The CSCO program discussed in this section involves both paper and telephone contact with internal and external customers. This program may require research specific to that program including accessing Integrated Data Retrieval System (IDRS) and the Automated Trust Fund Recovery System (ATFR).

All CSCO programs will follow additional guidelines set forth in the Taxpayer Advocate Program and the Processing Timeliness and Correspondence Guidelines Internal Revenue Manuals (IRM).

TFRP is a penalty provided for by Internal Revenue Code (IRC) 6672 against any person required to collect, account for and pay over taxes held in trust who willfully fails to perform any of these activities, or willfully attempts to evade or defeat any such tax or it's payment.. TFRP is a “pecuniary” penalty, meaning the government has suffered an actual monetary loss for unpaid trust fund taxes. The penalty is equal to the total amount of tax evaded, not collected, or not accounted for and paid over.

TFRP, under IRC 6672 applies to individuals or entities (representatives of a business with authority and responsibility) that did not pay the government:

:

The responsible person may be one or more of, but not limited to, the following:

Though TFRP may be assessed against several individuals, the total liability is collected (ultimately retained) only once from either

Assessments of the TFRP may be based on liabilities for the following tax forms with related Masterfile Tax (MFT) codes:

When more than one individual is assessed the penalty (Transaction Code (TC) 240 with Reference Number (RN) 618), the amount collected is equal to the unpaid trust fund owed by the business entity, plus interest and fees owed by the individuals trust fund portion of the business, plus accruals for each quarter involved.
The amount assessed for each responsible individual from a corporation may be different if all responsible persons were not liable for the same tax periods or the same parts of the tax period (e.g., if a responsible person joins or leaves a business mid-period). The amounts can also differ when Appeals reaches different settlements with the various responsible persons. In the following example where taxpayer B is the only person responsible for all the business tax periods at issue, the Service would seek to collect a total of $20,000 plus accruals.

Revenue Officers (RO) investigate and determine against whom to assess the TFRP. Unless collection of TFRP is in jeopardy, the taxpayer must be given a preliminary notice at least 60 days before the date of notice and demand for payment (and ordinarily before assessment) of the TFRP. The 60 day letter is Letter 1153(DO) and it provides for administrative Appeal rights. Appeals will consider the taxpayers timely protest and will either sustain in full, sustain in part, or concede the proposed penalty. A taxpayer may waive the 60 day notice period by signing Form 2751 (see IRM 5.7.6.1, Trust Fund Compliance). After completing the investigation and providing the required notice to the taxpayer of the proposed assessment, Form 2749, Request for Trust Fund Recovery Penalty Assessment is completed. A Form 2749 is initiated for each responsible individual with all of the related assessments. Assessments for Forms 941, 943, 944, 945, 1042 are generated on Automated Trust Fund Recovery Area Office (ATFR-AO), with few exceptions. The remainder are processed as indicated in IRM 5.19.14.2.5

The Area Office (AO) Technical Services - Advisory Control Point Monitor (CPM) forwards completed Forms 2749 to the Small Business Self Employed (SBSE) Ogden campus through ATFR. Any Form 2749 not processed through ATFR will be forwarded to Ogden CSCO via Form 3210 and manually input to IDRS.

Compliance Services Collection Operation (CSCO) in OSC and BSC

.

Taxpayer Advocate Services (TAS) is an independent organization within the Internal Revenue Service. TAS helps taxpayers who are experiencing economic harm such as not being able to provide necessities like housing, transportation, or food, taxpayers who are seeking help in resolving problems with the IRS, and those who believe an IRS system or procedure is not working as it should. See IRM 13.

ATFR is comprised of the following:

Revenue Officers use ATFR-AO to:

Control Point Monitoring and the Advisory Units use ATFR-AO to:

Compliance Campus uses ATFR-CC to:

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, which ever is later.

The following chart explains how the ASED is determined for trust fund taxes:

The statutory period for assessing trust fund taxes, collecting taxes, and refunding credits may be extended for TFRP cases by the following:

To reduce the instances of non-assertion of the TFRP caused by the expiration of the ASED, a CP Notice 527, TFRP Assessment Statute Expiration Date Notice, is generated. See IRM 5.19.14.4.4.

The Collection Statute Expiration Date (CSED) is normally ten (10) years from the date of assessment. (Refer to IRM 5.1.19 Collection Statute Expiration).

) Employment tax is comprised of trust fund and non-trust fund taxes. The trust fund portion of these taxes is the amount of Social Security and Medicare (FICA), and income tax the employer is responsible to withhold and remit to the government on behalf of the employee. The non-trust fund portion of these taxes is the amount of Social Security and Medicare taxes the employer is responsible to match and pay to the government.

Non-trust fund tax is determined by dividing the FICA tax of the related BMF module in half. Trust fund tax is calculated by adding one-half (1/2) the FICA and all of the income tax withheld for the period. The non-trust fund amount is always the same for the corporation. It does not change from RRP to RRP when they are assessed different amounts.

The table below outlines the calculation of the TFRP assessment amount.

