3.17.243  Miscellaneous Accounting

Manual Transmittal

September 24, 2013

Purpose

(1) This transmits revised IRM 3.17.243, Accounting and Data Control, Miscellaneous Accounting.

Material Changes

(1) Various editorial changes have been made throughout the IRM.

(2) Updated subsection 3.17.243.3.5 to add a note regarding the use of a credit transfer via IDRS, instead of the Form 12857.

(3) Added a note to 3.17.243.4.5(1) regarding the timeframe for resolving the Unpostables.

(4) Updated subsection 3.17.243.4.8(3) to clarify who rejected items should be returned to. Also updated the contact information in the chart.

(5) Inserted a new subsection, 3.17.243.4.10, identity theft Erroneous Refund Write-Off Procedures.

(6) IPU 13U0945 issued 05-20-2013 IRM 3.17.243.4.8(3) Updated to add instruction for returning duplicate TC 841 documents to functions other than AM and RICS-IVO. Also updated the chart to change the POC for Brookhaven AM.

(7) IPU 12U1971 issued 12-20-2012 IRM 3.17.243.4.8(2) updated to clarify duplicate TC 841 procedure.

(8) IPU 12U1971 issued 12-20-2012 IRM 3.17.243.4.5.2 updated to correct doc code number

(9) IPU 12U1971 issued 12-20-2012 Exhibit 3.17.243-5 Inserted list blocking series for doc code 45 and 48.

(10) IPU 12U1935 issued 12-13-2012 Updated subsection IRM 3.17.243.4.5 to add information that is going to be provided by Unpostables.

(11) IPU 12U1935 issued 12-13-2012 IRM 3.17.243.4.5.1 updated to remove the requirement of the TC 971 AC 663.

(12) IPU 12U1935 issued 12-13-2012, inserted new subsection IRM 3.17.243.4.8 to provide instruction on procedures for handling duplicate TC 841 submissions.

(13) IPU 12U1886 issued 11-29-2012, IRM 3.17.243.4.5 updated to include IRM 3.17.243.4.5.1 and IRM 3.17.243.4.5.2, separating the procedures for resolving cases with a TC 841 and TC 700 posted.

(14) IPU 12U1886 issued 11-29-2012 IRM 3.17.243.4.6 inserted new subsection to provide instruction on resolving Unpostables that involve another Accounting operation.

(15) IPU 12U1666 issued 10-03-2012 IRM 3.17.243.4 added new subsection to insert instructions for processing IDT Form(s) 3809.

(16) IPU 13U0186 issued 01-23-2013 IRM 3.17.243.6.9.5 added new DOJ subsection to include procedures for criminal restitution, MFT 31 case processing.

(17) IPU 13U0244 issued 01-30-2013 IRM 3.17.243.4.2(1) added new timeframe and procedures for TC 841 TC 700 posting research and audit trail information (superseded by IPU 13U0807 issued 05-01-13).

(18) IPU 13U0244 issued 01-30-2013 IRM 3.17.243.4.2(2) added immediately (superseded by IPU 13U0691 issued 04-05-13).

(19) IPU 13U0244 issued 01-30-2013 IRM 3.17.243.4.1 added establishing SCF module prior to sending documents to Batching.

(20) IPU 13U0691 issued 04-05-2013 IRM 3.17.243.4.2 added note concerning ERSED for GL 6905 write-offs.

(21) IPU 13U0691 issued 04-05-2013 IRM 3.17.243.4.1 added TC 843 and TC 702 blocking series and Doc. codes (superseded by IPU 13U0807 issued 05-01-13).

(22) IPU 13U0691 issued 04-05-2013 IRM 3.17.243.4.9 added instruction for receiving Form 3809 and Form 3245 from Non-Accounting Operations.

(23) IPU 13U0691 issued 04-05-2013 IRM 3.17.243.4.8 updated contact information for Kansas City AM.

(24) IPU 13U0782 issued 04-22-2013 IRM 3.17.243.6.9.4 added procedures for State Court Ordered Restitution

(25) IPU 13U0782 issued 04-22-2013 IRM 3.17.243.6.9.5(1) to clarify date information on MFT 31 procedures.

(26) IPU 13U0782 issued 04-22-2013 IRM 3.17.243.6.9.5(3) modified the note to delete quarterly check of cases, and modified instructions.

(27) IPU 13U0807 issued 05-01-2013 updating IRM 3.17.243.4.1 by deleting blocking series and Doc. code for TC 843 and TC 702.

(28) IPU 13U1064 issued 06-07-2013 IRM 3.17.243.4.1 to remove the reference to the Form(s) 3809 having a TXMOD print attached.

(29) IPU 13U1084 issued 06-12-2013 IRM 3.17.243.4.1(5) to clarify which copy of the Form 3809 should be sent to the Erroneous Refund Team.

(30) Made editorial changes in IRM 3.17.243.4.4(2)

(31) IPU 13U0807 issued 05-01-2013 IRM 3.17.243.4.2(1) deleted second and third bullets regarding research posting of TC 841 and TC 700.

(32) IPU 13U0807 issued 05-01-2013 IRM 3.17.243.4.8(3) Deleted fifth bullet regarding (902 Window) DBA modifications.

(33) Changed the title of subsection 3.17.243.4.9.

(34) IPU 13U0807 issued 05-01-2013 IRM 3.17.243.4.9(2) Added two notes for TC 843 and TC 702 blocking series and Doc. Code.

(35) Removed IRM subsection 3.17.243.8.1, Requesting a FTD Coupon as the service no longer process FTD payments.

(36) Added Exhibit 3.17.243-15 showing a Form 8166, Input Reconciliation Sheet.

(37) Added Exhibit 3.17.243-16 showing an example of the identity theft erroneous refund write-offs to the 6905 account.

Effect on Other Documents

IRM 3.17.243 dated August 28, 2012 (effective October 1, 2012) is superseded. This IRM also incorporates the following IRM Procedural Updates (IPU), issued between October 3, 2012 through June 12, 2013 - 12U1666, 12U1886, 12U1935, 12U1971, 13U0186, 13U0244, 13U0691, 13U0782, 13U0807, 13U0945, 13U1064, and 13U1084.

Audience

All Wage and Investment Submission Processing Campuses.

Effective Date

(10-01-2013)

Paul J. Mamo
Director, Submission Processing
Wage and Investment Division

3.17.243.1  (10-01-2010)
Form 1040NR Fiduciary (CSPC Only)

  1. All Form 1040NR, U.S. Nonresident Alien Income Tax Return, Fiduciary returns are processed to the Non-Master File database at the Cincinnati Submission Processing Center (CSPC).

    Note:

    A Form 1040NR Fiduciary return is processed as a Non-Master File return

    under Master File Tax 20.

