5.9.16  Insolvency Case Monitoring

5.9.16.1  (02-01-2011)
Field Insolvency

  1. Report Guidelines. Field Insolvency retains responsibility for working most reports on cases assigned to its inventories. The Centralized Insolvency Operation (CIO) may refer certain cases appearing on their assigned reports to Field Insolvency offices for resolution. Reports routinely handled by Field Insolvency are:

    • courtesy investigations

    • bar date follow-up

    • proof of claim follow-up

    • technician review follow-up

    • court closure follow-up

    • referral to Counsel

    • Litigation Transcript System reports

  2. Chapter 11 Monitoring. Field Insolvency monitors Chapter 11 cases. IRM 5.9.8.11, Postpetition/Preconfirmation BMF Monitoring, and IRM 5.9.8.16.2,Monitoring the Plan and Reviewing for Lien Refile, outline Chapter 11 monitoring requirements.

5.9.16.2  (03-01-2007)
CIO Case Monitoring

  1. Case Monitoring Responsibilities. Technicians at the CIO monitor postpetition IDRS actions affecting bankruptcy cases in their assigned inventories by processing Litigation Transcript System (LTS) reports.

5.9.16.3  (02-01-2011)
Litigation Transcript System

  1. Litigation Transcript System (LTS). The Litigation Transcript System (LTS) program matches electronic litigation transcripts from master file with the TIN records of the open AIS database. This automated program allows Insolvency caseworkers to manage their inventories based on necessary actions rather than on periodic general reviews of all cases assigned to them.

    1. Centralized Insolvency Operation. CIO units generate and work LTS reports for cases assigned to their inventory and forward specific reports, such as new assessments, to Field Insolvency when appropriate.

    2. Field Insolvency. Field groups generate and work LTS reports on cases currently assigned to the Field. They also work transcripts and reports for cases transferred to them from Centralized Insolvency because of complex issues.

    3. Weekly Extractions. MF data are sorted and transmitted to the AIS database once a week. After the data are matched and sorted by employee case assignment number, the transcripts can be printed.

    4. Timeframe. Caseworkers must review their assigned transcripts within five workdays of receipt with two exceptions for the CIO. The CIO must review New Assessment and Closed Case transcripts within 15 calendar days of generation.

    5. Identification and Prevention of 11 USC Violations. LTS reports assist Insolvency employees to identify and to resolve violations of the Bankruptcy Code. Correction of actions taken in violation of the automatic stay must be initiated within two workdays of the date a violation is detected.

    6. Pending Refunds. LTS generates a Manual Refunds Pending for Review Report (with cases sorted by employee number) to identify possible refund issues that may require immediate handling. The report can be accessed by selecting "Reports" on the AIS Main Menu, scrolling down to the "Manual Refund" list and selecting "Pending Refunds" . LTS loads the MF and AIS refund data automatically to the AIS manual refund screen.

    7. Refunds Generated by LTS. For each debtor's TIN, LTS generates a weekly Report of Refunds when a docket is open on AIS, a module has a current -V or -W freeze condition, or a TIN is added to the Manual Refund data screen for possible refund. IDRS overpayment information is added weekly to AIS. The report can be accessed by selecting "Reports" on the AIS Main Menu, scrolling down to the "Litigation Transcripts" list and selecting "Refunds Generated by LTS" . (See IRM 5.9.16.4, Manual Refunds .)

  2. Working Transcripts. LTS reports identify stay violations, new assessments, and module credits in part to meet the requirements of the Bankruptcy Code Compliance Program (BCCP) regarding correction of violations of the automatic stay. LTS matches master file (MF) data from IDRS with the TINs on AIS. CIO caseworkers only work LTS reports for cases assigned to them. Field Insolvency generates and works LTS reports for those cases assigned to its specialists. CIO technical units receive litigation transcripts from CIO clerical units via Form 3210, Document Transmittal. The transcripts can be viewed or printed at the option of the requestor. Reports can be generated by organization code, group number or specific employee. The transcripts are identified by five categories:

    • Credit Balance with New Transaction

    • Other Credit Balance

    • Case Closed on AIS

    • New Assessments

    • All Other (optional for the CIO)

5.9.16.3.1  (02-01-2011)
"Credit Balance" and "Other Credit Balance" Reports

  1. Prepetition Credit and Prepetition Liability. If a credit and liability are both prepetition, the caseworker must determine if the credit is a true module overpayment. Based on local rules or standing orders, the credit balance may be resolved by:

    1. manual refund to the debtor;

    2. manual refund mailed to the trustee;

    3. transfer of the credit to another period; or

    4. partial refund to the taxpayer or mailed to the trustee.

