3.14.1  IMF Notice Review (Cont. 1)

3.14.1.5 
Clerical Support Procedures

3.14.1.5.1 
Clerical Priorities

3.14.1.5.1.5  (01-01-2014)
Printing of Notices — Correspondence Production Services (CPS East and CPS West)

  1. With the delivery of the OLNR Retype Enhancement, the need to route notices back to the Notice Review Function is eliminated. Notices that require printing and mailing will generate and be mailed from one of the Correspondence Production Services (CPS) sites.

3.14.1.6  (01-01-2014)
Primary Notice Review Procedures

  1. This section provides procedures for tax examiners within the Notice Review Function.

3.14.1.6.1  (01-01-2014)
General Review Procedures

  1. Notice Review must verify certain types of information common to all returns to ensure the accuracy of each notice. Compare the CP Notice data, along with the information contained in the NRPS Package/Control D, against the information on the return.

  2. The following instructions attempt to address the situations that are most frequently encountered when reviewing notices. These instructions cannot address every possible issue; use in conjunction with all of the information contained in this IRM and exercise good judgment.

  3. In addition to completing the following General Review Procedures, continue with the necessary subsections as appropriate:

    • Reviewing Math Error Notices — See IRM 3.14.1.6.12.

    • Earned Income Credit (EIC) — See IRM 3.14.1.6.12.3.

    • Reviewing Estimated Tax (ES) Discrepancy Notices — See IRM 3.14.1.6.13.

    • Reviewing Priority Refund Transcripts — See IRM 3.14.1.6.14.

    • Reviewing Non-Math Error Balance Due Notices – CP 14IRM 3.14.1.6.15.

    • Reviewing Non-Compute Notices — See IRM 3.14.1.6.16.

    • Reviewing Notices with Specific Selection Keys — See IRM 3.14.1.6.17.

  4. To prevent a refund from generating, see IRM 3.14.1.7.1.1, Refund Intercepts

  5. For Taxpayer Notice Code (TPNC) lists and descriptions, refer to Document 6209, IRS Processing Codes and Information, Section 9, and IRM 3.12.3, Individual Income Tax Returns – Error Resolution System (ERS).

3.14.1.6.1.1  (01-01-2014)
Verifying Return Information

  1. Verify the following items for each selected notice:

    • Social Security Number (SSN)

    • Individual Taxpayer Identification Number (ITIN)

      Note:

      The SSN or ITIN may be in full form or truncated on the notice

    • Document Locator Number (DLN)

    • Name and address

    • Return received date

    • Tax Period

    • Signature(s)

    • Offsets (including TOPS, Credit Elect, and Lump Sum)

    • Dishonored payments and bad check penalties

    • Discovered remittance

    • Contributions to reduce the public debt

    • $10,000,000 (ten million) refunds

    • Pending transactions

    • Taxpayer correspondence

    • Frivolous Claims

    • Slipped blocks and mixed data blocks

    • Community property split

    • Injured spouse claim

    • Decedent accounts

    • Return Processable Date (RPD) if required

3.14.1.6.1.1.1  (01-01-2014)
Social Security Numbers (SSN's)

  1. The Social Security Administration (SSA) assigns all SSNs. ECC-MTB verifies taxpayer SSNs against SSA records to identify invalid situations. Master File identifies an invalid SSN with a trailing asterisk (*). If the asterisk appears after the SSN on a notice, it indicates that the SSN has already been identified as invalid.

    Example:

    123–32–1321* is an invalid SSN.

  2. For TY 199612 and later, the secondary taxpayer must have a valid TIN in order to qualify for a personal exemption. By law, taxpayers are not required to update their name with SSA; therefore, some exceptions exist when an invalid TIN is allowed for purposes of claiming a personal exemption, etc. If the taxpayer is using the SSN issued to them by SSA (or ITIN issued by the IRS ), but their last name now differs because of marriage, allow the personal exemption. In these cases, ERS will input Return Processing Code (RPC) E and a new name control will be established as a valid IRS name control on the account.

  3. Master File takes the following actions on accounts having invalid SSNs unless the SSN is an ITIN:

    • Master File issues a CP 54. If review of the account determines that the invalid condition can be corrected, void the CP 54.

    • Master File freezes overpaid accounts when the TC 150 posts. See IRM 3.14.1.6.11.10, Restricted Credit Interest Freeze (I–).

  4. Compare the SSN on the notice to the SSN on the return. When a taxpayer has data for both a valid and an invalid SSN and the only difference is the name control, determine if the difference was caused by a processing error, such as a transposed first and last name or a misspelled last name. If so, do the following:

    If a tax return... Then...
    Has posted to either the valid or the invalid SSN, but not to both
    1. Use CC ENMOD/ENREQ to input a name change on the invalid SSN

    2. Input CC STAUPS for eight cycles if the account has a balance due

      Note:

      The accounts will resequence and merge. It is not necessary to move payments on the account

    3. Void or retype notice as appropriate

    Caution:

    Take action to prevent subsequent notices as appropriate

    Has posted on both the valid and the invalid SSNs Do not merge the accounts or make a name change
    1. Recharge (ESTABDT) and route the case to Accounts Management for resolution

    2. Input CC STAUPS for eight cycles if the account has a balance due

    3. Input TC 570 or CC NOREFP per guidelines in 3.14.1.7.1.1, Refund Intercepts, if account is refunding

    4. Void the notice

  5. When reviewing a balance due notice generated by a joint return, check for payments on the invalid portion of the secondary taxpayer’s SSN. If payments are on the invalid secondary SSN, transfer them to the primary SSN where the joint return posted.

    Exception:

    If both the valid and invalid accounts show duplicate posted returns, send the case to Accounts Management for resolution.

  6. In all other situations involving invalid SSNs, review all attachments to the return, looking for evidence of a correct SSN. Use CC INOLE and CC NAMES to check for other SSNs, or a pending name change.

    If... And... Then...
    The correct SSN can be verified and the account resolved  
    1. Void all notices to the taxpayer

    2. Prevent the refund from generating

    3. Input CC STAUPS for eight cycles if the account has a balance due

    4. See IRM 3.14.1.6.22 Reprocessing Returns

    The invalid SSN condition cannot be resolved, but an adjustment or credit transfer is required A new SSA name control is present on CC INOLE(T)
    (See " Note " following this table)
    1. Void the CP 54

    2. Do not transfer credits from the valid to the invalid account. Input CC STAUPS for eight cycles to allow the quarterly SSA update to merge the accounts. Quarterly updates will occur in cycles 5, 16, 31, and 44

    3. If a credit transfer from or an adjustment to the account is necessary and the transaction will post during a quarterly SSA update cycle, use a posting delay code so the transaction will post after the update to avoid an Unpostable

    A new SSA name control is not present on CC INOLE(T)
    (See " Note " following this table)
    1. Use Hold Code "4" on an adjustment to prevent any credit from refunding

    2. Input a TC 570 (Doc Code 24 or 48) or a Credit Freeze Code "1" (Doc 34) on the credit side of any transfer into the account. Make sure that any refund remains frozen until the taxpayer responds to the CP 54

    3. Input a TC 570 on the debit side of any Doc Code 24 or 48 when transferring credits out of the account

    Note:

    Do not use Doc Code 34 to transfer a payment out. There is no way to freeze the debit side of the transfer

    Note:

    On a weekly basis, tapes containing name control updates are received from the SSA. On a quarterly basis, the updated accounts are merged.

3.14.1.6.1.1.2  (01-01-2014)
Individual Taxpayer Identification Number (ITIN)

  1. The IRS requires that all foreign and domestic taxpayers provide a valid identification number. This number can be either a valid social security number (SSN) or an Individual taxpayer identification number (ITIN).

  2. ITINs are issued to individuals who are required to have a U.S. Taxpayer Identification Number, but neither have nor are eligible to obtain a SSN.

  3. ITINs are valid only for tax purposes and are obtained by completing Form W-7, Application for IRS Individual Taxpayer Identification Number.

    Note:

    If Form W-7 is attached to the return see IRM 3.14.1.6.9.1, Taxpayer Correspondence.

  4. ITINs can be identified by a "9" as the first number and a range of "70 - 99" for the 4th and 5th numbers.

    Exception:

    4th and 5th numbers 89 and 93 are not ITINs

    Note:

    ATINs also begin with "9" as the first number; however, the 4th and 5th digits will be "93" .

  5. Compare the ITIN on the notice to the ITIN on the return. When a taxpayer has data for both a valid and an invalid ITIN and the only difference is the name control, determine if the difference was caused by a processing error, such as a transposed first and last name or a misspelled last name. If so, do the following:

    If a tax return... Then...
    Has posted to either the valid or the invalid ITIN, but not to both
    1. Use CC ENMOD/ENREQ to input a name change on the invalid ITIN

    2. Input CC STAUPS for eight cycles if the account has a balance due

      Note:

      The accounts will resequence and merge. It is not necessary to move payments on the account

    3. Void or retype notice as appropriate

    Caution:

    Take action to prevent subsequent notices as appropriate

    Has posted on both the valid and the invalid ITINs Do not merge the accounts or make a name change
    1. Recharge (ESTABDT) and route the case to Accounts Management for resolution

    2. Input CC STAUPS for eight cycles if the account has a balance due

    3. Input TC 570 or CC NOREFP per guidelines in 3.14.1.7.1.1, Refund Intercepts, if account is refunding

    4. Void the notice

  6. When reviewing a balance due notice generated by a joint return, check for payments on the invalid portion of the secondary taxpayer’s ITIN. If payments are on the invalid secondary ITIN, transfer them to the primary ITIN where the joint return posted.

    If... And... Then...
    The correct ITIN can be verified and the account resolved  
    1. Void all notices to the taxpayer

    2. Prevent the refund from generating

    3. Input CC STAUPS for eight cycles if the account has a balance due

    4. See IRM 3.14.1.6.22 Reprocessing Returns

    The invalid ITIN condition cannot be resolved, but an adjustment or credit transfer is required A new ITIN name control is present on CC INOLE(T)
    1. Void the CP 54

    2. Do not transfer credits from the valid to the invalid account. Input CC STAUPS for eight cycles.

    A new ITIN name control is not present on CC INOLE(T)
    1. Use Hold Code "4" on an adjustment to prevent any credit from refunding

    2. Input a TC 570 (Doc Code 24 or 48) or a Credit Freeze Code "1" (Doc 34) on the credit side of any transfer into the account. Make sure that any refund remains frozen until the taxpayer responds to the CP 54

    3. Input a TC 570 on the debit side of any Doc Code 24 or 48 when transferring credits out of the account

    Note:

    Do not use Doc Code 34 to transfer a payment out. There is no way to freeze the debit side of the transfer

    Exception:

    If both the valid and invalid accounts show duplicate posted returns, send the case to Accounts Management for resolution.

3.14.1.6.1.1.3  (01-01-2014)
Document Locator Number (DLN)

  1. Always verify the DLN on the Quick Print copy of the notice or NRPS Package/Control D against the DLN on the return, to ensure the correct document is being reviewed.

  2. Use the posted return data, selected vouchers, and pending transactions available in the NRPS Package/Control D to determine whether the refund is questionable. If the return is unavailable, then determine whether the refund should be prevented from generating.

  3. Only prevent the refund from generating when additional research is needed and the return is unavailable.

  4. When you need the return to complete the research, inform the lead, who will investigate the reason for unavailability, and possibly locate the return.

  5. Management should identify and coordinate with problem area(s) so that corrective action can be taken as quickly as possible.

3.14.1.6.1.1.4  (01-01-2014)
Verifying and Correcting Name Information

  1. Verify the name on the notice against the entity information on the return.

    Note:

    Before preventing a refund from generating for a name correction, determine if the taxpayer will be able to cash the check (non-critical entity adjustment). If the check can be cashed, allow the refund and input the entity change on OLNR. See IRM 3.14.1.6.1.1.6,NRPS Automated Entity Updating.

    Caution:

    If the taxpayer will not be able to cash the refund (critical entity adjustment), prevent the refund from generating. See IRM 3.14.1.7.5, Entity Adjustments.

