4.24.8  Examination Guidance for Excise Claims for Refund or Abatement

Manual Transmittal

August 05, 2014

Purpose

(1) Revised IRM. This transmits revised IRM 4.24.8, Excise Tax, Examination Guidance for Excise Claims for Refund or Abatement.

Material Changes

(1) Subsection titles have been renamed, reorganized and expanded. Updates have been made throughout this section to reflect changes in legislation and changes to the excise claim control, report writing, and case closing procedures. Incorporated Interim Guidance Memos listed below. Updated exhibits to add clarity.

(2) Restructure content to better reflect report writing and case processing of all the types of claim reporting situations both paid or unpaid.

(3) Listed below is a table of the 2-24-2012 IRM cites and changes made.

Old IRM Section Number Description of Change
4.24.8.1 Overview Updated content and added (3) to remind examiner to analyze claim history during every exam.
4.24.8.2 Types of Claim Reporting Forms Updated content to reflect legislative changes.
4.24.8.3 Types of Claims Reorganized and updated existing content for clarity.
4.24.8.4 Statute of Limitations for IRC 6416(a)(4), 6421, 6426 and 6427 Claims Updated content for clarity, revised existing examples and added new example (10).
4.24.8.5 Excise Claim Classification and Control Procedures Updated existing content and incorporated SBSE 04-1013-0084, Determining Exam Period. Incorporated SBSE 04-0514-0043 Use of Push Code 51.
4.24.8.6 Refund Categories Updated existing content for clarity.
4.24.8.7 Source Code 30 Unpaid Claims - Allowed on Survey Content updated and moved to 4.24.8.7.1 through 4.24.8.7.3. Retitled to Unpaid Claims and address the 5 unpaid claim types.
4.24.8.8 Source Code 30 Unpaid Claims - Regular Agreed Content updated and expanded to cover completion of the report or case processing form. Retitled to Unpaid Claims Agreed Report Writing and Case Processing Procedures. Incorporated SBSE 04-1013-0083 here.
4.24.8.9 Source Code 30 Unpaid Claims - Unagreed and Excepted Agreed Cases Contents updated and portions moved to specific sections in 4.24.8.8 relating to the report or case processing form. Retitled to Unpaid Claims Unagreed and Excepted Agreed Cases.
4.24.8.10 Source Code 31 Claims- Third Party Paid Claims Contents updated and portions moved to specific sections in 4.24.8.12 relating to the report or case processing form. Retitled to Paid Claims (Source Code 31) Introduction.
4.24.8.11 Centralized Classification of IRC 4081(e) Claims Moved to 4.24.8.16. Title changed to Paid Claims (Source Code 31) Survey and new content added relating to survey of paid claims.
4.24.8.12 Abatement Claims Related to Examination Assessments Moved to 4.24.8.17. Title changed to Paid Claims-Report Writing and Case Processing Procedures and new content added relating to completion of Form 5384, 5344, and 3198. Incorporated SBSE 04-0114-0011 here.
4.24.8.13 No Consideration Given To Certain Refund Claims Moved to 4.24.8.18. Title changed to Paid Claims-Unagreed Report Writing Procedures and new content added.
4.24.8.14 Claims in Cases Previously Considered by Appeals Moved to 4.24.8.19. Title changed to Agreed Paid Claim Statute of Limitation Considerations and content from 4.24.8.10.1 moved here.
4.24.8.15 Suits for Recovery of Erroneous Refunds Existing content moved to 4.24.8.20. Retitled to Unagreed Paid Claim Statute of Limitation Considerations and content from 4.24.8.10.2 moved here. Incorporated SBSE 04-1013-0082 here.
4.24.8.16 Use of Form 907 Agreement to Extend the Time to Bring Suit Existing content moved to 4.24.8.21. Retitled to IRC 4081(e) Claims and content from 4.24.8.11 moved here.
4.24.8.17 Request for Reconsideration of Disallowed Claims Existing content moved to 4.24.8.22. Retitled to examination Assessment Abatement Claims and content from 4.24.8.12 moved here.
4.24.8.18 Restricted Interest Existing content moved to 4.24.8.23. Retitled to No Consideration Given to Certain Refund Claims and content from 4.24.8.13 moved here.
4.24.8.19 Claims for Refunds of an Overpayment of Excise Tax on Insurance Policies Issued by a Foreign Insurer or Reinsurer Existing content moved to 4.24.8.24. Retitled to Claims Previously Considered by Appeals and content from 4.24.8.14 moved here.
NEW 4.24.8.20 Suits for Recovery of Erroneous Refunds Content from 4.24.8.12.3 moved here and retitled to Erroneous Refunds-Suits to Recover.
NEW 4.24.8.21 Use of Form 907 Agreement to Extend the Time to Bring Suit Content from 4.24.8.12.4 moved here and retitled as Form 907- Agreement to Extend the Time to Bring Suit.
NEW 4.24.8.22 Request for Reconsideration of Disallowed Claims Content from 4.24.8.13 moved here.
NEW 4.24.8.23 Restricted Interest Content from 4.24.8.14 moved here.
NEW 4.24.8.24 Claims for Refund of an Overpayment of Excise Tax on Insurance Policies issued by a Foreign Insurer or Reinsurer Content from 4.24.11.10 moved here.
Exhibit 4.24.8-1. Filing Due Dates Content reorganized and retitled exhibit to Claim Types, Filing Methods and Claim Due Dates.
Exhibit 4.24.8-2. Statute Dates and Recovery of Erroneously Paid Claims Deleted existing content.
Exhibit 4.24.8-3. Searching for Excise Claims on IDRS/CFOL Moved relevant content and retitled as Exhibit 4.24.8-2. New exhibit added as a table showing payment types for gasoline purchases and who is claimant.
Exhibit 4.24.8-4. Credit Reference Numbers and Corresponding Abstract Numbers Deleted existing exhibit as content in IMS and on web site. New exhibit added as a table showing payment types for diesel purchases and who is claimant.

Effect on Other Documents

This material supersedes IRM 4.24.8, dated 2-24-2012. This IRM section includes procedural guidance found in the following Interim Guidance Memos:
SBSE-04-1013-0082, Reissued Expanded Procedures for Protecting the Statute of Limitation Period for Source Code 31 Unagreed Third Party Paid Claims, dated 10-21-2013;
SBSE 04-1013-0083, Reissued Interim Guidance on Consideration of the Excessive Claims Penalty with Respect to Use of Certain Fuels Under IRC 6675, dated 10-21-2013;
SBSE 04-1013-0084, Reissue Form 8849 Claim for Refund of Excise Taxes, Examination Period, dated 10-21-2013;
SBSE 04-0514-0043, Reissue Use of Push Code 051 for SFR Paid Claim Controls, dated 5-21-2014.
SBSE-04-0114-0011, Interim Guidance on Persons Not Required to file a Tax Return-Increases to Paid Claims During Exams, dated 1-14-2014.