    When a true module credit exits:
    IF... THEN...
    standing orders or local rules allow offsets, CIO Action: input a credit transfer on line. (See IRM 21.5.8.4.1,IDRS Guidelines for Credit Transfers and IRM 21.5.8.4.2, Credit Transfer Input on IDRS.) If an amended proof of claim is required, reassign the case to the appropriate Field Insolvency caseworker, documenting the AIS history with the reason for the reassignment. The Field Insolvency caseworker will be advised of the potential need for case action via an E-mail sent by AIS to their Outlook E-mail address.
    Field Insolvency Action: Prepare Form 2424, and forward it to Centralized Case Processing (CCP). The document may be sent electronically by secure E-mail to *SBSE ccpinslv or mailed via Form 3210 to CCP at Internal Revenue Service, 2970 Market St., Mail Stop 5-E04.114, Philadelphia, PA 19104.

    Note:

    When preparing a credit transfer that will absorb the entire credit, caseworkers must access the Refund File on AIS to update the " Issue to" field to a "Never Process" value to prevent the case from appearing on the Pending Manual Refund report.

    standing orders or local rules do not allow offsets, and the dollar amount meets the LEM criteria for referral to Counsel to request a lift stay for offset, CIO Action: document the AIS history, noting the research results and the basis for transferring the case to the Field. Reassign the case to the appropriate Field specialist. The Field Insolvency caseworker will be advised of the potential need for case action via an E-mail sent by AIS to their Outlook E-mail address.
    Field Insolvency Action: depending on local agreement with Area Counsel, make a determination about requesting a lift of the stay for offset.
    the credit cannot be offset and does not meet the IRM criteria for referral to Counsel, prepare Form 5792, Request for Manual Refund, to refund the overpayment to the debtor or to send the credit to the debtor c/o the trustee.
    NOTE: If the overpayment came from the trustee, the overpayment should be sent back to the trustee, unless otherwise directed by the trustee. If the overpayment came from the debtor or third party, the refund of the overpayment should be sent to the debtor or the trustee, depending on whether the trustee has made a valid turnover request. The first name line on the refund request must always match the first name line on the tax return for the specific module.

    Caution:

    Caseworkers must update the "Issue to" field to "Never Process" on the refund screen on AIS when a 5792 will not be issued.

    Note:

    The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 allows offset of prepetition income tax refund credits to prepetition income tax liabilities for cases filed on or after October 17, 2005.

  2. Post-Petition Credit with Additional Liability. If the LTS credit is postpetition, the caseworker must research IDRS to determine if postpetition liabilities exist.

    IF... THEN...
    research shows existing postpetition liabilities, apply the credit to the existing postpetition liability unless offset is barred by local rules or standing orders.
    CIO Action: input a credit transfer on line. (See IRM 21.5.8.4.1, IDRS Guidelines for Credit Transfers, and IRM 21.5.8.4.2,Credit Transfer Input on IDRS.)
    Field Insolvency Action: prepare Form 2424 (or other form accepted by CCP) requesting a credit transfer and send to CCP.
    more than one postpetition liability exists, apply the credit to the most imminent CSED first, and continue in this same manner until the credit is exhausted unless offset is barred by local rules or standing orders.
    the credit is not exhausted but standing orders or local rules allow postpetition credits to offset to prepetition debts, CIO Action: input a credit transfer on line. (See IRM 21.5.8.4.1, IDRS Guidelines for Credit Transfers, and IRM 21.5.8.4.2, Credit Transfer Input on IDRS.) Update the AIS history explaining actions taken. If a proof of claim has been filed, reassign the case to the appropriate Field Insolvency caseworker. The Field Insolvency caseworker will be advised of the potential need for case action via an E-mail sent by AIS to their Outlook E-mail address.
    Field Insolvency Action: prepare Form 2424 (or other form accepted by CCP) requesting a credit transfer and send to CCP. Amend claim or send credit letter to trustee as needed.
    the case is Chapter 13, the credit is not exhausted, no standing orders exist for offset to prepetition liabilities, but the dollar amount meets IRM criteria for referral to Counsel to request a lift stay, CIO Action: document the AIS history, noting the research results and the basis for transferring the case to the Field. Reassign case to appropriate Field specialist or advisor. The Field Insolvency caseworker will be advised of the potential need for case action via an E-mail sent by AIS to their Outlook E-mail address.
    Field Insolvency Action: consider requesting a lift of stay for offset based on local referral tolerances.
    the credit is not exhausted, no standing orders exist for offset to prepetition liabilities, and the amount does not meet the criteria for referral to Counsel to request a lift of stay, prepare Form 5792, Manual Refund Request, for any remaining credit and document the AIS history. The refund should be directed to the debtor or the trustee depending upon local rules or trustee turnover requests. ( IRM 5.9.16.4, Manual Refunds.)

