4.4.3  Credit Transfers and Reprocessing Returns

Manual Transmittal

September 16, 2011

Purpose

(1) This transmits revised IRM 4.4.3, AIMS Procedures and Processing Instructions, Credit Transfers and Reprocessing Returns.

Material Changes

(1) This IRM was revised as follows:

Subsection Description of Change
Title of IRM The title of this IRM was changed from "AIMS Procedures and Processing Instructions, Adjustments-Miscellaneous" to "AIMS Procedures and Processing Instructions, Credit Transfers and Reprocessing Returns."
All sections Various grammatical, editorial, and website address link additions and updates throughout. Identified group Responsibility and Centralized Case Processing (CCP) Responsibility.
IRM 4.4.3.1 Renumbered this section.
IRM 4.4.3.2 Retitled and updated instructions to add additional details for transferring credits and the requirement to include a statement from the taxpayer.
IRM 4.4.3.3 Retitled, updated instructions, and added group responsibility
IRM 4.4.3.4 Moved information in this section to IRM 4.4.3.3, retitled, updated instructions, and added group responsibility
IRM 4.4.3.5 Moved information in this section to IRM 4.4.3.3, retitled, added CCP and Appeals Processing responsibility, and added website links to forms and other IRM references
IRM 4.4.3.6 Moved this information to IRM 4.4.3.7. Added website links to forms and other IRM references, clarified group, CCP and Technical Services responsibilities.
IRM 4.4.3.7 Retitled and renumbered to IRM 4.4.3.7.4
IRM 4.4.3.8 Retitled and renumbered to IRM 4.4.3.7.5 and updated the threshold amount from $100 to $200 as reflected in IRM 21.4.5.4.2, Erroneous Refunds
IRM 4.4.3.9 Retitled, renumbered, and added additional detail to IRM 4.4.3.8. Added website links and additional details to the instructions
IRM 4.4.3.10 Retitled and renumbered to IRM 4.4.3.9 with subsequent sections renumbered accordingly. Addressed statute issues, added separate instructions for reprocessing SB/SE and LB&I cases, included group and CCP responsibility and instructions for Form 3870
IRM 4.4.3.10.1 Retitled and renumbered to IRM 4.4.3.9.1 replaced information in this section with instructions for reprocessing SB/SE cases
IRM 4.4.3.10.2 Retitled and renumbered to IRM 4.4.3.9.2 replaced information in this section with instructions for reprocessing LB&I cases
Exhibit 4.4.3-1 Eliminated exhibit. Incorporated instructions in IRM 4.4.3.9

Effect on Other Documents

IRM 4.4.3, dated March 1, 2003, is superseded. Content in IRM 4.4.8 Credit Transfers and Miscellaneous Adjustments, dated July 11, 2005 is contained in this IRM, as well as, the prior release of IRM 4.4.3 dated March 1, 2003; therefore, it is being obsolesced. IRM.

Audience

Large Business & International (LB&I), Wage and Investment (W&I), Small Business and Self-Employed (SB/SE)

Effective Date

(09-16-2011)

Charlestine D. Hardy
Director, Examination Planning and Delivery
Small Business/Self-Employed

4.4.3.1  (09-16-2011)
Introduction

  1. This chapter contains instructions for processing credit transfers and miscellaneous adjustments.

    1. Transferring payments and credits between related taxpayers see IRM 4.4.3.2.

    2. Refunds to anyone other than the taxpayer in whose name the tax was paid see IRM 4.4.3.7.

    3. Erroneous Refunds see IRM 4.4.3.8.

    4. Reprocessing Returns see IRM 4.4.3.9.

  2. This IRM frequently refers to tasks to be completed by the examiner/group. It is acceptable for any staff member in the group to perform the task at the manager's discretion.

  3. For additional guidance see the following IRMs:

    • IRM 21.5.8, Credit Transfers

    • Form 2424, Account Adjustment Voucher- IRM 3.17.21.10.3, Form 2424 (DRT24)

    • Form 3809, Miscellaneous Adjustment Voucher, - IRM 3.17.21.10.4, Form 3809 (DRT48)

4.4.3.2  (09-16-2011)
Transferring Payments and Credits Between Related Taxpayers

  1. Related taxpayer examinations sometimes result in adjustments increasing the tax for one taxpayer and decreasing the tax for the other taxpayer. This usually occurs between parent and subsidiary corporations or between trusts and beneficiaries. See IRM 20.2.5.13.1, Debit Interest on Liabilities Paid by Offset from a Different Taxpayer, for credit availability date and the need to manually compute interest by Centralized Case Processing (CCP).