Audience

This section is for SBSE Excise Managers, Examiners and Specialists.

Effective Date

(08-05-2014)



John H Imhoff Jr.
Director, Specialty Programs
Small Business/Self Employed

4.24.8.1  (08-05-2014)
Overview

  1. This section provides general guidelines and procedures for excise tax claims.

  2. The excise tax claims web page is at: http://mysbse.web.irs.gov/Specialty/excise/issues/claims/default.aspx The web page provides additional claim information that includes IRC citations, filing due dates, type of use tables, statute dates, and legislative developments.

  3. General exam procedures are used on excise tax claims for refund cases. IRM 4.24.6, Technical Guidance and Procedures for Excise Issues and IRM 4.24.10, Excise Tax Examination Reports, Case Closing and Appeals Procedures, provide specific information.

  4. An excise exam includes analysis of all claims and Form 720 abstracts reported in the primary, prior, and subsequent periods. IRM 4.24.6.3.6 states that a summary of the analysis and conclusion is included on the B200-1, Multi-Period and Related Returns Checksheet.

  5. This IRM section does not contain information for every possible claim for credit or refund situation. Excise examiners should exercise care and conduct necessary research specific to the examination.

  6. Excise examiners should refer to procedures found in IRM 4.24.6.15 to request the assistance or advice of an Excise Subject Matter Expert (SME).

4.24.8.2  (08-05-2014)
Claim Form Types

  1. Form 720X, Amended Quarterly Federal Excise Tax Return, is a request for a credit or refund of an overpayment reported on Form 720, Quarterly Federal Excise Tax Return. IRM 21.7.8.4.1.7 provides additional Form 720X information. IRM 4.24.8.6.1 describes the Campus Compliance Operations, Cincinnati (CCOC) processing of amended excise tax returns.

  2. Form 8849, Claim for Refund of Excise Taxes , is a request for an excise tax refund other than adjustments to reported liabilities. IRM 21.7.8.4.5 provides additional Form 8849 information.

  3. Form 720, Schedule C is a request for credit against reported excise tax liabilities and may be used in lieu of Form 8849.

  4. Form 4136, Credit for Federal Tax Paid on Fuels, is an income tax credit request, (in place of Form 8849 or Form 720, Schedule C) for the following claim types:

    • nontaxable uses of fuel,

    • sales of fuel, or

    • certain fuel mixtures or alternative fuels

    for income tax year instead of claiming a refund on Form 8849.

  5. Form 6478, Alcohol and Cellulosic Biofuels Credit, along with Form 3800, General Business Credit, may be used to claim a credit against income tax for certain:

    • sales,

    • production of biofuels, and

    • uses of alcohol as fuel not claimed or cannot be claimed on Schedule C of Form 720, 4136, or 8849.

    • The alcohol mixture, alcohol, and small ethanol producer credits expired December 31, 2011.

    • A second generation biofuel producer credit, renamed the cellulosic biofuel producer credit, added algae-based fuel and covered fuel sold or used after January 2, 2013, and before January 1, 2014. The second generation biofuel producer credit expired on December 31, 2013.

    .

  6. Form 8864, Biodiesel and Renewable Diesel Fuel Credit, along with Form 3800 may be used to claim a credit against income tax as a general business credit for certain: sales and uses of biodiesel and renewable diesel fuels not claimed or cannot be claimed on Schedule C of Form 720,Form 4136, or 8849.

  7. Form 843, Claim For Refund and Request for Abatement , may be used to claim a refund (or abatement) of certain overpaid (or over-assessed) taxes, interest, penalties, and additions to tax. IRM 4.24.16.3 contains additional information on fuel compliance penalty claim procedures.

  8. The Alternative Fuel, Biodiesel, Renewable Diesel Fuel Credit, and Mixture Credits, except for the Liquefied Hydrogen Alternative Fuel Credit expired December 31, 2013. The Liquefied Hydrogen Alternative Fuel Credit is set to expire September 30, 2014. The Alcohol Credit expired December 31, 2011.

4.24.8.2.1  (08-05-2014)
Form 8849 Excise Tax Claim Processing

  1. Form 8849 submissions are received by Centralized Specialty Tax Operations (CSTO).

  2. IRM 21.7.8, Business Tax Returns and Non-Master File Accounts-Excise Taxes outlines excise tax claim processing.

  3. CSTO may allow, disallow, select for exam, or not consider, (based on criteria found in IRM 4.24.8.13 ), a claim.

  4. IRM 4.24.8.8 through 4.24.8.13 provide claim report writing guidance.

4.24.8.3  (08-05-2014)
Claim Types

  1. IRC 6402, Administrative claim for refund states the general rule that allows refunds or credits of overpayments to the person who made the overpayment.

  2. The Internal revenue Code allows for specific claims for refund for:

    • IRC 6412, Floor Stocks Refunds

    • IRC 6415, Persons who collected certain taxes

    • IRC 6416, Overpayment of tax imposed by Chapter 31 and 32

    • IRC 6419, Wagering Tax Refund Claims

    • IRC 6420, Gasoline Used on Farms

    • IRC 6421, Gasoline used for certain non-highway, local transit systems, or certain exempt purposes

    • IRC 6426, Credit for alcohol fuel, biodiesel, and alternative fuel

    • IRC 6427, Fuels not used for taxable purposes

    Note:

    The following subsections contain an overview of the code sections listed above. The excise examiner should refer to the specific code sections and regulations to research applicable exam issues.

4.24.8.3.1  (08-05-2014)
IRC 6402, Administrative Claim for Refund

  1. The Secretary may credit or refund any tax overpayment, (plus interest), less any past-due support (as defined in section 464(c) of the Social Security Act), debts owed to Federal agencies, past-due, legally enforceable State income tax obligations, and unemployment compensation debts.

4.24.8.3.2  (08-05-2014)
IRC 6412, Floor Stocks Refunds

  1. IRC 6412 allows a claim or refund for excise tax paid on floor stock where the tax rate was reduced, or the statute expired or was repealed.

