21.4.3 Returned Refunds/Releases

Manual Transmittal

September 16, 2020

Purpose

(1) This transmits revised IRM 21.4.3, Refund Inquiries, Returned Refunds/Releases.

Material Changes

(1) IRM 21.4.3.5.3(7) - Updated wording for cases with CP 53 series notices. IPU 20U0418 issued 03-12-2020.

(2) IRM 21.4.3.5.3(9) - Added reminder and procedural time frames when inputting CC CHK64.

(3) IRM 21.4.3.5.3.1 - Updated title and removed CP 31 reference throughout, obsolete since 01-2016. IPU 20U0838 issued 07-27-2020.

(4) IRM 21.4.3.5.4(3) - Added exception for returned EIP pre-paid debit cards. IPU 20U0838 issued 07-27-2020.

(5) IRM 21.4.3.5.5(1) - Added clarification explaining who will send unexpired checks to BFS. IPU 19U1304 issued 12-16-2019.

(6) IRM 21.4.3.5.5(1) - Updated Philadelphia RFC PO Box number. IPU 20U0838 issued 07-27-2020.

(7) IRM 21.4.3.5.5(4) and (6) - Added time frame for overseas taxpayers. IPU 20U0363 issued 03-03-2020.

(8) IRM 21.4.3.5.5(5) - Added caution and example for requests involving unexpired returned refund check be applied to another tax module. IPU 20U0664 issued 06-02-2020.

(9) IRM 21.4.3.5.5.2.1 - Added time frame for overseas taxpayers and removing follow-up letter. IPU 20U0363 issued 03-03-2020.

(10) IRM 21.4.3.5.5.2.2 - Added time frame for overseas taxpayers, removing follow-up letter and updated scenario if both taxpayers are outside of the U.S. IPU 20U0363 issued 03-03-2020.

(11) Various editorial changes were made throughout this IRM and cross-references were added, removed or revised as appropriate. IPU 20U0664 issued 06-02-2020.

Effect on Other Documents

IRM 21.4.3, Returned Refunds/Releases, dated 09-17-2019, (effective 10-01-2019) is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs): IPU 19U1304 (dated 12/16/2019), IPU 20U0363 (dated 03/03/2020), IPU 20U0418 (dated 03/12/2020), IPU 20U0664 (dated 06/02/2020), IPU 20U0838 (dated 07/27/2020).

Audience

Employees located in all business operating divisions who have contact with taxpayers either on the phone, by correspondence, or personal contact

Effective Date

(10-01-2020)

Karen A. Michaels
Director, Accounts Management
Wage and Investment Division

Program Scope and Objectives

  1. Purpose: This IRM covers information on Returned Refunds/Releases. This section covers procedures to be used when processing and releasing returned refunds on taxpayer accounts.

  2. Audience: The primary users of the IRM are all Refund Inquiry tax examiners, customer service representatives (CSR) (telephone & paper), and Taxpayer Assistance Center functions.

  3. Policy Owner: Director of Accounts Management

  4. Program Owner: Process and Program Management, Accounts Management, Wage and Investment (WI)

  5. Primary Stakeholders: The primary stakeholders are organizations with whom Accounts Management collaborates (e.g., Return Integrity & Compliance Services (RICS) and Submission Processing).

  6. Program Goals: Program goals for this type of work are included in the Accounts Management Program Letter as well as IRM 1.4.16, Accounts Management Guide for Managers and under IRM 21.1.1, Accounts Management and Compliance Services Overview.

Background

  1. Employees in the Accounts Management (AM) organization respond to taxpayer inquiries and phone calls as well as process claims and other internal adjustment requests.

Authority

  1. IRS refunds the balance of an overpayment (after taking into account certain offsets) to the person who made the overpayment. IRC 6402(a); Treas. Reg. 301.6402–1.

  2. When considering issuing a check in another name under IRM 21.4.3.5.5.2.1, Issuing Checks in Another Name, note that the Government is at risk because it has the burden of proof that it appropriately reissued the check. See Murray v. U.S., 300 F.2d 804, 806 (1st Cir. 1962).

  3. The procedures in IRM 21.4.3.5.5.2.1, Issuing Checks in Another Name, apply to limited situations in which IRS has determined that it is in a position to evaluate documentation provided by a claimant. The Bureau of the Fiscal Service (BFS) regulations describe a proper indorsement by a third party which is described in IRM 21.4.3.5.5.2, Negotiation by Another Party.

    • The BFS procedure requires documentation that is consistent with the Assignment of Claims Act, 31 USC 3727. The Act covers the payment aspect of a claim, which is the relevant aspect for purposes of the subject actions; see 31 USC. 3727(a)(2) (“assignment” includes “the authorization to receive payment for any part of the claim”). In general, the Act requires that the assignment be attested to by two witnesses and the person making the assignment shall acknowledge it before an official who may acknowledge a deed, and the official shall certify the assignment.

    • Under the BFS procedure the claimant’s financial institution evaluates the documentation.

    • The availability of the BFS alternative procedure for a claimant may be taken into account when considering how much risk IRS should undertake.

     

Responsibilities

  1. The Director of Accounts Management (AM) has overall responsibility for the policy related to this IRM, which is published on a yearly basis.

  2. Additional information on management responsibilities is found in IRM 1.1.13.7.3, Accounts Management (AM), and IRM 21.1.1, Accounts Management and Compliance Services Overview.

Program Management and Review

  1. Program Reports: The program reports provided in this IRM are for identification purposes for the Accounts Management Customer Service Representatives (CSRs) and Tax Examiners (TEs). For reports concerning quality, inventory and aged listings, please refer to IRM 1.4.16, Accounts Management Guide for Managers. Aged listings can also be viewed by accessing Control Data Analysis, Project PCD, on the Control-D/Web Access server, which has a login program control.

  2. Program Effectiveness: Program Effectiveness is determined by Accounts Management’s employees successfully using IRM guidance to perform necessary account actions and duties.

Program Controls

  1. Program Controls: Goals, measures and operating guidelines are listed in the yearly Program Letter. Quality data and guidelines for measurement are referenced in IRM 21.10.1, Embedded Quality (EQ) for Accounts Management, Campus Compliance, Tax Exempt/Government Entities, Return Integrity and Compliance Services (RICS) and Electronic Products and Services Support.

