If the taxpayer corresponds that they previously reported income on a return under a different name, SSN, verify filing on IDRS. If filed with a spouse see IRM reference 5.18.1.10.2.3.13.2. If there is no indication of filing on IDRS, request a complete and signed copy of the return from the taxpayer. If filing is verified, do the following:

If the taxpayer corresponds that they filed a joint return, verify filing. Do the following:

If correspondence states that the taxpayer is deceased and date of death is not present, research IDRS. If after research, date of death is not found, contact spouse, or legal representative for date of death.

If correspondence states that income was reported on a Form 1041, follow instructions in 5.18.1.10.2.3.13.1. Also, input a TC 540 on the year during which the death occurred.

On deceased cases, check IDRS and ASFR for all open ASFR modules. Work all modules open on ASFR.

If the response from the taxpayer is that the income isn't theirs, do the following:

When deleting wages, correct the taxpayer's records by preparing Form 9409, IRS/SSA Wage Worksheet, Form 9409. Mail Form 9409 to the Social Security Administration (SSA) at the following address:
Social Security Administration
Division of Earnings Records Operations
300 N. Greene Street
4-D-15, 4th Floor, North Building
Baltimore, MD 21290

The taxpayer must provide the required documentation to substantiate Identity Theft. If the taxpayer indicates income was the result of identity theft or their SSN is being used illegally and the taxpayer does not provide substantiation, send either Corrospendex Letter 2626C, 239C or a Q-Note, to request documentation of Identity Theft. Include the following special paragraph: "To verify misuse of your Social Security Number, please send a copy of your valid U.S. federal or state government issued identification (driver’s license, social security card, passport, etc.) and a copy of a police report or the IRS affidavit Form 14039"

IRM 5.18.1.10.2.3.11.

The following documentation is required for a taxpayer to substantiate Identity Theft:

IF/THEN chart when account has been identified as ID Theft

TC 971 AC 522 identifies an account as a substantiated Identity Theft case. The indicator is input on the IDRS entity screen ENMOD using the IDRS CC REQ77. Refer to IRM 10.5.3-3 for a description of the terms and acronyms used for TC 971 AC 501 identity theft indicator codes such as the BOD/Function, Program Name and Tax Administration Source. ASFR valid MISC fields are provided in the table below:

When deleting wages, correct the taxpayer's records by preparing Form 9409, IRS/SSA Wage Worksheet. Mail Form 9409 to the Social Security Administration (SSA) at the following address:

Effective October 1,2008 Accounts Management established an Identity Theft referral/monitoring process for cases with tax administrative issues. This process will track the disposition of cases where the taxpayer with Identity Theft issues has contacted the Service on the ID Theft Hotline. See Who/Where under SERP for the coordinator in ASFR. If the ASFR ID Theft Coordinator receives a case which cannot be resolved by use of IRM 10.5.3, elevate the case through normal chain of command. (Manager, Dept. Manager, P&A Analyst, HQs Analyst) See Identity Theft IRM 10.5.3 for detailed procedures on case processing.

Cases meeting TAS criteria 5-7 and involve ID Theft
Identity Theft cases meeting TAS criteria 5-7 will now be referred to the AM IPSU Team.

Processing Form 14103, Identity Theft Assistance Request (ITAR) received from IPSU
ASFR may receive Form 14103 Identity Theft Assistance Request (ITAR) from IPSU, follow these procedures:

Global Review requests from Identity Protection Specialized Unit (IPSU)

If it is determined that an ASFR assessment was processed on an ID Theft case, and if when reversed the tax liability is zero:

A request to rescind a 90-Day Letter pursuant to IRC 6212(d) may be made by taxpayer or Technical Support Function on behalf of taxpayer. Request must:

The decision to rescind must always ensure protection of the Service's legal ability to assess tax. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A statutory notice of deficiency may only be rescinded by issuer of notice. Therefore, the party with delegated authority to issue and sign the statutory notice of deficiency, must sign Form 8626 on behalf of the Commissioner.

Statutory notices of deficiency do not have to be rescinded when the taxpayer files an acceptable return during 90-day period.