4.24.8.3.3  (08-05-2014)
IRC 6415, Persons who Collected Certain Taxes

  1. IRC 6415 allows a claim for the overpayment of communications or air transportation taxes. Alternatively, this claim may also be made under IRC 6402.

  2. A claim may be filed within the limitation period prescribed by IRC 6511(a). However, instead of filing a claim for refund, a taxpayer may apply the overpayment claim amount against the same tax on a subsequent return.

  3. Refunds are reflected on Master File Tax (MFT) 03 account.

4.24.8.3.4  (08-05-2014)
IRC 6416, Overpayment of Tax Imposed by Chapter 31 and 32

  1. Generally, the person who paid the tax that did not pass the tax to another, and obtained ultimate vendor written consent, is the person to file an overpayment of tax imposed by Chapter 31 (Retail) and 32 (Manufacturing) claim. However, registered ultimate vendor or credit card issuers must administer gasoline tax credits and refunds. The ultimate purchaser may file gasoline tax credits or refunds for gasoline purchases that include tax from unregistered suppliers.

  2. The table listed below summarizes claim filing rules for the sale of gasoline to State or local governments (SLG) and to non-profit educational organizations (NPEO):

    Payment Type Purchase From Claimant IRC
    SLG and NPEO pays by cash or check Non registered UV SLG or NPEO 6421(c), Notice 2005-80 4(b)(1)(v)
    SLG and NPEO pays by cash or check Registered UV UV registrant 6416(a)(4)(A), Notice 2005-80 4(b)(1)(iii)
    SLG and NPEO pays by credit card Non registered CC SLG or NPEO 6416(a)(4)(B), Notice 2005-80 4(b)(1)(v)
    SLG and NPEO pays by credit card Registered CC (from a UV or non UV) CC registrant 6416(a)(4)(B), Notice 2005-80 4(b)(1)(ii)

    Note:

    Fuel vendors who have Form 637 Registration Activity Letter UV and CC cannot file gasoline claims on Form 4136.

  3. Any portion of a refund made under IRC 6416(a)(4), Registered ultimate vendor or credit card issuer to administer credits and refunds of gasoline tax, which constitutes an excessive amount, as defined in IRC 6675(b) and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4081. The assessment period is 3 years from the last day prescribed for the filing of the claim. IRM 4.24.8.4 provides additional statute of limitation information.

  4. A registered ultimate vendor or credit card Issuer claim cannot be less than $200 and a one week period.

  5. IRC 6206 prescribes a 3 year period, (from the last day prescribed for filing the claim), to assess an excessive claim penalty under IRC 6675.

4.24.8.3.5  (08-05-2014)
IRC 6419, Wagering Tax Refund Claims

  1. A credit may be claimed by a person who overpays IRC 4401, excise tax on wagers. A claim may be made on Form 843, 8849 Schedule 6, or taken as a credit against the tax on a subsequent return. A claim must include a statement of facts as prescribed in Treas Reg 44.6419-1. This claim type is non-interest bearing.

  2. IRM 21.7.8.4.5.7.7 describes Form 8849, Schedule 6, Claims Relating to Taxes Reported on Form 730.

4.24.8.3.6  (08-05-2014)
IRC 6420, Gasoline Used on Farms

  1. In general, tax paid for gasoline used on a farm may be claimed by the ultimate purchaser as a non-interest bearing, annual (one-claim rule) claim on Form 4136.

  2. Persons not subject to income tax, i.e. The United States, a state, political subdivision of a state, or the District of Columbia, or organizations exempt from income tax under IRC 501(a) (provided that the organization is not required to file Form 990-T, Exempt Organization Business Income Tax Return, for that taxable year) are permitted to file claims on Form 8849 Schedule 1, Nontaxable Use of Fuels.

  3. Any portion of a refund made under IRC 6420, Gasoline used on farms, which constitutes an excessive amount, as defined in IRC 6675(b), and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4081. The assessment period is 3 years from the last day prescribed for the filing of the claim. IRM 4.24.8.4 provides additional statute of limitation information.

4.24.8.3.7  (08-05-2014)
IRC 6421, Gasoline Used for Certain Non-Highway, Local Transit Systems, or Certain Exempt Purposes

  1. In general, tax paid for gasoline used for certain non-highway purposes used by local transit systems or sold for certain exempt purposes may be claimed by the ultimate purchaser as a non-interest bearing, annual (one-claim rule) claim. However, an exception to the annual claim exists for quarterly payments on aggregate amounts (at least $ 750) payable under IRC 6421 and 6427 are permitted and must be filed during the first quarter following the last quarter included in the claim. See IRC 6427(i)(2) for additional information.

  2. Persons not subject to income tax, i.e. The United States, a state, political subdivision of a state, or the District of Columbia, or organizations exempt from income tax under IRC 501(a) (provided that the organization is not required to file Form 990-T for that taxable year) are permitted to file claims on Form 8849, Schedule 1.

  3. Any portion of a refund made under IRC 6421, which constitutes an excessive amount, as defined in IRC 6675(b), and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4081. The assessment period is 3 years from the last day prescribed for the filing of the claim. IRM 4.24.8.4 provides additional statute of limitation information.

4.24.8.3.8  (08-05-2014)
IRC 6426, Credit for Alcohol Fuel, Biodiesel, and Alternative Fuel

  1. Alcohol fuel mixture, biodiesel mixture, alternative fuel, and alternative fuel mixture credits are first required to be offset against taxes paid under IRC 4081 or 4041. To be eligible, a claimant must meet specific fuel property, registration, and/or time frame requirements as prescribed under IRC 6426. The credit is typically reported on Form 720, Schedule C.

  2. Fuel Mixture and Alternative Fuel Claim Expiration Dates:

    • Alcohol fuel mixture credit – December 31, 2011

    • Biodiesel mixture credit – December 31, 2013

    • Alternative fuel credit, other than liquefied hydrogen – December 31, 2013, (September 30, 2014 for liquefied hydrogen)

    • Alternative fuel mixture credit – For IRC 6426 December 31, 2013, For IRC 6427- December 31, 2011

4.24.8.3.9  (08-05-2014)
IRC 6427, Fuels Not Used for Taxable Purposes

  1. Claims under this code section include:

    • Intercity, local, or school buses

    • Use for farming purposes

    • Use by certain aircraft museums or in certain other aircraft uses

    • Alcohol, biodiesel, or alternative fuel (See IRM 4.24.8.3.8(2) for fuel mixture and alternative fuel claim expiration dates)

    • Blend stocks not used for producing taxable fuel

    • Nontaxable uses of diesel fuel and kerosene

    • Diesel fuel used to produce emulsion

    Note:

    Treas. Reg. 48.6427-8, Diesel fuel and kerosene; claims by ultimate purchasers, illustrates specific requirements and examples for this claim type.