When a subsequent tax assessment (TC 290, 298/ 300) has not been considered in the TF assessment, calculate the non-trust fund portion of the original BMF tax (TC 150) using the adjustment reference codes for FICA/Medicare tax and withholding or research ATFR-AO for Form 4183 calculations. If the subsequent tax assessment is not considered in the TF assessment, BMF payments received after the TC 290 posted are applied first to the non-trust portion of tax before cross referencing to the MFT 55 accounts. Payments received prior to the TC 290 posting may be applied to the trust fund portion of tax if the non-trust fund was fully satisfied prior to the additional assessment.

If the original Form 941 tax, including penalty and interest, was paid prior to an additional assessment (e.g., TC 290, TC 300, TC 308, TC 294, TC 298), any payments made towards the previously satisfied amount may not be reapplied to the additional tax assessment for calculation of the TFRP.

TC 766 Action Code (AC) 299 is a Consolidated Omnibus Budget Reconciliation Act (COBRA) credit that is treated as a TC 650 for the purpose of TFRP calculation. However, it is not cross referenced to related responsible parties.

Prior to August 17, 2001, the TFRP penalty assessment was shown on Form 2749 as a total combined assessment. On these assessments, the total penalty (TC 240) was combined on the last tax period reflected on the Form 2749.

Effective August 17, 2001, each quarter is listed on the Form 2749 separately and each quarter is assessed separately on IDRS.

The majority of Forms 2749 are generated through the ATFR-AO system. The Form 2749 is processed through the ATFR-CC application. Assessment data is maintained on the system electronically for future reference. On rare occasions a Form 2749 is manually processed, independent of the ATFR system. The adjustment is input to IDRS CC ADJ54. See IRM 5.19.14.2.5 for IDRS input instructions.

TFRP assessments for the following forms must be processed manually:

For manual assessments, the RO completes a paper Form 2749 which has five parts. They are:

Forms 2749 must be processed within 2 business days of receipt in CSCO.

The campus performs the ATFR “Check for New” function to upload Forms 2749 that have been submitted to ATFR-CC from the Control Point Monitors (CPM). These Forms 2749 are processed through ATFR daily. ATFR-CC systemically submits all of the Form 2749 transactions to IDRS. Those cases that cannot be systemically processed are added to the ATFR-CC campus inventory for employee processing.

When a Form 2749 is received on ATFR-CC, the system will ensure the most current IDRS information (payments/credits/debits) is reflected on the ATFR-CC Form 2749. The ATFR-AO Form 2749 will always appear as it was originally sent to the Compliance Campus.

Forms 2749 that cannot be processed through ATFR-CC are reviewed for the following information prior to manual input to IDRS:

Review the BMF Assessment Statute Expiration Date (ASED) for Forms 2749 processed manually as well as those processed through ATFR as follows:

When the ATFR-AO Form 2749 and IDRS prompt assessments do not match, verify the assessment amount. See IRM 5.19.14.1.6. If unable to resolve a discrepancy between what is assessed on IDRS and the Form 2749, reject the Form 2749 back to the Revenue Officer. Notify the RO via e-mail that Form 2749 was rejected and the reason why.

Use CC ENREQ with TC 000, filing status, year prior to penalty assessment and complete name and address to establish an account if the penalty is being assessed against a taxpayer with no account on Master File under the taxpayers own SSN. Input the transactions in the following order; CC ENMOD; ENREQ. (Refer to IRM 2.3.15 and IRM 2.4.9 for CC ENMOD and CC ENREQ).

Once the TC 000 has been established, process Form 2749.

The following examples illustrate circumstances that require an account to be established:

Forms 2749 input through ATFR-CC that can be worked systemically are processed upon receipt and those that require user intervention are added to the system inventory. Using the “Next Case” menu option, cases in the system inventory are retrieved and processed by employees.

Review the BMF ASED. See IRM 5.19.14.1.5.

Review the “RP History” menu option to determine the case condition(s) that require user intervention. Below are a few examples.

Reject Form 2749 via ATFR-CC if information is incomplete or incorrect on ATFR. Input a history on ATFR-AO with the reason for rejecting the Form 2749.

When the Form 2749 is processed and all transactions post to IDRS, the case will update to a posted status. At this time the UNLCE information is input. See IRM 5.19.14.2.6.

Trust Fund Recovery Penalty Assessments are input on the Individual Master File (IMF) under the responsible party(s) SSN. The assessment is input onto IDRS under MFT 55, using a TC 290 .00 with RN 618, for the amount of the Trust Fund Penalty.

Use CC REQ54 to input the assessment amount to the TFRP account(s) as listed below. From this, a TC 240 with a RN 618 and a CP 15B notice with a cross-reference EIN, will generate.

Always input CC ASEDR with review indicator" 1" to the BMF tax period unless the box on the F2749 is checked "no" . This suppresses the erroneous generation of CP 527, Trust Fund Recovery Assessment Statute Expiration Date Notice.

Use CC REQ77 to cross-reference all related TFRP accounts.