    Caution:

    Caseworkers must update the "Issue to" field to "Never Process" on the refund screen on AIS when a 5792 will not be issued.

    Note:

    Because of time constraints, generally referrals for lift stays will not be made on Chapter 7 cases based on LTS reports.

  3. Postpetition Credit and No Additional Liability. If the credit is postpetition and no additional liabilities are identified, the caseworker must prepare Form 5792, Manual Refund Request asking a refund be issued to either the debtor or payable to the debtor and mailed in care of the trustee. ( IRM 5.9.16.4 Manual Refunds.)

  4. Payment Posting IRM Section. IRM 5.9.15.6,Proper Application of Payments, guidance can be followed on determining the most appropriate manner in which to address credits identified by LTS reports.

5.9.16.3.2  (02-01-2011)
"New Assessment" Reports

  1. Identified by Transaction Codes. For each debtor TIN on an open AIS case, LTS generates a New Assessment report when the following newly posted transaction codes appear on a balance due module:

    • TC 150 - Return posted with assessment

    • TC 240 - Miscellaneous penalty

    • TC 290 - Additional tax assessment

    • TC 300 - Additional tax or deficiency by Examination

    • TC 671 - Dishonored check

    Note:

    The LTS New Assessment reports are not worked in Chapter 7 No Asset cases and, when generated, may be discarded into classified waste.

  2. Transaction Code Analysis. Caseworkers must analyze the transcripts for cases in their inventory to determine which transaction codes are present and what the next appropriate action is. Additional AIS and IDRS research may be required.

    IF... THEN...
    the new assessment is on a prepetition period, and the case is a Chapter 13 bankruptcy, CIO Action: re-assign the case to the appropriate Insolvency specialist or advisor; and document actions in the AIS history.
    Field Insolvency Action: determine if a new claim should be filed or if an existing claim should be amended. (See IRM 5.9.5.4, AIS Documentation.)
    the new assessment is on a prepetition period and the case is a Chapter 7 Asset, Chapter 11 or Chapter 12, determine if a new claim should be filed or if an existing claim should be amended.
    the new assessment is on a postpetition Chapter 13 period and the assessed liability is less than $2,500 for the current period and the aggregate assessed total of all postpetition assessments is less than $2,500, CIO will update the AIS history (example - Working LTS New Assessment for $XX/20XX12 for $XX, NAN) and discard the transcript in classified waste.
    the new assessment is on a postpetition Chapter 13 period and IDRS indicates full pay has been received based on the systemic balance due notice, CIO Action: place the transcript in classified waste if full payment has been received.
    the new assessment is on a postpetition Chapter 13 period, and IDRS indicates full pay has NOT been received based on the systemic balance due notice, and the outstanding liability is $2,500 or greater, or the aggregate assessed total of all postpetition assessments exceeds $2,500, CIO Action:
    • CIO will update the AIS history (example - Working LTS New Assessment 20XX12 for $XX, reassigned to field), and transfer the case to the appropriate field specialist or advisor. The Field Insolvency caseworker will be advised of the potential need for case action via an E-mail sent by AIS to their Outlook E-mail address notifying them of the case transfer.
    Field Action:
    • follow local procedures for addressing postpetition liabilities. Annotate the AIS history explaining how postpetition liabilities are to be handled upon discharge. (See IRM 5.9.5.4, AIS Documentation.)
    • make a lock-in letter referral determination (see IRM 5.9.5.13)

    Note:

    Tolerances for transferring cases from the CIO to Field Insolvency for postpetition new assessments are determined by mutual agreement between the CIO and Field Insolvency.