  2. The table listed below summarizes claim filing rules for the sale of diesel fuel and kerosene to State or local governments (SLG) and to non-profit educational organizations (NPEO):

    Payment Type Purchase From Claimant IRC
    SLG pays by cash or check Non registered UV No proper claimant Notice 2005-80 4(b)(2)(ii)
    NPEO pays by cash or check Non registered UV NPEO 6427(I)(1)
    SLG or NPEO pays by cash or check Registered UV UV registrant 6427(I)(5)(A),6427(I)(5)(C), Notice 2005-80 4(b)(2)(ii)
    SLG or NPEO pays by credit card Non registered CC SLG or NPEO 6427(I)(5)(D), 6427(I)(1), Notice 2005-80 4(b)(2)(iii)
    SLG or NPEO pays by credit card Registered CC (from a UV or non UV) CC registrant 6427(I)(5)(D), Notice 2005-80 4(b)(2)(i)

    Note:

    SLG cannot file diesel claim if paid by cash or check from either a UV or non UV registrant. SLG cannot file diesel and kerosene claims for purchases from an unregistered ultimate vendor.

  3. Any portion of a refund made under IRC 6427, which constitutes an excessive amount, as defined in IRC 6675(b) and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4041 or 4081. The assessment period is 3 years from the last day prescribed for the filing of the claim. IRM 4.24.8.4 provides additional statute of limitation information.

  4. In general, tax paid on fuels not used for taxable purposes, or mixtures of alcohol, biodiesel, or alternative fuel and alternative fuel producers that used or sold the fuel in their trade or business, may file a non-interest bearing, annual (one-claim rule) claim. However, other than for farming purposes and alcohol, biodiesel, or alternative fuel claims, an exception to the annual claim exists for quarterly payments, on aggregate amounts (at least $ 750) payable under sections IRC 6421 and 6427, are permitted and must be filed during the first quarter following the last quarter included in the claim. See IRC 6427(i)(2) for additional information.

  5. Mixture credits and alternative fuel credits have a special rule to the annual claim requirement that permits Form 8849 claims as long as the claim is not less than $200 and shorter than a one week period. Electronically filed mixture and alternative fuel claims do not need to meet the $200 limitation. These claims must be filed on or before the last day of the first quarter following the earliest quarter included in the claim

  6. If the Secretary has not paid a mixture or alternative fuel claim within 45 days of the date of the filing (20 days in the case of an electronic claim), the claim shall be paid with interest.

  7. A special vendor claim rule exists for diesel fuel used in certain intercity buses, and kerosene used in aviation or sold to state and local governments. A vendor claim may be filed if it is in excess of $200 ($100 in the case of kerosene) and equal to or greater than a 1 week period.

  8. Persons not subject to income tax, i.e. The United States, a state, political subdivision of a state, or the District of Columbia, or organizations exempt from income tax under IRC 501(a) (provided that the organization is not required to file Form 990-T for that taxable year) are permitted to file claims on Form 8849, Schedule 1.

  9. A state or local government tax-exempt sale by a registered ultimate vendor or registered credit card issuer that is resold by that state or local government to another state or local government does not change the character of the fuel sale and is permitted. A resale from a state or local government to a nonprofit organization (other than the Red Cross) or to any non-state or non-local government entity would invalidate the tax exemption status.

4.24.8.4  (08-05-2014)
Statute of Limitation for IRC 6416(a)(4), 6420, 6421, 6426 and 6427 Paid Claims

  1. Any portion of a refund made under IRC 6416(a)(4), 6420, 6421, or 6427 which constitutes an excessive amount (as defined in section IRC 6675(b), and any civil penalty provided by IRC 6675 may be assessed 3 years from the last day prescribed for the filing of such claim. The statute of limitation cannot be extended.

  2. Any portion of an IRC 6426 claim which constitutes an excessive amount may be assessed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid. IRC 6511(c) allows the statute of limitation to be extended by agreement.

  3. An alcohol, biodiesel, or alternative fuel claim, filed on Form 720, Schedule C, may include both IRC 6426 and 6427 claims. The IRC 6427 portion of a paid claim may not be extended.. The claims must be closed separately if the IRC 6426 exam period is extended.

4.24.8.4.1  (08-05-2014)
Examples of Statute of Limitation Dates for Claims

  1. The excise examiner determines and protects the statute of limitation (SOL) of all examinations. IRM 25.6.23, Examination Process - Assessment Statute of Limitations Controls., provides information on SOL protection actions.

  2. Exhibit 4.24.8-1 lists various claim type due dates to help determine an SOL expiration date.

  3. The following 10 claim examples serve as additional guidance:

    • Form 8849 Claims - example 1 through 5

    • Form 720, Schedule C - example 6 and 7

    • Annual claim by State and local government - example 8 through 10

  4. Below are 5 Form 8849 claim statute examples:

    Facts Synopsis
    Example 1:
    • Claimant – Registered UV Ultimate Vendor, calendar year income tax filer

    • Return – Form 8849, Schedule 2, Sales by Registered Ultimate Vendors

    • Claim Type – Use by a state or local government

    • Claim Period – January 1, 2009 to March 31, 2009

    • Claim File Date – June 15, 2009

    • Claim Paid Date – Timely filed

    This claim falls under IRC 6427(i)(4) which requires this claim to be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The statute of limitation (SOL) date is June 30, 2012 (3 years from the last day that the claim may be filed). Furthermore, IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended.
    Example 2:
    • Claimant – Registered UV Ultimate Vendor, calendar year income tax filer

    • Return – Form 8849, Schedule 2, Sales by Registered Ultimate Vendors

    • Claim Type – Use by a state or local government

    • Claim Period – January 1, 2009 to May 31, 2009

    • Claim File Date – June 15, 2009

    • Claim Paid Date – Timely filed

    This claim falls under IRC 6427(i)(4) which requires this claim to be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The statute of limitation (SOL) date is June 30, 2012 (3 years from the last day that the claim may be filed). Furthermore, IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended.
    Example 3
    • Claimant – Construction Company, calendar year income tax filer

    • Return – Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Claim Type – Nontaxable use of diesel fuel

    • Claim Period – January 1, 2009 to June 30, 2009

    • Claim File Date – July 1, 2009

    • Claim Paid Date – Timely filed

    This claim falls under IRC 6427(i)(2)(B) which requires this claim to be filed by September 30, 2009 (last day of the first quarter following the last quarter included in the claim). The statute of limitation (SOL) date is September 30, 2012 (3 years from the last day that the claim may be filed.) Furthermore, IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended.
    Example 4
    • Claimant – Registered “M” Blender, calendar year income tax filer

    • Return – Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit

    • Claim Type – Biodiesel Mixture Credit

    • Claim Period – January 1, 2009 through January 31, 2009

    • Claim File Date – February 20, 2009

    • Claim Paid Date – Timely paid

    • Supplemental Claim Information – The Form 8849 claim amount exceeded the 2009 first quarter 4081 tax liability. Form 720 was filed April 21, 2009.