  2. This section provides procedures for the Non-Master File processing of Fiduciary Form 1040NR returns. These returns are processed ONLY at the CSPC, and are filed to report income received by foreign estates or trusts. Form 1040NR filed by Non-Resident Alien individuals are processed on Master File. If returns, which have been identified as "fiduciary" are found to actually be individual returns, they must be returned to the Receipt and Control area where they are to be resorted to Individual Master File (IMF) Returns Processing.

3.17.243.1.1  (10-01-2010)
Due Date

  1. If Form 1040NR is being filed for a nonresident alien estate or trust that has an office in the United States, the return is due by the 15th day of the 4th month following the close of the tax year. (For a calendar-year return, the due date is April 15.)

  2. If Form 1040NR is being filed for a nonresident alien estate or trust that does not have an office in the United States, the return is due by the 15th day of the 6th month following the close of the tax year. (For a calendar-year return, the due date is June 15.)

    Note:

    If the regular due date for filing falls on a Saturday, Sunday, or legal holiday, Form 1040NR is due by the next business day.

3.17.243.1.2  (10-01-2011)
Distinguishing Form 1040NR Fiduciary Returns from Individual Returns

  1. Fiduciary returns will have some or all of the following characteristics:

    • Name line(s) may consist of numbers or a combination of letters and numbers

    • Account, Trust, Grantor, or Nominee may be indicated

    • Name line(s) may indicate Estate of . . .

    • No filing status may be indicated

    • No exemptions may be shown

    • The return may have an employer identification number (EIN) instead of a social security number (SSN)

    • The trust will show deductions for distributions made to U.S. or foreign beneficiaries. If so, check to make sure the beneficiaries reported the income on their returns. Also, check Integrated Data Retrieval System (IDRS) to see if Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts or Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner filed is the trusts name. The trust may state that it is a grantor trust of a foreign owner. If so, flag return and forward a copy to the Large Business and International, Individual Compliance Team at:
      Internal Revenue Service
      2970 Market Street
      Philadelphia, PA 19104
      BLN 2-H08-200
      Attn: Jack Loggia

3.17.243.1.3  (10-01-2011)
Document Perfection

  1. Verify only the items below:

    1. Name Control — underline name control in red. Be certain that the name control of the trust itself is indicated, rather than that of the bank or other company.

    2. Identifying Number — if number is missing, route to Entity Control for assignment.

    3. Street Address — if the return shows an address in ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ with "Foreign Trust Organization" .

    4. Line 66a — U.S. Tax Withheld at Source by partnerships under Section 1446 — if Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, is not attached and the credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ correspond. If no response, "X" the credit. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ allow the credit.

    5. Line 66b — U.S. Tax Withheld at Source by partnerships under Section 1446 — if Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is not attached and the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ correspond. If no response, "X" the credit. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ allow the credit.

    6. Line 67a — Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests if credit is claimed, verify that Form 8288-A is attached. If attached route case to FIRPTA (Foreign Investment Real Property Tax Act) unit for verification. If not attached, correspond. If no reply, "X" the credit.

      Note:

      After FIRPTA verifies the credit it will be returned to the originating function. If FIRPTA credit slip verifies an amount other than the amount listed on the document, "X" the credit on Line 67a and edit the correct amount verified on the document that is reflected on the credit verification slip.

    7. Line 67b — Form 1042-S — if Form 1042-S is not attached and the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , correspond. If no response, "X" the credit. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    8. Signature — if the return is unsigned, return to taxpayer for signature. DO NOT CORRESPOND IF FACSIMILE SIGNATURES ARE PRESENT.

      Note:

      Line 68: If there is an amount present, and the return is being filed for an Estate and Trust, you will need to "X" out the amount. Estate and Trust are not eligible to claim this credit.

    9. Math-verify taxpayers computation. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ accept return as filed.

    10. If the return is obviously late-filed (see "IRM 3.17.243.1.1, Due Date" above), and filer does not establish reasonable cause for lateness, and it is determined that penalty and/or interest assessments are required, follow the procedures below for preparing Form 3465, Adjustment Request, and route the return as directed for the appropriate action. The form is to be prepared if adjustment action will be required on a return. If the return involved has been blocked and numbered, attach the Form 3465 to the return and leave in the block for later adjustment action. If the return is not numbered (no-remittance), use the Form 3465 for routing to Adjustments for necessary action. Complete the form as follows:

      Complete the following:
      Enter the taxpayer’s name
      Enter the document locator number (DLN)
      Check Routing box for "Adjustments"
      Enter the EIN or SSN (if present)
      Enter the tax period ending, year and month
      Enter the tax form number
      In the "Remarks" areas, enter the reason (late filing) for the routing
      Complete the blocks for Signature, Unit Phone and Date

3.17.243.1.4  (10-01-2010)
Disposition of Returns

  1. Route remittance returns to Non-Master File Accounting.

  2. Route non-remittance returns to R&C for processing.

3.17.243.2  (12-05-2011)
Reversal of Erroneous Abatements

  1. General - This section provides instructions for overriding Master File computer programming that prevents the reversal of abatement transactions after the statute of limitations for assessment has expired.

  2. Erroneous abatements can be reversed only in limited circumstances. They are:

    1. See IRM 25.6.1.10.2.1.1.1, Clerical Errors .

    2. See IRM 25.6.1.10.2.1.1.2, Unauthorized Abatements Made After Referral to the Department of Justice. .

    3. See IRM 25.6.1.10.2.1.1.3, Abatements Due to Bankruptcy Discharge. .

    Note:

    Any penalties and interest that were erroneously abated can be assessed as if the erroneous abatement never occurred. Penalties and interest should also continue to accrue as if the erroneous abatement had not occurred.

    Note:

    Refer to IRM 25.6.1, , Statute of Limitations Processes and Procedures, for additional information.

  3. Processing - Receive requests for Reversal of Erroneous Abatement from the Statute Team, under cover of Form 12810, Account Transfer Request Checklist.

3.17.243.2.1  (10-01-2009)
Reversal of Erroneous Abatements Checklist

  1. Form 12810, Account Transfer Request Checklist, containing the following information:

    1. Complete entity information of the account being transferred from the Master File.

    2. If the reversal request involves a MF account, a current MFTRA or account transcript showing the account balance as either a debit or zero should be included.

      Note:

      If the reversal request is for a Non-Master File (NMF) account, a current NMF transcript must be attached.

    3. Reversal request listing the 23C date of the assessment being reinstated.

    4. Transaction codes (TC) and amounts being reversed.

  2. Completed Form 3465 with TC 860, the reinstated 23C date and entity information of the taxpayer whose account will be established on NMF. The information may not be the same as the MF account being transferred. If the reversal is for a NMF account, no account transfer is necessary.

    1. Indication of either "Notice to Taxpayer" or "No Notice to Taxpayer" .

    2. If a credit is available, indicate where the credit is located.

  3. A memorandum (2-way memo) will be signed by the Campus Compliance Official of the responsible team, addressed to the Accounting Official. This memorandum will set forth the conditions surrounding the erroneous abatement, the amount of tax considered still due, the type of tax, the tax period and taxpayer identification information. In addition, information should be included on how the reinstated liability will be handled, i.e., a credit is available for application and/or a notice will be issued to the taxpayer. Upon approval of the Statute Control Team and acceptance by the Accounting Official, this memorandum serves as authorization to process the requested action.