    If... Then...
    The name on the return is illegible Determine the correct name by checking the signature, the Form W-2 documents, the return envelope, and any other attachments
    The name on the notice is different (this also applies to the secondary name of a joint entity)
    1. If the name is different, misspelled or contains a typographical error, but is obviously the same taxpayer, correct the name in OLNR

    2. If the spouse's last name changed due to marriage, and the spouse signs the return with their married name, correct the name in OLNR

      Exception:

      Do not change the last name of the spouse unless they sign the return with their married name (or if the signature is illegible)

      Note:

      Although this may create an invalid spouse SSN condition for the subsequent year (if the spouse has not yet updated their name with Social Security Administration [SSA]), ERS can force the SSN through the system by assigning Return Processing Code (RPC) "E" to the next return

    3. If the name is obviously not the same taxpayer, check the SSN with CC INOLE and CC NAMES to determine the correct Master File name

    4. Update the second name line as needed. Do not change or add second name lines unless you have the original signed return

    The name on the return contains a name suffix (e.g.,, Jr., II, III, etc.)
    • Change name suffixes on the notice entity if they are incorrect or missing

    • Do not prevent refund from generating for a missing name suffix

    The name on either the return or the notice contains a middle initial
    • It is not necessary to add or delete a middle initial to the notice entity solely for the sake of matching the notice entity to the return

    • Correct the middle initial if already changing or correcting the entity for another purpose

    • Only change middle initial(s) by themselves if they are incorrect

    The return entity shows a deceased taxpayer, an "in-care-of" person, or a guardian Add a second name line, if possible
    The return is for a minor and a parent or legal guardian signs the return
    1. Add "minor" to the taxpayer’s name

    2. Add the parent’s or legal guardian's name as a second name line

    3. It is acceptable to remove the word "minor" from a child's entity if they are at least 18 years of age

    Note:

    A parent’s or legal guardian's signature is valid on a minor taxpayer’s return

    Two signatures appear on the return Verify that the entity reflects both names, unless the filing status is Married Filing Separately (FS3)

    Note:

    When the Joint Name Line is present in OLNR, it may appear that a notice on a joint account is being mailed to a single taxpayer. However, this is a Dual Notice condition, and each spouse will receive their own copy with identical information. An entity change is not necessary

  2. Reducing the length of taxpayer name
    Name and Address fields are limited to 35 characters each. If the name line is more than 35 characters, modify it in the order shown in the list below, proceeding to the next item (if necessary) until the taxpayer name(s) can fit on the name line:

    How to reduce length of taxpayer(s) name
    1. Use initials only for middle or second name

    2. Delete middle initial of secondary taxpayer

    3. Delete middle initial of primary taxpayer

    4. Use initials only for secondary taxpayer's first name

    5. Use initials only for primary taxpayer's first name

    6. Use initials only for primary and secondary taxpayers' first name(s), if their last name(s) exceed the 35 character/space limit

    Note:

    Do not intentionally shorten taxpayer name(s) if they fit within the 35 character space constraint

  3. Inputting Name Changes

    Tax Return Input format for joint filers
    John Doe Mary Doe John & Mary]Doe
    John Doe Mary Smith John]Doe]& Mary Smith
    John Doe Mary Smith-Doe John]Doe]& Mary Smith-Doe
    John D Doe Mary Ann Smith-Doe John D]Doe]& Mary Ann Smith-Doe
    John D Doe III MaryAnn L Smith John D]Doe]III & MaryAnn L Smith
    John A DECD & Jane B Doe John A DECD & Jane B]Doe

    Note:

    The bracket "]" indicates the information after or between the brackets is the controlling surname. Additional spaces must not be input immediately before or after the bracket. See IRM 3.13.5.118.7, Campus Document Services — IMF Account Numbers.

  4. Entity Changes and OLNR disposition

    1. If only a name and/or an address needs to be corrected on the notice, update the entity by using the "E" or "EI" disposition.

    2. If other changes in addition to entity are also required on the notice (such as amounts, labels or TPNCs), use the "R" or "RI" disposition.

3.14.1.6.1.1.5  (01-01-2014)
Verifying and Correcting Address Information

  1. Verify the address on the notice against the address on the tax return. Always correct the address on the notice. Use the return information provided by the taxpayer, but do not apply any information that is obviously incorrect. Refer to the lead if in doubt about any part of an address.

    Note:

    When making any change to the address in CC ENMOD/ENREQ, all elements of the address must be input (e.g.,, street address, city, state, and ZIP Code), even if the change is minor.

    Reminder:

    Always check CC ENMOD and CC IMFOLE before changing an address. The notice should be voided if ENMOD includes an Identity Theft (IDT) indicator (TC 971 AC501).

    If the address... Then...
    On the return is illegible Check the return and all attachments for a legible address
    On the return is from an IRS label, and is different than the address on the notice The taxpayer essentially agrees that the label information is accurate by signing the return. Check CC ENMOD for any pending or recent address changes. Change the address to match the label, but bypass any obvious errors that may appear on it
    On the notice is different, or is questionable Use the USPS ZIP code directory to verify the ZIP code, the spelling of the street, city, post office box, and state. Correct the address on the notice to reflect the ZIP Code directory information. Prevent refund from generating, if needed. If internet access is available, use the Post Office Web site's Zip Code Lookup http://zip4.usps.com/zip4/welcome.jsp
    On the notice contains an incorrect or misspelled street suffix Use the USPS ZIP code directory to verify the street suffix, then correct the entity in OLNR. Even though the Post Office can deliver by street name alone in most cases, all street suffixes (e.g.,, Avenue, Boulevard, Circle, Drive, Road, Street etc., or their abbreviations) must be correct on the notice, regardless of where the error originates
    Contains an Apartment, Building, Floor, Room, or Suite, etc. Correct or add these "secondary street indicators" if they are missing or incorrect.

    Reminder:

    If needed, prevent the refund from generating, when possible, if the check may be returned undeliverable as a result of a missing secondary street indicator. Large cities often have high-rise apartments in which the Post Office cannot guarantee delivery without an apartment number

    Contains a directional indicator in the street or city Make sure these "directional indicators" (e.g.,, N, NE, NW, E, S, SE, SW, W, etc.) are in the proper location. Typically, if a street name is a direction, it will be spelled out (e.g.,, West St., Northwest Blvd.). The directional indicators are almost always abbreviations (e.g.,, West St S, or S West St, E Chicago)

    Note:

    For additional reference information on addressing, and a more complete list of street designators and their abbreviations, refer to Document 12019, IRS Addressing Standards.

  2. In addition to following the chart above, change the address if:

    1. Signed correspondence from the taxpayer has the old address lined through and a new address written in its place.

    2. A CPA, attorney, or another authorized individual requests an address change, provided CC CFINK indicates that IRS has a Power of Attorney on file for that individual.

    3. Form 3870, Request for Adjustment, is attached to the document and shows a new address. This form is used by Area Offices to request account adjustments and indicates that there has been personal contact with the taxpayer.

    4. The return has a notation written on it, or has a response to previous correspondence attached, and we are accepting the information as coming from the taxpayer, even if it is not signed.

    5. The taxpayer has filed a Form 8822, Change of Address.

  3. Never change an address to an "in care of" unless the taxpayer or an authorized representative signed the request.

  4. Never change an address if a photocopy of an address change request does not contain an original signature.

  5. The return envelope should not be used to correct an address unless it is the same as the return and is used only to verify an illegible address from the return.

  6. Entity Changes and OLNR disposition:

    1. If only a name and/or an address needs to be corrected on the notice, update the entity by using the "E" or "EI" disposition.

    2. If other changes in addition to entity are also required on the notice (such as amounts, labels or TPNCs), use the "R" or "RI" disposition.

3.14.1.6.1.1.6  (01-01-2014)
NRPS Automated Entity Updating

  1. NRPS creates an Entity Update File (NRP 8250) for most IMF entity changes. Changes made to the notice entity will automatically update CC ENMOD with a TC013 or TC014.

  2. NRPS cannot create entity update records under all conditions. In the following situations, the tax examiner must always use IDRS to update CC ENMOD, in addition to changing the entity data in OLNR:

    1. All overpaid notices requiring a critical entity change must be corrected on both CC ENMOD/ENREQ and OLNR. See IRM 3.14.1.7.5, Entity Adjustments

    2. When a notice carries a SPACK/Spouse copy (identified by the presence of the "Joint Name Line" field on OLNR). This applies to any change to the name line and/or address lines.

    3. When no notice is going to the taxpayer, but an entity change is still necessary the OLNR entity does not need to be updated.

      Example:

      When an entity correction is necessary for a voided notice.

3.14.1.6.1.1.7  (01-01-2014)
Return Received Date

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Any return received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after the RDD should have the envelope attached and will carry the stamped "IRS Received Date" as the return received date unless the postmark date is on or before the RDD (as extended).

    Exception:

    A late filed return that was overlooked in processing may not be stamped. An incorrect received date will affect penalty and interest computations. See (3) below.

    If the postmark date is... Then the return received date is...
    On or before the RDD and a postmark was made by the USPS or a designated private delivery service under Internal Revenue Code (IRC) Section 7502(f) The RDD regardless of when the return was received
    After the RDD The IRS Received Date

  2. The TC 610 date on the tax module is the return received date. The "DUE/RCVD DATE" field in the NRPS Package/Control D also shows the received date.

  3. If there is a question about the received date, determine the correct received date in the following priority:

    1. Latest postmark date on envelope (United States Postal Service or designated private delivery service).

    2. Date the taxpayer signed the return (only if current year date).

    3. Julian date of the return DLN minus ten days.

      Exception:

      If the taxpayer has attached a note or explanation that the return is late because of rejection of a timely filed electronic return, the RDD will be used.

      Note:

      If a return was mailed to a state taxing agency, on April 15 or during the grace period and the state forwarded the return to IRS, it is considered late. If the IRS received date is not stamped on the return, use 0423XX as the received date.

  4. Adjust all interest and penalties as appropriate. Refer to IRM 3.14.1.6.21.1, Recomputations of Penalties and Interest — General.

  5. Verify the correct received date is used. If it is incorrect, prevent the systemic refund from generating, issue a Manual Refund with recomputed credit interest, (TC 770 for .00 if the refund date is within the 45-day interest free period), and put the Return Processable Date (RPD) on the account with the correct received date. See IRM 3.14.1.6.6,Manual Refunds.

3.14.1.6.1.1.8  (01-01-2014)
Tax Period

  1. There are three types of returns:

    1. Calendar Year — These are for a consecutive 12-month period ending on December 31. The tax period for this type of return is in the format CCYY12.

    2. Fiscal Year — These are for a consecutive 12-month period ending on the last day of a month other than December.

      Example:

      A return with a tax period ending January 31, 2013, has a tax period of 201301.

    3. Short Year — These are for a consecutive period of fewer than 12 months.

  2. Compare the year on the tax return against the tax period on the notice or the NRPS Package/Control D Contents Page.

    1. Look for cross-outs and changes to the tax period portion of the return.

      Note:

      Taxpayers often use current year tax forms to file prior year returns.

    2. Fiscal year returns are indicated at the top of the tax return.

    3. If the return is posted to the wrong tax period, reprocess the return to the correct tax period. Refer to IRM 3.14.1.6.22, Reprocessing Returns.

3.14.1.6.1.1.9  (01-01-2014)
Signatures

  1. Tax returns are legal documents. All returns must have a signature(s). Accept any original signatures that are signed according to the return’s filing status.

    Example:

    A joint return (FS2) requires two signatures.

    1. Returns signed with an "X" require the signatures of two witnesses. Correspond if the witness signatures are missing. Send Letter 12C, and include selective paragraphs 9 and Declaration paragraph "j" , to provide signature lines for the witnesses. If there is a daytime telephone number on the tax return call the taxpayer and explain why he/she is receiving the letter.

    2. Never accept photocopied signatures as valid original signatures for the tax return.

      Exception:

      Do not correspond if return states Correspondence Imaging System (CIS).

    3. If a person other than the taxpayer has signed the return, check CC CFINK to ensure that the taxpayer has a power of attorney on file for the signer. If no information is available and documentation is not included with the return, prevent the refund from generating and correspond for the necessary information.

  2. Electronic Filing (ELF) documents are signed either via Form 8453, or electronically. It is not necessary to correspond for signatures on an ELF processed return.

  3. If one or more signatures are missing on an overpaid account, analyze the return to determine if the taxpayer replied to previous correspondence from Code and Edit or ERS.

    Exception:

    If the entire refund is offsetting or refund cannot be prevented from generating, do not correspond for signature, and do not hold the case in inventory.