  2. Often the taxpayer will ask that a refund of one taxpayer (primary taxpayer) be applied to the additional tax of another taxpayer (related taxpayer). This agreement is documented in the form of a written statement signed by the taxpayer agreeing that its overpayment be credited to the related taxpayer and made part of the case file. It is in the interest of IRS to honor this type offset.

  3. A credit will be transferred between accounts only if there is a written statement from the taxpayer entitled to the credit requesting such application. See IRM 20.2.4.3, Availability Dates for Overpayments for additional information.

    Note:

    A credit may be transferred from an individual's Individual Master File (IMF) account to the same individual's Business Master File (BMF) account without a statement. The BMF account can be the individual's partnership, excise or employment tax account.

  4. Prior to forwarding the cases to CCP, secure transcripts of each module to be adjusted to ensure the information on the modules is correct and to look for any items that may cause processing delays. For example, pending transactions, freeze codes, or the taxpayer may have filed an amended return which needs to be considered.

  5. The examiner must complete Form 2424 to transfer credits from master file accounts. See IRM 4.4.3.3.

  6. The examiner must complete Form 3809 to transfer credits from NMF accounts. See IRM 4.4.3.4.

  7. Form 2424 and Form 3809 will be maintained in the case file for input by CCP. Annotate on Form 3198, Special Handling Notice for Examination Case Processing, in the "Special Features" section under "Other Instructions" to process Form 2424 or Form 3809 whichever is applicable.

    Note:

    Throughout this IRM, reference is made to completion of Form 2424. At the group's discretion they may opt to complete Form 3870, Request for Adjustment, in lieu of Form 2424. It is the group's responsibility to provide enough information on Form 3870 for CCP to adjust the taxpayer's account. Form 3870 is self-explanatory, however, if the examiner has questions regarding the completion of the form, they may contact CCP as shown in IRM 4.4.3.9.1 and IRM 4.4.3.9.2.

  8. Cross reference primary and related taxpayer returns on Form 3198 in the "Related Taxpayers or Key Cases" section and annotate to keep the returns together through the closure process.

4.4.3.3  (09-16-2011)
Transferring Master File Credits to a Master File/Nonmaster File Deficiency

  1. The information below provides instructions for completion of Form 2424.

4.4.3.3.1  (09-16-2011)
Debit Copy (Overpayment Account) Form 2424, Group Responsibility

  1. For transfers from IMF and Business Master File (BMF) accounts, use Form 2424. If the accounts are for different taxpayers, Transaction Code (TC) 850 and TC 730 may be entered on the same Form 2424 carrying the overpayment.

  2. Enter the following information on Form 2424:

    1. Taxpayer's name and address

    2. Employer identification number (EIN) or Social Security number (SSN) in the TIN section

    3. Master File tax (MFT) code

    4. Tax period

    5. Transaction date (due date for prepayment credits, paid date, or loss year return due date for carrybacks, whichever is later)

  3. Enter (TC) 820 as the first transaction code (1st TC) and enter the amount of overpayment credit being applied. Do not include allowable interest.

  4. Enter TC 570 as the second transaction code (2nd TC) and "BLANK" for the amount if more than one transfer document is to debit the same tax module.

  5. Enter TC 850 as the third transaction code (3rd TC) and the amount of allowable interest if such interest is also being transferred to the same tax period.

    Note:

    Interest is computed to the schedule date on an overpayment applied to a deficiency of another taxpayer. See IRM 20.2.4.6.5, Different Taxpayers and Offsets. A separate Form 2424 is needed if there are multiple credit availability dates, moving the earliest available credit first, making sure the RSED, (Refund Statute Expiration Date) is still open. See IRM 20.2.4.6, Offsets. If moving a credit from a prior tax module (e.g., from 200812 to 200712) there will not be any allowable interest.