Acronyms

  1. Common acronyms listed throughout IRM:

    Acronym Definition
    AMS Accounts Management Service
    AM Accounts Management
    BFS Bureau of the Fiscal Service
    BMF Business Master File
    CADE Customer Account Data Engine
    CC Command Code
    CDN Claims Disposition Notice
    CEBA Competitive Equality Banking Act
    CFIF Check Forgery Insurance Fund
    CI-SDC Criminal Investigation-Scheme Development Center
    CP Computer Paragraph (Notice)
    CSR Customer Service Representative
    DD Direct Deposit
    DLN Document Locator Number
    E-Fax Electronic Fax
    EQ Embedded Quality
    FI Financial Institution
    IAT Integrated Automated Tools
    ICCE Integrated Customer Contact Environment
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    IRS Internal Revenue Service
    ITAS Individual Taxpayer Advisory Specialists
    LP Limited Payability
    MFT Master File Tax
    NCOA National Change of Address
    NFL National Forensics Lab
    NMF Non-Master File
    POA Power of Attorney
    POC Payment Over Cancellation
    R&C Receipt & Control
    RAC Refund Anticipation Check
    RAL Refund Anticipation Loan
    RFC Regional Finance Center
    RI Refund Inquiry
    RICS Return Integrity & Compliance Services
    RIVO Return Integrity and Verification Operations
    RPM Return Preparer Misconduct
    RTN Routing Transit Number
    SERP Servicewide Electronic Research Program
    SS Secret Service
    TAC Taxpayer Assistance Center
    TAS Taxpayer Advocate Service
    TC Transaction Code
    TCIS Treasury Check Information System
    TOP Treasury Offset Program
    WI Wage & Investment
    WMR Where’s My Refund

Related Resources

  1. Refer to the related resources below (list is not all inclusive):

    • IRC 6402

    • Public Law 100-86, Title 4 of the Competitive Equality Banking Act of 1987 (known as the Limited Payability provision), 31 USC § 3328, Paying checks and drafts

    • Bureau of Fiscal Service - Treasury Check Information System

    • Document 6209 (IRS Processing Codes and Information)

    • Integrated Automation Technologies (IAT) Tool Instructions

    • Refund Inquiry Unit Addresses

    • Treasury Check Information System (TCIS)

    • Integrated Automated Technologies (IAT) - Missing Refund (CHKCL) tool

    • Integrated Automated Technologies (IAT) - Reissue Refund (CHK64) tool

    • IRM 21.4.1, Refund Research

    • IRM 21.4.2, Refund Trace and Limited Payability

    • IRM 21.4.4, Manual Refunds

Returned Refunds/Releases Overview

  1. Always adhere to the time frame listed in IRM 3.30.123, Processing Timeliness: Cycles, Criteria, and Critical Dates, to ensure all time frames are met when resolving cases. The following time frames are listed within that specific Internal Revenue Manual (IRM).

    • Undelivered and Limited Payability Refund Checks

    • Deleted/Returned Refund Checks and Recertification Credits

    • Non-receipt, Lost, Stolen, or Destroyed Refunds

    • Taxpayer Initiated Refund Inquiries

  2. Refund checks issued to taxpayers may be returned to the IRS or Regional Financial Center (RFC) for many reasons. This section of the IRM provides information and instructions for processing returned refund checks.

    Caution:

    Before discussing any tax information, you must be sure you are speaking with the taxpayer or authorized representative. See IRM 21.1.3.2, General Disclosure Guidelines. Before leaving any message on a taxpayer's answering machine, review IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail. Fax procedures contained in IRM 11.3.1.14, Facsimile (FAX), Electronic Facsimile (E-FAX), and IRS Internal Enterprise Electronic Facsimile (EEFAX)Transmission of Tax Information, must be reviewed prior to faxing confidential information to the taxpayer.

  3. In addition to account research on the Integrated Data Retrieval System (IDRS), review Account Management Service (AMS) for prior taxpayer contact.

What is a Returned Refund/Refund Release?

  1. Refund checks are returned for several reasons. Some of the most common are:

    • Incorrect address, U. S. Postal Service was unable to deliver check.

    • The taxpayer is not entitled to a refund.

    • The credit that created the refund belongs on another module.

    • The check is issued in the wrong name.

    • The check cannot be negotiated (joint/deceased taxpayer).

    • The check is expired and cannot be cashed (older than 12 months)

  2. The Receipt and Control (R&C) function within a Campus receives the returned refund checks and directs them to the Campus Refund Inquiry (RI) Unit.

  3. Returned refund checks must be stamped or written "non-negotiable" on the front of the check, or have the word "void" stamped or written on the front or back of the check. At the time of receipt, the employee should stamp “void” on the returned check.

  4. Refund checks returned to a Taxpayer Assistance Center (TAC) must be forwarded to the issuing campus Refund Inquiry Unit, in the appropriate business operating division (BOD) for processing. The issuing campus location is on the front, at the bottom of the check, and displays all or the first six letters of the campus. Individual Master File (IMF) returned checks will be worked at IMF campuses and Business Master File (BMF) will be worked at BMF campuses. For fax numbers and addresses, see Refund Inquiry Unit Addresses, located on Servicewide Electronic Research Program (SERP) under the Who/Where tab. Follow the procedures in the table in IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks).

Returned Checks Research

  1. Returned refund checks must be worked by campuses in the appropriate Business Operating Division (BOD). Individual Master File (IMF) returned checks will be worked at IMF campuses and BMF will be worked at BMF campuses. Send misrouted cases to the appropriate campus.

    Note:

    If a case involves both IMF and BMF returned checks, the receiving campus must coordinate case actions with the appropriate Refund Inquiry team.

  2. Taxpayer identification numbers (TIN) are no longer printed on refund checks. If a refund check is received without a TIN, research command code (CC) IMFOLC or CC BMFOLC using the check number and symbol located on the check in the upper right-hand corner. CC IMFOLC and CC BMFOLC will search for the matching tax module and return the appropriate CC IMFOLT or CC BMFOLT screen. Since CC IMFOL and CC BMFOL will only attempt to access the valid TIN, be sure to compare the check with the tax module to ensure you have the correct module. See IRM 2.3.51, Command Code IMFOL, for complete command code instructions.

    Note:

    For additional information on refund check origin, review IRM 3.17.79-4, Refund Schedule Number Format

    .

Acknowledgment of Returned Check

  1. Upon receipt of a returned refund check, Refund Inquiry (RI) employees will use the Returned Refund program in Account Management Services (AMS) to:

    1. Control the case on the Integrated Data Retrieval System (IDRS), Status B, Category 3913.

    2. Send Letter 4427C, Acknowledgement of Returned Refund Check, to the taxpayer, unless a completed Form 3913, Acknowledgement of Returned Refund Check, is received with the case from an IRS Taxpayer Assistance Center (TAC). In those cases, Form 3913 will serve as an acknowledgement letter. No interim letter is required, unless the 60-day time frame indicated on Form 3913 cannot be met.

    3. Send voided checks less than one year old to the Philadelphia RFC on Form 3210, Document Transmittal, for cancellation. Form 3210 is generated by the Returned Refund program in AMS.

      Note:

      When a check is received at a TAC, the employee will complete Form 3913 with all applicable information and send the voided check and Form 3913 to the appropriate RI Unit.

    4. Maintain a copy of Form 3913 with cases received from TACs.

      Note:

      If the automated system is down due to technical difficulty for more than one day, manually control the case on IDRS. Send Letter 4427C, Acknowledgement of Returned Refund Check, and manually complete Form 3210. Send to RFC.

Checks Returned to Regional Financial Center (RFC) by the Taxpayer or U.S. Postal Service

  1. Sometimes taxpayers return refund checks directly to the RFC instead of sending them to the campus.

  2. If the check has not expired, the Accounting Function receives SF 1098, Schedule of Cancelled Checks, from the RFC. The Accounting Function may forward the list to the Refund Inquiry (RI) Unit at their campus for notification purposes. If received in RI, the list may be maintained in the unit files or destroyed as classified waste.

  3. Correspondence received from the taxpayer will be sent with the SF 1098 list. See paragraph 9 below for instructions.

  4. Undelivered checks are identified on the SF 1098 list as "Code 2" . Checks returned to RFC by the taxpayer are identified as "Code 3" .