    If... Then...
    The signed reply is attached to the return Review the case as if the original return was signed
    There was no previous correspondence
    1. Prevent the refund from generating and correspond for the missing signature(s)

    2. Print the notice. Verify and edit, if necessary the Refund Release indicator (RRI) on the notice (RRI 1= No Refund, and RRI 3= Statute Expired)

    3. Follow IRM 3.14.1.7.4, Taxpayer Correspondence/Reply instructions

    There was previous correspondence, but no reply
    1. Computer Condition Code (CCC) 3 should have been edited on the return to generate a –R freeze (TC 570) to hold the overpayment. These cases will be worked as transcripts in Accounts Management (AM)

    2. If a –R freeze (TC 570) is not on the module then prevent the refund from generating using guidelines in IRM 3.14.1.7.1.1, Refund Intercepts and input a 290 for .00 Hold Code 4 to set a –K freeze

    3. Print the notice

    A taxpayer response is received after 45 days, and the control base is closed
    1. Complete Form 3465, Adjustment Request, indicating that the Return Processable Date needs to be updated

    2. Route Form 3465 and the response to Accounts Management

    3. Follow IRM 3.14.1.7.4, Taxpayer Correspondence/Reply instructions.

  4. If the return is a balance due, it is not necessary to secure the signature, unless a subsequent adjustment is necessary, which will result in the account becoming overpaid. If this occurs:

    1. Use Hold Code "4" on the adjustment to set a –K freeze.

    2. Retype the notice as appropriate and allow the notice to be released in cycle.

    3. Send Letter 143C for the signature, and handle the response appropriately when received.

    4. Open a control base under the activity "WAIT4SIGN" , and monitor the case for up to 45 days, or until a signature is received.

    5. Follow the reply or no reply instructions in IRM 3.14.1.7.4, Taxpayer Correspondence/Reply.

    If ... And the result will be... Then ...
    No other action is necessary  
    1. Print the notice in cycle

    2. Do not suspend the case

    An adjustment is needed a balance due
    1. Retype the notice

    2. Do not suspend the case

    an overpayment
    1. Use Hold Code "4" on the adjustment

    2. Retype the notice in the current cycle

    3. Monitor the case for 45 days from the date the letter was input, keeping the control base open under activity code "WAIT4SIGN "

  5. Faxed Signatures are now acceptable for returns in very limited situations if the taxpayer has not previously signed the return. Before acceptance, do the following:

    1. Verify that a faxed signature is not attached to the return based on a prior correspondence from the IRS.

    2. Validate that you are speaking to the taxpayer or authorized representative.

    3. Advise taxpayer that the signature will become a permanent part of the tax return.

    4. Fax the signature perjury statement (jurat) to the taxpayer or authorized representative.

3.14.1.6.2  (01-01-2014)
Analyzing NRPS Data Sheet Appended

  1. NRPS extracts this data from the following sources:

    • Generalized Unpostable Framework (GUF) and Unpostable Files

    • Tape Edit Processing (TEP) File

    • ERS File Revenue Receipts

    • Unidentified Remittance and Excess Collection File

    • Resequencing File

    • Generalized Mainline Framework (GMF) Error, Computer Assisted Review of ERS (CARE), Block Out of Balance (BOB), and Reject Files

3.14.1.6.2.1  (01-01-2014)
Pending Transactions

  1. Pending transactions are account actions that have not posted to the taxpayer’s account by the notice cycle.

  2. Pending transaction data consist of transaction codes, dates, and amounts, account identifying information, and other pertinent data. This data appears with the name of its source file (GUF, TEP, etc.) under the Pending Transaction heading on the NRPS Package/Control D Contents Page. Refer to the Pending Transaction Files exhibit. Exhibit 3.14.1-33

3.14.1.6.3  (01-01-2014)
Unpostable Transactions

  1. Unpostable transactions are transactions that require corrective action before they can post to the Master File.

  2. Unpostable Codes (UPCs) identify the set of conditions that caused the unpostable transaction. Unpostable Reason Codes (RCs) specify the various conditions that can be present for each UPC.

    Note:

    Document 6209, IRS Processing Codes and Information, Section 8B, contains descriptions of UPCs and RCs. This information will help determine the appropriate corrective action.

  3. Unpostable Resolution Codes (URC) identify whether the corrective action can be done systemically, manually by the Unpostables function, or must be rejected back to the originator for correction.

  4. The GUF and the Unpostable Files show pertinent information about unpostable transactions on IDRS, including:

    • Transaction Code

    • Date

    • Dollar Amount

    • ITIN

    • MFT

    • Tax Period

    • XREF Account

    • UPC

3.14.1.6.3.1  (01-01-2014)
Reviewing Unpostable Transactions

  1. A pending Unpostable will display one of the following identification codes next to the Transaction Code:

    • Unnn or UP — An open unpostable transaction "nnn" is a numeric unpostable code, e.g.,,, 198 or 175.

    • CU — A corrected unpostable. The transaction should post in the cycle displayed on IDRS.

    • DU — A deleted unpostable. This transaction will not post and has been deleted from the module.

    • NU — A nullified unpostable. This transaction should be resolved by the Rejects Function or by the originating tax examiner.

3.14.1.6.3.2  (01-01-2014)
Resolving Unpostable Transactions

  1. Utilize the following steps for resolving an unpostable condition:

    1. Use the Unpostable Code to determine the reason for the unpostable condition.

    2. Use CC UPTIN to view the unpostable record(s). If the unpostable transaction is out of region use the @ with the campus location code.

      Note:

      For listing of the campus locations codes see Doc 6209, Section 4.

      Example:

      UPTIN@07

    3. If the case is open, use CC UPDIS with the Unpostable Sequence Number to access the response screen.

    4. Overlay the CC UPDIS screen with CC UPCASZ and input any information useful to the Unpostables Function for resolving the unpostable condition.

    5. If the case is closed, the Unpostable Resolution Code (URC) will indicate the resolution to the unpostable condition. Use this information to determine how the transaction will affect the notice and the notice module. No further action is required on the unpostable. Correct the notice as instructed in the IRM 3.14.1.7.8,Notice Disposition.

      Note:

      Use CC ACTON to assign the closed unpostable to the originating tax examiner if located in the same campus. Otherwise, contact the originator by phone to advise that the unpostable condition needs to be addressed.

    6. If the transaction can be posted as it is, leave a history item indicating that the Unpostables Function should post the transaction without a change. The transaction may have been unpostable when it first reached the Master File.

      Example:

      When a TC 670 transaction has failed to post to an account having a credit balance (UPC 198), but will now post because a debit transaction has posted, leave a history item. See Notice Review Job Aid 2534-002.

    7. If you cannot determine whether an unpostable transaction will post, take no action.

  2. When notified of an unpostable, the transaction has usually been deleted on IDRS. Use the Unpostable Code information to correct the transaction.

    Note:

    The Unpostables Function will open a control base for the originating tax examiner and include the transaction on the Nullified Distribution Listing.

    If the... Then...
    Error condition can be corrected Re-enter the transaction with the corrected information
    Error condition cannot be corrected Close the control base. Input any necessary history items, TC 570s, or CC STAUPS. Prevent any incorrect refunds from generating, if applicable, per guidelines in 3.14.1.7.1.1, Refund Intercepts
    Adjustment or transfer was already input by someone else Do not enter a duplicate transaction. Close the control base

    Note:

    See Notice Review Job Aid 2534-002 for common Unpostable Codes and how to resolve them.

3.14.1.6.3.3  (01-01-2014)
Preventing Unpostable Transactions

  1. Avoiding Unpostables requires that the proper priority codes, hold codes, bypass indicators, freeze codes (or TC 570), and posting delay codes be input with an adjustment or credit transfer.

  2. Review each account carefully before entering an adjustment or credit transfer.

  3. Consider the effects of pending transactions, previous actions, freeze codes, module balances, and posted manual penalty and interest adjustments. Also consider the effects of the transaction being input.

  4. Contact any controlling tax examiner to coordinate actions on modules and to prevent erroneous and duplicate adjustments.

  5. To prevent unpostable tax adjustments (Doc Code 54):

    1. Verify that the adjustment is not a duplicate of a previous adjustment.

    2. Consider previous tax adjustments before inputting a subsequent adjustment, especially those within $10 of a previous adjustment. If it is still necessary, use Priority Code 8 on the adjustment.

    3. Look for any manual adjustments of penalties and interest (TC 160, 161, 170, 171, 340, and 341) that need correction or recognition when inputting an adjustment.

    4. Use the correct MFT, tax period, and name control.

    5. Input the correct Item Reference Codes and Credit Reference Numbers. Consider posted amounts, and limitations for each code being input.

    6. Do not attempt to reduce tax, any refundable credit, or any of the following Credit Reference Numbers below zero:
      873 — Adjust Primary F8919 Soc Sec Wages Computer
      874 — Adjust Secondary F8919 Soc Sec Wages Computer
      878 — Primary Self Employment Income
      879 — Secondary Self Employment Income
      885 — Advanced EIC
      886 — Taxable Income
      887 — Number of Exemptions
      889 — Self Employment Tax amount
      891 — Primary Tip Income
      892 — Secondary Tip Income
      893 — Adjust the Primary (F8919) Total Medicare Wages
      894 — Adjust the Secondary (F8919) Total Medicare Wages
      895 — Primary Medicare Income
      896 — Secondary Medicare Income
      898 — Primary Medicare Tip Income
      899 — Secondary Medicare Tip Income

  6. To prevent Unpostable Credit Transfers (Doc Code 24, 34, or 48):

    1. Whenever possible, begin the credit transfer from within the notice module.

    2. Use the correct reversal transaction code for the posted transaction code.

      Example:

      Use TC 672 to reverse TC 670.

    3. Use the correct MFT, name control, and tax period.

    4. When transferring overpayments, verify that the credit is available to be transferred. TC 830 and TC 820 amounts cannot exceed the credit balance on the module.

    5. When transferring payments from an account, verify that the dates on both sides of the credit transfer match. The money amounts must not exceed the amounts of the transactions being reversed.

      Caution:

      TC 826 and TC 706 can have different transaction dates. Use the correct dates for the debit and credit transactions when reversing these transactions. Follow credit elect and offset procedures, IRM 3.14.1.6.4.Offsets.

    6. When transferring credits to a fully paid module or to a balance due module and the transfer will create an overpayment, use a Bypass Indicator "1" .

    7. Use a Credit Freeze Code "1" or input a TC 570 on the credit side of the transfer if the credit should be held. This will generate a –R freeze.

      Note:

      Two TC 570s will not post simultaneously on a module, unless the first unreversed TC 570 is the systemic hold placed by IMF (55555 in the blocking series).

    8. Use a posting delay code (one to six cycles) to delay the posting of a transaction so that it matches the posting cycle of another transaction.

      Example:

      Use it to delay the posting of a Doc Code 48 debit transaction until a Doc Code 34 credit transaction posts.

3.14.1.6.4  (01-01-2014)
Offsets

  1. The computer will automatically offset an overpayment if a credit elect request to a subsequent year is present, but will first attempt to satisfy balances due for other federal taxes, or liabilities owed to other federal or state agencies. Therefore, when manually transferring credits, Lump Sum Credit Offsets to other federal taxes, and Treasury Offset Program (TOP) offsets to other agencies take priority over credit elect and refund requests. TOP offsets can be identified by the DEBT indicator on the module. See IRM 3.14.1.6.4.3TOP Offsets-TC 898/899

  2. Satisfy all existing modules with a balance due ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ before inputting a manual refund or manually transferring a credit elect.

3.14.1.6.4.1  (01-01-2014)
Credit Elect — TC 836/716 or TC 830/710

  1. The following notices pertain to Credit Elect situations:

    • CP 10 — Generates when a math error reduces the overpayment and the requested Credit Elect.

    • CP 10A — Generates when an EIC math error reduces the overpayment and the requested Credit Elect.

    • CP 45 — Generates when there is no settlement notice to inform the taxpayer that only a portion (or none) of the requested amount was credited.

      Note:

      If a settlement notice generates, the notice will contain a pop-in paragraph that informs the taxpayer of the unapplied credit elect amount.

  2. Review the return to determine if the taxpayer requested all or part of their overpayment be applied to the subsequent tax year as an estimated tax payment.

  3. When a credit elect request is transcribed properly on a current year return, the computer will automatically offset the credit (TC 836/716) if it is available, even if the overpayment is caused by a subsequent adjustment or credit transfer.

  4. If the full amount of credit elect requested is not available when the return posts, the computer will offset what is available, and continues to offset (as more credit becomes available), until the full credit elect amount is satisfied. This capability exists until the TC 150 for the next year's return posts.

  5. If the credit elect request was not transcribed properly, and the credit has refunded, take no action. CP 10 and 45 instructs the taxpayer to review the subsequent tax year estimated tax payments to avoid any possible underpayment.

  6. Master File will not automatically process credit elect requests on prior year or future year returns, if a TC 150 has already posted to the receiving tax period.