  4. If the original assessment documents cannot be obtained, a dummy document should be prepared and approved by the manager of the initiator, or at least 2 attempts to obtain the document should be provided (Form 4251 - Return Charge Out ).

  5. A letter to the taxpayer explaining the action and the amount of tax, penalty, and/or interest being reversed will be included if a notice to the taxpayer is required. A 510C letter (Refund in Error; Return Check) is not appropriate for the TC 860 action. The letter to the taxpayer will accompany the first notice (Form 6335) to the taxpayer. The letter must be signed by the originating function's operation manager. The taxpayer should also be advised of their right to seek assistance from Taxpayer Advocate Service.

    1. If taxpayer is not going to be billed, credit must be available in Excess Collections to full pay the account.

      Note:

      If the credit is located in another Campus, contact the requestor for Form 2158.

    2. Form 8765 (IDRS Control File Credit Application), must be included with the accounting package.

    3. This credit must be posted before the reversal request can be sent through Statute to NMF.

    4. Once the account is loaded, the credit can be applied to Automated Non-Master File (ANMF) using Form 8765.

3.17.243.2.2  (10-01-2009)
Processing the Reversal of Erroneous Abatement Package

  1. The reversal of erroneous abatement package, as described in (IRM 3.17.243.2.1, Reversal of Erroneous Abatements Checklist), will be forwarded to the Accounting Operation from the Statute Operation only. At the option of the Operation Manager, a preview of the package may be made to ensure all necessary documents are received. If items are missing, the request should be rejected back to the requestor through the Statute Function (See IRM 25.6.1.10.2.2.3, Correction of Erroneous Abatement cases by the Originating Function).

    1. The review may also include an analysis of the integrity of the request to ensure proper administration of the Internal Revenue Code and Regulations.

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

      Exception:

      If the taxpayer has submitted payment, the reversal must be processed.

    3. The Accounting Operation Manager must sign approval on the memorandum indicated in (3) above when the request is accepted.

  2. The Account Transfer Team will input the TC 400 to the MF.

    1. IMF accounts - Input TC 971 action code (AC) 045 using REQ77.

    2. BMF accounts - Prepare Form 514-B, Credit Transfer Voucher and Form 813, Document Register. (See IRM 3.17.243.2, Reversal of Erroneous Abatements for detailed instructions)

    Note:

    A TC 400 will not post to a MF account that has a credit balance. Prepare credit transfer document(s) for available credit(s), if appropriate.

  3. The TC 400 will generate CP 96 (IMF) or CP 296 (BMF).

  4. The Account Transfer Team will edit CP 96, CP 296, or CP 396 and prepare the Reversal of Erroneous Abatement package for NMF processing.

  5. The Account Transfer Team will forward the Form 12810, original Form 3465, Operation Manager's approved memorandum, and the original letter for the taxpayer (when a notice is required) to the appropriate function.

    Note:

    For additional instructions on processing Reversal of Erroneous Abatements see IRM 3.17.46.2.9, Reversing Erroneous Abatements .

3.17.243.3  (10-01-2009)
Requests for Account Adjustments

  1. Form 1120, U.S. Corporation Income Tax Return, and Form 1041, U.S. Fiduciary Income Tax Return (For Estates and Trusts), and Form 1041ES, Estimated Income Tax for Fiduciaries, are received from Reject Correction Unit.

    1. Form 3473, Rejected Document Transmittal, is attached to each transmittal of Form 1120 or Form 1041 returns from the Rejects Function.

    2. Form 3892, Corporation Edit Sheet, (ISRP - Section 02), and Form 4227, Intra-SC Reject or Routing Slip, are attached on the front of each Form 1120.

  2. Form 3465, Adjustment Request, are received from various Functions within IRS.

  3. Requests for adjustments may also be received on the Optional Form 27, 2-Way Memo, from district and field offices. Annotate action taken on both original, and copy. Route copy to initiator. If TC 520 is present on the account, a "W" freeze is present. Route the request and/or any attached documents to Compliance Service Collection Operations (CSCO) for processing. Local routing procedures may vary.

  4. Cases are controlled by the control clerk.

    1. The control clerk will count and maintain the record of receipts and releases on the report.

    2. The control clerk will order MFTRA on IDRS only on jeopardy refunds. All other Form 1120 are checked by the Parent-Subsidiary technicians.

  5. All Form 1120, except short period returns, should indicate whether a "Form 3177" was prepared before being routed to Accounting.

    1. If there is no indication of "Form 3177" , input TC 590 with closing code 14 using FRM49 for each subsidiary if transferring credits to the parent corporation.

    2. Note "Form 3177" on the return.

    3. If returns are frequently received without the "Form 3177" notation, refer to your supervisor so that the originating function can be notified of the deficiency.

3.17.243.3.1  (10-01-2009)
Parent-Subsidiary Cases

  1. Do not transfer subsidiary corporation prepayments to a parent corporation until a consolidated Form 1120, U.S. Corporation Income Tax Return, is filed. When such credits are transferred, the transfer and other related actions described below will be initiated and controlled by the Campus with which the consolidated return is filed.

  2. Locate and verify credits claimed on line 32 of Form 1120.

    1. Check IDRS for credits using command code SUMRY, on the parent. If the credit is found, bring up the account using command code TXMODA. Look for the TC 590 or TC 599. If the account is not on IDRS, request data from the Master File to verify credits claimed using BMFOL, BRTVU or one of the other Corporate Files On-Line (CFOL) research command codes. Annotate the log or local worksheet document. Examine the account transcript when received to locate the credit claimed by the parent corporation.

    2. Use Form 851, Affiliations Schedule, and Schedule-K to help locate credits from subsidiary taxpayers. Compare amounts claimed on F-851 with credits available as shown on the transcripts.

    3. Backup withholding may be present on line 32-F of Form 1120. No substantiation (Form 1099 Series) is required for entry of backup withholding on line 32-F. Since Regulated Investment Credit is normally entered on this line, the absence of an attached Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, may indicate an entry is backup withholding.

3.17.243.3.1.1  (10-01-2009)
Transferring Credits

  1. Transfer a credit to the correct module if necessary. Use IDRS whenever possible, since only IDRS will provide a cross-reference audit trail for Document Codes 24 and 48.

  2. Format DRT24 is used for transferring credits when a secondary transaction code is required. Format DRT48 is used for transferring carry over or other non-revenue receipt items. Format FRM34 is used for transferring credits within a Master File when no secondary codes are required.