When response indicates taxpayer does not understand letter or notice, or is requesting more information on proposed liability, if the taxpayer cannot be contacted by telephone, correspond to answer any questions. Retain a copy of any handwritten correspondence in case file. All Quick Notes and correspondex letters with open paragraphs must be reviewed by unit manager before mailing.

When the taxpayer submits a signed waiver of collection and assessment, the response is considered an "Agreed." An agreed response indicates that taxpayer agrees to proposed assessment on either the 30-Day Letter or the statutory notice of deficiency. (This includes agreement to the tax and all penalties.) A taxpayer may contest interest under limited circumstances. (See IRC 6404(e).)

To be considered an agreed response taxpayer must:

ASFR has added a section for the taxpayer to change his/her filing status, add spouse name and SSN and claim up to four dependents.

On an agreed response the Rate Reduction Credit should be applied if the taxpayer is eligible. All other credits; EIC, Child Tax Credit, Dependent Care Credit must be claimed on F1040 return.

Do the following

Original returns and correspondence indicating Frivolous Filer should be sent to the Campus Frivolous Filer Coordinator. The Frivolous Filer Coordinator in turn will forward the return/correspondence to the Ogden Frivolous Filer Team if it meets Frivolous Filer criteria. Normal processing should continue. Photocopies of returns or correspondence should be associated with the case file.

If the case should be returned from either the FF Campus Coordinator or the Ogden FF Team as not accepted the return or correspondence will be returned to the TE that worked the case. Associate the return/correspondence.

The following types of responses should be forwarded to the Campus FF Coordinator:

Taxpayers may submit requests for waiver or abatement of penalties. Requests may be made orally, if the request for abatement is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 20.1.1 for complete instructions on penalty abatement.

If the taxpayer requests penalty abatement based on reasonable cause, but a determination on reasonable cause cannot be made because the taxpayer did not supply sufficient information, do not deny the abatement. Correspond with the taxpayer using the appropriate correspondex letter (ie: 1382C) and request that they resubmit the request with the missing information.

You may use the Reasonable Cause Assistant (RCA) in AMS tools to help you determine when Reasonable Cause has been met.

The Recovery Rebate Credit (RRC) was part of the Economic Stimulus Act of 2008 eligible individuals were sent an Economic Stimulus Payment (ESP) giving them an advance payment of the 2008 Recovery Rebate Credit (RRC). The RRC is calculated in the same manner as the ESP except that the amounts are based on the Tax Year 2008 instead of Tax Year 2007. IRM Reference 21.6.3.4.2.12 Recovery Rebate Credit provides all necessary information required for researching, calculating and the input of the Recovery Rebate Credit. The RRC will need to be calculated on all 2008 Form 1040’s providing the taxpayer meets the qualifications per IRM Reference 21.6.3.4.2.12.3 RRC Qualifications

The Credit Reference Numbers (CRNs) to be used on adjustments are as follows:
CRN 338 – RRC computed based on tax liability.
CRN 256 – RRC computed based on qualifying income.
CRN 257 – RRC computed based on number of qualifying children.
Refer to IRM Reference 21.6.3.6.3 Economic Stimulus Payment (ESP) Computation for a full explanation of the CRN’s, computation methods, and CRN determination.

The RRC is claimed on Line 70 of the 2008 Form 1040, Line 42 on the 2008 Form 1040A, and Line 9 on the 2008 Form 1040EZ. To verify the amount of the credit claimed by the taxpayer you will need to review the taxpayer’s 2007 account to see if they received an advance credit. The credit will be posted on their 2007 account with the same CRN’s as shown above. Once you know the amount of the advance credit you can use the RRC Calculator on the IRS Website to compute the credit.

The American Recovery and Reinvestment Act of 2009 provided a new refundable credit for working families and certain government retirees.

The Making Work Pay (MWP) Credit allows eligible taxpayers to claim up to $400 ($800 for filing status 2).

The Government Retiree Credit allows eligible taxpayers to claim up to $250 ($500 for FS2)

The MWP credit is based on earned income. If the earned income per return is less than $6,451 ($12,903 for Filing Status 2) and there is additional U/R earned income, the taxpayer may be entitled to additional MWP.