When processing a paper F2749, hold the case until the DLN is available then write the DLN and the assessment date on the F2749. If multiple tax periods, write the DLN for each assessment on the F2749.

Route copies of F2749 as follows:

The TFRP file (commonly referred to as UNLCE) contains a record of the amount of the TFRP assessments, the business entity, and the responsible person(s). The file is established and researched on IDRS, using CC UNLCE, which is the IDRS screen display of F2749. See IRM 2.4.41 for CC UNLCE input information.

Each Compliance Campus has a separate TFRP (UNLCE) file containing the information input at that campus. Use Universal Access on IDRS to research files in different campuses.

Use information from the source document, F2749, to establish the TFRP file on IDRS. This file is not systemically updated by the Taxpayer Information File (TIF).

A history item field is available on the TFRP (UNLCE) file for the business entity and related responsible party(s) records. When in the research mode, the date, employee ID and history item will display. The input screen to enter history is a 56 character field. A maximum of 75 history items for each business entity and related responsible party(s) can be entered. Once the 75 history entries have been reached, the oldest entries will be systemically deleted.

Use CC UNLCER to research the TIN to determine:

) Utilize the Posted Assessment Report from ATFR each week to establish the TFRP (UNLCE) file for F2749 processed the previous week through ATFR. Update the TFRP (UNLCE) file within 5 business days from the Posted Assessment Report date.

When inputting information onto CC UNLCE:

BMF penalty assessments cannot be input to the TFRP file using the EIN format. Input BMF penalty assessments to the TFRP file using the SSN format. Indicate in the history item field that the assessment is a NMF EIN using the phrase: "SSN XXX-XX-XXXX represents BMF XX-XXXXXXXN NMF account" .

Input a history item to indicate the type of assessment.

Do not delete full paid accounts from the TFRP file.

Ogden and Brookhaven CSCO Operations are responsible for the Trust Fund Recovery Penalty program and all necessary actions (e.g., payment cross referencing, TC 971 linkages, and Form 3870 adjustment requests).

TFRP transcript case processing consists of ATFR and Non-ATFR (manual) transcripts. ATFR transcripts are processed systemically with and without user intervention. ATFR cases that are processed by a user are completed by inserting and/or deleting transactions, then submitting the transactions. “Submit Transactions” must be selected to close the case, even if no transactions are required.

Campus TFRP inventory is generated by the following computer generated transcripts:

Initial case actions on TFRP related transcripts must be completed within 43 days of the date of the transcript.

When processing any case, take all necessary actions. The account should be current. Cross-reference all payments that have posted. For Non-ATFR cases, use CC RECON if there are payments pending to post in the current cycle. See IRM 5.19.14.3.2.3 for exceptions.

MFT 55 accounts with a V- freeze present on CC TXMOD must be researched for a posted TC 130 with the corporate EIN that matches the F2749. If present, release with a TC 131 after the TC 240 posts whenever the only reason for input is for TFRP (refer to CP 44 in IRM 5.19.10.3.10 If the TFRP is assessed against the secondary SSN, the TC 130 should remain on the joint entity.

An ATFR case is defined as “all tax periods and all RRPs associated with the corporate entity case established with the same case creation date.”
The ATFR Coordinator performs the ATFR “Process New” function to upload ATFR Transcript cases and complete the systemic processing. Transcript cases that require user intervention are added to the system inventory. Using the “Next Case” menu option, cases in the system inventory are retrieved and processed by employees.
Ogden works ATFR cases where the Corporate Entity state is AK, AL, AR, AZ, CA, CO, FL, HI, IA, ID, IL, IN, KS, LA, MI, MN, MO, MS, MT, ND, NE, NM, NV, OK, OR, SD, TN, TX, UT, WA, WI, WY and where the corporate entity country is Guam, Puerto Rico, and Virgin Islands.
Brookhaven works ATFR cases where the Corporate Entity state is CT, DC, DE, GA, KY, MA, MD, ME, NC, NH, NJ, NY, OH, PA, RI, SC, VA, VT, and WV.

When a payment or credit posts to the TFRP account, cross-reference the amount to all RRPs and the related BMF module(s), including modules in Status 53, 72 and 71, and update the MMA.

Research the BMF modules for payments and credits not considered in the trust fund calculation, cross-reference to all RRPs and update the MMA.

If TC 91X and “Z” freeze is present on the account, contact CI/Fraud Detection Center and proceed per their instructions. For ATFR cases, input a history item on ATFR. For Non-ATFR cases, input a history on CC UNLCE.

Contact Area Office (AO) CPM when case(s) cannot be resolved. Form 2209, Courtesy Investigation, may be required if unable to contact by phone. The case will be referred on ICS to the Advisory Manager where the corporation account is located. Control on IDRS and monitor for 45 days. If unresolved, prepare Form 5942 and forward to Advisory Manager. A history entry is required on CC UNLCE if no response to either form. Some examples are:

Do not refer a case to the Area Office because there is no UNLCE data. See IRM 5.19.14.2.6 for steps to take when UNLCE information is missing.