4.4.3.3.2  (09-16-2011)
Credit Copy (Account Receiving Credit) Form 2424, Group Responsibility

  1. Enter on Form 2424:

    1. Taxpayer's name and address

    2. Employer identification number (EIN) or Social Security number (SSN) in the TIN section

      Note:

      If the account receiving the credit is a nonmaster file (NMF) account for the taxpayer, add an "N" after the taxpayer's SSN, 123-45-6789N.

    3. Master File tax (MFT) code

    4. Tax period receiving credit

    5. Transaction date (due date for prepayment credits, paid date, or loss year return due date for carrybacks, whichever is later)

  2. Enter TC 700 as the 1st TC and enter the amount of overpayment credit being applied (not including allowable interest).

  3. Enter TC 570 as the 2nd TC and "BLANK" for the amount unless the deficiency has already been assessed and is outstanding.

  4. Enter TC 730 as the 3rd TC with the amount of allowable interest. This should agree with the amount of TC 850 on the debit portion.

4.4.3.4  (09-16-2011)
Transferring NMF Credits to MF Deficiency

  1. The information below provides instructions for completion of Form 3809.

4.4.3.4.1  (09-16-2011)
Debit Copy Form 3809, Group Responsibility

  1. Form 3809 with Document Code 58 is used for those accounts that are transferring a credit from a NMF account to a MF account. Maintain a copy of Form 3809 in the case file and alert CCP by annotating on Form 3198 in the "Special Features" "Other Instructions" section that there is a NMF credit that needs to be moved to the taxpayer's MF account.

  2. Enter on Form 3809:

    1. Taxpayer's name and address

    2. EIN or SSN in the TIN section

    3. MFT

    4. Tax period with the overassessment

    5. Check the NMF block

    6. Leave the transaction codes blank

    7. Transaction date (due date for prepayment credits, paid date, or loss year return due date for carrybacks, whichever is later)

    8. The debit amount (total overpayment credit applied)

    Note:

    Prepare a separate Form 3809 if allowable interest is being applied, using the schedule date or 23C date as the transaction date.

4.4.3.4.2  (09-16-2011)
Credit Copy Form 3809, Group Responsibility

  1. Enter on Form 3809:

    1. Taxpayer's name and address

    2. EIN or SSN in the TIN section

    3. MFT

    4. Tax period receiving the credit

    5. Check the MF block

    6. TC 700 in the 1st TC

    7. Amount of overpayment credit being applied from NMF

    8. Transaction date (due date for prepayment credits, paid date, or loss year return due date for carrybacks, whichever is later)

    9. TC 570 in the 2nd TC and "BLANK" for the amount.

    Note:

    Prepare a separate Form 3809 if allowable interest is being applied, using the schedule date or 23C date as the transaction date.

4.4.3.5  (09-16-2011)
Form 5344, Examination Closing Record, or Form 5403, Appeals Closing Record, CCP Responsibility or Appeals Processing Responsibility

  1. If the offset is to be made as described above, follow these instructions in addition to routine processing.

    1. Related taxpayer—Use Hold Code 1 to prevent a refund. Input the document immediately.

    2. Input Form 2424 or Form 3809 to post one cycle after the related or overpaid Form 5344 or Form 5403.

    3. Input Form 5344 or Form 5403 to the primary tax module receiving the credit one cycle after Form 2424 or Form 3809 to ensure that the credit is available at the time of settlement.

    Note:

    Two Forms 5344 or Forms 5403 are being prepared.

4.4.3.6  (09-16-2011)
Debit Module Balance

  1. There may be occasions where the examiner is proposing a refund on a taxpayer's return; however (according to current transcripts), there is a liability on the same tax module that exceeds the proposed overpayment rendering the module balance in debt status. Accordingly, the refund cannot be offset to another taxpayer's deficiency. Advise the taxpayer that their request to offset the proposed refund to another taxpayer's deficiency cannot be accommodated. The refund will be applied to the debit balance of their account.

4.4.3.7  (09-16-2011)
Refunds to Other Taxpayers

  1. These procedures should be followed when a refund is to be issued to someone other than the taxpayer in whose name the tax was paid.