  3. Amending Proofs of Claim. IRM 5.9.13.18.1, Unassessed Claims, provides direction for amending claims. Some Insolvency offices send the trustee a credit letter rather than file an amended claim if a liability proves to be less than is shown on the Service's claim. Insolvency specialists should accede to the wishes of their trustee in choosing to file an amended claim or send a credit letter

5.9.16.3.3  (02-01-2011)
"Case Closed on AIS" LTS

  1. Case Closed on AIS. For each debtor TIN, LTS generates a "Case Closed on AIS" transcript when AIS shows a closed docket, and a current -V or -W freeze condition is present on at least one MF module. The caseworker must analyze IDRS to determine if TC 521 is input on all modules where the Insolvency TC 520 had previously posted.

    Caution:

    Other functions, such as Appeals, use TC 520 transaction codes. The closing code (CC) associated with the TC 520 identifies which area has restricted the tax account. See Document 6209 for explanations of the closing codes associated with TC 520.

    IF... THEN...
    the TC 521 has not posted on all modules, use IDRS command code REQ77 to input TC 521 to those modules where TC 521 is lacking. See IDRS Command Code Job Aid on SERP for adjustment instructions.
    the TC 521 has posted on all modules, review IDRS for the status of TC 520s. For multiple TC 520s, determine which TC 520 remains unreversed. See "Caution " above.
    the TC 521 has gone unpostable on at least one module because of an incorrect closing code, use IDRS command code REQ77 to input TC 521 with the correct closing code to those modules where TC 521 unposted. See IDRS Command Code Job Aid on SERP for adjustment instructions.
    the TC 520 relates to the LTS report bankruptcy case and the bankruptcy TC 521 has posted, CIO Action:
    1) Using command code REQ77, input TC 470 with no transaction date.
    2) At the same time input TC 472 with no transaction date, but with a one cycle delay. (Status 72 will change to status 47 and then to status 50 systemically)
    3) Once the case is in status 50, input command code STAUP, using status of case prior to bankruptcy and 00 cycles to remove the status 72 indicator. See IDRS Command Code Job Aid on SERP
    Field Insolvency Action: Request the above actions from Centralized Case Processing.
    the TC 520 relates to an Appeals case or other non-bankruptcy litigation, no action is necessary as the TC 520 is valid.
    the TC 520 applies to a bankruptcy case not related to the LTS report case, no action is necessary.

    When the LTS "Case Closed on AIS" transcript has been resolved, the caseworker must document the AIS history on all cases where action was taken and retain the transcript per managerial direction.

    Note:

    When another tool or automated report is available to identify TC 520s on closed cases that may need reversal, that tool or report may be used in lieu of the case" Closed on AIS" LTS.

5.9.16.3.4  (05-16-2008)
"All Other" LTS

  1. All Other. For each debtor TIN, LTS generates an "All Other" transcript when AIS has an open docket and:

    1. IDRS shows a current -V or -W freeze condition;

    2. a TC 670 has recently posted with a designated payment code other than 03 or 11; or

    3. any other condition that generates a transaction code.

  2. AIS and IDRS must be researched to determine if payment(s) are in violation of the automatic stay. (See IRM 5.9.3.5.1, Violations of the Automatic Stay,IRM 5.9.6.6.1, Debtor Payments on Dischargeable Taxes, and IRM 5.9.6.6.2, Voluntary Payments on Non-Dischargeable Taxes.)