The MWP credit begins to decrease (phase out) when the adjusted gross income (AGI) is:

Taxpayers who are non-resident aliens or can be claimed as a dependant on someone else's tax return do not qualify for the Making Work Pay Credit.

IRM 4.19.3.15.7 for additional information in regard to this credit.

Taxpayer may claim an education credit for qualified tuition and related expenses paid to an eligible educational institution, including accredited colleges, universities, and vocational schools. Form 8863, Education Credits (American Opportunity, Hope and Lifetime Learning Credits) is used to claim this credit.

A taxpayer can elect, for any year, only one of the credits for each student (American Opportunity, Hope and Lifetime Learning Credits).

Taxpayers CANNOT claim Education Credits when:

IRM 4.19.3.13.5 and IRM 21.6.3.4.1.5 for additional instructions in regard to claiming and adjusting the non-refundable credit.

IRM 21.6.3.4.2.14 for additional instructions in regard to adjusting the refundable portion of the credit.

The RSED is generally three years from the Return Due Date (RDD) for prepaid credits if a return was filed, or two years from the payment due date for other payments whichever is later. See IRM 25.6.1 for further explanations.

ASFR Returns and Reconsiderations are original returns. Generally, prepaid credits must be claimed within 3 years of the due date of the return with regard to extension. Therefore, if an ASFR return or Reconsideration is received more than three years from the due date with regard to extensions, a refund of prepaid credits should not be made. There are conditions that extend the RSED, see IRM 25.6.1.

Generally, the amount to be credited or refunded is limited to the tax paid during the three years immediately preceding the filing of a claim, plus the period of any extension of time to file. Therefore, even if prepaid credits are barred, available credits paid within three years of the received date of ASFR returns and ASFR Reconsiderations, are not barred.

Do not allow any overpayment of prepaid credits or subsequent payments to refund or offset if the RSED has expired.

Follow disallowance procedures in IRM 25.6.1.

When barring a refund, take the following actions:

The general rule is that an assessment of tax must be made within three years from the date a return is filed or the due date of the return whichever is later. Generally, this means that tax must be posted or journalized to Master File within 3 years from the received date of the return. Additionally, the Service has three years to assess additional tax due. See IRM 25.6.1 for exceptions to assessing additional tax within three years from the received date or due date of a return whichever is later. See IRM 25.6.1 for a more thorough explanation of the ASED, and the conditions that extend the ASED.

ASFR default assessments and the ASFR dummy TC 150 do not start the running of the ASED. Therefore, the ASED must be set when processing ASFR returns and ASFR Reconsiderations.

Additional review is necessary when a joint return is filed, and at least one spouse previously filed a return. IRM See IRM 25.6.1.9.4.4 for limitations to processing separate to joint returns and if it meets the criteria, resolve ASFR issues and route to adjustments.

ASFR Reconsiderations that are tax increases and ASFR Returns must be posted to Master File within three years of the received date.

If a return is received with an imminent ASED, see IRM 25.6.5.10.2. Imminent ASEDs are when the ASED is within 90 calendar days.

When processing ASFR returns and reconsiderations, determine the ASED. If the ASED is not posted on IDRS or the ASED is not correct on IDRS, input the ASED on IDRS. Generally, the ASED is set three years from the received date of the return. See IRM 25.6.1 to determine the date the return is considered filed under IRC when the return received is not valid.

To set the ASED input a TC 599 CC 89 using CC FRM49 with the received date of the return.

To correct an ASED posted to IDRS, input a TC 560 using CC REQ77. The required fields for input are:

The CSED is a time period established by law to collect taxes. The CSED is normally ten years from the date of assessment.

All ASFR assessments, including default assessments, start the CSED.

ASFR Reconsiderations should be processed even if the CSED which is based on the default has expired.

The Failure to File penalty applies on the amount due from the return due date (or extended due date) until paid or until the 25% maximum penalty is applied. The FTF penalty rate is 5% a month. When the FTF penalty under IRC section 6651(a)(1) and the FTP penalty for failure to pay tax shown on the return under IRC section 6651(a)(2)) both apply for the same months, the FTF penalty under IRC section 6651(a)(1) is reduced by the amount of the FTP penalty under IRC section 6651(a)(2). IRM 20.1.2.2.

