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Part 4. Examining Process

Chapter 19. Liability Determination

Section 4. CAWR Reconciliation Balancing (Cont. 2)

4.19.4  CAWR Reconciliation Balancing (Cont. 2)

4.19.4.3 
Replies

4.19.4.3.43  (02-01-2008)
Forms W-2, W-3, W-2c, and W-3c Received Prior to SSA Processing

  1. Forms W-2c/W-3c should not be forwarded to SSA unless social security amounts have changed or if the employee SSN is being changed.

  2. If the employee SSN is the onlychange on the form, write "URI" across the top of the Form W-2c/W-3c.

  3. Forms W-2c/W-3c are to be mailed through the USPS to the following address:

    1. Mailed by USPS —

      SSA

      Data Operations Center

      P. O. Box 3333

      Wilkes-Barre, PA 18767-3333

4.19.4.3.44  (02-01-2008)
Identifying Trends

  1. Whenever a "trend" seems to be emerging for a specific type of taxpayer and/or their Payer Agent, POA, or RAA, compile documentation to show the "trend" .

  2. Inform the Headquarters CAWR analyst through your local Technical Coordinator of the trend identified who will forward the documentation to the Headquarters CAWR analyst.

4.19.4.3.45  (02-01-2008)
Replies Citing CSX Claims

  1. In the court case CSX Corporation v. United States, an opinion was issued regarding whether payments made pursuant to reduction in force programs are considered wages for purposes of FICA taxes and compensation for purposes of RRTA taxes. The court concluded that employment taxes apply to all payments at issue except those identified in the opinion as incident to an employee layoff. The case is currently on appeal. Upon resolution of this case, Chief Counsel will provide further instructions for handling of these claims. When a reply is received citing a CSX claim see IRM 21.7.2.4.18.6.11 and IRM 21.5.3.4.7.3.1:

    IF THEN
    A reply is received claiming severance pay not subject to social security and Medicare tax, no Forms W-2c were filed for the affected employee(s)

    1. Research TXMOD and verify current and/or prior tax years.
    A reply includespreviously filed Form(s) 941c claiming severance pay and/or supplemental unemployment compensation pay not subject to social security or medicare tax.

    Note:

    These cases were erroneously refunded the employers’ share (7.65%) or the total (15.3%) of the social security and medicare tax contributions.

    1. Input the appropriate adjustment amount you will be assessing and the number of tax modules (quarters) adjusted on the CAP Detail Screen.

    2. Send a 2057c as a closing letter informing the taxpayer of the adjustment and that they can re-file Form 843 as a protective claim.

    3. Close the case on CAP using the appropriate closing code

    4. Re-assess each applicable quarter for the current and/or prior tax year(s) using normal procedures.

    5. Input TC 180 for .00 to suppress the penalty.

      Note:

      Any adjustment for subsequent tax years must be forwarded to AM (Accounts Maintenance) for re-assessment.

    6. Send the original claim to the following address found at on transmittal form 3210 with the annotation "CSX Protective Claim." The OSC will then establish IDRS controls with a protective claim indicator.

    The reply includes (correspondence only) claiming severance pay and/or supplemental unemployment compensation pay is not subject to social security or medicare tax. 1. Follow procedures above.

4.19.4.3.46  (02-01-2008)
Replies Indicating Common Paymaster/ Successor/Predecessor

  1. A common paymaster (see glossary) is not required to disburse compensation to all of the employees of the related corporations.

    IF THEN
    The reply indicates a Common Paymaster or Successor Employer.

    1. Research to verify ordering WIRS with Request Code 4 using CC MFTRA (W) or ORS if necessary.

    If research verifies that this condition caused wages over the maximum

    1. Prepare automated Form 6209 to reduce wages over the maximum.

    2. Prepare Form 6494 using Correction Code (5) remarks " Common Paymaster-employee(s) exceeded maximum wage limit" , attach the appropriate Forms W-2.