  5. Transaction code (TC) 841, blocking series and serial number "99999" , on the module, identifies checks returned by the taxpayer. Below are some examples of instances when a taxpayer will return a check and steps that should be taken:

    If taxpayer returns check Then
    Without cashing the check Make appropriate adjustment to the account if necessary, and issue correct refund.
    Requesting the refund be applied to a different module and the refund was not the result of a misapplied payment, was not due to IRS error or credit elect was not indicated on the return Apply the refund to the module indicated. See IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks), for procedures on applying the refund.
    Because check is "non-negotiable" , through no fault of the IRS. Reissue refund with no additional interest.

  6. TC 740, blocking series and serial number "99999" , identifies checks returned by the U.S. Postal Service.

    Note:

    The credit for "Code 2" and "Code 3" cases will post in approximately two to three weeks from the date the check was received by the RFC. In many instances, the credit is usually posted by the time the case is received.

  7. When the RFC receives a refund check for cancellation, they send the following to the RI function:

    • Correspondence from the taxpayer

    • Envelopes from the postal service

  8. The RFC or U. S. Postal Service will annotate on correspondence:

    • TIN or check and symbol number, if no TIN is on the check

    • Taxpayer is deceased (if applicable)

    • Taxpayer moved and left no forwarding address

  9. The RI function will:

    1. Control case on IDRS.

    2. Acknowledge the correspondence, send Letter 4427C, Acknowledgment of Returned Refund Check, if the taxpayer returned the check.

    3. Resolve P- or S- freeze condition.

    4. Input CC STAUP or TC 470 on balance-due modules if TC 841 or TC 740 has not posted back to the account.

      Note:

      See IRM 21.4.3.5.3, Undeliverable Refund Checks, and IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks), for further guidance.

Recertified or Original Returned Refund Checks

  1. A recertified check is any check reissued to the taxpayer to replace an original check. If a check was cancelled, the account will show a credit for the refund, TC 841 or TC 740. A refund may be cancelled for any of the following reasons:

    • Undelivered refund - See IRM 21.4.3.5.3, Undeliverable Refund Checks

    • Limited Payability - See IRM 21.4.2.4.7, Limited Payability (LP) Rules

    • Result of a refund claim (CC CHKCL) - See Exhibit 21.4.2-1, Command Code (CC) "CHKCL" Input

    • Refund intercept (CC NOREF) - See IRM 21.4.1.5.10, Refund Intercept Command Code NOREF with Definer "P"

    • Refund returned by the taxpayer - See IRM 21.4.3.5.4, Returned Refund Check Procedures, IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks), and sub-sections, and IRM 21.4.3.5.6, Resolving Returned Expired Refunds Limited Payability and sub-sections

    Note:

    When a refund check is cancelled, there is no "stop payment" placed on the check. The original check appears negotiable and is often cashed. If a check is cashed after being cancelled a debit TC 843, Payment Over Cancellation (POC) will post to the account. POCs are handled by the Accounting Function.

  2. When the taxpayer returns either the original, recertified, or both checks, use the following procedures:

    If the check is And it Then
    The original check Has not expired
    1. Prepare and attach Form 3210, Document Transmittal, with notation "Previous Cancellation" .

    2. Send check to RFC.

    3. Send Letter 4427C, Acknowledgment of Returned Refund Check, to the taxpayer.

    4. Respond to taxpayer, if necessary.

    5. Close control base "PREVCANC" .

      Note:

      No TC 841 will post due to prior cancellation.

    The original check Has expired
    1. Send Letter 4427C, Acknowledgment of Returned Refund Check, to taxpayer.

    2. Respond to taxpayer if necessary.

      Note:

      Do not return the check to RFC.

    3. Close control base and destroy the check.

      Note:

      No TC 740 will post due to prior cancellation.

    The original check Previous CC CHKCL initiated
    1. Account shows replacement issued, close 3913 base "PREVCHKCL" .

    2. Destroy original check.

    The recertified check Has not expired, nor has the taxpayer cashed the original refund check
    1. Send to RFC for cancellation.

    2. Send taxpayer Letter 4427C, Acknowledgment of Returned Refund Check.

    3. Update control base "841TOPOST."

    4. Monitor until TC 841 posts.

    5. Follow the instructions provided in taxpayer’s correspondence and advise taxpayer of the action taken, if applicable.

    6. If control base does not update within 45 days to "841P" take follow-up action to locate and apply the credit correctly.

    The recertified check Has expired, but the taxpayer has not cashed the original refund check
    1. Do not return check to the RFC.

    2. Send Letter 4427C, Acknowledgment of Returned Refund Check, to the taxpayer and follow expired return refund check procedures. See IRM 21.4.3.5.6, Resolving Returned Expired Refunds Limited Payability.

    The recertified check Has not expired and taxpayer has cashed the original refund check
    1. Send to RFC for cancellation.

    2. Update control base or history
      "CASHEDORIG" .

    3. Monitor for TC 841.

    4. Close base with input of TC 290 .00, Hold Code 2 to set a -K freeze and hold the credit. (TC 843, POC, will post from Bureau of the Fiscal Service (BFS) ).

Undeliverable Refund Checks

  1. If the U.S. Postal Service cannot deliver the refund check to the taxpayer's address they will return the check to the Bureau of the Fiscal Service (BFS) Regional Finance Center (RFC).

  2. The RFC cancels the undelivered refund checks weekly and transmits the undeliverable refund checks to Martinsburg Computer Center (MCC) for posting of TC 740 to credit the appropriate taxpayer's account. If a Treasury Offset Program (TOP) offset was made on the original refund, TOP will generate a TC 899 code 1 to reverse it.

  3. Review the module for conditions that could determine allowable credit interest (e.g., identity theft (IDT), etc.) and take the appropriate action, including a manual computation of interest if necessary, before releasing the refund.

  4. An S- freeze occurs when:

    1. An undelivered refund check less than one year old is returned by the postal service (TC 740 Blocking Series 99999) and the address has not been updated since the refund was issued.

      Note:

      Refund checks not cashed within 12 months of issue date are considered expired checks and are identified by a TC 740 Blocking Series 66666. See IRM 21.4.3.5.6, Resolving Returned Expired Refunds Limited Payability.

      Note:

      The Service will update the taxpayer’s address of record in accordance with the procedures in Rev. Proc. 2010-16 which includes clear and concise written notification. Taxpayers may notify the IRS of an address change using various methods (e.g., Form 8822, Change of Address; Form 8822-B, Change of Address or Responsible Party - Business; Form 3911, Taxpayer Statement Regarding Refund; correspondence described in section 5.04(1)a, etc.). Form 8822 and Form 8822-B are routed to Refund Inquiry when an S- freeze is present.

    2. A return is filed without an address and a "Campus Address" is assigned. For campus address cases, see IRM 21.4.1.4.5, Return Processed but No Address on File.

  5. For SCADDRESS transcripts received in RI, take the following actions for case resolution:

    1. Research CC IRPTRL for taxpayer address

    2. Send Letter 533C, Refund Check Undelivered or Not Negotiated, to the CC IRPTRL address(es) requesting the taxpayer furnish their current address

    3. Close case

    4. Take appropriate action on Letter 533C replies

    5. For transcripts that involve Identity Theft (IDT) or Return Integrity & Verification Operations (RIVO), see IRM 21.2.4.3.18, Return Integrity & Verification Operations (RIVO) and Criminal Investigation (CI), Transcript Issues, and IRM 21.2.4.3.19, Transcripts with Identity Theft (IDT) Involvement

  6. Any of the following will release an S- freeze.

    1. The filing of a subsequent return (TC 150)

    2. CC CHK64 to generate a TC 018 on CC ENMOD

      Note:

      Reissue Refund (CHK64) Tool is available as an IAT tool and is mandatory, unless a manual refund must be issued.

