indicated on TXMOD (upper right corner on first line), route to KITA Coordinator.

3.11.6.3.16  (07-24-2014)
Collection Function Cases

  1. The following should be detached and routed to the Collection Function if attached to the Form 1040X. Continue processing the amended return.

    1. Form 9465, Installment Agreement Request, or a written request for an Installment Agreement located in the Form 1040X, Explanation of Changes, or a separate attachment. Detach any Installment Agreement request and route to Collection as soon as you identify it, even if you suspend the Balance Due return for correspondence.

      Note:

      When the taxpayer does not submit a Form 9465 but has requested an installment agreement route the installment agreement request to collections following local procedures.

    2. CP 503/504, Taxpayer Notification of Federal Tax Not Received

    3. CP 523, Past Due Payment Default Notice

      Note:

      Verify that the taxpayer's name, TIN, and tax period are present on any detached item; perfect as necessary.

  2. Route all Automated Substitute For Return (ASFR) to Collections. The most distinctive way to identify an ASFR account is the TC 150 for .00 with an "SFR" literal to the right of the Document Locator Number (DLN) on TXMOD or the "SUBST4" on IMFOLI "Vestigial: Assessed Posted Return" column.

    Caution:

    SFR returns with TC 420 (unreversed) and a -L freeze should be routed to Exam per IRM 3.11.6.3.5.2. If the AMDISA status is 08 or less then see NFR below.

    Caution:

    NFR returns can be identified with either a TC 420 and a AMDISA status of 08 or less, a reversed TC 420 (TC 420 with subsequent TC 421) or the exam case will be closed (AMDISA status 90 and/or TC 300). These should be routed to CIS/AM.

    Exception:

    Research TXMOD. If there is a TC 599 cc: 89 which indicates a return has been processed, the 1040X must be routed to CIS/AM. Notate on case per IRM 21.3.4.12.3.1. If there is a TC 599 cc: 88 on TXMOD this is an ASFR Reconsideration and should be routed to:
    Fresno Campus
    ASFR Unit Stop 81304
    PO Box 24015 Fresno, CA 93779–4015

  3. Input TC 971/AC 012 only when sending the entire return to Collection.

  4. The T- Freeze is a TDA Status alpha indicator showing the account is assigned to Collections. The module is not frozen. T- Freeze accounts are assigned to specific Collection functions which are indicated by the Status Code: Status 22 is in ACS (Automated Collection System), Status 24 is in the Queue, and Status 26 is in the Collection Field Function (CFF) a revenue officer assignment.

  5. Route to CIS/AM if a T- freeze is present and NO Letter 1058, CP 90, or other correspondence such as request for payment plan, "can’t pay" , "won’t pay" , or "will pay later" , etc., is attached.

  6. If Letter 1058, Notice of Intent to Levy (Final Notice) or CP-90 Notice of Intent to Levy is attached to Form 1040X, and other correspondence such as request for payment plan, "can’t pay" , "won’t pay" , or "will pay later" , etc., route to Automated Collection System (ACS) as follows if a T- freeze is present.:

    Note:

    For IMFOLT the case status can be found under: STATUS:. For TXMOD the case status can be found under: Status. SC-STS. For IMFOLI the case status can be found under: STAT HIS

    If And Then
    IMFOL/TXMOD shows the case is in Status 22 or 24 The IRS address is on the top of the letter
    1. Detach the correspondence.
    2. Input TC 470, no closing code using REQ77.
    3. Leave a working trail on the correspondence and the Form 1040X. IRM 3.11.6.1.2.2
    4. Route the correspondence to the IRS address on the top of the letter.
    5. Continue processing Form 1040X.
    IMFOL/TXMOD shows the case is in Status 22 or 24 The IRS address is not on the top of the letter 1058 and correspondence is attached

    Exception:

    If no letter or correspondence is attached, continue processing Form 1040X.


    1. Research the appropriate ACS Support Site on SERP (http://serp.enterprise.irs.gov) under the Who/Where tab, select the link to ACS Support Liaison.

    Note:

    The BOD Code (W&I or SB/SE) will be needed to select the appropriate link.