    3. File Correspondence following the applicable no assessment needed case processing procedures. See IRM 4.19.4.7.

    If research verifies that this condition is due to a Successor/Predecessor situation

    1. Enter the x-ref EIN into the x-ref field on the CAP detail screen.

    2. File Correspondence following the applicable no assessment needed case processing procedures. See IRM 4.19.4.7.

4.19.4.3.47  (02-01-2008)
Replies With Disaster Indicators on CAP

  1. The following information applies to CAWR replies with a Disaster indicator present on the CAP Detail Screen.

  2. Access http://www.tris.irs.gov/fema/ to retrieve the beginning and ending date of the disaster period.

    IF THEN
    The reply is received with information balancing the case.

    1. Prepare automated Form 6209 if applicable to adjust the appropriate amounts.

    2. Prepare Form 6494 to send copies of the Forms W-3/ W-2 and/or W-3c/W-2c to SSA (if appropriate).

    3. File Correspondence following the applicable no assessment needed case processing procedures. See IRM 4.19.4.7.

    The reply is received with insufficient information to balance the case.
    AND
    the taxpayer correspondence is dated during the disaster period and the taxpayer does not state they cannot resolve their discrepancy due to the disaster

    1. Assess and close the case using the appropriate assessment needed case processing procedures. See IRM 4.19.4.7.

    The reply is received with insufficient information to balance the case.
    AND
    the taxpayer correspondence is dated before the disaster period

    1. Suspend the case on CAP using the suspense code 10.

    2. Suspend the case on IDRS notating "FEMA" and the disaster expiration date in the activity field.

    3. When the disaster period expires assess and close the case using the appropriate assessment needed case processing procedures. See IRM 4.19.4.7.

4.19.4.3.48  (02-01-2008)
Replies Requesting Copies of Forms 94X

  1. IF THEN
    An employer requests copies of Forms 94X in order to resolve the CAWR discrepancy.

    1. Send a 2057c closing letter including a breakdown sheet of the taxpayers’ account or you may include CC MFTRA definer Xor CC BRTVU/RTVUE or a TDU print after necessary editing has been made.

    2. Assess and close the case utilizing the appropriate case processing procedures. See IRM 4.19.4.7.

      Note:

      The breakdown sheet is found on the Intranet, Wage & Correction website.

    Copies of the actual original returns are needed.

    1. Explain to the taxpayer Form 4506, Request for Copy or Transcript of Tax Form, should be submitted along with the required fee.

4.19.4.4  (02-01-2008)
No Replies

  1. Cases that have had no reply to the notice or letter originally generated are referred to as No Replies. These cases are worked after the suspense period has expired. Because there has been no response, assess the tax due to the last available quarter of the tax year being worked.

  2. IRS-CAWR No reply batches are available for assigning to tax examiners by the CAWR Coordinator.

  3. Research IDRS thoroughly to determine if any changes have been made to the module since the CAWR correspondence was issued.

    1. Occasionally a taxpayer will send in a payment or missing tax return (94X) without sending in any indication as to why they took action. Research CC TXMOD for a new or pending TC 150. Close the case with no assessment if the TC 150 wage and tax amounts balance your case.

    2. If a TC 780/788 (unreversed by a TC 781) is present on any module of the tax year that you are working See IRM 4.19.4.2.13.

    3. If a No Reply has an adjustment or a X-reference is found that balances the case, close the case with a CC 30. Place a remark on the case to explain the action(s) taken. Input a TC 971 with AC 017 if an X-reference is found.

  4. Review WIRS, if available, re-checking for any missing Forms W-2, Family Employment, etc., for a possible resolution that may have been overlooked.

  5. When working an IRS-CAWR No Reply batch, all cases will be in status code 37, Once the tax adjustment is made, input closing code 30 on CAP, and close the IDRS control.