4.4.3.7.1  (09-16-2011)
Group Responsibility

  1. Provide documentary evidence to permit refunds to be made to, on behalf of, or in care of any of the following:

    1. Deceased taxpayers

      Reminder:

      Refunds due on joint returns when one spouse has died and no executor or administrator has been or will be appointed, may be made payable to the surviving spouse regardless of the amount. Documentary evidence is not required by the surviving spouse if the taxpayer was deceased prior to filing the joint return. On Form 3198 in "Special Features" under "Other instructions (explain)" , add the statement, "Manual Refund-Deceased Taxpayer" .

    2. Trustees or estates (both living and deceased taxpayers)

    3. Guardians, minors, and incompetents

    4. Dissolved corporations

    5. Assignment, receivership, and bankruptcy cases

    6. Reorganizations

    7. Corporate change of name or successorship

    8. Trusts and certain other cases

  2. Attachments will include:

    1. Form 56, Notice Concerning Fiduciary Relationship; or

    2. Court certificates, affidavits, letters testamentary or of administration; or

    3. Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. See IRM 3.11.3.10.2, Documentary Evidence, for information relating to the proper completion of Form 1310; or

    4. Any documentation related to the return

    Note:

    If returns for various tax years were received, attach the evidence to the most recent return with a scheduled refund.

  3. Copies of wills, trust instruments or amendments, and other similar documents will remain with the case file.

4.4.3.7.2  (09-16-2011)
CCP Responsibility

  1. Make sure the name entered on the allowance document is that of the person in whose name the check should be drawn. The refund checks are prepared and distributed by the disbursing center directly from the allowance documents.

4.4.3.7.3  (09-16-2011)
Technical Services Responsibility

  1. Refer any questionable or controversial claim to the local area counsel.

4.4.3.7.4  (09-16-2011)
Evidence Requirements Waived

  1. The evidence requirements are waived and no evidence is required when the entire amount allowable is credited to other taxes due from the same taxpayer, or when a fiduciary signed the return (or a claim containing a statement that the return was filed by the same fiduciary) within one year before the refund was made.

4.4.3.7.5  (09-16-2011)
Refund $200 or Less

  1. When the amount to be paid is $200 or less (including allowable interest) it may be paid to the fiduciary who signed the return (or claim) without regard to the one year period. If the file indicates the estate has been distributed, evidence will be required even though the amount is $200 or less and the return was signed by the fiduciary within the year. In each instance note the allowance document "Return (or claim) filed (date) by the fiduciary." Initial and date the notation.

4.4.3.8  (09-16-2011)
Recovery of Erroneous Refunds

  1. See IRM 21.4.5, Erroneous Refunds, for additional information on erroneous refunds.

4.4.3.8.1  (09-16-2011)
Group Responsibility

  1. Flag case files involving erroneous refunds by annotating on Form 3198 in "Special Features" under "Other Instructions (explain):"

    1. The name, address, and TIN of the taxpayer from whom the erroneous refund is to be recovered;

    2. The tax period;

    3. The tax return form number; and

    4. The amount of refund to be recovered.

4.4.3.8.2  (09-16-2011)
CCP Responsibility

  1. Forward the request for recovery of the erroneous refund to the Campus Accounting Branch.

  2. Include a transcript of the account from which the erroneous refund was issued.

4.4.3.9  (09-16-2011)
Reprocessing Returns

  1. This section contains instructions for the field examiners and CCP when it is necessary to reprocess a return to a correct TIN or a correct tax year.

    Reminder:

    IMMINENT OR EXPIRED STATUTE - A notation must be made on Form 3870, Request for Adjustment, Item 30, "Remarks" if the ASED (Assessment Statute Expiration Date) on the incorrect year or TIN has expired or is within six months of expiring.

  2. If the examiner suspects there may be an identity theft issue, see IRM 10.5.3, Identity Protection Program, for instructions on inputting the appropriate identity theft indicator(s) on the SSN owner's account.

4.4.3.9.1  (09-16-2011)
Reprocessing Instructions - SBSE Cases Open Under Examination, Group Responsibility

  1. The examiner must first determine if a paper or electronic return was filed. If a paper return was filed, the examiner will secure the original return from Files.