    IF... THEN...
    the case is a Chapter 13 or a Chapter 7 No Asset bankruptcy and payments have a DPC 05 and are in violation of the automatic stay, prepare Form 5792, Request for Manual Refund. (See IRM 5.9.16.4, Manual Refunds. )
    the case is a Chapter 13 or a Chapter 7 No Asset bankruptcy with DPC 06, 07, or 08, and payments are in violation of the automatic stay, CIO Action: The case should be given to the CIO liaison to advise the appropriate Field liaison that the case is being transferred to the Field for review and necessary actions.
    Field Insolvency Action: Review case and consult Counsel for guidance.
    the case is a Chapter 7A, 11, or 12 bankruptcy, and payments are in violation of the automatic stay, a decision must be made to refer the case to Counsel for a motion for offset or adequate protection or to prepare Form 5792, Request for Manual Refund.
    payments are not in violation of the automatic stay, determine if other liabilities exist where an offset is applicable.
    payments are not in violation of the automatic stay, and an offset is applicable, apply the payment according to the Bankruptcy Code or local rules/standing orders.
    CIO Action: input a credit transfer on line. (See IRM 21.5.8.4.1, IDRS Guidelines for Credit Transfers, and IRM 21.5.8.4.2, Credit Transfer Input on IDRS.) Update the AIS history explaining actions taken. If a proof of claim has been filed, reassign the case to the appropriate Field Insolvency caseworker. The Field Insolvency caseworker will be advised of the case reassignment from the CIO by an E-mail sent to their Outlook E-mail address by AIS.
    Field Insolvency Action: prepare Form 2424 (or other form accepted by CCP) requesting a credit transfer and send to CCP. Amend claims or send credit letters as needed.
    payments are not in violation of the automatic stay, but an offset is not applicable, prepare Form 5792, Request for Manual Refund. ( IRM 5.9.16.4)

    When the LTS All Other transcript has been resolved, the caseworker must document the AIS history and retain the transcript according to managerial instruction.

5.9.16.4  (02-01-2011)
Manual Refunds

  1. Forms 5792. The need to issue a manual refund may be identified by a debtor, an attorney, a trustee, a caseworker, or by an LTS report. Regardless of the source, manual refunds are prepared through the same steps. The format to input refund data systemically can be accessed by selecting the Manual Refund folder on the Taxpayer Screen on AIS. The SBSE - AIS 4.0 Oracle User Guide gives instructions to prepare and print Form 5792, Request for IDRS Generated Refund. If AIS is not available, manual refunds may be handwritten on paper Forms 5792. All Forms 5792 must be marked "Expedite."

  2. BPI Codes. IRM 5.9.4.4.3.1,Offset Bypass Indicators, explains the correct offset bypass indicators to use when preparing a manual refund for a taxpayer in bankruptcy. BAPCPA has required modifications to the code previously used.

  3. Required Inputs. As mentioned above, AIS provides a template of Form 5792. Some fields are systemically populated on the Refund Screen , such as the current name (to whom the refund is being issued), the refund tax period, the amount of the refund, the return Document Locator Number (DLN), the TIN, and remarks. Other fields require manual completion after the Form 5792 is printed from AIS. A drop down menu is provided with the AIS Form 5792 to annotate the "Issue To" field with the appropriate recipient of the refund:

    Value Description
    Trustee Refund to be issued to the trustee
    Taxpayer Refund to be issued to the taxpayer
    Hold Hold for research, will require change to Trustee, Taxpayer or Never Process.
    Never Process Do not issue refund, do not process.
    Pending Refund determination has not been made.

    Note:

    The name of the taxpayer on the Form 5792 must match the name on the tax return. If necessary, the Name systemically populated on the Form 5792 can be manually overwritten and "saved" by clicking on Save button on the navigation tool bar at the top of the Refund Screen. If the refund is being issued to the debtor in care of the trustee, the bankruptcy case number must be included in the Remarks field on the Form 5792.

  4. Data Needed for Completion. Current IDRS prints of TXMOD, IMFOLT or BMFOL are necessary to complete Form 5792 as fill-in information is transcribed from the IDRS or CFOL material.

    1. The "Issue to" field gives the caseworker the option of issuing the refund to the debtor directly or the debtor in care of the trustee. In most instances, Insolvency issues the refund to the taxpayer unless the trustee directs that all refunds be sent to him or her.