    2. Detach the correspondence.
    3. Input TC 470, no closing code, using REQ77.
    4. Leave a working trail on the correspondence and the Form 1040X. IRM 3.11.6.1.2.2
    5. Mail the correspondence to the ACS Correspondence Address indicated on SERP.
    6. Continue processing Form 1040X.
    IMFOL/TXMOD shows the case is in Status 26 The last four digits of the Collection-Asgmt>field is 8000 (xxx8000),

    Note:

    The Collection-Asgmt>field is located at the top right hand side of TXMOD.

    Route entire package to ASFR at either Austin or Fresno based on State mapping. See exceptions below because ASFR generally does not work 1040X claims.

    Exception:

    Research TXMOD. If there is a TC 599 cc: 89 which indicates a return has been processed, the 1040X must be routed to CIS/AM. Notate on case per IRM 21.3.4.14.1.1 If there is a TC 599 cc: 88 on TXMOD this is an ASFR Reconsideration and should be routed to:
    Fresno Campus ASFR Unit
    Stop 81304
    PO Box 24015 Fresno, CA 93779–4015

    Caution:

    Do not route returns with imminent or expired ASED. Bring returns imminent or expired ASEDs to Statute Coordinator or manager.

    IMFOL/TXMOD shows the case is in Status 26,

    Note:

    Route all amended returns when at least one tax period is in status 26.

    The last four digits of the Collection-Asgmt>field is NOT 8000, i.e. xxxxxxx
    1. Research the appropriate Revenue Officer Group office address on SERP (http://serp.enterprise.irs.gov) under the "Who/Where" tab, select the link RO by TSIGN/ZIP/STATE.

    2. Input TC 470, no closing code, using REQ77.
    3. Input TC 971 AC 012 for audit trail purposes to show where claim was sent.
    4. Route the entire case to the address obtained from SERP.
    5. If the RO calls to inquire why the 1040X was routed to them explain we cannot process the amended return without their approval since it is assigned to them.

    Note:

    At times even with it in status 26 the account is not assigned to a RO. Once it is placed in status 26 it is assigned to a group the very next cycle.

  7. Adjustment procedures when a -Y freeze is present on the module:

    1. If there is a unreversed TC 480 (OIC pending) alone on the module normal processing procedures should be followed as there is no prohibition on making adjustments to the module.

    2. If there is a unreversed TC 480 and TC 780 (accepted OIC), refer the case to the appropriate campus based on the Monitoring Offer in Compromise (MOIC) Compliance Campus Locations for Offers in Compromise. See the Monitoring Offer in Compromise (MOIC) Compliance Campus Locations for Offers in Compromise located on SERP under the Who/Where tab, to determine the appropriate campus site.

  8. If unable to determine the correct adjustment consult your work leader or manager.

3.11.6.3.17  (08-06-2014)
Innocent Spouse (Form 8857)

  1. Route innocent spouse claims on Forms 8857, or Form 1040X referencing innocent spouse (with or without Form 8857 attached) as follows.

  2. Innocent Spouse is the Only Issue.

    1. Per local procedures, photocopy the return then edit “No Action/Issue” across the top of the photocopy.

    2. Detach the Form 8857 then staple it to the back of the photocopy of the return.

      Note:

      If Form 8857 is not attached, edit “No Form 8857 Received” across the top of the photocopy.

    3. Input a TC 290 for .00 if the TC 150 was electronically filed otherwise use Form 9856 to route the return to files based on the DLN of the TC 150.

    4. Input a TC 470 for all years listed on Form 8857
      - Include closing code 90 if the account is not in status 26.
      - If the account is in status 26, do not include a closing code.

      Note:

      To determine the status, refer to the fifth line of TXMOD "SC-STS."

    5. Input a TC 971 with Action Code 065 for all years listed on Form 8857.

    6. Edit “TC 971/470” and appropriate closing code and date in the upper left margin of Form 1040X.

    7. Per local procedures mail the photocopy packet to (must be done daily):
      IRS - CSPC
      201 W. Rivercenter Blvd
      Covington, KY 41011
      Stop 840F

  3. Innocent spouse is filed with an amended return and involves other issue(s).

    1. Per local procedures, photocopy the amended return then edit “Copy – Do Not Process” across the top of the photocopy.

    2. Detach the Form 8857 then staple it to the back of the photocopy of the amended return.

      Note:

      If Form 8857 is not attached, edit “No Form 8857 Received” across the top of the photocopy.