    3. Systemic module update with TC 013 Business Master File (BMF) or TC 014 Individual Master File (IMF) updating from the Postal Service National Change of Address (NCOA) database.

      Note:

      Systemic releases will not occur if a name change has occurred since the return was filed. The NCOA and IRS records must match exactly. See IRM 3.13.5.40, Determining National Change of Address (NCOA) Address Changes.

    4. A taxpayer initiated address change through Internet Refund Fact of Filing (IRFOF) (address change option is currently disabled) will post as a TC 014 (IMF only) with a source code of 1.

    5. Input of TC 014 on IMF and TC 013 or TC 014 on BMF after posting of the TC 740

      Reminder:

      Refund will not release if the TC 846 and TC 740 are for different amounts.

    6. Module balance becomes zero or debit

  7. Customer service representatives (CSRs), tax examiners (TEs) and RI Unit Examiners will input CC CHK64 (TC 018) to change the address.

    Note:

    Taxpayer should receive a CP 564, Refund Check Not Delivered - New Check To Be Issued, when applicable. Therefore, do not use CC INCHG or CC BNCHG to update the address, use CC CHK64. For trustee changes, refer to IRM 21.7.1.4.9, Fiduciary Name/Address Change.

    Caution:

    When using the 2nd name line on CC CHK64 for a foreign address, you must use the current year in the tax year field regardless of the tax year for which the refund is being issued. For example, if the claim is for tax year 2017, and it is made after January 1, 2018, you must use 2018 in the tax year field. If this same claim is received after January 1, 2019, you must use 2019 in the tax year field.

    Note:

    Do not correspond for a current address on undeliverable refunds, unless specifically instructed to in the IRM.

    1. CC TXMOD must precede CC CHK64. (It cannot be input on a dummy module.)

    2. If there are multiple S- freezes, CC CHK64 input on any account with an S- freeze will release all S- freezes.

    3. Request must be from an authorized party. On a joint return, this would be either spouse (both signatures are required to negotiate the check). When updating our records through oral statement, advise taxpayer to change their address at their local post office.

      Note:

      If the secondary taxpayer on a joint account indicates an address change, determine if the change applies to the joint account or only the spouse. If the change applies only to the secondary taxpayer, make no change to the primary taxpayer's address. Advise the requestor the primary taxpayer must contact us or submit a Form 8822, Change of Address. IRM 21.4.2.4. (5), Refund Trace Actions, provides guidance for an acceptable oral statement.

    4. CC CHK64 can be input based on oral statement.

    5. Certain situations will require the CP 564, Refund Check Not Delivered - New Check to be Issued, to be stopped (e.g., if the credit will not refund due to an offset). The CP 564 can be stopped by overlaying the notice indicator on the CC CHK64 screen with an "N" . See IRM 25.25.12.7, Limited Direct Deposit Refund Procedures.

    Note:

    If a CP 53 series notice was issued for the tax period in question, see IRM 21.4.1.4 (2), Refund Inquiry Response Procedures, for additional information.

  8. Do NOT input a CC CHK64 under the following conditions (reissue refund as a manual refund):

    1. Original refund was a TC 840 and circumstances still exist where the taxpayer requires a manual refund.

    2. Original refund was a TC 846 with a Bypass Indicator (Injured Spouse).

    3. Deceased taxpayer and no CCC L or W on CC TXMOD or CC RTVUE for applicable period. See IRM 21.6.6.4.22, Decedent Accounts, for more information on decedent account refunds.

    4. Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, - Any address correction in response to a CP 231, Undelivered Refund Check, should not be updated on master file.

      Note:

      See IRM 21.7.7.7.4.5.4, Form 8038-CP Manual Refund Guidelines, for additional information regarding manual refunds.

  9. Use the chart below to release an S- freeze:

    Reminder:

    After CC CHK64 is input a refund check will be reissued in about 4 weeks, unless otherwise stated below.

    If And Then
    An unauthorized person requests the release Advise the unauthorized person that the refund release request must come from the taxpayer or the taxpayer's authorized representative. Do not disclose any information.
    An authorized person requests the release The refund is a TC 846 and was returned undeliverable
    1. Verify the address.

    2. Input CC CHK64.

    3. Advise the requestor a refund check will be reissued in about 4 weeks.

    An authorized person requests the release The refund is a TC 840 (manual refund) and returned undeliverable Determine if the refund must be re-input as a manual refund. If a manual refund is not necessary, input CC CHK64.
    An authorized person requests the release Pending TC 018 or TC 014 on CC ENMOD
    1. Verify the address.

    2. Advise the requestor a refund check will be reissued in about 4 weeks.

    An authorized person requests the release Pending TC 018 or TC 014 is on CC ENMOD, address is incorrect
    1. Input CC NOREFP to stop the refund.

    2. Update the address by using CC ENREQ, INCHG.

    3. Advise the requestor of the refund will be reissued in about 8 weeks.

    4. Release the P- freeze when the TC 841 posts.

    An authorized person requests the release
    • S- freeze after CC CHKCL action

    • No open control

    • No Pending TC 018 or TC 014

    1. Verify the address.

    2. Input CC CHK64.

    3. Advise the requestor a refund check will be reissued in about 4 weeks.

    An authorized person requests the release S- freeze after the CC CHKCL action and has an open control RI will contact area with open control for release of the refund.
    CSRs will forward Form 4442, Inquiry Referral, with the new address, to the area with an open control and advise taxpayer they will receive their refund in approximately 6 weeks.
    An authorized person requests the release
    • Multiple freeze conditions

    • No open control

    Follow the instructions for each freeze condition. See IRM 21.5.6, Freeze Codes.
    An authorized person requests the release
    • Multiple freeze conditions

    • Open control

    Contact the employee/area with the control and coordinate the resolution of the conditions. See IRM 21.5.6, Freeze Codes. CSRs will forward Form 4442 with the new address, to the area with an open control and advise the taxpayer they will hear from IRS in 30 days.
    Exempt Organization sub-module on BMF CP 231, Undelivered Refund Check CC CHK64 will unpost, a manual refund is required.

    Note:

    For trustee changes, refer to IRM 21.7.1.4.9, Fiduciary Name/Address Change

    .
    Invalid TIN shown on CC ENMOD or CC TXMOD Research invalid condition and input CC CHK64, to release S- freeze, if appropriate.
    If CC ENMOD shows an incorrect/incomplete address Input CC CHK64 with correct address.
    45-day interest-free period is in jeopardy. Interest free period expires 06/01 on IMF refund returns filed by 04/15 Delay is due to IRS error
    1. Allow interest.

    2. Overlay interest indicator" N" on CC CHK64 with "Y."

    45-day interest-free period is in jeopardy. Interest free period expires 06/01 on IMF refund returns filed by 04/15 Delay is not due to IRS error Do not allow interest.

    Note:

    Leave the interest indicator as N on CC CHK64.