      Caution:

      In the event that a refund that is property of the estate that should have been sent to the trustee is refunded to the debtor, the caseworker should NOT generate another refund to send to the trustee. If the trustee requests the refund, the caseworker should advise the trustee to request the refund from the debtor.

    2. The debtor is entitled to interest if the credit is available for more than 45 calendar days from the date the refund is issued. Interest is computed using CC COMPA with definer D. (IDRS Command Code Job Aid on SERP provides instructions for using command code COMPA.) Interest is calculated either from the due date of the return, the return received date, or the payment date, whichever is applicable, to either the following business day or the second business day based on whenever Form 5792 is to be faxed to Campus Compliance. (See IRM 3.14.1.6.6.2, Computing Credit Interest on Manual Refunds.)

      Note:

      If a trustee has requested a refund because (s)he sent a payment on an account erroneously, interest will not be paid to the trustee unless that payment was an overpayment of the Service's claim.

    3. If Form 5792 is faxed before 12:00 p.m., the date of the next business day is used. If Form 5792 is faxed after 12:00 p.m., the date of the second business day is used. The interest calculated is placed in Box 6, TC 770 Amount. Box 5 totals the combined amounts of interest in Box 6 and the overpayment amount from Box 7.

    4. Field Insolvency must send the completed Forms 5792 to Compliance Services Collection Operation (CSCO) at the Philadelphia Campus. The Form 5792 should be sent to CSCO:
      a) by scanning the Form 5792 and E-mailing it to CSCO:
      b) faxing the Form 5792 to CSCO in Philadelphia; or,
      c) mailing the Form 5792 to CSCO.

    5. Campus Services Collection Operation (CSCO) at the Philadelphia Campus also process Forms 5792 prepared by the CIO.

    6. The initiator of the refund request must have a system in place to follow up in 14 days to verify posting of the refund requested on Form 5792.

      Note:

      The initiator of a manual refund is responsible for monitoring the posting of the refund and for contacting Campus Compliance to correct unpostable errors.

  5. Field Insolvency Refund Requests. When manual refunds are prepared by Field Insolvency caseworkers, Form 5792 must be completed, signed by a delegated authority, and submitted to the Compliance Services Collection Operation (CSCO) at the Philadelphia Campus.

  6. Additional CIO Refund Steps. In addition to completing Form 5792 and obtaining an approval signature from a delegated authority, the CIO must ensure command code RFUND is input on IDRS.

    Note:

    CMODE to Ogden is required prior to inputting command code REFUNDR.

  7. Monitoring. When a manual refund is requested, the initiator must control and monitor the case until the TC 840 posts to the master file.

  8. Documentation. Matters concerning refunds and credits should be handled expeditiously by the Service and pertinent information promptly documented on AIS. This includes information on expedited Form 5792 refund requests. AIS history items may be used in court should litigation develop.

  9. NMF Manual Refunds. Manual refunds for non master file (NMF) accounts must be prepared on Form 3753, Manual Refund Posting Voucher, and sent to the centralized NMF processing address below:
    Accounting Control/Service Operations
    P.O. Box 2345
    Cincinnati, OH 45201
    Stop 21.

Exhibit 5.9.16-1 
Instructions for Preparing Form 5792

Note:

All Forms 5792 should be prepared using the electronic version on AIS when possible.

  1. Prepare one Form 5792 for each tax period. Exception: Portion of refund goes to the trustee and the remainder is to be issued to the debtor.

  2. Ensure all of the entries are legible.

  3. Only original entries (no strike through, correction tape, or liquid).

  4. Punctuation - No periods (John M. Doe or Case No.) or commas (,). Acceptable forms of punctuation are & (ampersand), / (slash), - (Hyphen) and % (percent symbol or to indicate in care of).

  5. Form 5792 must have an original signature of the approving official (stamped signatures or electronic signatures are not acceptable).

    Note:

    The signature on the Form 5792 should match the signature submitted on Form 14031, Manual Refund Signature Form, for the current fiscal year.

  6. Field Insolvency should scan the Form 5792 and transmit it via secure E-mail to *SBSE PSC CSCO Man Ref as the primary method for transmitting the manual refund request. The secondary method preferred is faxing the request to CSCO. Finally, the Form 5792 may be mailed to CSCO via overnight mail. The CIO will hand deliver Forms 5792 to the designated area in CSCO.