When payments/credits/debits are received on accounts, update the memo money amount field to reflect the unpaid balance of the trust fund. This includes the account where the payment was received and all related accounts.

The MMA field on CC TXMOD reflects the remaining unpaid trust fund balance on all IMF and BMF related modules. The MMA is input as a TC 971 with action codes 093 and 097. The MMA must be input when a trust fund assessment is made. Update the MMA each time any single transaction (e.g., credit or debit) occurs on the account, after the last transaction when multiple transactions post, or when updating an incorrect MMA.

When a new TC 971 posts, it will overlay the money amount in the original TC 971. There will be only one TC 971 for each cross-referenced transaction. The cycle of the original TC 971 updates to a current posting cycle, but the original TC 971 date remains. The updated TC 971 will display as a “DJ” transaction in the Pending Transactions section of IDRS showing the date of the payment/credit.

IMF and BMF MMA:

The MMA is input in dollars and cents format for both IMF and BMF accounts using the CC REQ77 screen field called FREEZE-RELEASE-AMT. There are ten spaces available in this field.

When the trust fund has been paid in full, reduce the MMA to .00. Never input a TC 971 AC 094/096 to reverse a previous TC 971 unless it is to correct erroneous information. If erroneous information exists, it may be necessary to input a new TC 971 AC 093/097.

Use the current date when inputting a missing or incorrectly reversed TC 971.

Payments, credit offsets, and debits are cross-referenced to the related IMF and BMF account module using either the ATFR or IAT applications. Payments are cross referenced using TC 241 RN 697 from BMF to IMF, TC 241 RN 699 from IMF to IMF, and TC 538 from IMF to BMF.

Payments must be posted to reflect the originating payment application. For example trust fund to trust fund, and interest to interest. When a single payment is split between trust and interest, cross-reference to trust and interest on the related accounts using a separate TC 241 RN 699/697 and/or TC 538.

BMF payments must be applied to the non-trust fund portion of tax before cross-referencing to the MFT 55 account(s). Once the non-trust amount is paid, cross-reference payments to the MFT 55 account(s) until the trust fund portion is paid. If an additional tax assessment (TC 290) was not considered in the TF assessment, payments received after the TC 290 posted are applied to the non-trust fund portion of tax before cross-referencing to the MFT 55 account(s). Payments received prior to the TC 290 posting may be applied to the trust fund portion of tax if the non-trust fund was fully satisfied prior to the additional assessment. See IRM 5.19.14.1.6 for TFRP calculations.

Once the trust fund portion of tax is paid, then apply payments to assessed penalties and assessed interest, then to accrued penalties and accrued interest. Continue to apply payments in this order until the trust fund and trust fund interest is full paid. Amounts applied to BMF fees and penalties are not cross-referenced.

IMF payments are cross-referenced to the BMF and all RRPs until the trust amount is full paid. Then apply payments to assessed fees and collection costs, then to interest. Amounts applied to fees and collection costs are not cross-referenced.

When a payment on the TFRP account is reversed or refunded:

⋆⋆The netted amount is the difference between the original amount that posted to the tax module and the amount that was reversed. Ex. $100 - $25 = $75. $75 is the netted amount

After applying credits to TFRP accounts and BMF modules, review the Payment Sorter to validate credit dates/amounts for each payment.

Payments other than those listed below are applied using the normal payment application method. See IRM 5.19.14.3.2

If the TFRP was assessed under Old Calculation methodology, BMF payments posted prior to 01/01/03 are applied as follows:

The following are examples of Old Calculation cases.

On single period new assessments, when payments are posted to both the IMF and BMF accounts, cross-reference in payment date order depending on where the payment posts.

If one or more RRPs make a payment on the same day that does not full pay the trust, cross-reference each payment to all related accounts.

If more than one RRP makes a payment on the same day that full pays the TFRP assessment but does not full pay the interest, divide the balance of the TFRP assessment by the number of RRPs that made a payment on that day. Cross-reference that portion of each payment to full pay the TFRP assessment. Cross-reference the remaining amount toward the interest due.

If more than one RRP makes a payment on the same day that full pays the TFRP assessment including interest, divide the balance of the TFRP assessment and interest by the number of RRPs that made a payment on that day. Cross-reference that portion of each payment to full pay the TFRP assessment plus interest and refund the difference if there are no outstanding tax liabilities.

If the trust fund is full paid and more than one RRP makes a payment on the same day that pays the interest, and the interest amounts owed for each officer is not the same, divide the smallest balance of interest due by the number of RRPs that made a payment on that day and cross-reference that portion to all related party(s). Once the interest on the account with the smallest balance is full paid, continue cross-referencing to the remaining RRPs in the same manner. See chart and example below:

If a payment is received from an RRP against whom the TFRP has been assessed, apply it to the underlying BMF tax periods in earliest assessment order.