    3. Input the adjustment(s).

    4. Follow instructions (d) through (g) from paragraph (2) above.

3.11.6.3.18  (07-24-2014)
Injured Spouse Allocation (Form 8379)

  1. If the taxpayer files Form 8379 with their return, process the return. Correspond for missing information or signatures per normal procedures. See IRM 3.11.6.9

    1. Input the adjustment as" No Source Document" (NSD). If the adjustment will result in a credit balance or the account is in a credit balance, include a hold code 1 with the adjustment to prevent refund issuance.

    2. Input a TC 971 AC 071.

    3. Bring the Form 8379 to the top of the claim.

    4. Route the entire original package to CIS/AM.

  2. If the taxpayer files a return with the sole purpose of filing the Injured Spouse Claim and no other issue is involved follow the instructions below. Do not correspond for a missing signature.

    1. Input a TC 290 .00
      - Change the Category Code to MISC.
      - Include a hold code 1 if the account is in a credit balance
      - Input a “N” in the Source Document Attached field

      Note:

      The TC 290 .00 does not require a reason code.

    2. Input a TC 971 AC 071.

    3. Bring the Form 8379 to the top of the claim

    4. Route the entire original package to CIS/AM.

  3. If the return does not meet SP criteria or you are processing a loose Form 8379:

    1. Input a TC 971 AC 071.

    2. Bring the Form 8379 to the top of any attachments or correspondence.

    3. Route the entire original package to CIS/AM.

      Note:

      Do not input an adjustment or a 290 .00.

  4. If the taxpayer indicates an Injured Spouse Allocation, but does not submit Form 8379 route the entire package to CIS/AM.

    Note:

    Do not input a TC 971 AC 071.

  5. Do not confuse Injured Spouse and Innocent Spouse although both forms will be routed out.

3.11.6.3.19  (07-24-2014)
Prisoner Returns

  1. IDRS Command Code FTBOL definer P has been programmed in xClaim to run in the background. This Command Code provides information as to whether a taxpayer is or has been incarcerated (prisoner) and release date if appropriate. The Command Code is running so that tax examiners are aware they are processing a prisoner’s return. Prisoners have the same rights as law abiding taxpayers when it comes to income tax. However many schemes and fraudulent returns originate from prisoner populations and tax examiners need to be aware when they are working a prisoner claim in order to identify any irregularity.

  2. FTBOL may not always pick up that a claim is from a prisoner. Other indications that it is a prisoner return are:

    • Marking on envelope that indicates prisoner mail

    • PRI written on claim or line 7 1040

    • Form W-2 indicates wages earned in prison

    • Address on return or envelope identifies a prisoner

  3. Returns filed by full year prisoners, containing wages/withholding earned while incarcerated, regardless of filing status, are not entitled to the following refundable credits:

    • Earned Income Tax Credit (EIC)

    • Making Work Pay Credit (MWPC)

    • Additional Child Tax Credit (ACTC)

    • Recovery Rebate Credit(RRC)

  4. A person is considered a full year prisoner if the person is incarcerated as follows:

    • Incarcerated on or before 01-01-YYYY continuously through 11-30-YYYY or beyond, or

    • Incarcerated on or before 02-01-YYYY continuously through 12-31-YYYY or beyond, or

    • Incarcerated on or before 01-01-YYYY continuously through 12-31-YYYY or beyond, which includes all prisoners incarcerated for life or on death row

      Note:

      If a release date displays 00/00/0000 or 99/99/9999 treat as still incarcerated.

  5. Full year prisoners will be routed to IVO. Use the following tolerance table for full year prisoner claims when sending claim to IVO

    Category Refund Consists of Withholding Only Refund Contains Other Refundable Credit
    Prisoner $1.00 Tolerance $1.00 Tolerance

    Note:

    This includes married filing joint returns.

  6. If taxpayer is not a full year prisoner and there is no indication they were paid for work while incarcerated follow chart below.

    If Then
    If IRPTR data is available for the year of the tax return and the return verifies. Continue processing claim
    If IRPTR data is not available for the tax year of the return or unable to verify wages. Route to IVO. See 3.11.6.3.4 for routing criteria

    Reminder:

    On a married filing joint return verify IRPTR information for both spouses.