  10. Additional research may be required to determine the type of refund to send to the taxpayer. If there appears to be a need for further research on the account, take appropriate action. This may include contacting other IRS functions or more communication with the taxpayer, see Letter 533C, Refund Check Undelivered or Not Negotiated.

  11. If additional research or contact with the taxpayer results in moving the overpayment to a different tax module, follow the guidance in IRM 21.4.3.5.5 (5), Resolving Returned Refunds (Unexpired Checks).

  12. Take appropriate action on Computer Paragraph (CP) replies.

Undelivered Refund Notices
  1. Letter 533C, Refund Check Undelivered or Not Negotiated, or CP 231, Undelivered Refund Check, informs the taxpayer a refund check was returned undelivered and requests a correct address. These notices will no longer be reviewed before mail out. If these notices are received in RI, route them to machine services for immediate mail out.

  2. Destroy all undelivered CP 231 notices, Letter 533C and envelopes that have a new address provided by the U. S. Postal Service or the current resident at the mailing address, as classified waste without further action.

    Note:

    On July 2011, a "2-D Bar Code" pilot program involving various CP notices was implemented. Some of the notices still display the entire SSN while others have the SSN redacted/masked (e.g., XXX-XX-1234). To identify the account, a "hand held" bar code scanner must be used to read the taxpayer account information. If the scanner cannot read the bar code, CC TPIIP must be used. For more information on CC TPIIP, refer to the IDRS Command Code Job Aid located on SERP under IRM Supplements.

Local Undelivered Refund Check Listing (URCL)
  1. The Undelivered Refund Check List (URCL) is no longer provided for publication. However, a news release is issued each year to inform the public that there are refunds that have gone undelivered and could be available to the appropriate taxpayer. The news release advises the taxpayer to access Where’s My Refund or call the refund hot line if they believe their refund check may have gone undelivered.

Returned Refund Check Procedures

  1. If the taxpayer calls or sends in a request on how to return his/her refund check, the customer service representative (CSR) or tax examiner at the Campus RI Unit, should first confirm the refund check was issued by the Service. Refer to IRM 3.8.44-7, Agency Location Codes (ALC), to confirm the ALC is on the list. If the ALC (begins with 2009XXXX) located at the top of the check next to the date is on the listing, advise taxpayer to write "void" in the endorsement area on the back of the check. Advise taxpayer to mail the check with a letter of explanation to the issuing campus RI Unit. The issuing campus location is on the front, at the bottom of the check, and displays all or the first six letters of the campus. See the Refund Inquiry Unit Addresses link for the appropriate address. Advise the taxpayer not to write on the front of the check. If the ALC is not on the list, advise taxpayer the check was not issued by the Service, but by another federal agency.

    Caution:

    If the check is a Refund Anticipation Loan (RAL) or a Refund Anticipation Check (RAC), advise the taxpayer to send the check along with an explanation of why they are returning it, to the IRS campus where they would file a paper return. The address can be found on the last page of the Form 1040 instructions. See IRS Mailing Addresses. See IRM 21.4.1.5.7.1 (7), Direct Deposit of Refunds, for guidance to determine if a refund is a RAL/RAC. When received, Receipt and Control or Campus Support will take the appropriate action to route the check to RIVO. Enter a narrative in AMS with the advice to the taxpayer and the reason for it.

  2. Returned refund checks, whether being sent to a Refund Inquiry team from within the campus, or from outside the campus, must follow the procedures in IRM 3.8.47.4.4, Secure and Process a Returned Refund Check, for documentation and packaging to ensure the security of the check.

    Note:

    Managers should refer to IRM 1.4.16.5 (6-7), Monitoring and Reviews, for Form 3210 Managerial Review requirements.

  3. When there is potential refund fraud or ID theft involved, Refund Inquiry should take the following actions. (In most instances, these checks will already have been routed by Submission Processing.)

    Reminder:

    Refund checks returned to a Taxpayer Assistance Center (TAC) must be forwarded to the issuing campus Refund Inquiry Unit, in the appropriate business operating division (BOD) for processing. The issuing campus location is on the front, at the bottom of the check, and displays all or the first six letters of the campus. Individual Master File (IMF) returned checks will be worked at IMF campuses and BMF will be worked at BMF campuses. For fax numbers and addresses, see Refund Inquiry Unit Addresses, located on Servicewide Electronic Research Program (SERP) under the Who/Where tab. Follow the procedures in the table in IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks).

    1. Make a copy of the returned Treasury refund check. All Treasury checks must be stamped "Non-Negotiable" , or, have the word "void" stamped or written on the front or back of the check.

    2. Prepare a Form 3210, Document Transmittal, and send to BFS as normal. See IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks), for the BFS address.

    3. The following table describes the types of checks and the routing procedures:

      If Then
      Treasury IRS refund checks are returned as undeliverable and you identify that there is the same address (different names) on multiple checks indicating possible fraud
      • Fax/eFax check copies and correspondence to Fresno RIVO at:
        ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      • Include the date the Treasury check was sent to BFS on the Fax/eFax

      Treasury check(s) is returned and ID theft is not indicated, but appears to be fraud related (e.g., Multiple checks with different names have been mailed to the same address. Explanation is something like, "I don't know these people, but these checks were mailed to my house." )
      • Fax/eFax check copies and correspondence to Fresno RIVO at:
        ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      • Include the date the Treasury check was sent to BFS on the Fax/eFax

      Treasury check(s) is returned and a note is attached indicating ID theft (e.g., "I got this refund check made payable to me but I have not even filed my tax return this year. I don't know why I got this check." )
      • Fax/eFax check copies and correspondence to Fresno RIVO at:
        ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      • Include the date the Treasury check was sent to BFS on the Fax/eFax

      Treasury check(s) is returned undeliverable, OR not belonging to the person named on the check, AND there is evidence of previous RIVO External Leads review. i.e., TC 841 DLN blocking series/serial number 77711, 77712, or 77713 and issuance of a CP 53A, CP 53B or CP 53C notice
      • Fax/eFax check copies and correspondence to Fresno RIVO at:
        ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      • Include the date the Treasury check was sent to BFS on the Fax/eFax

      A third-party check (non-Treasury checks including RAL/RAC checks) is received outside of Receipt and Control or Campus Support Process it back to the appropriate function per IRM 3.8.46.1, Discovered Remittances (for Receipt and Control), or IRM 21.1.7.9.20, Discovered Remittance (for Campus Support).
      Check is attached to:
      • Letter 4115C, or

      • Letter 4464C, or

      • Letter 4883C

      • Fax/eFax check copies and correspondence to Fresno RIVO at:
        ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      • Include the date the Treasury check was sent to BFS on the Fax/eFax

    4. If not already on the account, input TC 971 AC 522 and the appropriate IDT tracking Code. See IRM 25.23.2.3, Identity Theft Claims - General Guidelines, for codes and additional information.

      Note:

      Do not keep an open or monitor control on the case once it has been forwarded to RIVO.

    5. If you receive items (including debit cards) from different sources, for example U.S. Postal Service, a law enforcement agency, etc., sort the items and mail to:
      Internal Revenue Service
      ATTN: External Leads Manager, Stop 23101
      5045 East Butler Avenue
      Fresno, CA 93727

       

      Exception:

      For returned Economic Impact Payment pre-paid debit cards, follow instructions in IRM 3.8.45.18(4), Repayment of Economic Impact Payments (EIP).