When systemically assessed, the Failure to File posts as a TC 166. When manually assessed, the Failure to File posts as a TC 160.

IDRS will systemically calculate the FTF when the assessment is input with a priority Code 2.

To manually calculate the FTF on ASFR returns when the FTF and FTP apply to the same months, multiply the tax due per return by 22.5%. The tax due per return is the tax minus all pre-paid credits and payments received on or before April 15th in the year the return was due.

The Failure to Pay penalty is assessed for failure to pay amounts shown on the return, applies on the amount due from the return due date to the date paid at one-half of one percent (.005), not to exceed 25%. The FTP penalty on an ASFR increases from one-half of one percent (.005) to 1% after notice of intent to levy (CP 504) is issued. TC 971 with AC 69 or 35 also indicates that the 1% rate has been triggered. If the taxpayer files his own return (the due date for which, without regard to extensions, is after July 30, 1996) after the 1% FTP penalty rate has taken effect on the SFR assessment, the FTP penalty under IRC section 6651(a)(2) is recalculated on the amount showing due on the taxpayer's return by using the .5% rate for the same period the .5% rate was in effect on the SFR and the 1% rate for the same period the 1% rate was in effect on the SFR, not to exceed 25% in the aggregate. See IRM 20.1.2.

When systemically assessed, the Failure to Pay posts as a TC 276. When manually assessed, the Failure to Pay posts as a TC 270.

IDRS will systemically calculate the FTP when the an ASFR return assessment is input with a Priority Code 2.

To manually calculate the FTP on ASFR returns and, Reconsideration determine the amount due for each month tax remains unpaid from the due date of the return. See IRM 20.1.2 for further explanations. On IDRS, use CC COMPAF to calculate the FTP. Input the trigger date for assertion of the FTP to 1% on the COMPAF screen when applicable. When inputting an assessment via ADJ54, input the FTP as a TC 270.

The Estimated Tax (ES) Penalty must be manually calculated/verified if the taxpayer files a Form 2210 to ensure the taxpayer's calculations are correct. If the taxpayer does not file a Form 2210, the penalty must be manually calculated. See IRM 20.1.3 for complete instructions on calculating the ES penalty.

Determine the amount underpaid for each quarter. On IDRS, use COMPAE to calculate the ES penalty. Input TC 170 to assess any estimated tax (ES) penalty. See IRM 20.1.3.2.1 for assertion of the ES penalty tolerances.

When processing Reconsiderations:

The Negligence Penalty for Non-filers was repealed in 1990. It still applies to returns with due dates between July 18,1984 and December 31, 1989. If some of the tax is abated, then only the penalty that applies to the tax should be abated (NOT ALL). See IRM 20.2.5.3.

Fraud identification begins with the compliance employees and their ability to recognize the affirmative indications and acts of fraud by taxpayers. It is essential to detect and report any potential fraudulent activities.

Generally, compliance must show tax due and underpayment of tax due to deliberate intent to evade tax or willful and material submission of false statement or false documents in connection with an application and/or return.

Avoidance of tax is not a criminal offense. Taxpayers have the right to reduce or avoid their taxes by legitimate methods. It does not involve concealment or misrepresentation, but works within the legal parameters to shape events to reduce tax. Fraud may exist where a taxpayer willfully attempts to illegally underreport taxes, not pay taxes or both.

When a potential fraud indicator is found, fraud development must be considered, even though further consideration may find that a referral may not be warranted or may not be accepted by the Fraud Coordinator. The Fraud Coordinators can assess the fraud development potential and determine an appropriate action plan.

Below are examples of fraud indicators. The lists are not all-inclusive and are only indicative of the types of actions taxpayers may take to deceive or defraud. See IRM 25.1.11, Campus Collection Fraud Procedures for additional information

When processing ASFR TP responses, be alert for the following:

Once a TE identifies possible Fraud, they must elevate the case to the Team Leader.

The Team Leader reviews the case for possible Fraud.

The Functional Fraud Coordinator (FFC) reviews the case for possible Fraud.