  7. If a claim is returned from CI or IVO without any specific processing instructions or words that state "No CI Potential" or similar language and the claim still appears to be suspicious then elevate to your Lead or Manager. The Lead or Manager then needs to check with their local Planning Analysis Analyst to see if there are any treatment streams for these types of cases.

3.11.6.3.20  (05-12-2014)
Combat Zone

  1. Submission Processing will only process Combat Zone claims with net refund or zero balance. Any balance due Combat Zone returns must be routed to CIS/AM

    Note:

    When processing do not enter an Amended Claims date.

    Note:

    Do not apply CAT A criteria to Combat Zone returns when the taxpayer is actively serving in a Combat Zone, but continue to route to CIS if they meet CIS/AM. Determine taxpayer's active status on CC: IMFOLE line 11. The CZ indicator of "1" means they are actively serving in a Combat Zone and CZ indicator "2" means they are not.

    Note:

    A taxpayer (or the spouse, if married filing jointly) receiving nontaxable combat pay may elect to include the amount when figuring his/her earned income for purposes of computing EITC.

    Exception:

    All protective claims must be referred as CAT-A even if the taxpayer is actively serving in a Combat Zone.

  2. Several clues to determine if Form 1040X is a Combat Zone return are:

    1. "-C freeze"

    2. Taxpayer has indicated Combat Zone on the return.

      Note:

      If the literal "Combat Zone" is present on IDRS ensure there is a -C freeze before processing as Combat Zone. The literal without the freeze code is only an indication of past Combat Zone status on the account.

  3. If a -C Freeze , is posted on TXMOD/IMFOL, then IMFOLE or ENMOD will show a TC 500 with one of the following Closing Codes

    • CC 56 (Enduring/Iraq Freedom/No Specific Campaign)

    • CC 57 (Exit Date)


    If present, continue processing the return.

  4. If there is no -C freeze on a return that has been identified as a Combat Zone return, input a TC 500 with closing code 56 using REQ77. If the taxpayer provided a Date of Entry or Deployment, use that date for the TRANS-DT; otherwise use the IRS Received Date.

  5. If a TC 160 is already present on the account route to CIS/AM.

  6. If a "-I/I-" or "G-" Freeze Code is present, refer to CIS/AM

  7. Follow correspondence procedures (IRM 3.11.6.9) when required information is missing from the return.

  8. Do not True Dupe Combat Zone returns.

  9. Refer to IRM 3.11.6.8.1.2 if "Military Family Tax Relief Act" is indicated on the Form 1040X.

3.11.6.3.21  (01-01-2014)
Military Retirement Benefit Claims

  1. Taxpayers file Form 1040X claims based on a recalculation of disability retirement income received from the Government for their military retirement. These claims are based on IRC section 122 and recalculate the amount of taxable versus non-taxable income received. This is a misinterpretation of the Code section and is not allowable. The Form 1099-R issued by the Government does not include any amounts received as disability and the taxpayer in actuality is attempting to take a double deduction.

  2. Disallow any claim citing" Internal Revenue Service Section 1.122-1" or "Pursuant to 26 CFR" , unless the VA Determination letter with entitlement award is included with the claim. The letter will show the award amount and the monthly entitlement award. If the letter and entitlement award are present route to CIS/AM, otherwise follow paragraph (3) for disallowance procedures.

  3. Refer to IRM 3.11.6.9.3 for disallowance letter and use fill-in: "You are incorrectly applying the formulas under section 122 to your retirement pay that was reported on Form 1099-R. The nontaxable amount (if any) was already deducted by the Department of Defense from the amount shown on your Form 1099-R. You are not entitled to any further reduction."

3.11.6.3.22  (07-24-2014)
Processing Decedent Returns

  1. Submission Processing will only process Balance Due and Zero Balance decedent 1040X returns.

  2. Indications of a deceased taxpayer may include any of the following:

    1. Date of death is present

    2. "Deceased" written on the top of the form.

    3. "Deceased, Filing as surviving spouse" , or similar notation in the signature area.

    4. Death certificate, Form 1310, or other documentation is attached.

    5. "DECD" on an IRS label or written after a persons name.

    6. "Estate of" is present.