    1. Command code ESTAB is used to request an original paper return. (Follow local procedures when asking your AIMS/ERCS staff to ESTAB the return for you. Go to the AIMS/ERCS website and click on the "Contacts" section. Look for the document titled, "AIMS/ERCS Personnel Listing" to locate your local AIMS/ERCS analyst.)

    2. If the return cannot be secured through ESTAB, a "Special Search" will need to be done. (Follow local procedures when asking your AIMS/ERCS staff to contact the Campus Files personnel.) Go to the AIMS/ERCS website and click on the "Contacts" section. Look for the document titled, "Contact List - Area Office/Campus Contacts (XLS)." Each Campus has a contact listed for "Files and/or Form 2275 requests." Contact the person shown as the "Files" contact to help you locate the original return.

    3. If the original paper return cannot be secured through the prior two steps, contact the taxpayer for a copy of the return.

  2. If it is determined that the taxpayer filed an electronic return (determined by the first two digits of the Document Locator Number (DLN), associated with the TC 150), a TRPRT (tax return print) can be requested and used to reprocess the return. A TRPRT is a graphical (form image) print of a tax return stored on TRDB, (tax return database). See Document 6209, IRS Processing Codes and Information, Section 4, (3) Campus and File Location Codes, for a list of electronic filing DLNs.

  3. If the return still cannot be secured through the prior steps, a "dummy" return may be created. Secure an Integrated Data Retrieval System (IDRS) print using command code TRDBV to obtain the correct tax return numbers to enter on a tax return you will complete for the reprocessing. Write "Dummy Return" across the top of the tax return.

  4. The examiner will complete Form 3870, and:

    1. Annotate in Item 11, "Reason for Adjustment," the following comments: "Return posted to the incorrect tax period or TIN. Please reprocess the attached return to the following tax period or TIN" (whichever is applicable).

    2. Provide a complete explanation in Item 30, "Remarks," explaining how the account is to be reprocessed.

  5. Keep a copy of the return information for your files.

    Note:

    The AIMS/ERCS database of the incorrect year/TIN will remain in the group status. Do not update the status of the incorrect account to CCP.

  6. Forward the return and Form 3870 to CCP by either mail or fax. If the original return is secured, it must be mailed. All other forms of the return can be faxed to CCP.

  7. If mailing an original return and Form 3870 to CCP, use the following address and mail via overnight mail:


    Areas 201-207:
    IRS - Centralized Case Processing
    ATTN: FORT (Field Office Resource Team)
    5333 Getwell Road
    Memphis, TN 38118
    Fax: See the CCP Website for the fax number to CCP in Memphis.



    Areas 212-214 and 315:
    IRS - Centralized Case Processing
    ATTN: CCP Manager
    Mail Stop 8412-G
    201 W. Rivercenter Blvd.
    Covington, KY 41011
    Fax: See the CCP Website for the fax number to CCP in Cincinnati.

4.4.3.9.2  (09-16-2011)
Reprocessing Instructions - LB&I Cases Open Under Examination, Group Responsibility

  1. The group will secure the original return from Files.

    Note:

    A LB&I Imaging Network (LIN) return cannot be used as the document to be reprocessed. The original return must be secured.

    1. Use command code ESTAB to request the original return. (Follow local procedures when asking your AIMS/ERCS staff to ESTAB the return for you.) Go to the AIMS/ERCS website and click on the "Contacts" section. Look for the document titled, "AIMS/ERCS Personnel Listing" to locate your local AIMS/ERCS analyst.)

    2. If the return cannot be secured through ESTAB, a "Special Search" will need to be done. (Follow local procedures when asking your AIMS/ERCS staff to contact the Campus Files personnel.) Go to the AIMS/ERCS website and click on the "Contacts" section. Look for the document titled, "Contact List - Area Office/Campus Contacts (XLS)." Each Campus has a contact listed for "Files and/or Form 2275 requests." Contact the person shown as the "Files" contact to help you locate the original return.

    3. If the original return cannot be secured through the prior two steps, contact the taxpayer for a copy of the return.

  2. The group will complete Form 3870.

    1. In addition, annotate in Item 11, "Reason for Adjustment" , the following comments: "Return posted to the incorrect tax period or TIN. Please reprocess the attached return to the following tax period or TIN" (whichever is applicable).