Do not apply payments to a portion of any period for which a responsible person is not liable. For example, in the table illustrated below, if Taxpayer B makes a payment, his payment would not be applied to 01/199603. The application of his funds would begin with 01/199606.

Using the information above, the following examples illustrate the guidelines to follow when cross-referencing payments/credits which are posted to TFRP combined assessments.

Taxpayer A made a payment of $14,500 that fully satisfied the TFRP assessment including interest accruals and related BMF modules for Trust Fund

Taxpayer C made a payment of $3,100

Taxpayer A made a payment of $2,900

Taxpayer A made a payment of $7,000.

Payments received from the RRP should be cross-referenced to trust fund for all tax periods on the underlying BMF and related responsible party(s) accounts prior to cross-referencing any amount to interest. However, BMF payments can be applied to interest for the tax period where they posted after the trust fund for that tax period has been satisfied.

A separate TC 538, one for trust and one for interest, for each BMF tax period are required when applying trust and interest to the corporate account. When cross-referencing to other RRP accounts with combined assessments, the full amount of the trust fund payment can be cross-referenced, even if it is cross-referenced to multiple tax periods on the corporate account. A separate TC 241/699 is required to be input for interest and can be the combined amount when cross-referenced to other RRP accounts with combined assessments.

Input a history item on CC UNLCE for each TC 241 RN 697 indicating the tax period, date and amount that was applied to trust fund and/or interest.

The following combined new calculation examples illustrate the guidelines which should be followed when cross referencing payments/credits/debits which are posted to the BMF trust fund module(s).

Payment for $6,000 posted to the BMF tax period 199603.

• Payment for $4,000 posted to the BMF tax period 199606.

Payment for $3,000 posted to the BMF tax period 199609.

Payment for $500 (DPC 02) posted to the BMF tax period 199612.

Underpayment interest is generally computed from the date of the TFRP assessment to the date of the payment.

When calculating interest the following grace period(s) must be considered:

Payments that are applied towards trust fund interest on the originating account must be cross-referenced to trust fund interest on the related responsible party(s) accounts.

On combined assessments, payments made by the IMF are not applied towards interest until the trust fund for all quarters is full paid.

On single period new assessments, when interest payments post on the IMF account, use the posted TC 196 amount to begin applying the payment to the BMF account. Using CC INTST, CC COMPA or DMI, compute interest to the payment date on the other RRP accounts to determine the amount to be cross-referenced.

On single period new assessments, when interest payments post on the BMF account, compute interest to the date of the BMF payment or credit.

On combined assessments where BMF payments have full paid the trust fund and are beginning to pay interest, compute interest for the quarter that is full paid using that quarter's trust fund assessment amount from UNLCE. Use CC COMPA or DMI to compute the interest from the assessment date of the TC 240 for each related responsible party to the payment date.

On combined assessments where IMF payments have full paid the trust fund and are beginning to pay interest, use CC COMPA or DMI to compute the interest from the assessment date of the TC 240 to the payment date. Compute interest on the trust fund assessment amount from UNLCE for each quarter separately.

Compute interest for each assessment separately when assessments are posted on the same period for more than one corporation. Use IDRS CC COMPA or DMI to compute interest and post to IDRS using TC 340 if it is necessary to restrict interest. Caution should be used when manually computing or restricting interest. Do not unnecessarily restrict accounts; ensure that TC's 340/341 are used appropriately. Master File programming can accurately compute interest in some situations. Some examples include:

Verify that IDRS is computing interest correctly using DMI or CC COMPA. Generally, but not limited to, the only time that you will restrict the interest on an account will be if the 2nd corporation pays trust fund and interest before the 1st corporation on accounts with multiple assessments; or on combined assessments when the BMF begins to pay interest on a later tax period before trust fund is paid on an earlier tax period. If this is the case, compute interest for each assessment separately. Use CC COMPA or DMI to compute the interest and post it to IDRS using TC 340. Continue to manually update all interest using CC COMPA or DMI and post to IDRS using TC 340 until the account is full paid.

Use CC REQ54 to input TC 340

Always send a letter and a copy of the interest computation report to the taxpayer each time interest is manually computed or restricted. Users of CC COMPA may only send CC COMPAD prints to taxpayers as an explanation of the manual interest computation. Use Letter 3447 or Letter 3535 as a cover letter when providing an interest computation report to taxpayers as required by IRC 6631. Letter 3447 must be used as a cover letter for CC COMPAD printouts. For more information on manually computing interest, refer to IRM 20.2.8.3 Manual Computation.

When interest is cross-referenced to accounts where there is more than one assessment or accounts that have a combined assessment, a history entry is required on CC UNLCE. Include the following information:

When the amount collected exceeds the TFRP assessment including accruals, the taxpayer whose payment created the excess should receive a refund of the overpayment.