  3. Use format DRT24 to move the credits to a module for any return that has not posted.

  4. If the parent return has already posted, use CC FRM34.

    1. Use Subsidiary Code 1 if moving estimated credits from the subsidiary account to the parent corporation account with CC FRM34. If there is a credit on the module, a (para/sub cr) transcript will generate unless a TC 599 is present. If a TC 570 is required, overlay the C Credit Freeze Code on Line 7 position 40 with a 1 to generate the 570. This must be reversed at a later date.

    2. This transcript will remind the para/sub clerk that a credit remains on the account.

    3. If the subsidiary corporation is liable for the period in question, take no action. If the subsidiary corporation is not liable, the credit should be resolved by either transferring the credit to a liable period or refunding to the parent corporation.

    4. Use subsidiary code "0" for other transfers of Form 1120 estimated payments.

    5. In all other cases, leave the subsidiary code blank.

  5. Check for any debit balances on the subsidiary accounts before transferring to the parent corporation account.

  6. If IDRS shows a rejected TC 620 with the needed credit amount, notify the Reject Team that the credit is needed on the module. Notate the Form 1120 worksheet and close the case.

  7. If Unpostable Code 305 or 307 is present on the account, hand carry the return to the Unpostables Team to be corrected.

  8. Prepare FRM49:

    1. If Document Perfection has not indicated "Form 3177" in the margin of a consolidated return or there was not a TC 590 or TC 599 on the TXMOD, input TC 590 with closing code 14 using FRM49.

    2. Adjustment action is necessary when the subsidiary return (TC 150) has posted, but the parent corporation assumes liability for the period and claims credit.

    3. Input TC 470 on the subsidiary module.

    4. Transfer the credit to the parent corporation account.

    5. Prepare Form 3465, Adjustment Request, to abate the tax liability on the subsidiary amount.

3.17.243.3.1.2  (10-01-2009)
Credit Verification

  1. If the credits found do not agree with the credits claimed on the return, contact the requestor for an explanation.

    1. First check the available information closely.

    2. The missing credit may have been used elsewhere or previously refunded to the taxpayer or a debit may have been created by a misapplied credit.

    3. If it is necessary to verify a claimed credit, ask requestor to provide (copy) front and back of check. Hold the case open until it is received and traced. Input on IDRS the appropriate status code to the tax period.

3.17.243.3.2  (10-01-2009)
Short Period Form 1120

  1. Short period returns occur for several reasons:

    1. A business consolidates to form a new corporation.

    2. A taxpayer goes out of business.

    3. A taxpayer has approval to change fiscal year accounting period.

  2. These returns are received from rejects and controlled in the same manner as the consolidated corporation returns.

    1. Correct the Fiscal Year month and filing requirement, if necessary, before moving credits.

    2. Input secondary TC 570 to freeze module from offsetting or refunding the credit. Input a TC 571 if a credit balance remains after the return posts.

    3. Assign short periods on IDRS as IRRQ with ACTON.

    4. Verify credits when transferring to the short period. If condition codes Y and F are not present, use ENMOD and ENREQ, which generate BNCHG to change the Fiscal Year month to set up the period.

    5. Transfer credit and return Form 1120 to the Reject Team. Because of the NAP Validation of the Credit Transfer Command Codes, there should be fewer Unpostables. If the transaction unpost, it must be corrected immediately.

    6. If excess credits are shown in IDRS, transfer only the amount claimed on the return.

    7. For refunds with a transfer to debit balance, do not change line amounts on the Form 1120 return.

  3. Procedures for researching and transferring credits and for releasing refunds are the same as for consolidated returns.

3.17.243.3.3  (02-13-2012)
Form 1120 and Form 1041 Manual Refunds

  1. Form 1120 and Form 1041 manual refunds are routed to Accounting when the 45 day interest free period is in jeopardy. The Credit and Accounts Transfer Team will request a transcript to verify the ES credits claimed on the return. If the credits are the same as claimed on the return, initiate Manual Refund procedures as prescribed in IRM 3.17.79, Accounting Refund Transactions and IRM 21.4.4, Manual Refunds .

  2. All manual refunds that are prepared and processed must be monitored by the initiator until the TC 840 post. The procedures outlined in IRM 21.4.4.5.1, Monitoring Manual Refunds, are to be followed to complete the monitoring.

3.17.243.3.4  (10-01-2011)
$50 Million and $500 Million Refunds Notification

  1. IRM 3.17.79.3.7, $50 Million and $500 Million Refund Reports to Treasury, requires Treasury and IRS's Chief Financial Officer (CFO) to be given a 2 day notification whenever they have a single refund or several refunds with an aggregate total of $50 million dollars or more are scheduled for payment on any give day and a five (5) day notification whenever a sign refund or several refunds with an aggregate total of $500 million has been received for processing.

  2. Refer to IRM 3.17.79.3.7 for reporting instructions for $50 ad $500 million dollar refunds.

3.17.243.3.5  (10-01-2013)
Form 12857 Receipts

  1. General Explanation of Form 12857 is as follows:

    Note:

    Effective January 14, 2013, a credit transfer, via IDRS, can be used instead of Form 12857, Refund Transfer Posting Voucher, to transfer a refund from the incorrect account. As a result, there should be a significant decrease in the volume of Form(s) 12857 received.

    • Form 12857 is used to transfer an erroneously posted refund to the correct tax module on IDRS.

    • There are two parts to the form.

    • Part A will list the information relative to the account the refund needs to be posted “To”.

    • Part B will have the information relative to the account where the TC 840/846 is currently posted and being transferred “From”.

  2. Review the Form 12857 to ensure it is completed correctly. The following actions are to be taken when the Form 12857 is received.

    • Access IDRS command code IMFOL or BMFOL to verify that the account on Part B does in fact have a TC 840/846 posted.

      Note:

      Requests that are received related to ID theft cases should include IDRS prints showing the posted refund and the "to" account.

    • Verify that the amount and transaction date are correct. There may be instances where the TC 841 being input differs from the posted TC 840 or TC 846. See the table below.

      If And Then
      the TC 841 is less than the TC 840/846 a TC 720 is present for the difference reject the Form 12857
      the TC 841 is less than the TC 840/846 a TC 898 is present for the difference process the Form 12857
      the TC 841 is more than the TC 840/846   reject the Form 12857

    • Verify that boxes 11, 12, and 16 of Part A have the requested information. These fields are must enter boxes and missing data will cause the document to error out. If the information is missing, contact the originator to obtain.

    • If the Form 12857 doesn't show a split refund code, verify that one doesn't exist. If IDRS shows a SPL-REF-CD, annotate it in box 9, Part B, on the Form 12857.

    • Verify that the SSN in Part A has an account established for the applicable tax year.

    • Once the Form 12857 has been reviewed and a decision to process has been made, the receiving campus MUST acknowledge receipt of the form. The Form 3210 MUST be signed and returned to the originator within two (2) business days. This can be completed via fax or inter-office mail.

    • Assign a DLN to the form and prepare a Form 813.

    • Forward the form to the RACS unit for journalization.