    2. The examiner should also provide a complete explanation in Item 30, "Remarks" , explaining how the account is to be reprocessed.

  3. Keep a copy of the return for your files.

    Note:

    The AIMS/ERCS database of the incorrect year/TIN will remain in the group status. Do not update the status of the incorrect account to CCP.

  4. The original return and Form 3870 should be forwarded to the following address via overnight mail:



    IRS-CCP-Mail Stop 4020
    ATTN: FORT
    1973 N. Rulon White Blvd.
    Ogden, UT 84201

4.4.3.9.3  (09-16-2011)
SBSE and LB&I Continuation of Group Responsibility

  1. Reprocessing actions take approximately eight weeks to complete. Once the field examiner has been notified by CCP that the reprocessing action has been completed, the group will close both AIMS and ERCS controls on the incorrect tax period or TIN.

  2. AIMS and ERCS controls are closed on the incorrect tax period or TIN by completing Form 10904 , Request for Record Deletion from AIMS, using Disposal Code 33. Form 10904 is forwarded to the local AIMS/ERCS analyst section for input and updated to status 41 on ERCS (do not send Form 10904 to CCP for input).

  3. The group will work with their group secretary and/or local AIMS/ERCS analyst to establish AIMS/ERCS controls on the correct tax period or TIN.

  4. Once the return is reprocessed, AIMS/ERCS controls have been closed on the incorrect tax period or TIN and AIMS/ERCS controls have been established on the correct tax period or TIN, the examiner can forward their completed audit to the appropriate CCP office or Technical Services office for final closure of the examination.

4.4.3.9.4  (09-16-2011)
Reprocessing Instructions, CCP Responsibility

  1. This section contains instructions for CCP when a request is received to reprocess a return to the correct TIN or tax period.

    Note:

    Do not attempt to reprocess a return when the ASED is expired or imminent (within six months). An account transfer is necessary in this instance. Reference IRM 25.6.1.9.9.3, Statute of Limitations Processes and Procedures.

  2. Most requests for reprocessing will come through the FORT. When the request comes into the FORT team, CCP will determine if all of the information is available to reprocess a return. If not, instructions are provided to the field group as to what additional information is needed to reprocess the return.

    Note:

    If a return has never been processed (i.e. has not posted to another year or TIN), attach a Form 1725, Routing Slip, or local routing slip, and forward the return as received to Submission Processing. Ensure the IRS received date is entered on the return. If a Correspondence Imaging System (CIS) image is used and the return is signed, edit “CIS IMAGE - Do not correspond for signature” on the return. Submission Processing will correspond for any missing information on these returns. Refer to IRM 21.5.1.5.5, Processing/Reprocessing CIS Tax Returns, for additional information regarding CIS returns.

4.4.3.9.4.1  (09-16-2011)
Cases Involving Multiple Taxpayer Identification Numbers (TIN)

  1. On cases involving multiple TINs, determine if either account should be deleted.

  2. If necessary, contact the field examiner and/or Entity Control for purposes of deleting accounts, filing requirements and/or input of appropriate TC 59X.

4.4.3.9.4.2  (09-16-2011)
Reprocessing Returns That Have Posted to Master File

  1. When a return must be reprocessed (via Form 3893, Re-Entry Document Control, for IMF cases or a Form 13596, Reprocessing Returns, for BMF cases), refer to IRM 21.5.2.4.23 (7), Reprocessing Returns/Documents, for complete instructions on preparing these forms. Edit all BMF tax returns in green.

  2. When a dummy return is reprocessed in place of an original or duplicate return, use the same received date as the original or duplicate, respectively.

  3. Input TC 599, Closing Code 18 using IDRS Command Code FRM49 on the module to which the return is being processed when the receiving module is in MF Status Codes 02/03 (no TC 150 will be posted to the module).