    This claim falls under IRC 6426 (up to Form 720IRC 4081 tax liabilities) and IRC 6427 (the amount that exceeds Form 720IRC 4081 liabilities). The SOL for the IRC 6426 claim is April 30, 2012 (generally 3 years from the time Form 720 was filed (but not less than the required filing date) or 2 years from the time the tax was paid whichever is later). The SOL for IRC 6426 claim may be extended by agreement under IRC 6511(c). The claim portion that exceeds Form 720IRC 4081 tax liabilities falls under IRC 6427(i)(3)(C) which required the claim be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is June 30, 2012 (3 years from the last day that the claim may be filed.) However, IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended.
    Example 5
    • Claimant – Registered M Blender, calendar year income tax filer

    • Return – Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit

    • Claim Type – Biodiesel Mixture Credit

    • Claim Period – December 15, 2009 through January 13, 2010

    • Claim File Date – January 27, 2010

    • Claim Paid Date – Timely paid

    • Supplemental Claim Information – The Form 8849 claim amount exceeded the 2009 fourth quarter and 2010 first quarter IRC 4081 tax liabilities. Form 720 was timely filed for the 2009 4th quarter and 2010 1st quarter.

    This claim falls under IRC 6426 (up to Form 720IRC 4081 tax liabilities) and IRC 6427 (the amount that exceeds Form 720IRC 4081 liabilities). The claim period may carry over to the next calendar year. The SOL for the IRC 6426 claim is January 31, 2013 and April 30, 2013 (generally 3 years from the time Form 720 was filed (not less than the required filing date) or 2 years from the time the tax was paid), The SOL for IRC 6426 claims may be extended by agreement under IRC 6511(c). The claim portion that exceeds IRC 4081 falls under IRC 6427(i)(3)(C) which requires this claim to be filed by March 31, 2010 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is March 31, 2013 (3 years from the last day that the claim may be filed.) IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended.

    .

  5. Below are 2 Form 720 Schedule C statute examples :

    Facts Synopsis
    Example 6
    • Claimant – Registered AL Alternative Fueler

    • Return – 2009 1st Quarter Form 720, Quarterly Federal Excise Tax Return

    • Amounts Reported: IRS No. 120 CNG for $183 Schedule C line 14c CRN 428 credit for $500

    • Claim Type – Compressed Natural Gas Credit

    • Claim Period – January 1, 2009 through March 31, 2009

    • Claim File Date – on or before April 30, 2009

    • Claim Paid Date – Timely paid

    This CRN claim falls under IRC 6426 (up to Form 720, IRC 4041 tax liability) and IRC 6427 (the amount that exceeds Form 720IRC 4041 liability) $183 and $317, respectively. The SOL for the $183 IRC 6426 claim is April 30, 2012 (generally 3 years from the time Form 720 was filed (not less than the required filing date) or 2 years from the time the tax was paid), The SOL for IRC 6426 claim may be extended by agreement under IRC 6511(c). The $317 IRC 6427 claim portion that exceeds IRC 4041 falls under IRC 6427(i)(3)(C) which requires the claim be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is June 30, 2012 (3 years from the last day that the claim may be filed.) IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL for $317 can NOT be extended.
    Example 7
    • Claimant – Registered AM Alternative Fuel Mixture Producer

    • Return – 2013 1st Quarter Form 720, Quarterly Federal Excise Tax Return

    • Amounts Reported-IRS No. 062 Gasoline $12,000, IRS No. 112 Liquefied petroleum gas (LPG) - $10,000, IRS No. 120 Compressed natural gas (CNG) - $10,000, IRS No. 121 Liquefied hydrogen - $10,000, IRS No. 124 Liquefied natural gas - $10,000 Schedule C line 14h CRN 436 credit for $52,000

    • Claim Type – Liquefied gas derived from biomass used as fuel in a furnace

    • Claim Period – January 1, 2013 through March 31, 2013

    • Claim File Date –April 10, 2013

    • Claim Paid Date – Timely paid

    This CRN claim amount that falls under IRC 6426 (limited to Form 720IRC 4081 tax liabilities) is $12,000 with an SOL date of April 30, 2016 (generally 3 years from the time Form 720 was filed (not less than the required filing date) or 2 years from the time the tax was paid), The SOL for IRC 6426 claim may be extended by agreement under IRC 6511(c). ---------------------------------------------------- The $40,000 balance is not permitted as the alternative fuel mixture credits under IRC 6427 were repealed after December 31, 2011. See IRM 4.24.8.3.8(2). As stated above, the credit falls under IRC 6426 and is limited to Form 720IRC 4081 tax liabilities. The SOL date to assess tax on the excessive claim amount and impose an IRC 6675 excessive claim penalty (if reasonable cause does not exist) is June 30, 2016 (3 years from the last day that a claim of this type may be filed.) IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL for the $40,000 assessment and applicable penalty can NOT be extended."
       
  6. Listed below are 3 examples of SOL dates for annual claims filed by state and local governments:

    Facts Synopsis
    Example 8
    • Claimant – Registered UV Ultimate Vendor

    • Return – 2009 1st Quarter Form 720, Quarterly Federal Excise Tax Return

    • Claim Type – Diesel fuel use by a state or local government

    • Claim Period – January 1, 2009 through March 31, 2009

    • Claim File Date – on or before April 30, 2009

    • Claim Paid Date – Timely paid

    This claim falls under IRC 6427(l)(5) which required the claim to be filed by June 30, 2009 (last day of the first quarter following the last quarter included in the claim). The statute of limitation (SOL) date for the claim is June 30, 2012 (3 years from the last day that the claim may be filed). IRC 6427 paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended. An important distinction is that the code section defines claim and statute requirements and not the return used to report the information. This is evidenced by the fact that the Form 720 return was due April 30, 2009 and has an April 30, 2012 SOL date. Furthermore, Form 720X, Amended Quarterly Federal Excise Tax Return, generally cannot be used to amend Form 720, Schedule C claims or extend the statute of limitation. IRM 25.6.22, Statute of Limitations, Extension of Assessment Statute of Limitations by Consent, provides guidelines on statute extensions.
    Example 9
    • Claimant – State government entity, fiscal year-end March 31

    • Return – Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Claim Type – Ultimate purchaser - nontaxable use of gasoline

    • Claim Period – April 1, 2009 to March 31, 2010

    • Claim File Date – March 31, 2010

    • Claim Paid Date – Timely paid

    • Supplemental information – The gasoline fuel was not purchased from a registered ultimate vendor or registered credit card issuer.