    • Input a history item on IDRS for both accounts/modules – 12857RELSD.

    • After the journalization is completed, the form will be sent for processing, through ISRP.

  3. All Form 12857 received must be processed within 5 business days.

    Note:

    Any Form(s) 12857 that are received and identified as ID theft must be given priority handling and must be forwarded to Batching under cover of Form 3210. The Form 3210 must be annotated, "ID theft, please Expedite" .

3.17.243.4  (10-03-2012)
ID Theft Erroneous Refunds, Form(s) 3809

  1. This subsection describes the steps that are to be taken by the Accounting Operations on Form(s) 3809 that are received related to identity theft erroneous refunds.

3.17.243.4.1  (06-12-2013)
Processing the Receipts

  1. RACS will receive identity theft erroneous refund Form(s) 3809 from Manual Deposit on a daily basis for journalization.

  2. Each pack will consist of four copies of Form 813 and the Form(s) 3809 under cover of Form 3210. There will be no more than 75 items per Form 813. These packages will be received in RACS. The Form 3210 should include the DLN(s) of the Form(s) 813 that are being sent. The RACS teams need to review the Form 3210 and acknowledge receipt ensuring date of receipt is annotated.

    1. The Form 3809 with a TC 841 will have a blocking series 945-949 with Doc. code 48.

    2. The Form 3809 with a TC 700 will have a blocking series 745-749 with Doc. code 58.

  3. Within 24 hours of receipt, the RACS Team will prepare a Form 8166, using the DOC ID and item count, listing each money amount separately from the 3809. The total amount listed on the Form 8166 must equal the Form 813 total. See Exhibit 3.17.243-15 for an example of the Form 8166.

  4. The DOC ID input to RRACS will be 15 digits as follows: DOC ID = DLN of 813 (without sequence number) plus two digit year plus total volume on Form 813. e.g., 892482619451275

  5. The RACS Team will:

    • Journal the TOTAL amount of each Form 813 listed on the Form 8166, using a 480 window to debit the 1545 account and credit master file (4120/4220). For the prepare date on RRACS, use the date of the journal.

    • Stamp or write the 480 journal number on Form(s) 3809 and/or Form(s) 813.

    • Send the file copy of Form 3809 and copy of Form 813 to the Erroneous Refund Team to be maintained until the five year statute period has expired.

    • Maintain debit side of Form 3809 and copy of Form 813 in 1545 account file for use in balancing.

    • Hand carry, under cover of a document transmittal, a copy of Form 813 to Data Conversion so that the DLN can be set up on SCCF. To prevent SCF, Block Out Of Balance (BOB) items, release the Form 813 to Data Conversion the day prior to releasing the work to Batching.

    • Hand carry the credit side of Form 3809 and one copy of Form 813 to Batching, under cover of Form 3210 so that the Form 3809 can be batched and sent to ISRP for transcription.

    Note:

    At the site's discretion, the DLN can be set up on SCF by the Data Control unit.

3.17.243.4.2  (10-01-2013)
Maintaining the Receipts

  1. After the RACS Team has journalized the Form(s) 3809 and forwarded them for processing, the general ledger (GL 1545) side of the Form 3809 will be forwarded to the Erroneous Refund Team. The Erroneous Refund Team will:

    • Maintain the Form(s) 3809 in a suspense file by Form 813 DLN.

  2. Once the 5 year ERSED has past prepare a write off listing. The write off listing will consist of the fifteen digit DOC ID (listing each money amount separately), Name Control, and Loss Amount. See Exhibit 3.17.243-16

    Note:

    Identify theft Erroneous Refunds have a 5 year erroneous refund statute expiration date (ERSED) and cannot be written off to the GL 6905 until the five years have past.

  3. Forward the write off listing and the identity theft write off cover memo to the Accounting Operation manager for signature. An example of the write-off cover memo has been added as Exhibit 3.17.243-17.

  4. Forward the signed memo and listing to RACS for journalization, using a 490 window, to credit 1545 and debit 6905 using the same DOC ID as when the case was opened.

3.17.243.4.3  (10-03-2012)
Inventory Control

  1. On a daily basis (by COB everyday) the RACS Team will drop a UPC for the total of Form(s) 3809 received that day from Manual Deposit (receipts) and a total of Form(s) 3809 released to Batching that day (production) using OFP 710-01047.

3.17.243.4.4  (10-01-2013)
Monthly Balancing Procedures

  1. Use the DOC ID and total amount of the Form 813 on the monthly trial balance spreadsheet to balance to RRACS.

  2. The RRACS report 0155 will not show a true case volume. Therefore, to get the true case volume to report on the Form 3997:

    1. Add the number of DOC IDs that were previously input to 1545 account (e.g.,– ITER2012090014).

    2. For the new case ID numbers- e.g. 892482619451275, take the last two digits of the DOC ID and add those all together. In this example, the volume would be 75.

    3. Add the totals from a and b above to get the grand total.

3.17.243.4.5  (10-01-2013)
Resolving Unpostable Identity Theft Cases Processed as an Erroneous Refunds

  1. The following procedures apply to the stolen identity theft cases processed as an erroneous refund. The Unpostable TC 720 or TC 740 will be for accounts that have a TC 841 or a TC 700 posted.

    Note:

    Every effort should be made to resolve Unpostable conditions within 4 weeks of assignment.

  2. The Unpostables function will assign a control on IDRS (CC TXMOD) to the Accounting Erroneous Refund Team’s generic IDRS number for UPC 138-0 which cannot be resolved in Unpostables. The Unpostable function will prepare and forward a listing daily that will show the cases that have been assigned. This will allow Accounting to begin working the cases prior to receipt of the CCA listing.

    Note:

    These items will remain in the Unpostable inventory for four cycles/weeks while Accounting works the document. Any inventory not worked within the specified timeframe will be 1-coded to Accounting.

  3. The Erroneous Refund Team will receive a Case Control Activity (CCA) Report showing the unpostable documents.

  4. If there is an existing open control base by another area, notify the other area of the actions being taken.

3.17.243.4.5.1  (10-01-2013)
Resolving Cases with TC 841 Posted

  1. The Erroneous Refund Team will verify TC 841 on taxpayer's account.

  2. The Erroneous Refund Team will prepare a Form 3245 for a TC 843 to debit the taxpayer's account. A DLN needs to be assigned using Doc code 45 and a 540-549 blocking to the debit portion. Prepare Form 813.

  3. A Form 3809 will be prepared for the credit side to the RRACS GL Account, include the taxpayer's TIN, money and transaction date and in explanation field include Doc-ID. Prepare Form 813 and forward to RACS.

    Note:

    Research will need to be done to determine which GL account the TC 841 money is journaled to (1545, 6905, 9998).

    • Debit the taxpayer (4120/4220) account using from Form 3245

    • Credit either the 9998, 6905, or 1545 accounts using the Form 3809.

    • RACS will journal using a 400 window for the 9998 or 6905 account and a 480 window for the 1545 account.