    1. Use CC IMFOL to review the subsequent period if it is not in the NRPS Package/Control D.

    2. Manually input all subsequent credit elects on all prior year returns.

      Caution:

      Never transfer credit elect from a module with an expired RSED.

    3. Transfer a claimed credit elect directly to a module separated by more than one tax period, if all modules in between claim the same Credit Elect, are settled modules, and no penalties or interest will abate. Use the correct dates and an Override-Dt Code "2" on the Doc Code 48 transfer.

      Example:

      Transfer from 201212 directly to 201412, if 201312 also claims a credit elect request, and has no penalty or interest that would abate if the credit elect was passed through it.

    4. All other offsets (TC 820/826, TC 898) have priority over a Credit Elect. Only reverse a TC 820/826 offset in favor of a credit elect, when a TC 826 has offset to the credit elect receiving module, and penalties and interest in that receiving module will decrease if a timely credit elect posts. However, do not reverse a TC 898 for a credit elect.

    If any of the following apply... Then...
    • The subsequent tax period has a balance due;

    • The credit elect will cause penalties and interest assessed on the subsequent period to partially or fully abate; or

    • The taxpayer claimed the credit on the subsequent tax period and the Credit Elect field on the subsequent module has a significant amount,

    • There is no TC 150 on the subsequent year's account

    1. Prevent the refund from generating

    2. Retype the settlement notice, editing the Credit Elect and unapplied credit elect fields accordingly, or void the CP 45

    3. Manually offset the Credit Elect

    Otherwise Allow the refund

  7. When increasing tax or reversing credits on the notice module, reverse all or part of a notice cycle Credit Elect to cover the debit. Use CC ADC48 and TC 832/712 on IDRS.

    1. Prevent the refund from generating on the subsequent module. Reverse the offset using a posting delay code to allow time for the TC 841 to post before the TC 712. Also, input Bypass Indicator "0."

    2. Do not reverse a Credit Elect that was offset in a different cycle than the notice cycle.

      Example:

      If the notice generated in cycle 201415 and the TC 836 posted in cycle 201408, do not reverse the TC 836.

    3. Retype the original notice and edit the Credit Elect/unapplied credit elect fields or retype to a CP 10 and edit the "Credit Elect per Taxpayer" and "Credit Elect to Next Year" fields.

  8. If the Credit Elect from the prior year module (TC 716) was intended for another account, use CC ADD48 to transfer the payment with a TC 712/710:

    1. Use the TC 716 date as the TC 712 date.

    2. Use the correct date for the tax period as the TC 710 date.

  9. When manually transferring Credit Elect(s), input TC 830/710 using CC ADD48:

    1. Use the later of the Return Due Date (RDD) or the date of the credit creating the overpayment (except on timely credits) such as the TC 830/710 date.

      Note:

      Multiple TC 830s may be needed depending on the date the credit is available. Always transfer the most recent credits first.

    2. If a tax adjustment or credit transfer creates (or is a part of) the overpayment, input the offset (TC 830) to post after the adjustment or credit transfer by inputting a posting delay code, if needed.

    3. If a subsequent notice must be stopped, take the appropriate action. See IRM 3.14.1.7.8, Notice Disposition.

      Note:

      Coordinating the timing of posting actions allows all transactions to post in a manner that prevents unintentional refunds and unpostables. If the required overpayment amount is not available, the computer will resequence the TC 830 for one cycle. The full amount of credit must be available or the TC 830 will unpost.

      Reminder:

      If FTF or ES Penalty will recompute, input a TC 290 for .00 with a Hold Code "4" , and a posting delay code timed to post in the same cycle as the penalty reversal. This will prevent an adjustment notice.

      If... Then...
      The penalty or interest will recompute because of an adjustment action To avoid erroneous refunds and unpostables, use posting delay codes and a TC 570 or credit freeze code to time the transactions to post in the following order:
      1. Adjustments or credit transfers

      2. TC 830

      3. TC 571 (if needed)

      Caution:

      Check for prior year debit modules before inputting a TC 830/710. Use CC ADD24 and a TC 820/700 if an offset to a debit module is needed. Time it to post in the same cycle as the TC 830/710

      Note:

      If penalties and interest will not recompute, the input of a posting delay code on the TC 830 is unnecessary.

      A Doc Code 34 credit transfer will create the overpayment
      1. Input a Credit Freeze Code "1" on the transfer. Input the TC 830/710 on a Doc Code 48 with a Posting Delay Code "2"

      2. If a credit will remain on the module to be refunded, use CC REQ77 to input a TC 571

      3. Use a Posting Delay Code "3" to time it to post after the TC 830

      A Doc Code 24 or 48 credit transfer or a Doc Code 54 adjustment will create the overpayment
      1. Use a TC 570 on the credit side of the transfer

      2. Use Hold Code "4" on any CC ADJ54 adjustment

      3. Input the TC 830/710 on a Doc Code 48 with Posting Delay Code "1"

      4. If a credit will remain on the module to be refunded and Hold Code "4" was not used, use CC REQ77 to input a TC 571. Use a Posting Delay Code "2" to time it to post after the TC 830

    4. Determine the correct notice disposition:

      If... And... Then...
      The CP 45 or settlement notice with the Credit Elect pop-in paragraph was generated for the taxpayer Master File cannot systemically offset the additional Credit Elect
      1. Manually transfer the Credit Elect (see above)

      2. Retype the notice to reflect the credit elect

      Master File can systemically offset the additional Credit Elect Print the notice
      All of the requested Credit Elect amount has now been applied A CP 45 generated Void the CP 45
      A settlement notice generated with the Credit Elect pop-in paragraph Retype the notice to include the corrected Credit Elect amount, and also to exclude the pop-in paragraph (or void if no notice is necessary at all)
      The total Credit Elect applied is still less than the taxpayer’s figures A CP 45 generated Retype the CP 45
      A settlement notice generated with the Credit Elect pop-in paragraph Retype the notice to reflect the current status of the taxpayer's account

  10. When manually transferring a credit elect, do the following:

    1. Use an Override-Date Indicator "2" on both sides of a CC DRT48 screen if the debit and credit transaction dates are different.

      Example:

      When moving a credit elect forward two or more years.

    2. Typically, for the TC 830 date, use the Return Due Date (RDD) or the earliest date of credit availability, whichever is later. The same date applies to the TC 710 date.

    3. Multiple CC ADD48 transactions are necessary if credit availability dates (after RDD) are staggered.

      Example:

      On a 201312 return, with a $1,500 credit elect requested: If only $500 is available at RDD (04152014), and the remaining $1,000 isn't available until 06/15/2014, then input two separate TC 830s with corresponding dates.

    4. Do not input a Credit Elect for an amount exceeding the available credit on the losing module. The transaction will go unpostable.

3.14.1.6.4.2  (01-01-2014)
Lump Sum Credit Offset — TC 826/706 and TC 820/700

  1. Master File offsets available overpayments (with a TC 826/706) to an account in which a taxpayer has a balance due. The overpayment offset will post as a TC 826 (with a corresponding TC 706 in the receiving module).

  2. If credit interest is available on that overpayment, and offsets at the same time as the TC 826, the credit interest offset will post as a TC 856 (with a corresponding TC 736 in the receiving module).

  3. A notice will generate to inform the taxpayer of the offset:

    Note:

    This offset to a debit account has priority over a requested credit elect.

    • CP 16 generates when an overpayment with a math error offsets to another tax liability. Refer to IRM 3.14.1.6.12.6, Math Error Notice Disposition.

    • CP 49 generates for any other offset to another tax liability.

  4. Use a Doc Code 24 credit transfer with a TC 701 (debit) and TC 821 (credit) to reverse an offset to a tax liability.

  5. Include a TC 570 with the TC 821 (and any associated TC 851) on the credit side of the transfer screen, if the credit should be held.

    Note:

    A TC 701 input to a settled module will not generate a CP 60 on the module.

    1. Verify that the reversal date matches the original offset date. Use CC IMFOLT to review a module that is not in the NRPS Package/Control D or on IDRS.

      Caution:

      The TC 826 date may differ from the corresponding TC 706 date. Similarly, the TC 856 date may differ from that of the corresponding TC 736.

    2. Reverse multiple transactions in the order that the TC 826s appear on the module. Do not combine transactions.

  6. If an adjustment will leave a balance due on a module, reverse the offset:

    If... Then...
    There is a current cycle TC 826/706 offset Reverse it, in whole or in part, to satisfy the balance due. Do not reverse a prior cycle TC 826 unless the TC 826 amount is refunding in the current cycle
    The module that received the offset has a current cycle refund Prevent the refund from generating. Reverse the TC 826, using a posting delay code to allow time for the TC 841 to post prior to the TC 821

  7. Use CC ADD24 with TC 731 (debit) and TC 851 (credit) to reverse credit interest that has been offset (TC 736/TC 856). Use a TC 570 on the credit side of the transfer if the credit needs to be held.

    Note:

    Use CC REQ54 with a TC 772 to reverse the TC 776. Use Hold Code "3" , if needed.

  8. Void or retype the CP 16 or the CP 49 as appropriate. Refer to IRM 3.14.1.6.12.6.5, CP 16 – Notice Disposition .

3.14.1.6.4.3  (01-01-2014)
Treasury Offset Program (TOP) Offsets — TC 898/899

  1. For current year Form 1040, an amount other than zero in the unapplied credit elect field indicates a TOP Offset.

    Note:

    Do not prevent the refund from generating to transfer unapplied credit elect; the TOP offset has priority over the credit elect. Be aware of situations requiring special handling. Refer to IRM 3.14.1.6.9.7, Injured Spouse Claims, if necessary.

  2. A TOP Offset debt indicator is displayed on the following screens:

    • CC TXMOD (DMF-LIAB-IND>) — below the TC 846 line, to the right

    • CC TXMOD (OTN-CD) — TC 898 with OTN-CD below the refund

    • CC REINF (FMS-DEBT-IND)

    • CC INOLE with definer S or X (Debt Indicator). The debt indicators for a TOP Offset are "F" or "B"

  3. For more information about reversing TOP offsets, refer to the Notice Review Job Aid 2534-002.

3.14.1.6.4.4  (01-01-2014)
Payments and Credits

  1. This section contains information related to payments and credits. It includes information on Lockbox Payments, the Remittance Transaction Research (RTR) System, Dishonored Payments, Discovered Remittance, and Contributions to Reduce the Public Debt.

3.14.1.6.4.4.1  (01-01-2014)
Lockbox Payments

  1. Payments for balance due returns (Form 1040–V) and Estimated Tax payments (Form 1040–ES) are sent to Lockbox locations.

  2. Estimated Tax payment DLNs contain "220" as the third, fourth, and fifth digits.

    1. If a Lockbox payment causes an ES discrepancy, follow the procedures in IRM 3.14.1.6.13, Reviewing Estimated Tax Discrepancy Notices.

    2. Follow local procedures for Out-of-Area Lockbox payments.

  3. Form 1040–V payment DLNs contain "270" as the third, fourth, and fifth digits.

    1. If the tax return indicates that a payment was made and an ES discrepancy exists, verify any excess credits against the balance due on the return.

    2. If the excess ES credit matches the balance due on the return, void or retype the ES discrepancy notice as appropriate.

3.14.1.6.4.4.2  (01-01-2014)
Remittance Transaction Research (RTR) System

  1. The Remittance Transaction Research (RTR) system is a researchable database that provides all payment information and images on-line immediately after receipt from ISRP and Lockbox. RTR supports ten days of data on-line and three years of data near-line, allowing for an immediate query response time. Exhibit 3.14.1-32 Remittance Transaction Research (RTR) System.

  2. Notice Review's use of RTR provides greater efficiency in resolving payment tracer cases and misapplied payment or excess credit issues.

3.14.1.6.4.4.3  (01-01-2014)
Dishonored Payments and Bad Check Penalties

  1. If a Dishonored Payment transaction (TC 611, 671, 641, 681, or 661) and a penalty (TC 280 or TC 286) are pending on the notice module:

    1. Prevent the refund from generating.

    2. Hold the original notice.

    3. If the refund was prevented, wait for the TC 841 to post, if applicable

    4. Input CC STAUPS for eight cycles if a balance due remains.

    5. Retype the original notice to include the Dishonored Check Penalty (Notice Penalty Code "04" ). Update the balance due and pay-by-date, refund amount, or credits on the notice using CC RECON and/or CC INTST.

      Note:

      CC INTST is not accurate until the TC 280 or TC 286 posts or CC RECON updates the module.

3.14.1.6.4.4.4  (01-01-2014)
Discovered Remittance

  1. When reviewing tax returns, especially Non-Math Error Balance Due notices (Key 092), thoroughly search all attachments (including envelopes) for payments.