  6. SSA-CAWR case type 08 (without Compliance Indicator) cases that contain either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more must be coordinated with your local Large Corporation Coordinator. See IRM 4.19.4.2.1.1.

  7. For cases with a potential tax assessment of $100,000 or more, subsequent contact must be made. Call the taxpayer or send a 99C letter using the an paragraph and state that this is the second attempt to make contact and if no response is received, make the assessment using normal processing procedures.

    Note:

    For those cases referred to the Large Corp. Technical Unit, second contact is not required.

  8. For cases showing a debit and credit on the CAP money fields, See Exhibit 4.19.4-4.If a Form 1040, U. S. Individual Income Tax Return, with a Schedule H was filed by the taxpayer, the MFT & ADJ Screen will have the corresponding MFT 30 and SSN information. Instructions for working the Schedule H are included in See IRM 4.19.4.2.7.

  9. If correspondence has been issued on cases where there is a PAL indicator and no reply is received from the taxpayer, consider the information on the PAL indicator and work the case according to the appropriate processing procedures.

  10. If an employment code "S" is present for any SSA-CAWR/SSA Indicator 2 case, a penalty assessment cannot be made to that EIN/TIN on MFT 13. Do the following:

    1. Research for a parent TIN/EIN and/or a phone number for the entity. This may include contacting the Large Corporation unit for help locating the parent company.

    2. Contact the taxpayer in an effort to obtain the missing Forms W-2, so that a penalty assessment does not have to be made.

    3. Be sure to consider the amounts reported under the parent TIN/EIN while working the subsidiary case.

    4. Follow normal correspondence and reply procedures for the SSA-CAWR/SSA Indicator 2 case worked as a result of this situation.

      Note:

      CORRESPONDENCE MUST BE ISSUED TO THE PARENT TIN/EIN BEFORE A PENALTY ASSESSMENT CAN BE MADE AGAINST THE PARENT ENTITY.

4.19.4.4.1  (02-01-2008)
No Reply Bankruptcy (TC 520) and Defunct Cases (TC 530 - CC 07 and 10)

  1. Bankruptcy cases are assigned to the Centralized Insolvency Operation (CIO) at the Philadelphia Campus. See IRM 4.19.4.2.6. (1).

  2. After the No Reply phase for SSA-CAWR cases, input to MFT 13, a TC 290 PRN 549 for $ .00. These cases are already closed on CAP with a status code 98 so it is not necessary to update the status on CAP.

  3. After the TC 290 .00 posts for the SSA-CAWR case, BMF will forward status code 40 to CAP to confirm the posting of the TC 290.

  4. However, BMF will not currently load to CAP. Check CC BMFOL to determine if the status code 40 posted to the SSA-CAWR case.

  5. For IRS-CAWR cases with a TC 530 closing code 7 or 10 or a TC 520 closing code 72 or 74 input the TC 290 for $.00 and close the case on CAP using CAWR closing code 98. Do not assess these cases.

  6. For IRS-CAWR cases with a TC 530 with any closing code other than 7 or 10 adjust the case following normal processing procedures. Close CAP with CC 98.

  7. For IRS-CAWR cases with a TC 520 with any closing code other than 72 or 74 contact Insolvency prior to making assessment so they can amend the proof of claim if applicable. Adjust the case following normal processing procedures. Close CAP with CC 98.

4.19.4.4.2  (02-01-2008)
Delete Cases - No Replies

  1. A delete case is one which has been brought into balance at Enterprise Computing Center-Martinsburg (ECC-MTB) through various updates to the module.

  2. If no response was received to an IRS-CAWR case, input a TC 290 for .00 on the last available quarter for the tax year being worked. Consider the case closed.