  4. Stamp or write the 400/480 journal number on Form(s) 3425 and Form(s) 3809 and Form(s) 813.

  5. RACS will hand carry Form 3245 and Form 813 to Batching under cover of Form 3210 so that the Form 3245 can be batched and sent to ISRP for transcription.

  6. RACS will give the Form 3809 credit side to the area maintaining the General Ledger account on the credit side of the document.

  7. The Erroneous Refund Team will Monitor daily for TC 843 posting to taxpayer's account and ensure TC 470 or STAUP actions are taken to stop an incorrect notice.

  8. Once TC 843 has posted, contact the Unpostable Team and tell them to process request to post TC 720 or TC 740, Unpostable (code 138 0) to process refund cancellation. Close the control base.

3.17.243.4.5.2  (10-01-2013)
Resolving Cases with a TC 700 Posted

  1. The Erroneous Refund Team will verify the TC 700 is posted on the taxpayers' account.

  2. The Erroneous Refund Team will prepare a Form 3809, using a Doc Code 58 and blocking series 790-799 to post a TC 702 (debit) to the taxpayers' account and credit the applicable general ledger account. Prepare a Form 813 and forward to RACS.

    Note:

    Research will need to be done to determine which GL account the TC 700 money is journaled to (1545, 6905, 9998).

    • Debit the taxpayer (4120/4220) account using from Form 3809.

    • Credit either the 9998, 6905, or 1545 accounts using the Form 3809.

    • RACS will journal using a 400 window for the 9998 or 6905 account and a 480 window for the 1545 account.

  3. Stamp or write the 400/480 journal number on Form 3809 and Form 813.

  4. RACS will hand carry Form 3809 and Form 813 to Batching under cover of Form 3210 so that the Form 3809 can be batched and sent to ISRP for transcription.

  5. RACS will give the Form 3809 credit side to the area maintaining the General Ledger account on the credit side of the document.

  6. The Erroneous Refund Team will Monitor daily for TC 702 posting to taxpayer's account and ensure TC 470 or STAUP actions are taken to stop an incorrect notice.

  7. Once TC 702 has posted, contact the Unpostable Team and tell them to process request to post TC 720 or TC 740, Unpostable (code 138 0) to process refund repayment. Close the control base.

3.17.243.4.6  (10-01-2013)
Resolving Unpostable TC 720 on Identity Theft Cases Processed by Another Site

  1. There may be cases where the TC 841 was posted by one site and the subsequent input of a TC 720, by another site, is going Unpostable. The following scenario and procedures explains the actions need to resolve this Unpostable.

    • Site A has input a TC 841 and journaled to their 1545 Account.

    • Site B has input a TC 720 as the money has been returned from the bank. The TC 720 goes Unpostable.

    • The Unpostable is assigned to Site B's Accounting function.

    • Site B will advise Site A that the original action has to be reversed. This will be accomplished by faxing, after calling, a copy of the CCA listing to the appropriate contact, as shown below.

    • Site A will need to input a TC 843 to reverse the TC 841 and they will also need to reverse the journal action in their 1545 account.

      Note:

      A History item is to be input on IDRS when the form to post the TC 843 has been released for transcription.

      Note:

      These items must be worked expeditiously. All sites need to prepare and release the TC 843 documentation within 2 weeks.

    • Site B will monitor the account for posting of the TC 843 and Site B will advise the Unpostable Team to go ahead and post the TC 720.

    Note:

    See IRM 3.17.243.4.5, Resolving Unpostable Identity Theft Cases Processed as an Erroneous Refunds, above for additional information if needed.

3.17.243.4.7  (10-03-2012)
Resolving Unpostable Identity Theft Where the TC 840 Has Been Transferred to an IRSN

  1. The Unpostables function will assign a control on IDRS (CC TXMOD) to the Accounting Erroneous Refund Team’s generic IDRS number for UPC 138-0 which cannot be resolved in Unpostables.

    Note:

    These items will remain in the Unpostable inventory while Accounting works the document.

  2. The Erroneous Refund Team will receive a Case Control Activity (CCA) Report showing the unpostable documents.

  3. If there is an existing open control base by another area, notify the other area of the actions being taken.

  4. The Erroneous Refund Team will verify TC 841 and that there is no TC 971 AC 663 present.

  5. The Erroneous Refund Team will review IDRS to locate a TC 971 showing the XREF-TIN.

  6. If present, prepare a Form 12857 to debit (TC 840) the true taxpayers’ account and credit (TC 841) the IRSN.

    • Assign a DLN, Prepare Form(s) 813 and forward to the RACS Team for journal action. Journal using RRACS Window 400.

    • RACS will hand carry both sides of Form 12857 to Batching.

  7. If the XREF-TIN is not present, prepare Form 2275 to request the original Form 12857 from files, using the DLN of the posted TC 841. This will give you the XREF-TIN.

  8. Ensure TC 470 or STAUP actions are taken to stop issuance of incorrect notices and monitor daily for TC 840 to post to the taxpayers’ account stop an incorrect notice.

  9. Once TC 840 has posted, contact the Unpostable Team and tell them to process the request to post TC 720 or TC 740, Unpostable (code 138-0). Close your control base.

3.17.243.4.8  (10-01-2013)
Resolving Unpostable Identity Theft Where There is Duplicate TC 841

  1. The Unpostable operation will 8 code the duplicate TC 841 to the Rejects operation.

  2. Rejects will immediately work these cases. The Rejects function will perform a Reject 630 (4–0) and prepare a Form 4028 (0–2) for the duplicate TC 841, so that this item can be deleted from SCF. Rejects will route the case and Form 4028 under cover of a Form 3210 Accounting.

  3. The Accounting operation will:

    • Pull the Forms 3809 (2) out the packs of work. This will include the copy that is in the Erroneous Refund Team and in the team that is performing the balancing.

      Note:

      The Form 3809 must be voided to ensure it is not reprocessed.

    • The Form 813 will be modified to show the case(s) that were pulled. The item count and the money amounts must be adjusted on the Form 813.

    • The RACS Team will reverse the original journal action. Journal the total amount of each unpostable document using a 480 window to debit either 4120 (BMF) or 4220 (IMF) and credit the 1545 account. The same document # used in the original 480 journal to open the case MUST be used to reverse the unpostable items.

    • A copy of the journal must be given to the Erroneous Refund Team and the team that is performing the balancing for association with the original package.

    • The rejected items will be listed on a transmittal to return the items back to the originating employee, for all functions except AM or RICS/IVO (AMTAP). All of the items that are being returned to AM or RICS-IVO because of the duplicate TC 841, will be returned to the point of contact listed below for each site. If there are duplicate TC 841 documents that need to be returned to another operation, they should be returned to the individual that prepared the Form 3809.