  2. Use the following procedures to process a discovered remittance:

    1. Prepare Form 3244, Payment Posting Voucher, in duplicate.

    2. Attach the copy to the front of the tax return under the entity section.

    3. Use CC ACTON to input a history item of "DISC–REMIT" on IDRS.

    4. Input CC STAUPS for eight cycles on all balance due modules.

    5. Void, retype, or label the original notice as required.

    6. Provide the remittance, the original copy of Form 3244, the NRPS Package/Control D, a print of CC TXMOD, and the tax return to the lead.

    7. Complete Form 4287, Record of Discovered Remittance, as appropriate.

      Note:

      Check to see if the taxpayer indicates the money is intended for the Public Debt. Refer to IRM 3.14.1.6.4.4.5, Contributions to Reduce the Public Debt, if necessary.

3.14.1.6.4.4.5  (01-01-2014)
Contributions to Reduce the Public Debt

  1. Occasionally, taxpayers request that all or part of their overpayment (or remittance) be applied to reduce the Public Debt. These payments generally post as a TC 610 or TC 670.

    If the credit... Then...
    Is refunding
    • Prevent the refund from generating if the refund has been held (no TC 846 and a TC 570 with blocking series "55555" ) and prepare Form 3809, Miscellaneous Adjustment Voucher, in duplicate, to transfer the specified amount to the 6400 account. Refer to the Transferring Credits to the Public Debt Fund exhibit. Exhibit 3.14.1-34

    • If TC 846 is on the module, take no action

    Posted to a prior year module Prepare Form 3809, Miscellaneous Adjustment Voucher, in duplicate, to transfer the specified amount to the 6400 account. Refer to the Transferring Credits to the Public Debt Fund exhibit. See Exhibit 3.14.1-34 for step by step instructions
    Posted to a current year module Prepare Form 2424, Account Adjustment Voucher, to transfer the specified amount to the 6400 account. See IRM 3.14.1.6.8, Figure 3.14.1-5 for step by step instructions

3.14.1.6.5  (01-01-2014)
Decedent Accounts

  1. When a taxpayer dies during the tax period, all Functions must follow certain procedures to ensure that a correct refund is issued. In order for a computer generated refund check to be issued to the correct person, the account must have all of the following present:

    1. A current year entity reflecting first and second name lines.

    2. Computer Condition Code (CCC) "L" or "W" .

    3. All required supporting documents. If both taxpayers on a joint return (FS2), or a lone taxpayer (FS1, 3, 4, or 5) is deceased, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, or court appointment documentation must be attached to the return if the account is overpaid.

    4. Make sure the term "DECD" appears after the first name of the decedent on a joint (FS2) account, or after the surname of the primary taxpayer for any other filing status. Only surviving spouses and representatives should appear on the second name line.

    5. Do NOT change the name line to replace the term "DECD" with "Estate of" under any circumstances. Code & Edit or ERS may use that for correspondence purposes, but do not remove the term "DECD" from the entity.

      Note:

      Supporting documentation is unnecessary on even balance or balance due accounts or if only one taxpayer on a joint account (FS2) is deceased, or if the overpayment is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  2. Decedent refund claims must have supporting documents (Form 1310 or Court Appointment Documentation and Payment Verification) unless there is a surviving spouse. The surviving spouse need only provide the date of death for the deceased spouse. The following CCCs apply to decedent accounts. Review the NRPS Package/Control D to determine if the necessary codes were transcribed:

    CCC DESCRIPTION
    A
    • Both taxpayers died during the tax period

    • Deletes both the primary and secondary taxpayers from the module

    • Form 1310 or court appointment documentation is required to allow any overpayment to be refunded to the personal representative or court appointed official

    Reminder:

    If the account is overpaid, the return should also contain CCC "L"

    F
    • The primary taxpayer died during the tax year

    • Deletes the primary taxpayer from the module and establishes an updated entity for the surviving spouse on the secondary SSN, one cycle after the return (TC 150) posts

    • Form 1310 or court appointment documentation is not required since there is a surviving spouse

    Reminder:

    If the account is overpaid, the return should also contain CCC "W"

    Note:

    Both CCC "A" and "F" generate a TC 540 on the module for the year of death, updating the Mail Filing Requirement (MFR) to "08" on the entity, which deletes the filing requirement

    9
    • The secondary taxpayer died during the tax year

    • Deletes the secondary taxpayer from the module and establishes an updated entity for the primary taxpayer one cycle after the return (TC 150) posts

    • Form 1310 or court appointment documentation is not required since there is a surviving spouse

    Reminder:

    If the account is overpaid, the return should also contain CCC "W"

    L
    • Reverses the first and second name lines so that the refund check generates to the person on the second name line

    • Form 1310 or court appointment documentation is required, since there is no surviving spouse

    W
    • This is used when there is a surviving spouse on a joint account

    • Suppresses the first name line so the refund check will generate to the second name line only

    Note:

    A CCC "L" or "W" prevents the refund check from being issued to the deceased taxpayer. An account with a surviving spouse with a CCC "L" or "W" does not require a manual refund

  3. Review the account:

    If... Then...
    Additional information (signature, Form 1310 or court appointment documentation) is required before a refund can be issued
    1. Correspond with the taxpayer in the current cycle to request the missing information. Remove DECD from the name line when corresponding by letter, but do not remove DECD from the entity portion of the notice on OLNR or on ENMOD. Also, do not replace DECD with Estate Of on the Notice or on ENMOD

      Note:

      A math error or a discovered credit might have caused the overpaid condition

    2. If an adjustment is not needed, print the original notice in cycle. The taxpayer may not realize that a refund is due

      Note:

      A prompt reply is likely if the surviving spouse or Executor realizes a refund is due

    3. Follow Reply/No Reply instructions in IRM 3.14.1.7.4 Taxpayer Correspondence/Reply Procedures

    The account contains a CCC "9" An adjustment resulting in an additional refund will require a manual refund since a second refund will not be computer generated
    1. The original TC 846 computer generated refund will be issued correctly if there is a first and second name line on the current entity and the account contains a CCC "L" or "W"

      Note:

      CCC "9" indicates a deceased secondary taxpayer. After the computer releases the original refund, it will also delete the secondary taxpayer’s name from the module and the name line

    2. Input the adjustment with the appropriate Hold Code

    TC 540 is not present and the primary taxpayer is the decedent, and the date of death is in the same year as the notice module Use CC REQ77 to input a TC 540. Use the Date of Death in the TRANS-DT> field of FRM77 response screen. TC 540 is not necessary if the secondary taxpayer is the only decedent

    Note:

    Refer to the IRM 3.14.1.6.6Manual Refunds section for instructions on issuing a manual refund.

  4. Form 1310 or court appointment documentation is required when an overpayment on a decedent account ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ will refund to someone other than a surviving spouse. Refunds ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ do not require the documentation.

    If... And there was... Then...
    Form 1310 or court appointment documentation is attached to the return  
    1. Verify that the notice has the same second name line and address as the attached Form 1310 or court appointment documentation

    2. If different, correct notice

    Form 1310 or court appointment documentation is not attached to the return No previous correspondence Prevent the refund from generating and correspond for the missing Form 1310 or court appointment documentation

    Note:

    Remove DECD from the name line when corresponding by letter, but do not remove DECD from the entity portion of the notice on OLNR or on ENMOD. Also, do not replace DECD with Estate Of on the Notice or on ENMOD

    No reply to Code and Edit or ERS correspondence CCC "3" should have been edited on the return to generate a –R freeze (TC 570) to hold the overpayment

  5. Form 1310 or court appointment documentation is not required on a balance due account, unless an adjustment is made that will result in an overpayment.

3.14.1.6.6  (01-01-2014)
Manual Refunds

  1. A Manual Refund (also known as an IDRS-generated refund) is a refund which is not generated by normal computer processing. Manual Refunds post to the tax module as a TC 840.

  2. The three general processes to follow for manual refunds are:

    1. Determining if a Manual Refund is required.

    2. Computing credit interest, if necessary, on the credit to be manually refunded.

    3. Preparing and inputting the Manual Refund, via Form 5792 and CC RFUNDR.

  3. Before inputting a Manual Refund:

    1. Ensure that a computer-generated refund will not generate.

    2. Prevent any computer-generated refund. Wait until TC 841 is present on TXMOD before inputting a Manual Refund.

    3. Monitor any account where a pending transaction may cause a refund to generate before the TC 840 posts.

    4. When issuing a manual refund based on a "Hardship" claim, verify that no bankruptcy action (V– freeze) is pending.

  4. Verify that the case is correct and no other actions are needed before issuing a manual refund.

    1. Do not generate a TC 846 from any IDRS actions.

    2. Use a Hold Code "1" , "2" or "4" (as appropriate) on a CC ADJ54 adjustment and a TC 570 or credit freeze code on a credit transfer.

  5. Obtain all necessary documents to support the refund claim. Correspondence or telephone contact with the taxpayer may be needed.

  6. Use CC IMFOLI to research the taxpayer’s account for debit balances on other modules. Transfer credit using a TC 820/TC 700 on CC ADD24 to satisfy a balance due if the assessed liability is ≡ ≡ ≡ ≡ ≡ ≡ ≡ or the accrued liability is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. Refer to IRM 21.4.4.3.5, Manual Refunds, for freeze codes that must be addressed before a manual refund is issued.

  8. Take all necessary action to prevent an erroneous refund or erroneous notices from generating.

  9. Use a CC REQ54 to input a new Return Processable Date on IDRS if required correspondence was received after the Return Due Date (including extensions):

    If... Then...
    A CC REQ54 adjustment is needed Include the Return Processable Date with that adjustment. Use Hold Code "1" , "2" or "4" , if necessary
    A CC REQ54 adjustment is not needed Use CC REQ54 to input the Return Processable Date. Input a TC 290 for .00, Blocking Series "05" , NSD, and Hold Code "4" .

3.14.1.6.6.1  (01-01-2014)
Determining When a Manual Refund is Required

  1. Issue Manual Refunds under the conditions listed below. For additional information, see IRM 21.4.4, Manual Refunds.

    Note:

    It is mandatory to issue and monitor Manual Refunds using the IAT tool.

    If... Then...
    The taxpayer requests an immediate refund on a deleted refund case due to financial or other hardship Issue a manual refund
    A refund was prevented from generating to verify unclaimed payments, the substantiated total is $5,000 or more, and the 45-day interest-free period is in jeopardy

    Example:

    A taxpayer claims three payments of $2,000 each. The account shows these plus another payment of $2,260

    Issue a manual refund for the substantiated payments
    A refund is for $10,000,000 (Ten Million) or more Refer to $10,000,000 Refunds, IRM 3.14.1.6.9.3
    Technical or Taxpayer Advocate Service criteria determine that there has been a gross disservice to the taxpayer, a refund was prevented from generating to verify unclaimed payments , the documents are unavailable, and the taxpayer has not replied to correspondence Issue a manual refund
    1. Issue a manual refund for the claimed payments

    2. Transfer the unclaimed payments to the Unidentified Remittance File or to the Excess Collection File. See IRM 3.14.1.6.8, Excess Collections (XSF) and Unidentified Remittance (URF) Files

    The taxpayer requests that a refund check be issued to an address other than that shown on IDRS, and indicates that the address is temporary Issue a manual refund to the temporary address

    Caution:

    Do not input an address change. Use CC REQ77 to input TC 971 AC037

    The refund is for a prior year return with an original name line that has changed Issue a manual refund in the taxpayer’s current name
    The refund is for a decedent overpaid return without a CCC "L" code on the module A manual refund is not necessary

3.14.1.6.6.2  (01-01-2014)
Computing Credit Interest on Manual Refunds

  1. Credit interest is mandatory on an overpayment or refund, if certain conditions specified in the Internal Revenue Code (IRC 6611) are met. Refer to IRM 20.2, Interest.

  2. An overpayment is defined as beginning with the first amount paid in excess of the tax liability. Tax liability includes tax, additions to tax, penalties and interest. Generally, credit interest is paid on the available net overpayment.

  3. No interest is allowed if the refund is issued within 45 days after the later of the Return Due Date, Return Received Date, or Correspondence Received Date.

  4. If the return is not in processable form, suspend the 45-day interest-free period. The return is not considered in processable form until all the required information, correspondence, or supporting documentation is received. On these cases, the start date for the 45-day interest-free period is the Correspondence Received Date (CRD).