  3. If no response was received to an SSA-CAWR case, BMF will send a status code 40 to CAP when the 549 penalty posts.

4.19.4.5  (02-01-2008)
Undeliverables

  1. This section is to be used for all IRS-CAWR, SSA-CAWR, and penalty notices that are returned undeliverable.

    Note:

    Undelivered mail clarifications may be found at the following website:

  2. If a TC 780/788 (unreversed by a TC 781) is present on any module of the tax year that you are working See IRM 4.19.4.2.13.

  3. Clerical will research all cases for a new/better address and:

    If ... And ... Then ...
    A new address is found It is within 30 days of the mail out date They will re-mail all information, including the original envelope to the new/better address.
      It is after 30 days of the mail out date

    1. Print the IDRS CC screen containing the new/better address.

    2. Attach the print to the Undeliverable mail.

    3. Input Undeliverable date onto CAP and batch the Undeliverable to a T/E.

    A new address is NOT found   Input Undeliverable date and batch for a T/E to work.

    Exception:

    SSA-CAWR Undeliverables received after cycle 33 are not to be worked or updated on CAP. Hand carry to your lead or manager.

4.19.4.5.1  (02-01-2008)
IRS-CAWR/SSA-CAWR Undeliverables

  1. All CP 251, CP 253, or 99C undeliverable mail is to be worked within 14 calender days of the IRS received date.

  2. Verify Undeliverable and IDRS to ensure a new/better address is not available.

    Note:

    Do not change IDRS. Address can only be updated with written request from the taxpayer.

  3. The Tax examinerswill research IDRS for a new/better address using command codes ENMOD, INOLES, NAMEE, BMFOL, etc.

    Note:

    Use the Research Address IDAP when available.

    If ... And ... Then ...
    IRS-CAWR: a new/better address was found  

    1. Ensure the undeliverable date was entered on CAP

    2. Update CAP with new address.

    3. Reissue the CP251, CP253, or 99C letter.
    IRS-CAWR: a new/better address was not found  

    1. Ensure the undeliverable date was entered on CAP

    2. Assess the additional tax using hold code 3 to prevent the issuance of another notice to the incorrect address. See IRM 4.19.4.7.1.

    3. Close CAP with CC 39.
    SSA-CAWR: a new/better address was found the date is prior tocycle 33

    1. Enter the undeliverable date, if not present on CAP

    2. Update CAP with new address.

    3. Reissue the CP 251, CP 253, or 99C letter.
    SSA-CAWR: a new/better address wasnot found the date is prior tocycle 33

    1. Ensure the undeliverable date was entered on CAP

    2. Assess the Intentional Disregard Penalty using hold code 3 to prevent the issuance of another notice to the incorrect address. See IRM 4.19.4.7.2.

    3. Close CAP with CC 46.
    SSA-CAWR: a new/better address was found the date is after cycle 33

    1. Re-mail all information including the original envelope to the new/better address.

      Note:

      Do Not Input the Undeliverable Date.

    SSA-CAWR: a new/better address was not found the date is after cycle 33

    1. Input undeliverable date on CAP.

    2. Assess the Intentional Disregard Penalty using hold code 3 to prevent the issuance of another notice to the incorrect address. See IRM 4.19.4.7.2.

    3. Close CAP with CC 46.

    Note:

    SSA-CAWR case type 08 (without Compliance Indicator) cases that contain either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more must be coordinated with your local Large Corporation Coordinator. See IRM 4.19.4.2.1.1.

  4. For IRS-CAWR if all fields are potential overpayments, close the case. Input a TC 290 for .00 and update the case on CAP using the appropriate undeliverable closing code.

  5. If the suspense period has expired and the case has been assessed, re-file the undelivered notice (including the envelope) with the previous 55 block for IRS-CAWR cases.

  6. If the suspense period has expired and the automatic penalty assessment has been made, file the undeliverable by inputting a TC 290 for .00 PRN 549 for .00 on MFT 13 and BS 15.

  7. Check the MFT & ADJ Screen to determine if Schedule H was filed on the MFT 30. Research that SSN for another address. If a new address is found re-mailing the notice or letter. If a new address is not foundassess the tax on MFT 30 or 05 as appropriate.