  7. Follow these line-by-line instructions:

Section 1 - Account Information

Block 1: Enter the Taxpayer Identification Number (TIN) and the file source (if applicable) of the account from which the refund will be issued. The file source is a character immediately following the TIN such as an * or a P.

Block 2: Enter the Master File Tax (MFT) Code.

Block 3: Enter the tax period as YYYYMM. Exception: period ending for MFT 52 is always "000000."

Block 4: Leave Blank. Campus (CSCO) personnel will enter the plan number, if applicable.

Block 5: Enter the name control.

Block 6: Leave Blank. Campus (CSCO) personnel will enter the TC 840 amount (overpayment, plus allowable interest) on refunds submitted by Field Insolvency. CIO must complete this field unless an interest computation is required.

Block 7: Leave Blank. Campus (CSCO) personnel will enter the TC 770 amount (allowable interest). If no interest is being computed, campus (CSCO) personnel will enter "0" or ".00" .

Block 8: Enter the amount to be refunded, (i.e., the amount being refunded, less allowable interest).

Block 9: Enter the appropriate line number. See IRM Exhibit 2.4.20-12, Description of Line Item Numbers, for the appropriate codes. Most commonly used codes are:

  • "1" should be placed in Box 9 if the refund is for a MFT 30 tax period where the refund is for the prior year . A prior year refund is defined as one occurring after the beginning of the 10th month, after the tax period ending date (includes a math error). Line 1 is only used for the one year identified as prior. It is not applicable for more than one tax period.

  • "2" should be placed in Box 9 if the refund is on a MFT 30 tax period where the refund is for the current year. The current year is defined as one occurring within and including the 9th month before the period ending date (includes a math error correction).

  • "3" should be placed in Box 9 when a MFT 30 tax period has a refund resulting from an audit adjustment with a 47 document code.

  • "4" must be used in Box 9 if the refund is the result of a data processing adjustment with a 54 document code.

  • "6" should be placed in Box 9 when the Form 5792 is prepared on a MFT 30 period for the purpose of:
    Returning a levy payment that was received in violation of the stay.
    Returning an installment agreement payment that was received after the petition date.
    Returning a payment at the trustee's request because it was sent to the Service in error.
    Refunding a trustee overpayment on our proof of claim.
    Returning a Form 1040 refund for any tax year that is not the current or prior year. For example, a 1040 manual refund request for 200712 that is processed on November 15, 2010.

  • "11" should be placed in Box 9 if the payment is for a MFT 01 tax period where the refund is for the prior year. Prior year (BMF Refund) is defined as a refund occurring 13 months or more subsequent to the tax period ending date (four months or more for Form 941 and Form 942).

  • "12" should be placed in Box 9 if the refund is for a MFT 01 tax period where the refund is an overpayment for the current year. Current year (BMF Refund) is defined as one occurring with 12 months of the tax period ending date (within 3 months for Form 941 and Form 942).

  • "15" should be placed in Box 9 if the refund is being issued on a MFT 01 tax period for the purpose of:
    Returning a levy payment that was received in violation of the stay.
    Returning an installment agreement payment that was made after the petition date.
    Returning a trustee payment that the trustee wants returned because of an error on their part.
    Returning a trustee overpayment on our claim to the trustee.

Block 10. A determination must be made on whether interest should be paid on the overpayment. If no interest is to be paid then use "0" in Box 10. Use an "N" for normal interest and "R" for restricted interest. Refer to IRM 20.2.4, Overpayment Interest, for details. Interest on an Overpayment: When a return is filed, an overpayment exists. The Service has 45 calendar days to issue a refund with no interest (See Exceptions). To determine whether the 45 calendar days have been met consider these dates:

  • The normal return due date

  • The return received date, without regard to extensions

  • The Return Processible Date (RPD), if present. (also known as Correspondence Received Date)

  • The received date of a formal or informal claim.

Add 45 days to the later of these dates. If the Form 5792 is not processed on or before that date, interest must be issued on the refund. In order to issue a refund within the 45 day interest-free period, the refund must be input by the 42nd day, if the 43rd day is a work day. If the 43rd day is not a work day, then the Form 5792 must be submitted earlier, as appropriate, so the 43rd day does not fall on a work day in order to meet the interest free period.