The Campus Collection Fraud Coordinator (CFC) reviews the case to determine if the case will be accepted by Fraud or not. Review must be completed within 21 days of receipt.

Field FTA reviews the case..

Modules in 8000 may be potential Fraud cases in CFf. ROs will contact the ASFR CFf Fraud Coordinator, when they have a potential Fraud case assigned to ASFR.

The ASFR Collection Fraud coordinator will research ASFR and do the following:

Certain math errors require no taxpayer contact prior to making the correction to the return and processing the return.

Math errors that require no taxpayer contact are:

Review the return, schedules and attached forms for no contact math errors.

Certain math errors require taxpayer contact to secure information to process the return.

Math errors that require taxpayer contact are:

Review the return, schedules and attached forms for contact math errors.

Verify that all W-2 case minors are reported on the return.

Compare W-2 income with entries on:

If the amount matches within $1.00 consider the wages reported.

Consider any two W-2 case minors, for the same taxpayer, that contain identical income information, as duplicates even if the payer names and EIN's are different.

Allow taxpayers (i.e., police officers, firefighters, etc.) who have sustained injuries in the line of duty to reduce Form W-2, box 1 Wages, by amounts indicated as line of duty injury payments when ALL of the following conditions are present:

Retired/non-active status members of the military employed as Junior ROTC instructors receive allowances for uniforms, housing, subsistence, etc. However, unlike active duty military personnel, these taxpayers CANNOT exclude these allowances.

Taxpayers must include Form W-2, Box 1, Wages, on their return and cannot reduce their wages by amounts shown on Stock Option statements. Consider the reduction underreported income.

Whenever wages are under/unreported, compute withholding (W/H) or consider W/H to determine if the under/unreported income meets the ≡ ≡ ≡ ≡ ≡ ≡ ≡ tax tolerance.

The taxpayer may exclude certain types of income. Wages reported on Form W-2, box 1 are generally reduced by the amount of excluded income. Some of these exclusions are:

Since the amount reported on Form W-2, box 1 should reflect these exclusions from income, the taxpayer should not subtract the above items from the amount reported as wages.

If wages are underreported, check the attached Form W-2 and/or any attachments to determine if the taxpayer excluded the amount as sick pay.

If the taxpayer attaches a substitute Form W-2 and reports a lesser amount than shown on the case minor from the same payer, consider the difference underreported.

If there are two Form W-2 case minors for the same taxpayer, from the same payer (payer name and EIN match) take the following action:

If wages are under/unreported, determine if the taxpayer makes any reference to repayment of supplemental unemployment benefits. If the taxpayer correctly reported net wages after repayment of supplemental unemployment benefits, consider the wages reported.

If the taxpayer is a minister and has reported Form W-2 wages on a Schedule C:

Statutory employees are self-employed independent contractors, for purposes of reporting income and expenses on their tax returns, who are treated (by their employers) as employees for FICA tax purposes.

Statutory employees should receive a Form W-2 with the statutory employee box checked in box 13.

Statutory employees report their Form W-2 wages on Schedule C or C-EZ, Gross receipts and sales line, along with business expenses. This income is NOT subject to self-employment tax and business expenses are not subject to the 2% limitation for miscellaneous itemized deductions. This income is subject to social security and Medicare taxes that should be withheld at the source by the payer and shown on Form W-2 as SS/Medicare Tax Withheld, SS Wages, and Medicare Wages and Tips.

Performing artists are not statutory employees, but, they may report Form W-2 income on Schedule C (instead of Form 2106), if during the tax year ALL of the following conditions apply:

If the taxpayer includes only non-statutory wages on the Schedule C or C-EZ, consider expenses underreported income.

If an explanation attached to the return indicates the fellowship, grant, or stipend was used for tuition, fees, books, supplies, and equipment required for the course, AND:

Taxpayers whose employer excludes earnings from taxable wages designated to pay for child care and/or care for dependents unable to care for themselves can deduct the amount of this benefit (within certain limits). The excluded amount is limited to the smaller of the taxpayer's earned income, the spouse's earned income, or $5,000 ($2,500 if married filing separately).