Returned Refund Check with Taxpayer Correspondence
  1. There are times when the taxpayer will attach correspondence with the returned refund check because the credit/payment that was refunded was intended to be applied to another tax period.

    1. Review the taxpayer correspondence and account on AMS and IDRS for the tax period(s) referred to in the taxpayer's correspondence.

    2. If the balance due tax period is located, transfer the credit, and input the necessary STAUP. Send the taxpayer a letter regarding the credit transfer.

      Note:

      For additional information about situations which will not allow credits to offset to a BMF balance due module, please review IRM 21.7.1.4.6, BMF Offset Program

      .

    3. Continue to process the returned refund check as usual.

    If there is any correspondence, unrelated to the returned refund check, that is not within your scope, forward correspondence to ICT.

    Note:

    AMS notes must be updated to explain the actions taken to address the returned refund check.

Resolving Returned Refunds (Unexpired Checks)

  1. Refund checks returned within 12 months of issue date are stamped "NOT NEGOTIABLE" , listed on a Form 3210, Document Transmittal, and sent to the Philadelphia RFC daily for cancellation. A copy of the check should be kept with the case. Non Refund Inquiry Unit employees, see (3) below. Refund Inquiry Unit employees, forward the Form 3210 and documentation via US Postal Service (please do not send it UPS/FedEx, etc., and do not include any reference to the IRS in the "To" portion of the address label) to:

    Bureau of the Fiscal Service
    Attn: Mailroom Staff
    P.O. Box 51318 (do not use a street address)
    Philadelphia, PA 19115

  2. RFC will return credit for returned refund checks via SF 1098 and will post a Transaction Code (TC) 841 to the taxpayer's account in approximately four to six weeks after the check is forwarded to RFC. If there was a TOP TC 898 on the original refund, TOP will generate a TC 899 to reverse it. RFC will return credits for Non Master File (NMF), Individual Retirement Account File (IRAF) and fee refunds manually on SF 1098.

    Note:

    Returned refund checks are sent to the RFC in Philadelphia for cancellation only if they are received on or before the last business day of the 12th month after the issue date. Checks not meeting this criterion have expired and will remain with the case. See IRM 21.4.3.5.6, Resolving Returned Expired Refunds Limited Payability, for procedures on expired checks.

  3. Take the following action when you receive a Form 3210, Document Transmittal and/or a returned refund check.

    If the returned check is Then
    Received in a Territory Office or Taxpayer Assistance Center (TAC)
    1. Write "Void" on back of check.

    2. Complete the Form 3913, Acknowledgment of Returned Refund Check, and provide the taxpayer with a copy.

    3. Complete the Form 3210, Document Transmittal. Refer to IRM 3.8.47.4.4, Secure and Process a Returned Refund Check.

    4. Send the check, Form 3210 and Form 3913 to the issuing campus Refund Inquiry Unit, in the appropriate business operating division (BOD) for processing. The issuing campus location is on the front, at the bottom of the check, and displays all or the first six letters of the campus. Individual Master File (IMF) returned checks will be worked at IMF campuses and BMF will be worked at BMF campuses. For fax numbers and addresses, see Refund Inquiry Unit Addresses, located on Servicewide Electronic Research Program (SERP) under the Who/Where tab.

    Received by a campus
    1. Acknowledge receipt of form.

    2. Keep expired returned refund check per note above in paragraph 2.

    3. Send unexpired checks directly to Philadelphia RFC for cancellation.

    4. Send Letter 4427C, Acknowledgment of Returned Refund Check, for refund checks received.

    Note:

    If the returned check is a non-IRS returned refund, refer to IRM 21.1.7.9.25, Non IRS Return Refund Checks for routing procedures.

  4. To research and resolve returned refund checks that include an explanation from the taxpayer, refer to the chart below. Follow the taxpayer's instructions whenever possible.

    If And Then
    Credit is to be applied to a balance due Credit not posted Input CC STAUP or TC 470 to prevent offset and monitor for credit
    Credit is to be applied to a balance due No balance due Notify taxpayer of status
    Credit has posted Follow taxpayer's instructions
    Credit intended as payment for taxes Credit not posted Monitor for credit, when posted, follow taxpayer's instructions
    Refund returned on a deceased taxpayer's account, refer to IRM 21.6.6.4.22.2, Processing Decedent Account Refunds Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, or required documentation attached Follow instructions and comply with request
    Refund returned on a deceased taxpayer's account, refer to IRM 21.6.6.4.22.2, Processing Decedent Account Refunds Form 1310 or required documentation not attached Send Form 1310 to estate of deceased taxpayer requesting documentation. If the surviving spouse of a joint return is claiming the refund, Form 1310 is not required.
    An erroneous name or designation of payee Not negotiable Request original document to verify payee, if necessary
    An original Amended U.S. Individual Income Tax Return received with the check Adjust account or route return to the appropriate function. When TC 841 posts, close 3913 base
    "XXXXX2POST" if the amended return was routed.
    Adjustment action posts before TC 841 Credit and
    P- freeze remaining on account
    Refer to IRM 21.5.6, Freeze Codes, to determine if the P- freeze can be released
    Refund was correct when issued Returned in error Provide explanation to taxpayer. Do not allow additional interest if the refund is to be reissued or applied to an outstanding liability.

    Note:

    If the original refund was a manual refund, you may need to reissue it as a manual refund. See IRM 21.4.4, Manual Refunds.

    Refund was correct when issued, but is returned by a third party because the taxpayer no longer lives at the address P- freeze or TC 841 pending to post
    • Research CC ENMOD, if a current address is found, reissue the refund.

    • If no current address is found on CC ENMOD, research current year IRPTR and issue a Letter 533C, Refund Check Undelivered or Not Negotiated, asking the taxpayer to verify their current address. Suspend and allow 45 days for a response (70 days for overseas taxpayers).

    • If no current address is located or no response is received, follow paragraph (11) below.

    Note:

    See paragraphs (7) and (8) below to determine if interest is allowable.

    Refund check is a non-IRS Treasury check (See IRM 3.8.44-7, Agency Location Codes ALC, for IRS ALC listing) Correspondence attached is requesting we apply or reissue the refund to a certain year or other IRS account action
    • Issue the 86C letter explaining we cannot accept a third party check and the check will be returned to the originating agency to be reissued.

    • Do not forward correspondence to BFS, detach from the check.

    • Prepare a Form 3210 using procedures in IRM 3.8.47.4.4, Secure and Process a Returned Refund Check and forward to BFS in Philadelphia. See IRM 21.1.7.9.25, Non IRS Return Refund Checks, for mailing address.

    Refund check is a non-IRS Treasury check (See IRM 3.8.44-7, Agency Location Codes (ALC), for IRS ALC listing) Correspondence is attached and is NOT requesting an IRS related action, but asking about the check or information related to it
    • Prepare a Form 3210 using procedures in IRM 3.8.47.4.4, Secure and Process a Returned Refund Check, and forward to BFS in Philadelphia. See IRM 21.1.7.9.25, Non IRS Return Refund Checks, for mailing address.