  5. Use the later of the following dates to determine whether the 45–day interest-free period has lapsed:

    • Return Due Date (RDD)

    • Return Received Date

    • Return Processable Date/Correspondence Received Date

  6. If the refund check date is more than 45 days after the later of the dates in Item (5) above, determine the credit interest period.

    Determining the "From" Date
    If the taxpayer... And... Then allow interest from the later of...
    Does not have an extension Filed the Return by the original due date The original due date, the payment date, or the Correspondence Received Date (CRD) (if after the due date)
    Filed the return after the original due date The return received date, the payment received date, or the CRD (if present)
    Has an extension Filed the return by the extended due date. The original due date, the payment date, or the CRD (if after the extension date)
    Filed the return after the extended due date The return received date, the payment received date, or the CRD (if present)

    Determining Payment Dates
    If the payment is a... Then the payment date is...
    Prepaid or timely credit, e.g.,,, estimated tax payment, withholding, or a payment before the due date The original return due date
    Subsequent payment (made after the due date) The payment received date

    Reminder:

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

    Determining the "To" Date
    If the overpayment is... Then...
    Initiated by the taxpayer The interest "To" date is one business day past the date of the CC RFUNDR date (two days for night shift)
    Initiated by the IRS. (Examples include: EIC eligibility, math error decrease in tax, and math error increase in refundable credits The portion of the overpayment initiated by the Service is subject to the provisions of IRC 6611(e)(3). (See IRM 20.2.4.7.5.5, 45-Day Rule) Go to one business day past the date of the CC RFUNDR date (two days for night shift), and subtract 45 days to derive the interest "To" date

    Note:

    The Refund Date cannot be a Saturday, Sunday, or legal holiday

  7. Use CC COMPA with Definer "D" to compute credit interest for the period determined in (6) above. The tables below show an example of the CC COMPAD computation.

    Note:

    CC COMPAD displays details of the computation, such as the number of days at each interest rate, that an ordinary COMPA display does not show. This detailed information is necessary to verify accurate calculations.

    Example:

    The return was filed by the due date. The return did not show an overpayment. There was an estimated tax discrepancy of $386.

    TC 150 06302014 $12,562
    TC 716 04152013 $2,414
    TC 660 01272014 $386
    TC 610 04152014 $10,148
    Overpayment to be refunded = $386

    CC COMPAD format for Credit Interest
    COMPAD (refund date is 07282013)
    04152014 06142014 386.00 (no $ sign)
    Subtract 45 days from 07292014 to arrive at the "to" date of 06142014

    Note:

    Credit Interest is not allowed on the 2008 Recovery Rebate Credit. This amount must be subtracted from the overpayment amount before credit interest is computed.

3.14.1.6.6.3  (01-01-2014)
Preparing Manual Refunds — Form 5792 and CC RFUNDR

  1. Complete Form 5792, Request for IDRS Generated Refund (IGR). Refer to Job Aid or the IRS intranet for a visual example of Form 5792.

    1. Write the taxpayer’s SSN, tax period, and transaction code where the supporting document will be filed, in the remarks area of Form 5792.

    2. If a manual refund will be issued to an address other than the Master File address, explain in the remarks area and indicate where the supporting documentation will be filed. Also input a TC 971 AC037 on the module using CC REQ77.

      Example:

      REMARKS: Temporary Address Change per Taxpayer Request.

    3. Monitor the case until the TC 840 posts. Input CC NOREFP, if necessary, to prevent a duplicate TC 846 from generating.

      Note:

      For additional directions on monitoring manual refunds see IRM 21.4.4.5.1, Monitoring Manual Refunds.

    Figure 3.14.1-2
    Form 5792 Field Descriptions, Section I
    Item Field Name Description
    1 TIN and File Source Enter the taxpayer's SSN
    2 MFT Code Enter MFT code from the refunding module
    3 Tax Period Enter Tax Period of the refunding module in YYYYMM format
    4 Plan number Leave Blank
    5 Name Control Enter Name Control from refunding module
    6 TC 840 Amount Enter the total overpayment plus any credit interest
    7 TC 770 Amount Enter the credit interest portion of the refund
    8 Overpayment Amount Enter the overpayment on the tax module, without interest
    9 Line No. Enter "01" for prior year, or "02" for current year. See IRM 2.4.20, CC RFUND Input
    10 Int'st (Interest) Ind. Enter "N" for normal, "R" for restricted, or "0" if no interest
    11 ULC Code Enter the Primary Location Code from TXMOD
    12 Sequence Number Enter the IDRS sequence number
    13 Block Series No. Blank unless refund is for an Injured Spouse claim
    14 1st Name Line Enter the name of the payee. Include Executor/Executrix, Admin(istrator), etc., if Form 1310 is attached
    15 2nd Name Line Optional unless refund is for a decedent return with or without surviving spouse
    18 Street Address or PO Box Enter address where the check is to be mailed
    19 City, State, and ZIP Code Enter City, State, and ZIP code where the check is to be mailed
    20 Remarks Enter all appropriate remarks
    21 Initiating BOD Check box - W&I-SP
    22 DLN of Return Enter DLN of the return
    23 Bankruptcy code case  
    24 TC 130 (check-box) Check if a TC 130 is present
    Section II Manual Refund Authority checklist Contains 13 check-boxes to address if appropriate
    Section III Interest Computation Contains Interest to Date and Total Interest Fields. Attach COMPAD print if interest is included in refund
    Section IV Manual Refund Approval Complete Items 1, 2, and 3 prior to submitting for approval
  2. Attach a copy of the IDRS screens for the following Command Codes: COMPAD, IMFOLI, ENMOD, TXMODA, RFUNDR, REQ54 and credit transfers (if input) to the Form 5792, as required by the Accounting Function. Also attach a copy of Form 1310 or court appointment documentation and any supporting documents to the case itself. Print and attach IMFOLI screen(s) for both the primary and secondary taxpayer, when applicable.

  3. Submit the case for review and approval.

  4. Secure Manager's signature on all three copies of Form 5792.

  5. Input CC RFUNDR on IDRS:

    1. Use the information from Form 5792.

    2. The CC RFUNDR entity section must match the entity exactly on Form 5792 (which may be different than the information on CC ENMOD). This includes hyphens, spaces, suffixes, all abbreviations, etc.

    3. If the manual refund is being sent to someone other than the taxpayer, such as an executor or executrix, include that representative's title on both Form 5792 and CC RFUNDR.

    4. CC RFUNDR will close the case unless the status is changed from C.

  6. Deliver the Form 5792 and its required attachments to the Accounting Function after input of the CC RFUNDR, per local procedures.

3.14.1.6.7  (01-01-2014)
Erroneous Refunds

  1. An erroneous refund (ERRF) is defined as "any receipt of money from IRS to which the recipient is not entitled" .

  2. In the Notice Review Function, erroneous refunds can result from:

    • Errors found on cases where the taxpayer has received a refund as a Split Refund;

    • Errors found on cases reviewed after the deadline for preventing a refund from generating for the cycle; or

    • Errors on notices not subject to the systemic refund hold (55555 in the blocking series) such as CP 16 and CP 51B

  3. If a duplicate refund is present, i.e. TC 840 and TC 846, treat the TC 840 as the erroneous refund.

  4. When an erroneous refund is identified, determine the correct erroneous refund Category. There are three categories of erroneous refunds:

    Erroneous Refund Category Description
    "A" Tax increased or tax/refundable credits decreased
    and
    IRS has erroneously decreased tax below taxpayer's figures or increased credits to more than the taxpayer's figures during processing

    Note:

    Withholding and estimated tax payments are not included in this category

    "B" Federal Income Tax Withheld was overstated by the taxpayer on a return or claim for refund, and as a result, a refund, offset, or credit elect generated, and the withholding should be reversed

    Note:

    This does not apply to Excess Social Security Tax Withheld (Excess Federal Insurance Contributions Act (FICA))

    Reminder:

    This Category is only for cases in which the taxpayer is at fault

    "D"
    • Misapplied payments

    • Entity errors that caused refund to be paid to wrong taxpayer

    • Duplicate refunds issued (i.e. TC 840 and TC 846 for same overpayment)

    • Refunds issued after refund statute expiration date (RSED)

    • Any other issues that do not fall into the Cat-A or Cat-B descriptions

  5. For detailed procedures on classifying and processing Erroneous Refunds, see IRM 21.4.5, Erroneous Refunds.

  6. Erroneous Refund procedures are not necessary in the following situations:

    1. Erroneous refund in Category A that is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Missing signature(s)

      Note:

      It is still necessary to attempt to obtain the missing signature(s).

    3. A Credit Elect request to the next year was not processed, and instead the credit refunded.

    4. No CCC "L" or "W" code was present on a decedent return.

    5. No Form 1310 or court appointment documentation is present.

    6. An error found in Notice Review (including errors made during initial processing) results in a tax increase with no prior tax decrease.

    7. An error found in Notice Review (including errors made during initial processing) results in a refundable credit (except withholding) decrease with no prior refundable credit increase.

    8. Scenario (f) and (g) are identified as "turnaround" cases and should be adjusted by using Blocking Series "77" , Source Code "6" , and Hold Code "0" . Insert Label 1 on the notice in the current cycle.

      Note:

      If a taxpayer requests abatement of the adjustment, route to Exam for a deficiency assessment on Form 3465, Adjustment Request. Attach all documentation available and a print of RTVUE and TXMOD.

  7. Route returns requiring reprocessing with an erroneous refund to Accounts Management.

    1. Order the return, if the return is not included with the case.

    2. Complete Form 3465, Adjustment Request, and explain the erroneous refund and the reason for the adjustment.

    3. Void the notice.

    4. Recharge the return using CC ESTABDT and route the case to Accounts Management.

      Note:

      Also refer cases involving two taxpayers using the same SSN or one taxpayer using two SSNs to Accounts Management. If a refund scheme or fraud is suspected, route the case to the Criminal Investigation Function.

3.14.1.6.7.1  (01-01-2014)
Category A ERRF Resolution

  1. Complete Form 3465 or applicable local form.

  2. Route to Exam using local procedures.

  3. Insert Label 15 or 16.

    Note:

    Do not input TC 844 or adjust the account. Do not take any actions or refer a Category A erroneous refund case to Examination when the erroneous refund amount is under ≡ ≡ ≡ ≡ ≡ ≡

3.14.1.6.7.2  (01-01-2014)
Category B ERRF Resolution

  1. Per the Office of Chief Counsel, input an assessment to reverse federal withholding overstated on a return or a claim for refund by the taxpayer.

    Reminder:

    These instructions do not apply to overstatements of Excess Social Security Tax Withheld (Excess FICA), which should be resolved using Category D procedures.

  2. Standard TC 807 withholding reversals from CC REQ54 do not post to the Summary Record of Assessment. To correct accounts that have either refunded, offset, or credit elected as a result of overstated withholding, an IRC 6201(a)(3) assessment must be input to "reverse" the withholding.

    Note:

    Even if the overpayment was offset or credit elected (rather than actually refunding), the taxpayer still claimed a refund due to the withholding overstatement, and therefore, an IRC 6201(a)(3) assessment is needed to recover it.

  3. An IRC 6201(a)(3) assessment protects the IRS' ability to collect, satisfies the requirement of denying a refund claim, and places burden of proof upon the taxpayer, should a case develop in tax court.

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. Use CC REQ54 to input an IRC 6201(a)(3) assessment to recover the overstated portion of federal income tax withheld:

    • Input TC 290 for the amount of overstated withholding being recovered.

    • In the Activity field of CC ADJ54, input: "W/H–6201A3"

    • Blocking Series 00

    • Source Code 2

    • Reason Code 051 (and any others that apply)

    • Hold Code 0

    • Do not use Item Reference Code 807

    • In the Remarks field of CC ADJ54, input: "IRC 6201a3 assessment to reverse overstated withholding" .

    • Do not input a TC 844 or send a Letter 510C.

    • Insert erroneous refund Label 15 or 16 on the notice, as appropriate.

      Note:

      Reversal of the withholding by using a TC 807 is only allowable when the overstatement of withholding did not result in an overpayment (prior to any offsets or credit elect). This is not a Category B Erroneous Refund.

      Caution:

      Counsel has advised if a refund claim is pending (the taxpayer has included the overstated amount as a refund), an assessment using a TC 290 must be used to recover the overstated credit. This is true even if the IRS was able to prevent refund from generating, i.e. the error is identified and the refund is prevented from being issued. In this situation, follow the above procedures; however, use Hold Code "3" and retype the notice to include the appropriate withholding TPNC.