4.19.4.5.2  (02-01-2008)
Undeliverable Mail for Returned SSA (CP 215 PRN 549)

  1. Process undeliverable notices within 14 calender days of the IRS received date.

  2. Research undelivered correspondence with operational errors, incomplete or incorrect name and erroneous or extraneous data. Make corrections and mail the letter.

  3. Research for a better address. If a better address is found, re-mail all information, including the original envelope to this (new/better) address. Do not change IDRS.

    Note:

    IDRS CAN ONLY BE UPDATED WITH A SIGNED REQUEST FROM THE TAXPAYER.

  4. If a better address is not found and the penalty assessment was made, file the undeliverable by inputting a TC 290 for .00 PRN 549 for .00 on MFT 13 and BS 15. If the penalty was manually assessed, attach the undeliverable notice to the penalty case file.

    Note:

    Undelivered mail clarifications can be found at the following website:

4.19.4.6  (02-01-2008)
Processing Late Replies and Replies to Assessment

  1. Late Replies—Late replies occur when taxpayer correspondence is received after the initial case is closed on the CAP System. CAP now has a Late Reply Table to be used when working Late Replies.Do not open the case on the main CAWR screens. These screens are for viewing purposes only. Work the case on the Late Reply Table and IDRS only. The taxpayer may send an amended return or Forms W-2/W-2c to try to resolve the case. Review the information and make any necessary corrections on IDRS. See . See IRM 21.3.3.4.17.1 (Preparation of Outgoing Correspondence) and IRM 21.3.3.3.4.3 (Quality and Timely Responses - Exception statement), to determine if additional correspondence is required.

    1. Late reply received and IDRS shows a Collection status . Follow procedures outlined in IRM 4.19.4.6.7, Accounts in Collection Status.

    2. Taxpayer's late reply provides information that resolves discrepancy. Follow procedures as outlined in Abatement Procedures.

  2. Late replies can fall into one of the following categories:

    • Responses that affect Form 94X Master File modules

    • Responses that affect SSA files

    • Responses that affect both SSA and the Form 94X Master File modules

    • Responses that require no change

  3. Any Late Reply that is received in an active Compliance status code on IDRS, must be coordinated with the responsible function(s) prior to the CAWR issue being worked.

  4. . Accounts in Collection Status - Any reply that is received in an account with an active Collection status code (22, 24 or 26) on IDRS must be coordinated with the responsible function(s) prior to the CAWR issue being worked. For example:

    1. When you receive a reply for a case in Status 22, 24 or 26 notify the ACS staff, using local procedures, that you have a reply so they can update their comments on the ACS system and suspend collection action. The tax examiners should document their attempts and outcome on the appropriate referral form. Work the CAWR issue and close the case.

    2. Input TC 470 CC 90 to suppress balance due notices while case is in inventory. Refer to for the appropriate ACS contact. Choose SBSE as the BOD and select the appropriate State for your case.

    3. If there are any other Collection issues that need to be addressed, such as a remaining balance due, Installment Agreement request, etc., those functions must work that portion of the reply.

    4. If the resolution does not result in a full abatement or taxpayer agreement, notify ACS so they can further update the comments on ACS and resume collection activity. Input TC 472 with no closing code to place case back into collection status.

    5. If the resolution results in a full abatement, the actions taken on IDRS will drop the account to zero and close the ACS case. Notify ACS of the full abatement.

  5. If the taxpayer is not addressing a CAWR issue, it is to be worked in Accounts Management (AM) regardless of the fact that a CAWR case is or was worked for the tax period of the taxpayer inquiry. AM must address the Action 61 requirements if the taxpayer response is 14 days or older.