  4. Input TC 971 with the appropriate action code (AC) on the incorrect module (this will identify the cross reference TIN/tax period data) whenever a return posted to an incorrect TIN/tax period and is being reprocessed to the correct module. Input TC 971 AC 017 on the module you are reprocessing the return to regardless of MF status. When inputting TC 971, use the correct transaction date (TRANS-DT) on IDRS Command Code REQ 77:

    1. A TC 971 AC 001 indicates reprocessing a TC 150. Use the return received date on CC TXMOD (located in the RET_RECVD_DT field) for the TRANS-DT.

    2. A TC 971 AC 002 indicates reprocessing TC 976. Use the posted TC 976 date on TXMOD for the TRANS-DT.

    3. TC 971 AC 017 indicates a processing return is being reprocessed to this period. The date depends on whether the original TC 150 is being reprocessed or the TC 976. Follow instructions as shown above for TRANS-DT. However, if the return posted to an earlier tax period with an incorrect date, use the actual received date of the return as the transaction date of the TC 971 AC 017.

      Note:

      A TC 971 AC 017 cannot be input on a period with a fiscal year month that differs from the one on ENMOD. (ENMOD displays name, address and other entity information). For example, a fiscal year taxpayer files a short period final return. It posts as a TC 976 on the tax period ended 200512, but needs to be processed to tax period 200603. Do not input a TC 971 AC 017 on 200603. This causes an unpostable condition since the fiscal year month (FYM) on ENMOD indicates 12. Do not change the FYM on ENMOD.

  5. If a TC 971 with one of the action codes listed above is incorrectly input on an account, reverse it with a TC 972 with the same action code.

4.4.3.9.4.3  (09-16-2011)
Two Returns Posted to Same Account, Correct Return Posted First

  1. If the TC 976 return is posted to an incorrect account, use IDRS and Corporate Files On-Line (CFOL) to determine the account to which it must be reprocessed.

  2. Once the correct account is determined, follow the instructions below.

4.4.3.9.4.3.1  (09-16-2011)
Reprocessing TC 976 Return to Module With No TC 150

  1. Use Form 3893 or Form 13596 to reprocess the return to the correct TIN or tax period. See IRM 21.5.2.4, Adjustment Guideline Procedures, for reprocessing instructions.

  2. On the module to which the return is being reprocessed:

    1. Input TC 971 AC 017 indicating where the return originally posted. See IRM 4.4.3.9.4.2 for proper input instructions.

    2. Input TC 599 Closing Code 18 if this account is in MF Status Codes 02 or 03.

  3. On the module from which the TC 976 return is being reprocessed:

    1. Input TC 290 for 0 (zero) (use appropriate hold code) to release the -A freeze if necessary. If transferring credits, use an appropriate hold code to prevent an erroneous refund from being issued.

    2. Transfer any credit which does not belong on this module (use TC 570 if necessary).

    3. Input TC 971 AC 002 using IDRS Command Code REQ77. See IRM 4.4.3.9.4.2 for proper input.

4.4.3.9.4.3.2  (09-16-2011)
Reprocessing TC 976 Return to Module With TC 150

  1. On the module to which the TC 976 return is being moved:

    1. To increase or decrease the tax, input TC 29X using the appropriate reference numbers. If transferring a credit to the module, use an appropriate hold code to prevent an erroneous balance due notice from being issued.

    2. If the TC 976 will be the original return for the receiving module, input the adjustment using a refile DLN blocking series 00X. If the TC 976 is an amended return for the receiving module, input the adjustment using an appropriate non-refile DLN blocking series.

    3. Use Priority Code 1 on the adjustment to allow the adjustment to post while the -L freeze is on the account.

    4. Cross out the incorrect TIN/tax period on the TC 976 return and enter the correct TIN/tax period. (It is not necessary to edit anything else on the return.)

    5. Attach the TC 976 return to the adjustment document.

  2. On the module from which the TC 976 return is being moved:

    1. Input TC 290 for 0 (zero) (use appropriate hold code) to release the -A freeze. If transferring credits, use an appropriate hold code to prevent an erroneous refund from being issued.

    2. Transfer any credits which do not belong on the module (use TC 570 if necessary).

    3. Input TC 971 AC 002 using IDRS Command Code REQ77.

4.4.3.9.4.4  (09-16-2011)
Two Returns Posted to Same Account, Incorrect Return Posted First

  1. When it is determined the TC 150 return has posted to an incorrect account, use IDRS and CFOL command codes to determine the account to which it must be reprocessed.