    • Add a note on the Form 3210, “Forward Correspondence to Originating Agency, Do Not Return to IRS. Not an IRS Check”

  5. If a taxpayer returns a refund check requesting that it be applied to another tax module and:

    • The refund was not the result of a misapplied payment

    • The refund was not due to IRS error

    • Credit elect was not indicated on the return

    • Liabilities were not claimed on Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors, for any Form 94x series tax return

    • Payment was not claimed on the total payment/deposit line of the tax form for the quarter in which the returned refund was to be applied, post the check as a TC 700. If interest was included on the refund and the taxpayer is still entitled to the interest, post the interest on the account with a TC 770. Do not allow additional interest.

    1. For purposes of moving the credit to a different tax module, the principal component of the refund is debited with TC 820 and credited to the receiving module with TC 700. The transaction date of the TC 820 (debit) is the 23C date of the TC 841 (TC 740 in the case of an undeliverable refund check): the transaction date of the TC 700 (credit) is the date the returned refund check was received.

    2. Because the posting of TC 841 will cause any systemically generated interest (TC 776) allowed on the refund to be removed with TC 777, it must be manually re-posted with TC 770. Input TC 770 with a CR-INT-TO-DT that is identical to the date interest was originally computed to on the returned refund. See IRM 20.2.4.7, Refunds, for more information.

      Caution:

      The CR-INT-TO-DT is the ending interest computation date for the interest that was included in the refund check. It is not the 23C posting date of a returned TC 846, nor the 23C posting date of the TC 776 that accompanies TC 846.

    3. When TC 770 posts, it is debited with TC 850 and credited to the receiving module with TC 700. The transaction date of the TC 850 (debit) is the 23C date of the TC 770; the transaction date of the TC 700 (credit) is the date the returned refund check was received.

    4. If a taxpayer originally requested that he or she receive a refund, and the refund is returned with a request that it be applied to the estimated tax account of the immediately succeeding tax year, the amount credited to the estimated tax account (on the date the returned refund was received) shall include the refund principal plus any overpayment interest that was originally allowed on the refund (provided the interest amount was not allowed in error). Do not characterize the transfer as a credit elect (TC 830 and TC 710), but use the transaction codes referenced above.

    5. Use CC ADD24/CC ADC24 (refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information) to generate the transfers described above. Input Bypass Indicator (BPI) "1" or TC 570, as appropriate, to override unpostable condition 305/198. See IRM 21.5.8.4.5, TC 570 and Bypass Indicator.

      Example:

      A Form 941 for the 4th quarter of 2018 is timely filed on 01/31/2019, reporting an overpayment of $950.00, which refunded with interest of $16.80. The module shows a TC 776 posted 06/17/2019 for $16.80 and a TC 846 posted 06/17/2019 for $966.80 The interest was computed on the overpayment of $950.00 from 01/31/2019 to 06/08/2019. IRS received the returned refund on 10/25/2019 with a request to apply it to pay a balance due on the Form 941 module for the second quarter of 2019 (201906). The returned refund posted to the module with a TC 841 for $966.80 and TC 777 for $16.80, both dated 06/17/2019.

      To transfer the principal portion of the returned refund to the 201906 balance due module, a credit transfer is entered with a TC 820 for $950.00, dated 06/17/2019, and a TC 700 for $950.00, dated 10/25/2019. An adjustment to re-allow the interest on the returned refund will be input with a TC 770 for $16.80 and a CR-INT-TO-DT of 06/08/2019. If the 23C posting date of this adjustment is 12/02/2019, then the transfer of the interest portion to the 201906 module is input with TC 850 for 16.80, dated 12/02/2019 (23C date), and TC 700 for 16.80, dated 10/25/2019 (the date IRS received the returned refund).

  6. If no explanation or other information is provided by the taxpayer, correspond with a Letter 407C, Refund Returned by Taxpayer; No Reason Indicated, or Letter 18C, Decedent Refund (Form 1310 Requested) if a Form 1310 is needed. Suspend the case and allow 45 days for a response (70 days for overseas taxpayers). If no response is received follow paragraph (11) below.

  7. When a refund check is reissued to the taxpayer or designated payee, do not allow interest if:

    • Taxpayer furnished incorrect information

    • Taxpayer moved before refund received

    • Refund returned to be applied to any outstanding balance

    • Taxpayer error

  8. Allow interest under the following conditions:

    • IRS error caused the refund to go to incorrect address

    • TC 841 posts after an adjustment, and P- freeze is on account

    • IRS caused the incorrect refund amount or directed the refund to the wrong payee

  9. Use the following guides when inputting a TC 290 to release P- freeze as a refund to the taxpayer. Refer to IRM 21.5.6, Freeze Codes.

    Individual Master File (IMF)
    No Interest
    IMF
    Same Interest
    IMF
    Additional Interest
    1. TC 290 for .00

    2. TC 770 for .00

    3. Hold Code "3"

    4. Reason Code "099"

    1. TC 290 for .00

    2. TC 770 for .00 or (amount of original interest)

      Note:

      On TC 770 for the amount of original interest, use the CR-INT-TO-DT of the original TC 776 or TC 770.

    3. Hold Code "3"

    4. Reason Code "099"

    TC 290 for .00
    Business Master File (BMF)
    No Interest
    BMF
    Same Interest
    BMF
    Additional Interest
    1. TC 290 for .00

    2. TC 770 for .00

    3. Hold Code "3"

    1. TC 290 for .00

    2. TC 770 for .00 (amount of original interest)

      Note:

      On TC 770 for the amount of original interest use the CR-INT-TO-DT of the original TC 776 or TC 770.

    3. Hold Code "3"

    TC 290 for .00

    Note:

    TC 770 for .00 not required for current year returns if the refund will be issued prior to June 1.

  10. Depending on the age of the credit, transfer the payment or credit to the Unidentified Remittance or Excess Collections accounts if:

    1. The credit cannot be released through research or correspondence with the taxpayer

    2. The taxpayer has not responded to our correspondence (original or follow-up)

  11. If unable to release the credit, transfer the credit as follows:

    1. If the credit is less than one year old, apply to the Unidentified Remittance account using Form 2424, Account Adjustment Voucher.

    2. If the credit is more than one year old, apply to the Excess Collections account using Form 8758, Excess Collections File Addition. Refer to IRM 3.17.220, Excess Collections File, for specific information about the Excess Collections Account 6800 and IRM 21.5.8.4 (16), IDRS Guidelines for Credit Transfers, for procedures on moving money into Excess Collection.

      Exception:

      Telephone contact is not required if a previous attempt was made to obtain new/correct address information (i.e., 533C or other letter).

Check for Different Amount
  1. If the taxpayer receives a refund in an amount different than expected, and the check has not expired, follow the table below to resolve.

    If And Then
    The taxpayer questions the amount You can determine the difference through IDRS and original refund is correct
    1. Provide explanation to taxpayer.

    2. If refund was returned, reissue and limit interest to the amount of the original refund.

    The taxpayer questions the amount You can determine the difference through IDRS research and refund is incorrect
    1. Advise taxpayer to write void on the back of the check and return it to the issuing campus with a letter of explanation.

    2. If the refund was returned adjust account as necessary.

    The taxpayer questions the amount You cannot determine the difference through IDRS research
    1. Advise taxpayer to write "void" on the back of the check and return it to the issuing campus RI Unit with a letter of explanation.