  6. Late Replies may also be Forms 4442/4442C that are referrals from CSRs. Provide taxpayers with interim responses (by telephone or in writing) if Tax Law Referrals of Late Replies cannot be resolved within seven (7) calendar days or Account Referrals of Late Replies cannot be resolved with fifteen (15) calendar days.

    Note:

    To eliminate —D freeze issues use priority code 4 when abating any prior year civil penalties and tax assessments where there are applied payments.

  7. Processing: For CAWR late responses that affect the Form 94X Master File module:

    1. Research IDRS for a TC 29X with Blocking Series 55X on the Form 94X, or TC 240 with Reference number 549 or 550 on MFT 13 and order document if necessary.

    2. Refer to applicable portion of the Reply section in IRM 4.19.4.3 and follow Late Reply Processing Procedures.

    3. Attach the correspondence and a copy of the Form 6494 (if needed) with the case file.

    4. If the taxpayer responds and only provides the SSN used for the Schedule H, research CC IMFOL to obtain the X-Ref TIN/EIN. If present on CC IMFOL, continue working the case. If not, refer to IRM 21.7 , Business Tax Return and Non-Master File Accounts .

    5. Forward any Forms W-3/W-2/W-3c/W-2c (or substitutes) received from the taxpayer to SSA via Form 3210, and either the Form 9338, Closed Case Transmittal Sheet for Returned SSA Cases, or Form 6494.

    6. If the adjustment DLN is not found, research CAP or the CAWR module (MFT 88) on IDRS using CC BMFOL definer U or Research CC BMFOL definer I to determine to which module the adjustment posted. Then use CC BMFOL definer T for that MFT and period.

    7. If there is no module present on IDRS, use CC MFREQ definer C to obtain the TXMOD.

    8. If the taxpayer responds and pays the penalty amount and the case is under tolerance, close the case with the appropriate closing status code on CAP and make the assessment on MFT 13. Make sure the payment is posted to MFT 13. If it is posted to another module, move it to MFT 13. Failure to do so will issue another notice (balance due) to the taxpayer.

    9. If the taxpayer responds and only provides the SSN used for the Schedule H, research CC IMFOL to obtain the X-Ref TIN/EIN. If present on CC IMFOL, continue working the case. If not, refer to IRM 21.7 , Business Tax Return and Non-Master File Accounts .

  8. Processing: For late responses — requiring no change (3) above:

    1. Research for a DLN TC 29X Blocking Series 55X.

    2. Issue a 2057c letter and associate the taxpayer's response with the case file.

  9. Late replies research:

    IF AND THEN
    Late reply research is completed No CAWR adjustment DLN or unpostable CAWR adjustment DLN is found Check IDRS to determine if one should have been input.
      If duplicate correspondence is found after the adjustment has been made Attach the case to the adjustment DLN (except BS 00) and update the date in the Late Reply Table to close the case.
      WIRS is needed Request WIRS via CC MFTRA definer W (should be received within 10 work days) or ORS when available
      The taxpayer just wants an explanation of why the CP was sent Issue Letter 2057c explaining reason for CP notice and/or assessment and update the date in the Late Reply Table to close the case.

    1. If the taxpayer responds and only provides the SSN used for the Schedule H, research CC IMFOL to obtain the X-Ref TIN/EIN. If present on CC IMFOL, continue working the case. If not, refer to IRM 21.7, Business Tax Return and Non-Master File Accounts.

    Caution:

    Always be aware of the statute date.

  10. If the correspondence is from a POA or other third party make sure that the criteria in IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File is adhered to before any response is sent.

4.19.4.6.1  (02-01-2008)
Late Replies Addressing SSA-CAWR Penalties

  1. Prior to abating a CAWR penalty (Late Filing and/or Intentional Disregard), be aware of the numerous attempts made by both the Service and SSA to solicit the correct information from the employer. Failure to secure and properly credit the missing Forms W-2 will impact an individual's SSA earnings record and ultimately that individual's retirement benefits. Given the history of correspondence sent to the taxpayer by SSA and the CAWR unit, caution should be used in abating the penalty. Careful consideration should be given to all filers claiming that they filed the required Forms W-2 timely.