    Note:

    For further information see IRM 3.13.5.118.9, Inputting Name Changes for Deceased Taxpayers.

  3. Correspond for missing signature if return is not signed by a surviving spouse, an attorney, CPA or representative of bank/fiduciary institution (credit union, pension funds, etc.). Correspond per IRM 3.11.6.9 using a 324C letter, paragraphs A, O, X, 4, a. "The return must be signed below the jurat but not on the paid preparer line."

    Reminder:

    On MFJ claims, the surviving spouse must sign for the deceased spouse as a surviving spouse. It should clearly state the taxpayer's name filing as surviving spouse. Correspond if missing.

  4. If correspondence is required for any missing forms/schedules; do not address the correspondence to the deceased taxpayer.

    1. Filing status 2 -- address correspondence to surviving spouse

    2. All other filing status -- address correspondence to the "Estate of" place in front of taxpayer's name (e.g. Estate of John Smith Decd)

      Note:

      Power of Attorney (POA) becomes void upon taxpayer's death.

  5. Documentary evidence is not required for the authority to sign the following:

    1. Balance due returns

    2. Zero/even balance returns

    3. Joint (FS 2) or married filing separate (FS 3) returns signed by the surviving spouse.

  6. Route the following to CIS/AM:

    1. Refund returns

    2. MFR 08 is present on INOLES indicating the primary taxpayer is deceased

    3. Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, is attached.

3.11.6.3.23  (01-01-2015)
Open Cases / Open Control Base

  1. Generally, if an account has an open control base in TXMOD you will need to route the return to the assigned employee or a specified department. An open case can be in any of the following status: "A" Active; "B" Background; "S" Suspense; or "M" Monitor.

    Note:

    Do NOT route cases that are open in ENMOD.

  2. There are 3 types of open cases:

    1. Cases that will be routed.

    2. Cases that can be worked.

    3. Cases controlled to your IDRS number.

  3. Cases in status A or S should be routed based on the ASSIGN-TO field of the open control. Do NOT route cases open in B or M status; continue to process if no other route out criteria exists. The following exceptions apply to A, B, S, and M status:

    1. If the open control is in B status due to a P- freeze/TC 841 route to CIS/AM.

    2. Refer cases with a category code NLUN, to the assigned IDRS number to process

    3. Cases open to accounts management should be routed to your local CIS/AM. See (8) below.

    4. Cases open to a 1040X SP employee at your local campus should be referred to the manager or lead following local procedures.

    5. Follow local procedures for cases that are processable by placing the case in B status, inputting an adjustment and then returning it to its original status.

    6. For cases open to an SP suspense queue see IRM 3.11.6.1.2.1

    7. Cases with Activity 9465 should be placed in “B” status and processed

    8. Follow local procedures for routing cases open to TAS.

  4. If the open control is assigned to your current or previous IDRS number close your open control before continuing to take any action on the return.

  5. When routing an open case, follow local procedures for completing Form 5102, 12305, 3210, etc.

    Exception:

    See (10) below and IRM 3.11.6.3.6 for routing cases to Underreporter.

  6. Use command code MESSG and/or the IDRS Unit and USR Database , IUUD, web site to determine the appropriate campus location and stop number based on the IDRS number in the ASSIGN-TO field of the open control.

    Caution:

    Stop numbers are not always updated timely. CC MESSG and IUUD may show conflicting information. Consult your lead or manager if different.

  7. When there are multiple open cases route the return based on the most recent open control in A or S status.

  8. Accounts Management IDRS numbers are identified by the service center 2 digit code and 301-399 series. For instance a Customer Service Representative (CSR) in Fresno would be 103XX. Submission Processing 1040X Units would use the SC code and the 200-244 series. This includes cases open to the AM suspense queue that do NOT contain 301-399 series:

    Campus Generic IDRS number
    Atlanta 0739900025
    Andover 0848900000
    Austin 0686100000
    Brookhaven 0138640000
    Cincinnati 0237500000
    Fresno 1042000000
    Kansas City 0938000000
    Memphis 0339300000
    Ogden 0439800000
    Philadelphia 0544300093

    Note:

    See IRM 21.5.1.5.1 for a current listing

    Specialized Site IDRS Number
    Andover 0830141335
    Atlanta 0730300948
    Austin 0630162104
    Brookhaven 0130008778
    Fresno 1030307434
    Kansas City – Carrybacks 0930658078
    Kansas City – Injured Spouse 0930605704
    Memphis 0330404224
    Philadelphia 0534027692

    Note:

    See IRM 21.5.2.3 for a current listing.