The gross benefit amount shows separately on Form W-2, box 10. The wage amount on Form(s) W-2, box 1 SHOULD NOT INCLUDE the DCB for the tax year.

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Taxpayers MUST complete Form 2441 or Schedule 2, Parts I, II, and III in order to compute the correct amount of Child Care Credit and excludable DCB.

If the taxpayer did not file Form 2441 (Schedule 2) and/or did not fully report DCB, the taxable portion is the DCB amount up to ≡ ≡ ≡ ≡ ≡ ≡ ≡ per payer and per taxpayer. If there is an indication that the taxpayer participated in one of the following Cafeteria Plans: flex plan, flex credits, or flex dollars (pre-tax deduction) for Dependent Care Benefits and the taxpayer IS NOT claiming Child Care Credit, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Taxpayers who receive DCB generally do not qualify for Child Care Credit. If the taxpayer claimed Child Care Credit, verify that the taxpayer is entitled to the credit. If they are not entitled, consider the amount claimed a no contact math error. IRM 5.18.1.10.2.3.19.

An exclusion from gross income is allowed for Employer-provided adoption benefits (EPAB) for qualifying expenses that a taxpayer incurs to adopt an eligible child. If the eligible child is not a U.S. citizen or resident, then the taxpayer may not claim an exclusion unless the adoption becomes final.

EPAB is reported on Form W-2.

The $10,000 limitation on the exclusion listed in the IRC is adjusted for inflation annually. The maximum exclusion is allowed, subject to income limitations, for the adoption of a child with special needs even if the taxpayer has no qualifying expenses. The exclusion begins to be phased out at the adjusted gross income in excess of an amount determined annually and based on inflation.

Employer-provided adoption assistance payments are shown on Form W-2, box 12 and are identified with a code "T" .

The wage amount on Form(s) W-2, box 1 does not include the EPAB payments for the tax year.

Taxpayers must complete Form 8839, Qualified Adoption Expenses, Part I, II and III in order to compute the correct amount of EPAB.

Taxpayers should include this taxable benefit amount with wage income on Form 1040/1040A, Wages, salaries tips, etc. line. They also write "AB" on the dotted line next to Wages, salaries tips, etc. line.

If Form 8839, Taxable Benefits line is not reported on Form 1040/1040A, Wages, salaries tips, etc. line, consider the taxable benefits unreported.

A Form 1099–OID reflects the original issue discount allocable to the tax year and the qualified stated interest paid or credited on the obligation during the tax year.

Original issue discount, which is treated as interest income, is the difference between the issue price and stated redemption price at maturity of a debt instrument ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Original issue discount (other than original issue discount on an obligation with a term of 1 year or less) is reported on Form 1099–OID.

If the taxpayer reports a partial amount or no amount from a 1099–OID case minor, consider whether the taxpayer has made an adjustment for acquisition premium, or some other offset. Original issue discount may be reduced by these offsets provided the taxpayer first included the gross amount of original issue discount on Form 1040, Schedule B, line 1. The line 2 amount should then reflect the taxable amount of original issue discount as adjusted for these offsets.

Interest from U.S. Savings Bonds, Treasury Bills, Treasury Bonds, and Treasury Notes generally appear on 1099–INT.

If the taxpayer reports an amount of savings bond interest that is equal to or greater than the case minor(s) amount, consider the case minor(s) reported unless the return amount is identified as being from a different payer.

Accept bond interest if the taxpayer indicates the following:

If the taxpayer reports an amount as savings bond, T-Bill bond, or note interest, and the 1099–INT case minor shows only regular interest, consider the case minor reported if the amounts match within $1 ONLY if the taxpayer has not excluded interest on Schedule B, line 3, for college tuition.

Form 8815, Exclusion of Interest from Series EE U.S. Savings Bonds After 1989, is allowed on Form 1040, Schedule B, (Form 1040A, Schedule 1).

Bond Interest must be reported on the return before being claimed as a Savings Bond Exclusion on Form 1040/1040A.

The savings bond exclusion claimed on Form 1040, Schedule B, (Form 1040A, Schedule 1) must be verified using specific tax year instructions. Use Package X to determine if the interest is under/unreported.