When cross-referencing a payment results in a credit balance:

If the RSED has expired and all liabilities are satisfied; or the account has no outstanding balances, transfer the credit(s) to the appropriate Excess Collection file following the procedures below:

If the overpayment involves a case identified as a bankruptcy (freeze code -V, -W), contact Centralized Insolvency Operation (CIO). Refer to http://serp.enterprise.irs.gov/databases/who-where.dr/inslvncy-bnkrptcy/national_insolvency_field.htm, SERP National Insolvency Directory for the appropriate phone and/or address information. Control and monitor the case, and follow up with CIO as necessary every 90 days until the credit balance is resolved. Do not move credit to another balance due account. Input a history Item on CC UNLCE that CIO was contacted.

If the overpayment involves a case identified as an OIC (freeze code -Y), contact the appropriate MOIC Liaison located on the SERP Who/Where tab http://serp.enterprise.irs.gov/databases/who-where.dr/coic_backend.htm for action. Brookhaven TFRP employees will contact Brookhaven MOIC and Ogden TFRP employees will contact Memphis MOIC. See IRM 5.19.7 for information about OIC. Do not move credit to another balance due account.

There are several different types of TFRP accounts that are assessed on Non-Master File (NMF):

NMF accounts will not have a TC 971 AC 093/097 on the NMF account or the related RRP and corporate accounts. NMF accounts are identified as NMF on CC UNLCE.

NMF transcripts generate when a transaction or payment posts to a NMF account. These transcripts generate in the CSC NMF Unit and are forwarded to CSCO TFRP in Brookhaven and Ogden to be worked.

When a payment or credit posts to the NMF TFRP account, cross-reference the amount to all related TFRP modules and the underlying BMF module(s), including Status 53, Status 72, and Status 71. Follow the procedures in IRM 5.19.14.3.4 and IRM 5.19.14.3.5.

Payments and credits cannot be cross referenced to the NMF accounts. Once the TFRP is full paid, any remaining penalty on the NMF account is abated. Complete Form 1331-B and forward to CSC NMF Accounting to request abatement of the remaining TFRP. A separate Form 1331-B is not necessary to abate penalty or interest assessments; however, it must be notated on the Form 1331 B to abate any penalty and interest, including accruals.

Determine if a TC 130 Entity freeze (V- freeze) is on the Master File account for the RRP that is on NMF. Reverse the TC 130 when the account is full paid or the CSED has expired.

A Payment Expired CSED (PMTEXPCSED) transcript will generate when a payment is applied to a module after the CSED has expired. Refer to IRM 5.19.10.5.2 for procedures to work these transcripts.

If more than one TFRP assessment (TC 240 ref 618) is posted to the TFRP account for the same corporate entity, and the date of the assessment(s) and the dollar amounts are the same, review the DLN for a determination if the additional assessment(s) is a “true duplicate.” A duplicate assessment may be indicated by the Document Code of the DLN of the TC 240. The Document Code is the 4th & 5th digits in the DLN. A Document Code 51 indicates the assessment was a quick or prompt assessment. A manually submitted TFRP assessment will contain a Document Code 54. If the assessment(s) is determined to be a “true duplicate,” abate the assessment with the most current date. If review of the DLN(s) indicates the duplicate assessments(s) resulted from incorrect ATFR processing, see IRM 5.19.14.3.2(4).

When RRP’s have multiple corporate assessments with the same assessment date, apply payments to the corporation assessed first by the RRP that made the payment. Cross reference payment(s) to all RRP’s to correspond with the assessment of the same corporation regardless of the order in which they appear on the tax module. Update the MMA accordingly.

When RRP's have multiple corporate assessments with different assessment dates, apply the payment, credit or debit beginning with the earliest TFRP assessment date. Cross reference payment(s) to all RRP’s to correspond with the assessment of the same corporation regardless of the order in which they appear on the tax module. Update the MMA accordingly.

When multiple MFTs with different (BMF) assessment dates are assessed on one RRP or as a combined assessment, apply payments to the MFT with the earliest BMF assessment date. If BMF assessment dates are the same, apply from MFT number, lowest to highest.

Input a history item on CC UNLCE for each TC 241/ Ref 697 indicating the EIN, tax period, date and amount that was applied to trust fund and/or interest.

When an Offer in Compromise (OIC) is accepted, a TC 780 is placed on the tax periods included in the offer. When the terms of the OIC are properly completed, a TC 788 is placed on the tax periods, and the OIC account is treated as full paid, see IRM 5.19.7.3.26.

When an OIC is accepted (TC 780) continue to cross-reference the payment or credit to that account until the TC 971 AC 032 is pending. Ensure that the TC 971 AC 097 for the corporation that filed the OIC is updated with the unpaid trust fund amount, or the TC 971 AC 093 for the RRP that filed the OIC is updated with the unpaid trust fund amount.

Before cross-referencing payments to an account with a posted TC 604 containing a TC 971 AC 032, contact the MOIC liaison located on the SERP Who/Where tab to ensure the accuracy of the account. Brookhaven TFRP employees will contact Brookhaven MOIC and Ogden TFRP employees will contact Memphis MOIC.

When a bankruptcy freeze (-V or –W) appears on the MFT 55 module, process the case. See IRM 5.19.14.3.7(4) for cases involving overpayment.