  9. To put a case into suspense use CC ACTON. Follow local procedures for suspending and monitoring cases.

  10. When routing open cases to Underreporter use routing forms per local procedures and route based on the DLN of the TC 922. See IRM 3.11.6.3.6 for further information. AUR Stop numbers:

    Campus Stop Number Reconsideration Cases
    Austin 6692 - AUSC 6692-AUSC
    Atlanta 45A-ATSC 84-ATSC
    Andover 860-ANSC 860-ANSC
    Brookhaven 620-BSC 622-BSC
    Fresno 86106-FSC 86106-FSC
    Ogden 6653 - OSC 6652-OSC
    Philadelphia 5-EO8.113 - PSC 5-EO8.113-PSC
  11. Follow local procedures when routing open cases.

3.11.6.3.24  (01-01-2014)
Releasing Screened Returns

  1. To release forms that are screened, sort into batches for each category and follow local routing procedures (including Batch Transmittal).

  2. "Hand carry" statute returns to the area following local procedures.

  3. For "PECF Dummy" returns to be processed through ISRP notate the correct Program Code and Blocking Series for Batching and Numbering function.

  4. Follow IDRS screening procedures for sorting and routing returns or correspondence to another function. For Carryback/Carryforward claims, Disaster Claims, Injured Spouse, Innocent Spouse, Statute returns, etc., follow local procedures for routing to CIS/AM.

3.11.6.3.24.1  (07-24-2014)
TC 971 and Action Codes

  1. A TC 971, when input with one of the action codes shown in (2) below, indicates the taxpayer filed an amended return and begins an action trail for the document. The action code indicates where the return was routed. Since some of these actions generate a TC 977 on master file and a "-A or E-" freeze on IDRS, the Received Date of the Form 1040X must be input for the transaction date. For Action Code 270, the current date is entered when mailing a refund return back to the filer. Generally do not enter an action code if you are only routing correspondence or form attached to a Form 1040X.

    Exception:

    Form 8938 requires an action code even though it may be only routed to files.

  2. The action codes most frequently used by Code and Edit in conjunction with TC 971 are as follows:

    ACTION CODE DESTINATION
    010 Amended return/claim forwarded to Accounts Management (Automatically input by CIS)
    120 Amended return/claim in Submission Processing
    012 Collection (When routing the entire return)
    013 EXAM/Frivolous
    014 Statute function
    015 Underreporter function
    016 Destination International Cases amended returns/claims go to Philadelphia (Automatically input by CIS)
    065 Form 8857, Request for Innocent Spouse Relief (and Separation of Liability and Equitable Relief) filed. Route to Covington, KY.
    071 Form 8379, Injured Spouse Claim and Allocation.
    270 Amended return sent back to the taxpayer for additional information. Enter the current date as TRANS-DT.
    698 Form 8938 Statement of Foreign Financial Assets attached to Form 1040X. If Form 8938 is the only issue send entire package to files IRM 3.11.6.1.3. If other issues are involved process as normal and keep Form 8938 with claim. IRM 3.11.6.11

    Note:

    For further information see TC 971 action codes in 6209

3.11.6.4  (07-24-2014)
Forms 1040X Processed through ISRP Input

  1. The following returns may be prepared or edited by the 1040X Unit for input through the ISRP system instead of IDRS:

    1. PECF "Dummy" returns when the filer has checked one or both PECF boxes on the Form 1040X. See IRM 3.11.6.2.4.

    2. An "original" return is prepared by IRS from data shown on a Form 1040X when no TC 150 has posted for a statute return. The 1040X unit will convert the Form 1040X to a Form 1040 and route to Statutes instead of ISRP. See IRM 3.11.6.3.2

  2. To release returns processed through ISRP, a transmittal to Receipt and Control is prepared and Program Code 44400 for the "Dummy PECF" returns is notated. Any return that is sent to Code and Edit to be processed as an original will be blocked in the correct series by Receipt and Control function.


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