    Receipts From: Return Rejects To: Phone Number Fax Number
    AM Contacts      
    Atlanta AM Joseph Dahunsi or
    James M Paul
    678–530–5154
    678–530–6220
    678–530–5061
    Austin AM Cecilia Hernandez or
    Tony De La Cerda
    512–460–1614
    512–460–0697
    855-782-2370
    Brookhaven AM Mary Zaun or
    Norman Heinrich
    631–654–6505
    631–687–1704
    631-447-4406
    Fresno AM Jim Denning or
    Salina Struffert
    559–454–6691
    559–456–5067
    559-454-7164
    Kansas City AM Ramada Johnson 816-325-2715 816-292-6276
    Philadelphia AM Charles McCann or
    Heidi Jordan
    267–941–3700
    267–941–4657
    267-941-1364
    267-941-1444
    RICS-IVO Contacts      
    Andover RICS-IVO Barbara Mackay 978-691-6862 978-691-6603
    Atlanta RICS-IVO Victoria Bryant 770-455-2029 770-455-2150
    Austin RICS-IVO Bob Dean 512-460-4695 512-460-4124
    Fresno RICS-IVO Rudy Alvarado 559-441-5909 559-441-5909
    Kansas City RICS-IVO Sheila Urum Eke 816-291-9265 819-292-6193
    Ogden RICS-IVO Sheila Bailey 801-620-4506 801-620-4399

3.17.243.4.9  (10-01-2013)
Duplicate IDT TC 841 or TC 700 Posting Identified by Originators

  1. When Non-Accounting Operations identify duplicate posting of a TC 841 or TC700.

    Note:

    These items will be forwarded to Accounting for corrective actions.

  2. Non-Accounting Operations will:

    • For duplicate TC 841:

    • Prepare a Form 3245 with a TC 843 as a debit.

    • Also, prepare a Form 3809 credit to RRACS GL account with taxpayer's TIN, money, transaction date and Doc ID in the explanation field.

    • For duplicate TC 700:

    • Prepare a Form 3809 debit with a TC 702 to the taxpayer's account with the duplicate TC 700. Credit the RRACS GL account with taxpayer's TIN, money, transaction date and the Doc Id in the explanation field.

      Note:

      Research will need to be done to determine which GL account the TC 841/700 money is journaled to (1545, 6905, 9998).

      Note:

      A copy of the TXMOD with the duplicate transaction should accompany the Form 3809/3245, if not these items may be rejected back to the preparer.

      Note:

      The Form 3809 with a TC 843 will have a blocking series 540–549 with Doc. code 45.

      Note:

      The Form 3809 with a TC 702 will have a blocking series 790–799 with a Doc. code 58.

  3. The Erroneous Refund Team will:

    • Review documents for required information.

    • Verify copy of TXMOD with duplicate transaction is attached to corrective Form 3809.

    • Assign ID theft DLNs to the Form 3809 and Form 3245 for pipeline processing and RRACS journals.

3.17.243.4.10  (10-01-2013)
Duplicate IDT TC 700 Posting Identified by Accounting

  1. Due to systemic programming, duplicate TC 700 transactions will post to the taxpayers' module and may result in an erroneous refund. If the Accounting operation identifies cases where there is a duplicate TC 700, they will take the following actions.

  2. If the TC 700 has posted on the account and a credit balance remains:

    • Input a TC 570 to freeze the account.

    • Pull the Form 3809 for the second transaction from the suspense file.

    • Contact the originator and advise them that the transaction appears to be a duplicate. Request that the originator submit the necessary documents, which are stated above, to reverse this transaction.

    • Once the documents are received, assign the DLN(s), have the necessary RRACS journal actions completed, and submit the form for pipeline processing.

  3. If the TC 700 has posted on the account and a refund has been issued:

    • Pull the Form 3809 for the second TC 700.

    • Contact the originator to advise them that there appears to be an erroneous refund on the tax module.

3.17.243.4.11  (10-01-2013)
Identity Theft Erroneous Refund Write-Off Procedures

  1. An extract will be pulled from the Custodial Detail Database (CDDB) identifying accounts that have been identified as meeting the 5 year statute expiration date. The extract will identify cases by campus using the DLN associated with the corresponding campus.

  2. There will be two extracts for each month, one for TC 841’s and one for TC 700’s. Each extract will have a total volume and amount at the end of the spreadsheet.

  3. Each campus will receive their extracts on a monthly basis. CFO will email the extracts on approximately the 6th working day of the month to the campus group mailbox. Each extract will cover a period of one month. The journalization each month MUST be completed by end of month processing.

3.17.243.4.11.1  (10-01-2013)
Actions to be Taken by the Erroneous Refund Team

  1. Once extracts are received, pull Form(s) 3809 for the corresponding cases identified on the extracts.

    Note:

    In the event an item has an expired statute expiration date but is not captured in the extract (e.g. new case), add it to the extract and update the volume and amount.

  2. Verify volume and totals of cases listed on extracts with the Form(s) 3809.

  3. Verify 5 year statute expiration date has expired, which is determined by the transaction date.

  4. Add a column for the Doc ID on each extract.

  5. Update the extract with the Doc ID for each case, ensuring the Doc ID format is input correctly so that cases are grouped correctly.

  6. Sort extract by Doc ID. This sorting process will ensure all Form(s) 3809 from the same Doc ID will be captured and grouped together on the spreadsheet

  7. Prepare and submit one memorandum along with the two extracts for ID theft cases for approval and signature from the Accounting Operation Manager.

    • Accounting Operation Manager will sign the memorandum only and return to ERRF.

    • The ERRF Team will forward the signed memorandum, extracts and Form(s) 3809 to the RACS Team for journaling.

    Note:

    These losses do not impact Director’s Accountability or cause an irregularity in the accounts of the Campus Field Director’s. Submission to the HQ Losses and Shortages Analyst is not required.

3.17.243.4.11.2  (10-01-2013)
Actions to be Taken by the RACS Team

  1. Receive signed memorandum and extracts with corresponding Form(s) 3809. Once the journal actions are completed, RACS will Forward a copy of the memorandum, extracts and Form(s) 3809 to the function maintaining the documents, if not RACS, for balancing and GAO audit file as a closed case.

3.17.243.5  (10-01-2011)
Refund Litigation Cases

  1. This subsection describes the requirements for receiving, processing, controlling and releasing Refund Litigation case requests.

3.17.243.5.1  (10-01-2011)
Background

  1. A taxpayer initiates a complaint or petition in a suit for recovery of taxes. This is forwarded to the appropriate SPC by a United States Attorney in district court cases, or by the Tax Division of the Department of Justice in Court of Claims cases.

  2. To assist the Service in expediting retrieval of the necessary files, telephone contact (follow up via memorandum) is made by the offices indicated above. These calls provide pertinent information on the taxpayer and the tax liability.