EXAMPLE: If the 43rd day is Saturday, the refund must be input no later than the Thursday proceeding the Saturday to meet the interest-free period.

Once the interest-free period has expired, we must pay interest on the refund from the return due date, or the return received date (if no extension exists), whichever is the later.

EXCEPTIONS - INTEREST IS NOT PAID IN THESE SITUATIONS:
Trustee: If the trustee requests a refund because he/she sent in a payment in error. However, if the payment resulted in an overpayment of the Service's claim, then interest should be paid.
Levy Payments: Levy payments that are being returned unless the levy proceeds belong to someone other than the taxpayer(s).
Installment Agreement Payment: Post-petition installment agreement payments.

Note:

If interest will be paid, you must also enter an interest "From" date in Section III. See IRM 3.14.1.6.1.2, Computing Credit Interest on Manual Refunds.

Block 11: Leave Blank. The Universal Location Code (ULC) (formerly the District Office code) will generate when the RFUND CC is input to IDRS. Campus (CSCO) personnel who inputs the RFUND command code will complete this block.

Block 12: Leave Blank. Campus (CSCO) personnel who input the RFUND command code to IDRS will input the sequence number.

Block 13: Leave Blank. Campus (CSCO) personnel will complete this block.

Block 14: This will self-populate from AIS. However, if the debtor is deceased, do not address the first name line to a deceased taxpayer. Use the name and title, if appropriate, of the person claiming the refund as the payee for refunds issued on decedent accounts. Example: Jim Jones, Executor. The deceased taxpayer's name is "Joe Smith, Deceased" is shown on the second name line.

Note:

If the name of the person on the 1st Name line does not match ENMOD or INOLES, you will need to explain it in the remarks section (Box 20) on the Form 5792.

Note:

There is a 35 character limitation. Do not use periods "." in blocks 14 thru 19.

Example: Joe E Smith or J E Smith

Block 15 - 19: These blocks will self-populate from AIS depending on your selection of who the refund should be sent to (debtor or trustee). These five blocks are subject to the 35 character limitation.

Block 20: If the refund is being issued to the debtor in care of the trustee, the bankruptcy case number should be listed in the "Remarks" section.

Block 21: AIS automatically selects SBSE.

Block 22: Enter the document locator number (DLN) of the return or the credit. Do not use the DLN of an electronically filed return.

Block 23: AIS automatically selects SBSE.

Block 24: Leave Blank.

Section II. Manual Refund Authority (Complete all Applicable Items).

Block 1 thru 12: AIS has been programmed to populate items 1C, 5B, 6, 8 and 11. If circumstances exist for other line items to be checked the Insolvency employee will need to do this manually.

Block 13: The campus (CSCO) employee who inputs command code REFUND will check this box.

Section III. Interest Computation.

Leave blank unless interest will be paid. If interest is to be paid, enter the "From" date. See IRM 3.14.1.6.6.2, Computing Credit Interest on Manual Refunds.

If, the taxpayer: Then, allow interest from the later of:
has an extension and filed the return by the extended due date, the original due date, payment date, or the Correspondence Received Date (if after the extension date).
does not have an extension or filed the return after the extended due date, the return received date, the payment received date, or the Correspondence Received Date (if present).

Section IV: Manual Refund Approval

Block 1: Leave Blank. The Campus (CSCO) employee who will be entering the CC RFUND will put their IDRS number in this block.

Block 2 & 3: AIS will populate the name, IDRS number, and phone number of the Insolvency employee inputting the Form 5792.

Block 4: Leave blank for signature of Designated Approving Official. To be an approving official, the signature must be on file in the Service Center Accounting branch where the F 5792 will be sent. At the beginning of each Fiscal Year, signatures for those designated Approving Officials must be submitted to the appropriate service centers in order to be recognized.

Block 4a: If your immediate manager will be the person approving the F 5792, you may use the option on AIS to select this individual and the information will automatically populate. Otherwise, leave blank for approving official to complete.

Block 5: AIS automatically populates this when it is printed.


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