    IRC 6416(a)(4) requires the registered ultimate vendor or registered credit card issuer to file gasoline claims used by a State. In the event that the ultimate vendor or credit card issuer is not registered then the State may file a claim. For this example, the claim must be filed by March 31, 2013, (no later than three years following the close of the State’s taxable year Tres Reg 48.6421-3(b)). The statute of limitation (SOL) date for the claim is March 31, 2016 (3 years from the last day that the claim may be filed). IRC 6416(a)(4) paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended. Note: IRC 6427(l)(5) does not allow a State or local government to file a claim for diesel fuel and kerosene, only the registered ultimate vendor or registered credit card issuer may file. The State or local government may file a claim for diesel or kerosene purchases from an unregistered credit card issuer but not an unregistered ultimate vendor.
    Example 10
    • Claimant – State government entity, fiscal year-end April 30

    • Return – Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Claim Type – Ultimate purchaser – nontaxable use of gasoline

    • Claim Period – May 1, 2012 to July 31, 2012

    • Claim File Date – August 31, 2012

    • Claim Paid Date – timely paid

    • Supplemental information – The gasoline fuel was not purchased from a registered ultimate vendor or registered credit card issuer

    IRC 6416(a)(4) requires the registered ultimate vendor or registered credit card issuer to file gasoline claims sold to a State. In the event that the ultimate vendor or credit card issuer is not registered or ineligible to file a claim then a State may file a gasoline claim. In this example, the state filed a quarterly gasoline claim. A State may file quarterly gasoline claims under IRC 6427(i)(2). The statute of limitation (SOL) date for the claim is October 31, 2015 (3 years from the last day that the claim may be filed). IRC 6416(a)(4) paid claims are assessed under IRC 6206 which means that the SOL can NOT be extended. Note: IRC 6427(l)(5) requires the registered ultimate vendor or registered credit card issuer to administer claims for diesel fuel or kerosene sold to States. A State may file a claim for diesel or kerosene purchases from an unregistered credit card issuer but not for an unregistered ultimate vendor.

4.24.8.5  (08-05-2014)
Excise Claim Classification and Control Procedures

  1. Excise tax paid and unpaid claims and amended returns are classified by Centralized Specialty Tax Operations (CSTO) at Campus Compliance Operations, Cincinnati (CCOC). Interest bearing fuel claims (Form 8849 Schedules 2, 3, and 8) are always paid claims. IRM 21.7.8.3.2(2) describes the classification criteria. Claims related to an original excise tax return are not classified by CSTO, but forwarded for association with the return.

  2. Paid claims are also classified by Exam Operations Support (EOS) Planning and Special Projects Workload Identification and Classification (PSPWIC). IRM 4.24.18.3.4 provides claims classification and control procedure information. IRM Exhibit 21.5.3-2 highlights mandatory selection criteria.

  3. Unpaid claim cases must be started immediately upon assignment.

  4. The excise examiner must begin working unpaid claim cases within 30 days of case assignment.

4.24.8.5.1  (08-05-2014)
Master File Control Procedures for Form 8849 Claims

  1. CSTO unpaid claim selection process:

    1. Check for Transaction Code (TC) 150 on Master File to determine if excise tax return posted. If yes, Form 8849 claims are established with MFT 40, Source Code 30 (unpaid claim), and no push code. If TC150 is not posted, the claim is established the same way but with push code 036.

    2. The activity code will be the applicable abstract code.

    3. Unpaid claims established on MFT 40 will have a statute date of AA, .

    4. Claims filed on Form 720X will have the statute date of the original filed Form 720. Excise examiners need to verify and update the statute as appropriate.

    5. Claim cases will be established on ERCS in status code 08.

    6. Claim cases will be updated to status code 10 and shipped via Form 3210 to field groups.

    7. Source code and status code are determined by CSTO.

  2. PSPWIC paid claim selection process:

    1. If MFT 03 is on AIMS, establish Source Code 31, under tax period that corresponds to claim period.

    2. If MFT 03 is not on AIMS follow IRM 4.24.6.11, Substitute for Return (SFR) procedures, establish Source Code 31, Push Code 051, and assign tax period that corresponds to claim period.

    3. Paid claims are established with an activity code directly related to the Credit Reference Number (CRN) claim. The use of an activity code requires a numeric SOL. IRM 4.24.8.4.1(1) provides SOL information.

      Note:

      The use of Push Code 51 does not remove the IRM 1.4.40.4.3(3) requirement for the manager to screen the return to determine the accuracy of the assessment statute information and to identify the need for establishing statute controls.

  3. CSTO Paid Claim control procedures:

    1. Push Code 051 is used to establish substitute for return (SFR) controls for paid claims (Source Code 31) using Master File Tax (MFT) 03 (for Form 720).

    2. Paid claims have "live" statutes of limitation.

    3. The CSTO AIMS/ERCS unit updates the paid claim statute from EE to the correct statute date before the case is sent to the field. The excise group manager is responsible to verify and update the paid claim statute date as warranted within 5 days of receipt of the case.

  4. Paid claims may be processed under various tax modules. Examiners may have to review all tax modules to locate the claim. See Exhibit 4.24.8-2 for more information.

    Note:

    No filing requirements are established for the substitute module.

  5. Check command code AMDISA to identify claims in transit from CSTO prior to closing an examination.

  6. IRM 21.7.8.4.5.7.9, Form 8849, Schedule 6, Later Events That Give Rise to an Overpayment to an Overpayment by Someone Other than the Form 720 Taxpayer, describes establishment of a claim with or without a Form 720.

  7. Paid claim cases are established under cycle type EX-Regular and unpaid claims under cycle type EX-Claimin IMS. IRM 4.24.6.2 provides IMS information.