3.14.1.6.7.3  (01-01-2014)
Category D ERRF Resolution

  1. Complete Form 3465 or applicable local form.

  2. Input all applicable credit transfers, adjustments and Entity changes prior to routing the case.

  3. Use TC 570 on the debit side of the credit transfers.

    Note:

    If removing a timely credit will create FTF or ES Tax penalty assessments, input a TC 290 for .00 with Hold Code "3" .

  4. Send Letter 510C to the taxpayer.

  5. Input a TC 470 with a closing code (CC) 93 using REQ77, with a Posting Delay code "1" to prevent issuance of Balance Due notice.

  6. Input TC 844, using CC REQ77 with demand date.

  7. Route the case to the appropriate Erroneous Refund Coordinator using local procedures.

  8. Insert Label 15 or 16 on the Notice as appropriate.

    Exception:

    When the erroneous refund is issued on an Adjustment notice, void the notice.

3.14.1.6.8  (01-01-2014)
Excess Collections (XSF) and Unidentified Remittance (URF) Files

  1. When there is not enough information to properly apply credits to a taxpayer’s account (e.g.,,, when a taxpayer does not claim a payment and the correct taxpayer cannot be located), funds may be transferred to the Unidentified Remittance File (URF) or the Excess Collections File (XSF).

    Note:

    TC 820 may indicate that a payment has been moved from the taxpayer’s account to URF or XSF. If the cross-reference TIN and tax period (next to the transfer DLN) are all zeros or nines, the credit was transferred to either the URF or the XSF. If a taxpayer files a return claiming credits that were applied to the URF or XSF, it may be necessary to transfer the credit from the URF or the XSF to the Master File. Use Form 8765, IDRS Control File Credit Application. Figure 3.14.1-3a

    Caution:

    If the DLN of the payment is for another Submission Processing Campus, send the request to that campus.

    1. Credits less than 12 months old are applied to the Unidentified Remittance File. Credits over 12 months old are applied to Excess Collections. An application to move credits to Unidentified Remittances can be made in the 11th month.

      Exception:

      Credits with Document Codes 48, 58, or 65 may be added to the XSF regardless of age.

    2. Earned Income Credit (TC 764 or TC 768) and Generated Refundable Credit (TC 766) will be accepted by Excess Collections.

  2. For assistance in matters related to XSF andURF, an Excess Collections/Unidentified Remittance Files contacts list is provided in the Who/Where tab of SERP.

3.14.1.6.8.1  (01-01-2014)
Excess Collections File (XSF) — 6800 Account

  1. The XSF consists of two accounts:

    • 6800 Account — Credits over one year old that cannot be applied to a taxpayer's account are transferred to the 6800 Account.

    • 9999 Account — Credits in the 6800 Account are automatically transferred to the 9999 Account after one year.

  2. Before requesting a payment from the XSF, determine whether the statute of limitations for refunds has expired. The general rule is that a claim for refund must be filed within three years from the date the original return was filed, even if the return was delinquent, or two years from the date the tax was paid, whichever is later.

    If the claim was filed... Then the amount paid within...
    within the three-year period, the prior three years, plus any return filing extension period, may be refunded
    within the two-year period, the prior two years may be refunded

    Note:

    Prepaid credits are treated as being paid on the Return Due Date (RDD). These include: withholding (TC 806), Estimated Tax payments (TC 660, TC 716, and TC 710), Earned Income Credit (TC 764 and TC 768), and Generated Refundable Credit Allowances (TC 766).

    1. Check the Monthly Statute Alert Bulletin.

    2. The remarks section of the CC XSINQ record should indicate "STATUTE" or "FROZ" if the credit is barred from refunding.

    3. If the refund statute has expired, the application to move credits from XSF must not exceed the tax liability, interest, and penalties. There can be no refund or credit elect.

3.14.1.6.8.1.1  (01-01-2014)
Requesting Payments From the XSF

  1. Use CC XSINQ to verify that the credit is available.

    Note:

    Do not request transfer of the credit if the remarks section of the CC XSINQ record indicates "CLOS" . These credits are not available for transfer.

  2. Prepare Form 8765, IDRS Control File Credit Application, per instructions. Figure 3.14.1-3a

  3. Attach a current print (less than seven days old) of CC TXMOD or CC IMFOL and CC XSINQ to Part 1 of Form 8765.

  4. Enter CC STAUPS for eight cycles on balance due accounts to prevent erroneous or unnecessary notices.

  5. Determine which campus transferred the original credit to the XSF.

  6. If the original transfer to XSF was local, route Part 1 of Form 8765, with research, to the local Statutes function. After Statutes completes their clearing process, they will forward the case to the Excess Collections Function, per the Statute of Limitations, refer to IRM 25.6.1.7.3.3, Transferring Credits from the XSF.

  7. If the original transfer was done in another campus, route the case to the other campus' Accounting function, per the Statute of Limitations, refer to IRM 25.6.1.7.3.3, Transferring Credits from the XSF.

  8. Attach Part 2 of Form 8765 to the case.

  9. Include a complete explanation for the request.

    Note:

    An IRM reference alone is not a sufficient explanation.

  10. Give the completed form and all necessary attachments to your lead to hand-carry to the Statute Classifier, who will stamp "STATUTE CLEARED" on the form before routing it to the Excess Collections Unit.

    Figure 3.14.1-3a
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    FORM 8765 - IDRS Control File Credit Application

    Figure 3.14.1-3b
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    FORM 8765 - IDRS Control File Credit Application

3.14.1.6.8.1.2  (01-01-2014)
Transferring Payments To the XSF

  1. Correspond for the missing payment information using Letter 1687C.

  2. If the taxpayer does not reply, or replies with insufficient information,use Form 8758, Excess Collection Files Addition, to apply a credit to the XSF. Form 8758 is a two-part form. Attach the research to part one (the original). Figure 3.14.1-4a

  3. Use the received date of the credit. Do not use the available date of the credit or the return due date.

  4. Use the original DLN of the credit, not a transfer DLN.

  5. Issue a manual refund when money is transferred out of an account using a Form 8758 paper document and there is still an overpayment to be refunded. Refer to IRM 3.14.1.6.6, Manual Refunds.

  6. Move each payment individually. Do not transfer a lump sum.

  7. The date on Form 8758 and the date of the CC IMFOLT or CC TXMOD print must be no more than seven days prior to receipt of the case in the Excess Collections Function.

  8. Both copies of Form 8758 must be complete and identical. Route both to the Excess Collections Function.

  9. Attach the following to the original copy: a current CC IMFOLT or CC TXMOD print, a copy of any taxpayer correspondence, tax returns, vouchers, or other research relevant to the transfer to the XSF, and a research history sheet showing the research performed on the case.

    Note:

    Send only copies of original (DLN) documents. Do not send original ("live" ) documents.

  10. Use activity code "CLTO6800" to close the IDRS control base.

  11. A TC 971 AC296 must be input using CC REQ77 to indicate taxpayer contact has been attempted. Input "971" in Field TC>, input "296" in Field TC 971/151-CD>, and input "Credit to Excess Collections" for remarks.

  12. A TC 971 AC296 must be input using CC REQ77 to indicate taxpayer contact has been attempted. Input "971" in Field TC>, input "296" in Field TC 971/151-CD>, and input "Credit to Excess Collections" for remarks.

    Figure 3.14.1-4a
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Form 8758 - Excess Collections File Addition

    Figure 3.14.1-4b
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Form 8758 - Excess Collections File Addition

3.14.1.6.8.2  (01-01-2014)
Unidentified Remittance File (URF) — the 4620 Account

  1. Follow procedures in the subsections that follow when transferring credits to, or from, the 4620 URF account.

3.14.1.6.8.2.1  (01-01-2014)
Requesting Payments From the URF

  1. Use CC URINQ to verify that the credit is available.

  2. Follow the instructions on Form 8765, IDRS Control File Credit Application. Figure 3.14.1-3a

  3. Attach Form 8765 to a print of CC URINQ.

  4. Include research as required.

  5. Enter CC STAUPS for eight cycles on balance due accounts to prevent erroneous or unnecessary notices.

  6. Route Form 8765, with research, to the Unidentified Remittance Function.

3.14.1.6.8.2.2  (01-01-2014)
Transferring Payments To the URF

  1. Correspond for the missing payment information using Letter 1687C.

  2. Issue a manual refund for the substantiated payment(s) when there is still an overpayment amount to be refunded. Refer to IRM 3.14.1.6.6, Manual Refunds.

  3. If the taxpayer does not reply, or replies with insufficient information, use Form 2424 to apply a payment to the URF. Form 2424 is a two-part form: the pink copy is the original, and the blue copy is the duplicate. Attach the research to the pink copy. See Figure 3.14.1-5.

  4. Use the received date of the credit. Do not use the available date of the credit or the Return Due Date.

  5. the original DLN of the credit, not a transfer DLN.

  6. Include the payment DLN, the tracer ID, and the reason for the transfer to the URF in the “Remarks” section.

    Note:

    An IRM reference alone is not a sufficient explanation.

  7. The date on Form 2424 and the date of the CC IMFOLT or TXMOD print must be no more than seven days prior to receipt of the case in the Unidentified Remittance Function.

  8. Both the pink and blue copies of the Form 2424 must be completed and sent to the Unidentified Remittance Unit. The carbon (blue) copy must be legible and match the original (pink) copy.

  9. Attach the following to the original (pink) copy: a current CC IMFOLT or TXMOD print, a copy of any taxpayer correspondence, tax returns, vouchers, or other research relevant to the transfer to the URF, a research history sheet (except on Statute credits) showing the research performed on the case and the results, and a copy of the check.

    Note:

    Send only copies of original (DLN) documents. Do not send original ("live" ) documents.

    Figure 3.14.1-5
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Form 2424 Account Adjustment Voucher

3.14.1.6.9  (01-01-2014)
Special Notice Review Issues

  1. This subsection contains instructions related to miscellaneous issues. These issues include:

    • Taxpayer Correspondence

    • Taxpayer Advocate Service (TAS) criteria cases

    • $10,000,000 (Ten Million) Refunds

    • Frivolous Claims

    • Slipped Blocks

    • Community Property Splits

    • Injured Spouse Claims

    • Natural Disasters

    • Combat Zone Returns

    • Large Dollar Review, and

    • Undeliverable Notices

    Million Dollar Notice Review Processing System (NRPS) Transcript (CP 380)

    1. Generates if the module balance plus computed interest is a credit of 1 million dollars or more.

    2. The key 020 selects the Million Dollar NRPS Transcript.

    3. Review of these transcripts are the responsibility of the Team leads in NR.

    4. The NR Team lead will contact the employee identified as having control over the account.

    5. This contact should be done as an E-mail notification that this account has an X– freeze posted that is 15 cycles old.

    6. Once the contact has been made, then the Team lead will leave a case history using IDRS that the employee identified as having control over the account was notified.

      Note:

      A refund for 10 million dollars or more will not generate a TC 846. A manual refund is required if the refund must be allowed. A $10 million refund transcript will generate. See IRM 3.14.1.6.14.2, Million $10 Refund Transcripts.

    IF... THEN...
    No established control over the account can be found The Team lead will review the account
    No other issues are found during the review The Team lead will prepare a manual refund for the credit balance, including any interest if applicable, and release the X– freeze

3.14.1.6.9.1  (01-01-2014)
Taxpayer Correspondence

  1. If taxpayer correspondence is discovered attached to the return, review, analyze, and determine disposition as necessary. Follow Action 61 requirements (noted below) to initiate a response.

    If the taxpayer... And there is... Then...
    Requests installment payments or indicates an inability to pay No indication that Code and Edit has forwarded the letter to the Collection Function
    1. Leave an audit trail in the upper left margin of the return showing that the letter was sent to the Collection Function

    2. Verify that the taxpayer’s SSN and address are on the letter

    3. Send the letter to the Collection Function according to local procedures

    4. Input CC STAUPS for eight cycles on balance due notices

    5. Input CC REQ77 with TC 971 AC043

    Inquires about an account An open control base Route the original letter to the tax examiner who has the case controlled on IDRS
    No open control base Route the original letter to Accounts Management. Leave an audit trail in the upper left margin of the return.

    Reminder:

    Input CC STAUPS for eight cycles on a balance due module

    Requests abatement of a penalty due to Reasonable Cause The request was denied (identifiable by CCC "7" ) Route the request to Accounts Management for correspondence with the taxpayer.