4.4.3.9.4.4.1  (09-16-2011)
Reprocessing TC 150 Return to Module With No TC 150

  1. Use Form 3893 or Form 13596 to reprocess the return to the correct TIN or tax period. See IRM 21.5.2.4, Adjustment Guidelines – Procedures.

  2. On the module to which the return is being reprocessed:

    1. Input TC 971 AC 017 indicating where the return originally posted.

    2. Input TC 599 Closing Code 18 if the account is in MF Status Codes 02 or 03.

  3. On the module from which the TC 150 is being reprocessed:

    1. Input TC 29X with the appropriate reference numbers to adjust the tax to the amount reflected on the TC 976 return. Use blocking series 00X-08X since the TC 976 is now the original return on the module. Use Priority Code 1 and the appropriate hold code if moving payments from the module to prevent an erroneous refund.

    2. Adjust penalties if necessary.

    3. Transfer any credits which do not belong on the module.

    4. Attach TC 976 return to the adjustment document.

    5. Input TC 971 AC 001 using IDRS Command Code REQ77.

4.4.3.9.4.4.2  (09-16-2011)
Reprocessing TC 150 Return to Module With TC 150

  1. On the module to which the TC 150 return is being moved:

    1. Input TC 29X to increase or decrease the tax using the appropriate reference numbers. Use Priority Code 1 if the account contains a -L freeze and the appropriate hold code if moving payments. If your adjustment will be the new original return for the period, input your action using a refile DLN blocking series 00X.

    2. Cross out the incorrect TIN/tax period on the TC 150 return being moved and enter the correct TIN/tax period. It is not necessary to enter anything else on the return.

    3. Attach the TC 150 return you are moving to the adjustment document.

  2. On the module from which the TC 150 return is being moved:

    1. Input TC 29X to increase or decrease the tax using the appropriate reference numbers. Use Blocking Series 00X-09X since the TC 976 is now considered the original return on the module. Adjust the tax for the difference between the TC 150 and TC 976 returns. Use Priority Code 1 if the account contains an -L freeze and the appropriate hold code if moving payments.

    2. Adjust penalties if necessary.

    3. Transfer credits if necessary. Input or generate TC 570 as appropriate.

    4. Input TC 971 AC 001.

    5. Attach the TC 976 return to the adjustment document.

4.4.3.9.4.5  (09-16-2011)
Reprocessing Returns with Failure to Deposit (FTD) Penalty Computation Other than Current MF Computation

  1. If a return being reprocessed contains an FTD penalty computed differently from that which would be computed under current processing:

    1. Verify the correct penalty amount.

    2. See IRM 20.1.4, Failure to Deposit Penalty, for more information.

    3. Edit a computer Condition Code (CCC) "J" if the taxpayer provided a valid explanation for non-assertion of the FTD penalty based on reasonable cause. See IRM 20.1.4.26, FTD Penalty Relief.

4.4.3.9.4.6  (09-16-2011)
FTD Discrepancies on Reprocessing Return Cases

  1. First conduct in-house research by verifying the return computation to ensure FTD information was correctly entered. If an error is found due to addition, subtraction, transposition of numbers or misapplied entries:

    1. Correct the deposit amount claimed on the return and,

    2. Reprocess the return to the correct module if necessary.

  2. If FTD payments are missing or misapplied, research the FTD Credit Module (MFT 01, tax period 000000), the "Unidentified Remittance File" and prior and subsequent tax periods to locate payments.

  3. Transfer any erroneously posted payments to the correct modules. See IRM 21.5.8, Credit Transfers.

  4. When resolving reprocessing return conditions involving returns subject to a FTD penalty, compare the "Record of Federal Tax Liability" (ROFTL) section of the return against deposits and payments posted to the modules involved. This applies to returns posted to correct modules as well as those being reprocessed to other modules.

  5. If deposit and credit amounts posted to a module differ from the return tax liability by $250 or more, perform research to resolve any discrepancies.

  6. Before closing the case, check IDRS to see if a CP 194 notice or a CP 207 notice was issued. If so, coordinate with Accounts Management to prevent erroneous FTD penalty assessments.


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