When the TFRP is assessed, IDRS issues a first notice. The CP 15B informs the taxpayer of the tax periods (up to 25) included in the TFRP assessment. Three weeks later, IDRS issues Notice 504. Six weeks after the issuance of Notice 504 the account is assigned to Status 22 (ACS) or Status 26 (RO). The CP15B provides the taxpayer guidelines on requesting suspension of collection as provided by IRC 6672(c). The taxpayer may respond to these notices in writing or by telephone.

The Form 4442, Inquiry Referral is used when a taxpayers inquiry cannot be resolved during initial contact with the IRS. The initial contact may be received in person, or by telephone. Control Forms 4442 as taxpayer correspondence.

Written requests received in CSCO must be controlled within 14 days from the IRS received date or 3 business days from the operation receive date. When a final response cannot be initiated within 30 days, an interim response will be initiated by the 30th calendar day from the IRS received date. Sites using Accounts Management System (AMS) for controlling and monitoring inventory follow AMS guidelines for case control and acknowledgment of taxpayer correspondence. If correspondence is received from a previous area after the 30 days expires and no interim letter was issued, you must send an interim letter within five business days of receipt in your area. Subsequent interims may be required if you are unable to respond as promised, see IRM 21.3.3.4.2.2, Interim Responses. Follow all other IDRS control procedures in IRM 21.3.3.4.2.2, Interim Responses.

If correspondence is received stating the taxpayer does not understand or is questioning the TFRP assessment, send Letter 2282C and explain the determination for assessment.

If the correspondence states the taxpayer is not liable for the TFRP; or the taxpayer is requesting an abatement of the TFRP, research IDRS to verify that the withheld tax of one employee for each quarter of liability has been paid. If payment has been received, forward the correspondence to the Advisory office where the claimant resides. Send Letter 2282C to the taxpayer advising him/her of the referral to Advisory. If payment for the withheld tax of one employee for one quarter of liability has not been paid, send Letter 2282C with Form 843 to the taxpayer.

If the taxpayer requests a refund of taxes paid, send Letter 2282C with Form 843 to the taxpayer.

If the taxpayer states payments have not been applied or have been applied incorrectly, research IDRS and apply or correct any missing and/or misapplied payments. If payments are applied or corrected, send Letter 2282C to inform the taxpayer.

Correspondence received that includes a request to make payments, states he/she is currently on an installment agreement, states he/she is in bankruptcy, incarcerated, deceased, or is entitled to military deferment, forward the inquiry to Balance Due Accounts. Notate "TFRP issue resolved " on the correspondence prior to routing.

Correspondence received for all other issues are routed to the appropriate functional area. Use the Campus Mail Routing Guide in SERPhttp://serp.enterprise.irs.gov/databases/local-sites-other.dr/local.dr/mrg.dr/mrg_all_campus.htm for the determination where to route.

If Form 2848, Power of Attorney (POA) and Declaration of Representative, or Form 8821, Tax Information Authorization (TIA), is attached to the notice or correspondence, use CC CFINK to research the Centralized Authorization File (CAF) to verify if the POA is authorized for the period(s) in question. If the account is not on CAF the Form 2848 must contain the following:

A POA or TIA must contain the essential elements listed in IRM 21.3.7 to be valid. Those essential elements include:

Specific use Powers of Attorney (e.g., civil penalties and Forms 843) are entered onto the CAF. This eliminates the need for the taxpayer to resubmit authorization requests each time a third party corresponds on a specific issue. When a valid authorization is received in an office which does not process authorizations to the CAF, FAX the authorization to one of the centralized CAF campuses for processing.

If a valid POA or TIA is received, send responses to correspondence to the taxpayer and to the authorized representative. Replies from a valid POA are treated as if the taxpayer(s) was responding.

If an unauthorized third party requests information concerning the penalty assessment, send Letter 135C, Power of Attorney Needed to Furnish Information. Do not send or discuss tax information with an unauthorized third party. Correspond directly with the taxpayer.

If during a taxpayer contact or correspondence, it appears a taxpayer may be experiencing a hardship or otherwise meets TAS case criteria, determine if you are able to resolve and close the TAS issue on the same day as the taxpayer contact. If so, do not refer the inquiry to TAS. If you cannot resolve in the same day, complete a Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), refer the taxpayer to TAS, and document the referral on CC UNLCE.

Document case actions in AMS

Refund Claims are written requests for TFRP adjustment(s) submitted by the taxpayer which must be approved by Technical Services Advisory (Advisory). A Form 843, Claim for Refund and Request for Abatement, can be submitted for any payment made by the individual by submitting the claim within two years of the date of the payment.

A taxpayer may also submit an Informal Claim for Refund/Abatement. A taxpayer who is not asking for a refund does not need to use Form 843 to receive consideration of the claim. See IRM 5.19.14.4.1.4

If a taxpayer submits a Form 843 claim stating they are not liable for the Trust Fund assessment, after verifying the taxpayer meets the requirements below, send the claim to the Advisory office where the claimant resides. See SERP for the correct Advisory office to send the claim, based on the claimant's zip code.