  3. Facsimiles (fax) and memorandums are received from both the District Counsel and Chief Counsel.

  4. Instructions in this subsection referring to “Counsel” means either District Counsel or Chief Counsel.

  5. The telephone call and a copy of the complaint or petition should be received prior to the facsimiles or memo from Counsel requesting the files. Send the requested information to the requesting office (either District Counsel or Chief Counsel) using either certified or registered mail.

3.17.243.5.2  (10-01-2011)
Processing Requests

  1. Maintain a monthly log, showing all new case requests processed during the month and the dates on which the telephone call, initial complaint and the fax/memo was received.

  2. Take the following action immediately upon receipt of the taxpayer’s complaint, telephone call or fax/memo:

    1. Use command code ACTON to establish an open control base for all affected tax modules.

    2. Identify each tax period involved in a Refund Litigation case with a TC 520 freeze with closing code (CC) 73. If a TC 520 with CC 73 is not present, take the necessary steps to input this freeze.

    3. If the account has been moved to the retention register, use applicable procedures to reestablish the account (TC 370).

  3. Research and secure the requested document(s) using expedite procedures.

    • Use IDRS research capabilities to help locate needed returns.

    • When documents are charged-out, contact the appropriate function to immediately obtain the required documents.

      Note:

      Take this action regardless of where the documents are charged-out.

    Exception:

    If the document is charged-out to the Examination Function for a Frivolous Filer Case, secure a photocopy to forward to the requesting Counsel. The Examination Function will forward the tax return as soon as their case is resolved.

3.17.243.5.3  (10-01-2011)
Controlling Cases

  1. If a facsimile/memo is not received in the Files Function within ten (10) calendar days from the receipt of the copy of the taxpayer’s complaint or the initial call from Counsel (whichever came first), the Refund Litigation Coordinator (RLC) must telephone the respective Counsel in the area office to request it.

    Note:

    Take this action whether all, some or none of the requested documents have been secured. The purpose is to alert Counsel that no fax/ memo has been received. Request fax/memo from Counsel or secure the date it was mailed.

  2. Associate all documents received with the related complaint (petition) and hold for receipt of the facsimile/memo from Counsel’s office.

    • Review the case file for any indication that a statutory notice of claim disallowance has been sent to the taxpayer.

    • If a statutory notice of claim disallowance is sent to the taxpayer, use the certified mailing number and date the notice was mailed to obtain the certified mailing documents from the mail room.

    • Associate these documents with the case file.

  3. When the facsimile/memo is received from Counsel, associate and compare the fax/memo with the copy of the complaint (petition) to determine if the documents requested and those secured are in agreement.

    1. Resolve any discrepancies.

    2. If any needed Revenue Agent Reports (RARs), appellate reports, etc., are attached to other returns, amend the facsimile/memo to include those returns and note the additions on the transmittal.

    3. This comparison excludes any supplemental fax/memo from Counsel.

    4. Perform the actions requested in the facsimile/memo.

    5. The copy of the complaint (petition) can be made a part of any retained control file.

  4. When the facsimile/memo is received and all documents for the case have NOT been secured, the RLC must immediately contact District Counsel and give the status of the case. Counsel will advise whether to send what has been compiled or to hold until the entire case file has been secured.

  5. When all documents for a case are not located, send a microfilm transcript for ADP modules to Counsel and the Department of Justice. If the tax module is not present, notify Counsel. Forward microfilm transcripts immediately when the module becomes available.

    Note:

    Regardless of whether the partial case file or just the transcript has been sent, handle the case expeditiously.

3.17.243.5.4  (10-01-2011)
Releasing Cases

  1. When the facsimile/memo has been received, prior to forwarding the assembled case file to Counsel, photocopy the file.

    1. Do not delay transmitting the case file. Do not exceed 75 pages for the duplicate file

    2. Copy priority items in this order: Transcripts, Claims for Refund, RARs, Tax Returns, and Appellate Reports

    3. If the requested administrative files are voluminous, call the District Counsel for permission to omit the duplicate file procedure.

  2. Send the copy to: Assistant Attorney General, Tax Division, Department of Justice, Washington, DC 20530 via certified or registered mail. Note the title of the case and court in which the case is pending and attach a copy of the facsimile/memo.

  3. Use a copy of the original facsimile/memo to set up a case file to control the receipt of each document or information received for the case.

  4. Ninety days (90) after receipt of the original facsimile/memo, forward a copy of the control file listing documents not secured. Include an explanation of the research that has been performed and indicate controls have been terminated.

3.17.243.5.5  (10-01-2011)
Closing Returned Cases

  1. Take the following actions when the completed Refund Litigation case is returned to the SPC:

    1. Check the case file to verify that all returns shown on the Form 3011-A, Transmittal Memorandum, are enclosed.

    2. Indicate on Form 3011-A if returns or related materials are missing before returning the form to Chief Counsel.

    3. Examine the file to locate the Notice of Adjustment. Associate the Notice of Adjustment with the specific return and place the work papers with the current refile numbered return.

    4. If the Form 3011-A indicates a settlement is to be paid by the Government or other adjustment is required but no evidence that adjustment has been input, route the file to the Examination Function.

    5. Refile non-potential “Closed” case returns and work papers by the current refile (control) DLN. If more than one period is involved in the completed Return Litigation case, refile work papers with the most current tax period refile DLN.

  2. After Form 3011-A is received and verified, remove the TC 520 freeze by inputting a TC 521. Input a TC 521 for each module that contains a TC 520 with CC73. Close all open control bases.

3.17.243.5.6  (10-01-2011)
Emergency Refund Litigation Case Requests

  1. Refund Litigation Cases already in progress sometimes need expeditious handling of requests for additional information from District Counsel. Requests are via telephone.

    • District Counsel must furnish in writing the full name and IRS badge or commission number of the person(s) making the telephone request as soon as possible after the request.

    • This information should also be included in the facsimile/memo.

      Note:

      It is not necessary to wait until receipt of a fax or memo before processing the request as long as District Counsel provides the necessary information.

  2. Immediately upon receipt of the telephone request, begin securing the requested documents and/or information.

    • Photocopy upon securing information

    • Hold Department of Justice photocopy until written memo or facsimile is received.

  3. If a facsimile/memo is not received within five (5) days from the receipt of the telephone request, telephone Counsel in the appropriate office to request it.

  4. Maintain a monthly log, exclusive of the log required in IRM 3.5.61.4.2.2, Processing Request, showing all emergency telephone requests during the month and dates received.

3.17.243.5.7  (10-01-2011)
Collections on Judgements in Tax Cases

  1. These cases were previously known as Refund Suits and Collection Suits in which a judgement is rendered to collect taxes.

    1. Collection on these judgements requires Department of Justice to secure the current year returns. Requests for these returns come directly from the Department of Justice.

    2. These requests will be via telephone and followed by a two-part memo; one part to be stamped “received” and returned to the Department of Justice immediately.

  2. Immediately upon receipt of the telephone request, begin securing the requested documents and/or information.

  3. If the memo has not been received within five (5) days from the receipt of the telephone request, telephone the requester to request it.


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