4.24.8.5.1.1  (08-05-2014)
Determining the Form 8849 Examination Period

  1. Form 8849 claims can aggregate over multiple quarterly periods within a claimant’s income tax year. Adjustments to this claim form is posted to the Form 720 module.

  2. A Form 8849 exam period is established using the quarter that includes the last day included in the claim. For example:

    • A 2010 annual Form 8849 claim with claims for all 4 quarters will have an examination control period of December 31, 2010 since the last day included in the claim falls in the 4th quarter.

    • A 2/1/2010 to 4/15/2010 claim will have an examination control period of June 30, 2010 since the last day included in the claim falls in the 2nd quarter.

  3. For fiscal year taxpayers who file an annual Form 8849, the exam period is the last quarter of the claim. For example a Form 8849 , Schedule 1 claim filer with a fiscal year end of June 2010 that includes claims from all 4 quarters of the fiscal year, filed on September 30, 2010 will have an examination control period of June 30, 2010.

    Note:

    Transactions reported on Form 8849 are separate and distinct from Form 720 reported transactions for SOL and exam purposes and the time for filing claims varies for each type of claim reported on Form 8849 schedules.

4.24.8.5.1.2  (08-05-2014)
Use of Revenue Protection Codes (RPC) in IMS

  1. Time spent working cases is tracked under three different codes, referred to as Protection of Revenue Base (P of RB) codes. The three codes are:

    • N − Used when there is no filed request for refund."N" applies to regular examination activities prior to any request for refund. Once there is a request for refund, all subsequent time charges should be made to either "P" or "R" .

    • P − Used to record time spent protecting the revenue base (i.e., working the claim issue).

    • R − Used to record time spent examining regular (non P of RB) issues on returns where there is a request for refund has been filed. ERCS allows time charges to "P" and "R" for the same return on the same day.

    Note:

    Once an examiner charges either“ "P" or "R" time to a return, ERCS will no longer allow “N ”time to be charged. Once a protection code issue is identified, IMS users should refer to IMS Help under “Update RP Code” for assistance.

  2. The issue must be checked out to edit the Revenue Protection Code (RPC) in IMS.

  3. Charging time to "P" and "R" does not change the process for requesting an update to the return for claim purposes. Although IMS will allow the correct P of RB codes to be input, the items ERCS needs to update the return are not included.

4.24.8.6  (08-05-2014)
Refund Categories

  1. Excise claims can be filed by two different methods:

    • First Party Claims

    • Third Party Claims

  2. First Party Claims are normally filed on an amended return by the taxpayer who filed the original return to change or reduce the original taxes filed and paid against the Abstract/IRS number.

  3. Third Party Claims are filed by an end user for fuel used for a non-taxable purpose or for tax exempt sales for a non-taxable use for a refund of previously paid Excise taxes. These are almost always filed using the CRN. Examples include:

    1. A farmer who files for fuel used on a farm for farming purposes, or

    2. an Ultimate Vendor who sells fuel tax exempt to state or local governments.

  4. There are four categories of refunds, each with unique processing procedures:

    • Amendment to Form 720, 730, 11-C, and 2290

    • Refundable Credit

    • Credit against Tax

    • Third Party Claims

    .

4.24.8.6.1  (08-05-2014)
Amendment to Form 720, 11-C, 730 and 2290

  1. Form 720X is used to amend excise tax liabilities, Schedule C section IRC 4051(d) tire tax and IRC 6426 alcohol fuel, biodiesel, and alternative fuel credits previously reported on Form 720. No other Schedule C items can be amended with Form 720X.

  2. CCOC receives all Form 720X returns.

    1. Form 720X is processed as a “duplicate return.”

    2. Any amended Form 720 requesting an increase or reporting a decrease of less than $5,000 will be processed as an amended Form 720 and a Form 720X will not be required.

  3. Claims for overpayments relating to Forms 11-C, 730, and 2290, are made on Form 8849 Schedule 6.

  4. A claim for credit for tax paid on vehicles that were destroyed, stolen, used 5,000 miles or less (7,500 miles or less for agricultural vehicles) or sold can also be made on line 5 of Form 2290.

4.24.8.6.1.1  (08-05-2014)
Report Writing Procedures for Examined Amended Form 720

  1. Use Form 5384, Excise Tax Examination Changes and Consent to Assessment and Collection for agreed exams, and Form 5385, Excise Tax Examination Changes for unagreed exams.

  2. For a full disallowance, the disposition of the amended return will include the following "Other Information" section language:

    1. On (date) you filed an Amended Form 720X, for refund of ($ amount) for (tax period). As a result of our examination, we have disallowed the entire ($ amount) of the amended return.

  3. For a Partial Disallowance, the disposition of the amended return will include the following "Other Information" section language:

    1. On (date) you filed an Amended Form 720X, for refund of ($ amount) for (tax period). As a result of our examination, we have allowed ($ amount) of the amended return.

  4. For a Full Allowance, the disposition of the amended return will include the following "Other Information" section language:

    1. On (date) you filed an Amended Form 720X, for refund of ($ amount) for (tax period). As a result of our examination, we have allowed the entire ($ amount) of the amended return.

4.24.8.6.2  (08-05-2014)
Refundable Credit

  1. A refundable credit refers to a payment for the claim amount that reduces a tax liability below zero. A non-refundable credit is limited to the tax liability.

  2. An IRC 34, Certain uses of gasoline and special fuels, claims are refundable credits reported on Form 4136. The credit is for amounts equal to the sum payable to a taxpayer under IRC 6420, 6421 and 6427.

  3. These refunds are reflected on the corresponding tax module which includes:

    1. Form 1040, U.S. Individual Income Tax Return,

    2. Form 1120, U.S. Corporation Income Tax Return,

    3. Form 1120S, U.S. Income Tax Return for an S Corporation,

    4. Form 1065B, U.S. Return of Income for Electing Large Partnership,

    5. Form 1041, U.S. Income Tax Return for Estates and Trusts,

    6. Form 990T, Exempt Organization Business Income Tax return, and

    7. Form 1120C , U.S. Income Tax Return for Cooperative Association.

4.24.8.6.3  (08-05-2014)
Business Related Credits

  1. An IRC 40A, Biodiesel and renewable diesel used as fuel, nonrefundable business related credit, allowable as a general business credit under IRC 38, is reported on Form 8864, Biodiesel and Renewable Diesel Fuels Credit.

  2. An IRC 40, Alcohol, etc., used as fuel, nonrefundable business related credit, allowable as a general business credit under IRC 38, is reported on Form 6478, Biofuel Producer Credit.