To obtain a suspension of collection while under IRC 6672(c), a refund claim is pending; the taxpayer must take the following actions within 30 days after the date of notice and demand:

A Form 843 must be filed for each quarter (separate assessments).

A payment must be made for each quarter (separate assessments).

Only one Form 843 and one payment are required on combined assessments.

Forms 843 will be perfected where they are received.

Upon receipt of Form(s) 843, research IDRS for the payment(s) described above. If the payment is posted to IDRS:

If the claim is allowed, Advisory will prepare Form(s) 3870, Request for Adjustment, and forward to CSCO.

When researching IDRS, if the payment is not present:

Form 3870 relating to TFRP assessments are worked in the Ogden and Brookhaven CSCO Campuses. Brookhaven works Forms 3870 for accounts where the Corporate Entity state is CT, DC, DE, GA, KY, MA, MD, ME, NC, NH, NJ, NY, OH, PA, RI, SC, VA, VT, or WV. Ogden works all other TFRP Forms 3870.

TFRP related Form(s) 3870 must be processed within 30 days of the campus received date.

CSCO will receive Form 3870 for abatement of the TFRP liability for any of the following circumstances:

Only Advisory is authorized to request abatements on cases outlined in (3) (b) and (c) above.

When Form 3870 requests abatement for the following conditions, apply the applicable payment(s). Do not abate the TFRP assessment:

Forms 3870 received from Advisory requesting full or partial adjustment and/or abatement of TFRP liabilities:

If Form 3870 is unprocessable i.e., unclear or incomplete, contact Advisory or the originator for additional information. If unable to contact, reject Form 3870 and return it to the originator via Form 3210. Include a thorough explanation of the reason for the reject.

If Form 3870 is received based on litigation or bankruptcy and no TC 521 or TC 604 has posted, contact Advisory to verify that the litigation or bankruptcy has been completed. If not, reject the Form 3870 back to the originator via Form 3210. .Include a thorough explanation of the reason for the reject.

When a responsible person(s) is determined to be not liable and Form 3870 is received requesting full abatement of the TFRP:

When a responsible person(s) is determined to be partially liable and Form 3870 is received requesting partial abatement of the TFRP:

If the BMF tax liability has been reduced (TC 291) on the associated BMF account:

When multiple TC 240 assessments appear on the module input the assessment date of the TC 240 being adjusted as the "Return Processable Date" on CC ADJ54.

If refund is related to a Department of Justice directed reversal, Advisory prepares a Memorandum of Authority and Form 3870 directing CSCO to expeditiously notify campus Accounting Branch to input TC 400 to transfer and re-establish the account on Non Master File.

Leave a history on CC UNLCE. Include the tax periods that have been adjusted and the original amount of the TFRP assessment for that period.

Complete the adjustment action and maintain Form 3870 as a source document in the employee adjustment folder.

CP Notices 527, Trust Fund Recovery Penalty Assessment Statute Expiration Date Notices, are issued quarterly in cycles 13, 26, 39, and 52 on the corporate accounts when there are 58 to 70 cycles left before the statute expires on a module in the account. They are issued to inform the field that an ASED is about to expire. CP 527 notices must be extracted from Control D no more than 10 days following the issuance.

CP 527 notices must be completed within 30 days of the notice date. If an indicator is not input to IDRS before the next quarterly issuance of CP 527, subsequent issuances will show both new periods meeting the criteria outlined above and unsatisfied periods previously identified.

CC: ASED sets the ASED review indicator on a module to prevent the issuance of notices on cases for which TFRP assessments have been made or determined to be not applicable. Valid ASED Review Indicators are:

Collection staff in the Compliance Campus will review, separate, and process the notices in the following order:

A notice generates on a sole proprietorship if it has a Form 1120 filing requirement. It is not necessary to separate these from the remaining CP Notices 527.

The following Manager Reports were developed to monitor and manage Form 2749 and TFRP transcript inventories. Review of these reports is mandatory and should be performed by the Department Manager. It may be delegated no lower than the Team Leader level. Documentation of these reviews must be maintained for a period of 1 year.

The following System Reports were developed to monitor and manage Form 2749 and TFRP transcript inventories that are in the ATFR system, not yet assigned to individual employees. System reports are available only to those with System Manager profiles. A System Manager can view information for all teams as well as the System Inventory. Review of these reports is mandatory and should be performed by the Department Manager. It may be delegated no lower than the Team Leader level. The ASED Svc Ctr Report may not be delegated below the Department Manager level. Documentation of these reviews must be maintained for a period of 1 year.

The following System Reports were developed to ensure timely processing of Form 2749 and TFRP transcript inventories that are in the ATFR system, not yet assigned to individual employees. Like the system reports above, these reports are available only to those with System Manager profiles. Review of these reports is mandatory and should be reviewed by the Department Manager. It may be delegated to the ATFR Coordinator or Team Leader level. Documentation of these reviews must be maintained for a period of 1 year.