    1. A copy of Form W-3 with a timely signature date should not be accepted alone as evidence because a fictitious document can be easily prepared. However, if a taxpayer provides a copy of Form W-3 and copies of Forms W-2 other than copy "A" along with a timely dated return receipt, all penalties should be abated.

    2. The employer may have submitted returns timely that were returned by SSA for an unprocessed condition, then never resubmitted by the employer. The penalty would be applicable in this situation.

    3. When a payer claims the forms were filed, proof of submission can be made by contacting the local SSA office or accessing ORS/ERQY to verify that they have received the missing Forms W-2.

  2. When the employers response states they did not understand why the penalty was assessed, send Letter 2057C with the applicable paragraphs explaining the penalty.

  3. When Forms W2c are submitted in response to CAWR correspondence and:

    1. The Forms W-2c balance the case, abate the penalty.

    2. The Forms W-2c partially balance the case, abate the portion of the penalty corrected by the Forms W-2c.

  4. If you receive a Form 941c or Form 843 claim adjusting the SS wages, SS tips, medicare, FIT, and/or AEIC, to match the Forms W-2/W-3, adjust the account and remove the appropriate amount of the penalty assessment.

  5. If Forms W-2/W-2c are received with the late reply, order the original CAWR documents from Files if necessary to ensure the new submission is not duplicating the original reply to our correspondence.

  6. If Forms W-2 are secured after the Service assesses the Intentional Disregard Penalty the applicable portion of that penalty (Penalty Reference Number 549) will be abated and the lesser late filing penalty (Penalty Reference Number 550) will be assessed based on the number of Forms W-2 secured ONLY when the payer responds within ten days of the CP 215 response date and includes the applicable Forms W-2. Otherwise the PRN 549 penalty remains on the account.

    Exception:

    If the taxpayer provides the applicable Forms W-2 but did not timely respond to the CP 215, abate the 549 and apply the 550 penalty when there is an indication that the CAWR notice was returned as undeliverable.

    Exception:

    The penalty will be fully abated (ie: no penalty assessed) if the payer responds with acceptable reasonable cause as to why the penalty should be abated. See IRM 20.1.1.3.1 for further information regarding reasonable cause.

  7. Abate the penalties using TC 290, the negative dollar amount being abated, with Reason Code 062 and the appropriate Penalty Reason Code must be entered in the fourth RC position on CC ADJ 54

  8. When a taxpayer responds to the penalty assessment after the Statute has expired and provides reasonable cause, abate the penalty.

  9. If the taxpayer responds to any collection notice issued after the CP 215, reasonable cause must be provided in order to abate the penalty. If reasonable cause or due diligence is denied take the following actions:

    1. Notify the taxpayer using a Letter 854C

    2. Research TXMOD for a TC 470

      If ... Then ...
      TC 470 is found Release with a TC 472 (SSA-CAWR)
      TC 470 isnotfound Input STAUP for 6 cycles to delay the notices.

    3. Input the closing date in the Late Reply Table on CAP to close the case.

  10. If the original assessment document was input with Blocking series 00 (auto-assessed), attach either the Form 13675 or 5706, History Sheet to the taxpayer correspondence.

    1. Input a TC 290 for zero

    2. Use Blocking Series 98 (to ensure that the letter and history sheet is filed with the original return)

    3. Use Reason Code 062

    4. Leave the fourth RC position blank.

  11. If the original assessment document was input with BS 52 or 53 (manually assessed):

    1. Input a TC 290 .00.

    2. Use Blocking Series 99.

    3. Use Reason Code 062.

    4. Leave the fourth RC position blank.

    Reminder:

    Check for any freeze codes that would be released by the TC 290 posting. If there are any, re-file the return and associated documents under the original DLN.