  3. As described in IRM 4.24.8.6.2(1), the refund is made to the corresponding tax module.

4.24.8.6.4  (08-05-2014)
Third Party Claims

  1. Third party unpaid claims are claimants other than the taxpayer that reported the excise tax return liability.

  2. “Substitute” modules are established on MFT 03 to provide a Master File AIMS control and to process the claim for refund.

  3. Third party refund claims (other than for fuel taxes) for collected taxes and certain retail or manufacturer taxes are controlled on AIMS using Master File procedures. Some examples of this type of claim include:

    • tire and retail tax for exported items,

    • communication tax, and

    • air transportation tax claims filed by the consumer.

  4. Where quarterly fuel credit claims are processed prior to the filing of an income tax return, a "substitute" module may be utilized temporarily until the income tax return posts.

4.24.8.7  (08-05-2014)
Unpaid Claims (Source Code 30)

  1. Unpaid Claim types:

    • Survey

    • Disallowed in full

    • Disallowed in part

    • Allowed in full

    • Increase to original claim amount

4.24.8.7.1  (08-05-2014)
Unpaid Claims - Survey

  1. Activity Code 615 is used for examination survey time.

  2. Unpaid claims selected for exam must be assigned to an examiner. If after review, the examiner determines that a claim is clearly allowable-in-full, the claim should be "surveyed after assignment" .

  3. Claims requiring appeals consideration cannot be surveyed. IRM 4.24.8.14 describes paid claim statute of limitation considerations.

  4. Form 2503, Survey After Assignment-Excise or Employment Tax, is included in the IMS case file. Provide a brief reason for the survey action. Form 5384 is not to be completed.

  5. The claim is stamped "Survey After Assignment" , signed and dated by the examiner and group manager.

4.24.8.7.2  (08-05-2014)
Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claims - Survey

  1. Check the "Other Instructions" box, in the Special Features Section, and indicate the Credit Reference Number(s) and amount(s) of the claim to be allowed. If this is an interest bearing claim, provide the allowable credit interest date which would be the later of the due date of the claim or claim received date. Provide claim type: Ultimate Vendor or End User.

  2. For non-interest bearing claims (i.e., IRC 4081(e), 6416(b), 6419(b), 6421(a), and 6427(a)), check the "Other Code Section" box in the Special/Restricted Interest Features Section and include a comment that provides the applicable code section and the non-interest bearing claim characteristic.

  3. The excise examiner must verify that the AMDISA claim amount matches the claim amount per return. If the AMDISA does not, the excise examiner must complete Form 5348 to update the AMDISA claim amount.

4.24.8.7.3  (08-05-2014)
Form 5344, Examination Closing Record, Unpaid Claims - Survey

  1. There is an IMS option to survey claims after assignment. IMS will generate the Form 2503 but the excise examiner will need to prepare a manual Form 5344 in order for the case to close through CCP. Refer to IMS help menu for more information.

  2. Complete Form 5344 and include in case file when closed to Centralized Case Processing (CCP). Do not apply time to the survey case. Complete the taxpayer information section and item 21 Claim Amount. Disposal Code 34 will be used for unpaid claim survey cases. Do not complete items 22, 23, 24, or 404 on Form 5344.

  3. Follow normal survey procedures found in IRM 4.10.2.5.4 Surveying Claims.

4.24.8.8  (08-05-2014)
Unpaid Claims - Agreed Report Writing and Case Processing Procedures

  1. Generally, regular agreed cases involving claims are similar to other regular agreed cases. See IRM 4.10.8.9, Claims, for more information. Guidance below covers the report writing and case processing procedures for the following unpaid claim dispositions reported on Form 720, Form 720X,Form 720X Sch C, Form 720 Sch C, and Form 8849:

    • Claims disallowed in full,

    • claims disallowed in part,

    • claims allowed in full, and

    • increase to original amount of claim.

  2. IRC 6675, Excessive Claims with Respect to the Use of Certain Fuels, penalty must be addressed in excise tax claim case files. IRM 4.24.9.6 provides IRC 6675 guidance.

  3. In determining whether a case is regular agreed, a case involving a claim is considered agreed if the claim is allowed in full, or if agreement is secured on Form 5384, and Form 3363, even though the taxpayer will not execute Form 2297.

4.24.8.8.1  (08-05-2014)
Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, Unpaid Claim - Disallow In Full - Report Writing

  1. Form 720X , Form 720X Sch C, Form 720 Sch C, and Form 8849

    1. Complete the top portion of Form 5384.

    2. For Form 720 Sch C, Form 720X Sch C or Form 8849 complete columns 1 through 8 for the items in the claim using the Credit Reference Numbers (CRNs) shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    3. For Form 720X complete columns 1 through 8 for the items in the claim using the Abstract Numbers shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    4. Input any other proposed adjustments or issues not related to the claim that taxpayer agrees with using the appropriate Abstract Numbers.

    5. In the "Other Information" Section include a statement regarding the disposition of the claim. "On (date) you filed Claim Form _______, or an informal claim for refund of ($ amount) for (tax period). As a result of our examination, we have disallowed the entire ($ amount ) of the amount claimed." .

  2. Issue Letter 569-X, Claim Disallowance Letter, and secure agreement on Form 5384.

  3. Secure agreement on Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit.

  4. Solicit Form 2297, Waiver of Statutory Notification of Claim Disallowance.

4.24.8.8.2  (08-05-2014)
Form 5344, Examination Closing Record, Unpaid Claim - Disallow In Full

  1. When generating a Form 5344 in IMS the required fields should be pre- populated. The excise examiner should verify these pre populated fields per IRM 4.24.10.10. These fields include but are not limited to the items in (2) through (4) below.

  2. Form 720X, Form 720X Sch C, Form 720 Sch C, and Form 8849 enter the claim information in Form 5344 items 21, 22, 23 and 24.

    Note:

    item 24 should be coded claim type "Z" .

  3. Form 720X abstract adjustments, complete Form 5344 items:

    1. 404a and 404b,

    2. The time on item 404c should reflect non-claim time and equal time on item 28 for the other issues examined, and

    3. Enter 00 on item 404d.

    4. The time on item 404e should reflect claim time on item 23.

    5. If no other issues are examined, leave item 28 blank with claim time in item 23.

    Note:

    No CRN adjustments are reflected in item 404. If the examination results in additional tax due, enter the adjustment amount in item 404.

  4. Item 404 is not completed for unpaid Form 8849's, Form 720 Sch C, or Form 720X Sch C.

  5. Item 13 use Disposal Code 01.


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