    Note:

    Code and Edit tax examiners assign CCC "7" and send the Appeals letters

    NRPS data does not show CCC "7" or CCC "M" Route the request to Accounts Management for correspondence with the taxpayer. Leave an audit trail in the upper left margin of the return. See IRM 20.1, Penalty Handbook

    Note:

    Before routing see IRM 3.14.1.6.21.1(4)

    Requests assistance in computing tax or credits, indicates that information is missing, or anything else beyond the scope of Notice Review  
    1. Void the notice

    2. Recharge the return and route the case to Accounts Management for correspondence with the taxpayer

    Reminder:

    Comply with Action 61 guidelines when referring cases older than 25 days to another Function

    Requests acknowledgment of payments and/or documents attached to the return Route the request to the Receipt and Control Function (or use local procedures)
    Attached original or certified documents (such as, birth certificates, SSN card, marriage license etc.) Return them to the taxpayer upon completion of the case, unless the taxpayer indicates that returning them is unnecessary. If the document is needed as a source document, attach a copy to the return

    Exception:

    Do not detach death certificates on decedent returns
    Attached documents labeled as copy or the taxpayer has indicted returning them is unnecessary Staple documents to the back of the return or attach completed Form 9856 and return to files
    Has replied to IRS initiated Processing correspondence (12C letter, Form 3531, Form 6001, etc.) No evidence of a Return Processable Date (RPD) on the account
    1. Prevent the refund from generating if it reflects interest

    2. Input RPD with TC 290 with appropriate Hold Code

    3. Issue Manual Refund if necessary to avoid paying interest

    Has not replied to IRS Processing correspondence (no reply stamp on Form 6001, Form 3531, etc.) No I– freeze on account (freeze is set by Computer Condition Code U)
    1. Prevent the refund from generating if it reflects erroneous interest

    2. Verify correct no-reply procedures were followed by ERS/Rejects

    3. Issue manual refund for overpayment without interest

    Was not required to reply (Correspondence was issued in error) An I– freeze on the account Issue manual refund for appropriate amount of credit interest (TC 770) using 23C date of TC 846 as Interest-to date for computation if necessary
    Attaches Form W-7, or Form W-7A  
    1. Make a copy of the return, front and back pages only, and indicate across the copied return that it is a “COPY ONLY”. Line thru the DLN of the copied return. DO NOT SEND ORIGINAL RETURNS

    2. Detach the Form W-7 from the original return, make a copy of it and staple the copy to the back of the original return. Notate on the Form W-7 copy that the original was sent to Stop 6091, ITIN and the date it was sent. Staple the original Form W-7 to the front of the copied return that you are sending

    3. Route the original Form W-7 and the copied return per local procedures. DO NOT ALLOW THE EXEMPTION, ETC., BECAUSE THE Form W-7 HAS NOT BEEN PROCESSED

  2. Action 61 Requirements — A Quality Response is an accurate and professional communication which:

    • Is based on information provided,

    • Requests additional information from the taxpayer,

    • Or notifies the taxpayer that we have requested information from outside the IRS.

  3. A Quality Response is timely when initiated within 30 days (calendar days) of the IRS Received Date.

  4. When a Quality Response cannot be issued timely:

    • An interim response will be initiated by the 30th calendar day from the IRS Received Date.

    • Use either the Letter 2645C, if holding the return for research, or Letter 86C, if routing the return to another service center.

      Note:

      All interim letters should inform the taxpayer when a final response can be expected. Include employee name, employee number and telephone number.

  5. Exceptions to Action 61 Requirements:

    • Substitute returns

    • Amended returns

    • Tentative Carrybacks

    • CAF/POA

    • Address Changes

    • Responses to IRS solicitation for information necessary to secure or complete processing of the tax return.

3.14.1.6.9.2  (01-01-2014)
Taxpayers Meeting Taxpayer Advocate Service (TAS) Criteria

  1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. TAS criteria include economic burden, systemic burden, best interest of the taxpayer, and public policy (as determined solely by the National Taxpayer Advocate (NTA)). TAS is responsible for assisting taxpayers who have unresolved problems with the IRS. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria if additional information is required.

  2. While the Internal Revenue Service (IRS) is continually working to serve customers in a quality manner, some taxpayers still have difficulty getting solutions to their problems or getting timely and appropriate responses to their inquiries. Per IRC 7803(c), Congress established the office of the National Taxpayer Advocate (NTA) and its functions within the IRS to assist these taxpayers. TAS has identified criteria that qualify taxpayers for TAS assistance. The Case Advocate will conduct an independent review of actions that have been taken or need to be taken to resolve the problems taxpayers are experiencing.

  3. Employees should not view TAS case criteria as a means of excluding taxpayers from TAS, but rather, as a guide to TAS case acceptance. The criteria under which TAS accepts a case should not govern whether a taxpayer is entitled to relief.

  4. If the IRS employee can resolve a taxpayer’s inquiry or provide the relief requested, as outlined in IRM 13.1.7.4, Same Day Resolution by Operations, a referral to a TAS office is not necessary even if TAS case criteria are met. The definition of "same day resolution" is "within 24 hours." However, cases where the employee cannot completely resolve the issue within 24 hours, but has taken steps within 24 hours to resolve the taxpayer’s issue, also meet the definition of “same day.” Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS.

    Note:

    It is important that all IRS employees handle potential TAS cases with the taxpayer's best interest in mind. Refer also to IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, for more information. Provide the taxpayer with the number for the NTA toll-free case intake line, 1-877-777-4778 or TTY/TDD 1-800-829-4059. The taxpayer should be advised that TAS is available if the taxpayer is not satisfied with the service he or she received.

  5. An IRS employee should make a referral to a TAS office if the employee receives a taxpayer contact, and cannot initiate action to resolve the inquiry or provide the relief requested. A taxpayer does not have to specifically request TAS assistance to be referred to TAS. IRS employees will advise taxpayers of the option to seek TAS assistance when appropriate. TAS will request documentation from the taxpayer if it is needed to support the requested relief, or required by their IRM.

  6. The following types of cases should NOT be referred to TAS:

    1. Cases where the taxpayer’s complaint or inquiry only questions the constitutionality of the tax system, or

    2. Cases where the focus of the taxpayer's inquiry is solely to employ frivolous tax strategies to avoid or delay filing or paying federal taxes.

3.14.1.6.9.3  (01-01-2014)
$10,000,000 (Ten Million) Refunds

  1. An account with an overpayment of $10,000,000 or more requires that a manual refund be issued since a TC 846 will not generate. These cases are assigned to the lead the same day they are received in the Notice Review Function. See IRM 3.14.1.6.14.2, Million $10 Refund Transcripts.

    Note:

    Refer to Document 6209, IRS Processing Codes and Information for release of the X– freeze.

  2. Use current procedures for resolving the case:

    1. Verify all unclaimed credits.

    2. Offset the overpayment as needed to cover any debit balances.

    3. Abate any interest caused by an overpayment not due the taxpayer.

    4. Monitor the case until all actions post to the Master File.

  3. The account must be fully paid or in debit status before closing the control. If another area has an open control on the case, contact that area, close the control, and route all available documents to that area.

    Exception:

    The control base may be closed if there is an L freeze on the module and a Revenue Agent has advised that the credit not be refunded due to legal implications.

  4. If, after any adjustments, the account has a credit balance less than $10,000,000:

    1. Offset credit to any debit balance modules.

    2. Prepare a manual refund for the excess credit.

    3. Monitor the case until the TC 840 posts.

  5. If, after any adjustments, the account has a credit balance of $10,000,000 or more, the Accounting Function must issue the manual refund:

    1. Prepare Form 3753, Manual Refund Posting Voucher.

    2. Send the original return, transcript, Form 3753, all prints essential to manual refunds, and any other documents pertaining to the case to the Accounting Function.

    3. Monitor the case until the refund (TC 840) posts.

  6. Close the control base after all account transactions post.

  7. Keep photocopies of the return and the transcript on file for future reference.

3.14.1.6.9.4  (01-01-2014)
Frivolous Claims

  1. If it can be determined that a return is a frivolous claim, refer the notice and return to the Examination Function immediately.

  2. Currently, one of the more common frivolous claims is the Reparations Tax (also known as the Black Investment Tax). The claim is based on the premise that African-Americans should receive repayment for historical slavery. There is no existing law that allows payment of reparations. Any claim(s) for reparations should be disallowed.

  3. Another example of a frivolous claim is when taxpayers attempt to eliminate their tax liability by removing their income by citing "Less Native American Indian Treaty" or simply "Native American Indian Treaty" . Usually, these filings include Form 1099–MISC income and tax withheld (generally higher than 18 percent of earnings) that results in a refund. Follow procedures in IRM 21.5.3.4.16.7, Identifying Frivolous Returns/Correspondence and Responding to Frivolous Arguments, for routing these claims to the Ogden Campus Frivolous Return Program.

  4. For additional information and examples, see the figure in IRM 3.11.3–11, Frivolous Filer/Non-Filer Definitions, and IRM 4.19.15, Discretionary Programs.

  5. If Notice Review is reviewing an Integrity & Verification Operations (IVO) [formerly Accounts Management Taxpayer Assurance Program (AMTAP)] case and any one of the following is on the tax module void CP 24:

    • Notice Review identifies a return with a P– or –R freeze

    • Has an open 06501 control base

    • A 4464C letter has been issued to the taxpayer

    • A TC 971 AC134 on the account

      Note:

      If the account contains a math error that needs to be corrected, adjust the account using HC "4" to prevent a notice from generating and to prevent the refund from issuing.

  6. If a Notice Review Tax Examiner identifies a case as a potential frivolous or identity theft claim, submit the case to the "funny box" for further review before taking any action. If the case is not returned to the Tax Examiner timely (Thursday 10:00 am local time) prevent any refund from generating. If an adjustment is needed, use Hold Code "4" . Follow normal procedures for Notice Disposition.

3.14.1.6.9.5  (01-01-2014)
Slipped Blocks and Mixed Data Blocks

  1. Slipped blocks and mixed data blocks occur when data from a document or payment posts to a module related to a different document or payment in the same block of DLNs. The erroneous data on the notice module usually belongs to the taxpayer whose document or payment is immediately before or after the notice document or payment in the DLN block sequence.

    1. Research the five accounts posted immediately prior to and the five accounts immediately subsequent to the notice document.

  2. Slipped Blocks have the following characteristics:

    1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

    2. The incorrect transactions have DLNs from other documents or payments in the same block.

    3. The DLN is usually from the document or payment immediately before or after the notice document or payment in the block sequence.

    4. A slipped block may result in erroneous refunds, incorrect notices, and/or lost or missing documents, returns, or payments.

      Note:

      Per Chief Councel: If money is found in the wrong account(s) due to a Slipped Block and the money has refunded, Erroneous Refund Procedures (CAT- D) must be used to recover the money. Even if the money is not in your original assigned case.

  3. Mixed Data Blocks have the following characteristics:

    1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

    2. The data is incorrect due to a transcription error.

    3. A mixed-data block may result in erroneous refunds and/or incorrect notices.

  4. Suspect a slipped block or a mixed data block if any of the following conditions are present:

    1. The data on the notice module does not match the data on the document.

    2. A posted payment amount does not match the amount listed on the payment voucher.

    3. A payment is missing or is misapplied.

  5. Research the five accounts posted immediately prior to and the five accounts immediately subsequent to the notice document.

    1. If the situation involves... Then...
      Two or less taxpayers Resolve the case in Notice Review. See IRM 3.14.1.7, Case Resolution
      Three or more taxpayers
      1. Resolve your account on IDRS if possible. See (6) below

      2. Recharge any live documents to Payment Tracer

      3. Complete Form 3465, Adjustment Request, and indicate in the remarks section what action was taken to resolve your account

      4. Print all incorrect vouchers and include them in the package

      5. Route entire package to Payment Tracer and complete the following:

      1. Input CC STAUPS for eight cycles on any balance due account

      2. Enter all appropriate history items

  6. To resolve your account:

    1. Prevent the refund from generating (when present and if possible per IRM 3.14.1.7.1.1) if it is needed to resolve the credit discrepancy.

      Note:

      If the refund cannot be prevented from generating and is needed to resolve the credit discrepancy, work any math error adjustment and the credit discrepancy as a Category D erroneous refund. See IRM 3.14.1.6.7.3, Category D ERRF Resolution.

    2. Transfer all payments not belonging to your taxpayer to the appropriate account(s). Input a TC 570 on the credit side if needed.

    3. If any payments belonging to your taxpayer are found, transfer them into your taxpayer's account.

    4. Reverse any current cycle offsets if needed.

      Note:

      Use a TC 570 on the credit side of the offset reversal.

    5. Work any math error.

    6. Determine the notice disposition.

      Note:

      Make every effort to resolve these situations in cycle.


More Internal Revenue Manual