    2. If refund returned, request the return and all related documents, if necessary, to resolve the case.

    3. Send an interim letter or telephone taxpayer with explanation of the delay, if necessary.

    4. Upon receipt of the documents, take appropriate action and send taxpayer a letter explaining the resolution.

    5. Adjust the account and/or reissue the refund.

Negotiation by Another Party
  1. In some cases, a third party will request the refund check be reissued in their name because the taxpayer is unable to negotiate the check (i.e., imprisonment). The criteria to issue a refund check in another name is listed in IRM 21.4.3.5.5.2.1, Issuing Checks in Another Name.

  2. If the check cannot be reissued in the third party’s name based on the IRM, there are some alternative methods the Service may suggest. BFS regulations state a treasury check may be signed by another party without the need to reissue the check in the third party’s name. A bank may accept a check endorsed by another party, and assumes responsibility for verifying the party is authorized and has the capacity to endorse and negotiate the check. See 31 CFR. 240.13, Indorsement by payees, at (b)(1)(ii) for acceptable endorsements by another party. See 31 CFR. 240.13(b)(2). The procedure also applies to the endorsement of a joint check by one payee.

  3. If the third party does not meet the IRM criteria for issuing the check in their name, follow procedures in chart below:

     
    If Then
    The third party does not meet criteria to have the check issued in their name per IRM 21.4.3.5.5.2.1, Issuing Checks in Another Name Send Letter 1219C and advise the check cannot be issued in the third party name and advise of options below that may assist in negotiating the check on behalf of the taxpayer
    • FS Form 232, Specific Power of Attorney - By Individual for the Collection of a Specified Check Drawn on the United States Treasury at https://fiscal.treasury.gov/pfc/forms.html or

    • They may contact the bank who may offer the payee to sign a bank-produced document providing a “specific power of attorney” to the person signing the check

    The third party provides a copy of an IRS Form 2848, Power of Attorney and Declaration of Representative and requests the check be issued in their name per the taxpayer’s request Send Letter 1219C and explain that Form 2848, Power of Attorney and Declaration of Representative, authorizes a representative to receive, but not endorse or collect, a check drawn on the Treasury. IRS rules and regulations require that an endorsement by any person other than the payee comply with the BFS regulations. See 26 CFR. 601.504(a)(5). Suggest the alternative methods in “Then” section above.

  4. The IRS may reissue a refund check to another party in the limited situations listed in IRM 21.4.3.5.5.2.1, Issuing Checks in Another Name, or in the name of one joint filer in the limited situations listed in IRM 21.4.3.5.5.2.2, Joint Filers Request Refund Check in One Name, after the IRS has determined that the documentation submitted with the request to reissue the check could help defeat a subsequent complaint against the IRS by the taxpayer or by one joint filer that the refund check was improperly cashed by another party or by the other joint filer.

Issuing Checks in Another Name
  1. When a taxpayer requests the refund check be reissued in a name of another party, he/she must send back the voided check and provide sufficient proof:

    If And Then
    BMF refund check Correspondence stating company dissolved and sufficient documentation received
    1. Send Letter 4427C, Acknowledgment of Returned Refund Check, to the taxpayer.

    2. Issue manual refund to designated individual.

    BMF refund check Sufficient documentation is not received
    1. Send appropriate letter (e.g., 407C, 696C, etc.) requesting missing documentation.

    2. Suspend case for 45 days (70 days for overseas taxpayers).

    BMF refund check No response to request is received after 45 days (70 days for overseas taxpayers)
    1. Transfer the credit to the

      1. "4620" or

      2. "6800" account

      For instructions on applying credit to these accounts, see IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks). For procedures on moving credits to the 4620 account see IRM 21.5.8.4 (16), IDRS Guidelines for Credit Transfers.

    2. File and close case using TC 290 .00.

    IMF refund check Payee signed statement that check is not from joint account, or has letter or court certification showing conservatorship or guardianship, etc.
    1. Send Letter 4427C, Acknowledgment of Returned Refund Check, to the taxpayer.

    2. Correct entity information, if applicable.

    3. Release refund or follow manual refund procedures to issue refund to designated individual.

    IMF refund check Insufficient documentation
    1. Send Letter 1219C, Refund Inquiry; (Joint F3911) Requires Certification: Form 1040, requesting missing documentation.

    2. Suspend case for 40 days (70 days for overseas taxpayers).

    IMF refund check No response to request is received after 45 days (70 days for overseas taxpayers)
    1. Transfer the credit to the "4620" or "6800" account. For instructions on applying credit to these accounts, see IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks). For procedures on moving credits to the 4620 account see IRM 21.5.8.4 (16), IDRS Guidelines for Credit Transfers.

    2. Close control.

    3. File case using TC 290 .00.

Joint Filers Request Refund Check in One Name
  1. If a taxpayer filed a joint return and requests the refund check be reissued in one name follow the procedures below. Advise the taxpayer to return the voided check to the appropriate Refund Inquiry team with supporting documentation as stated in the If/Then chart below. Team addresses can be found on the SERP - Who/Where tab at Refund Inquiry Unit Addresses.

    If Then
    One or both spouses are outside the United States in connection with the military and the requester is one of the payees on the check Advise requester to submit in writing:
    1. Copy of Power of Attorney (POA) issued by the military, or

    2. Signed statement from other spouse consenting to issuance of the refund to requester

    One or both spouses are outside the United States and the requester is one of the payees on the check Advise requester to submit in writing:
    1. A signed statement from other spouse consenting to issuance of the refund to requester with a statement that the other spouse is outside of the United States and won’t be in the United States for the next [XX] months.

       

      Note:

      In cases where spouse has been deported or other circumstance, a specific time frame may not be known.

    One spouse is incarcerated and the requester is one of the payees on the check Requester must submit written permission from incarcerated spouse consenting to issuance of the refund to the requester.
    One spouse is missing and there is no legal separation Advise taxpayer to obtain one of the following:
    1. A copy of police report of missing person or,

    2. Certification from state or local government agency that spouse cannot be found, or

    3. A copy of notice printed in newspaper

    Taxpayer is divorced and submits a copy of the divorce decree dictating how the refund should be allocated (see Rev. Rul. 80-8, amplified by Rev. Rul. 86-57.) Follow procedures in IRM 21.4.4, Manual Refunds.
    One spouse is unable to endorse the joint refund check due to medical reasons Taxpayer must submit supporting documentation to prove they have been appointed to act for the other spouse or sufficient documentation to establish a hardship situation exists.

    Note:

    BFS regulations allow a Treasury check to be signed by a guardian or other fiduciary appointed under state law when the payee is incompetent and lacks the ability to provide consent or authorization. Evidence of the authority may be required by Treasury in the event of a dispute. See 31 CFR 240.14, Checks issued to incompetent payees

    The request does not meet any of the above criteria
    1. Reissue check in both names.

    2. Send Letter 1219C, Refund Inquiry; (Joint F3911) Requires Certification: Form 1040, using appropriate paragraphs and giving reason:
      "One spouse refuses to endorse the refund check (i.e., civil matter, no divorce decree allocating the refund)" . Utilize open paragraphs, as needed.

    The request meets any of the above criteria and sufficient documentation is received Process request. See IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks).
    The request meets any of the above criteria and sufficient documentation is not received
    1. Send Letter 1219C to request missing information

    2. Suspend case for 45 days (70 days for overseas taxpayers)

    No response to Letter 1219C after 45 days (70 days for overseas taxpayers)
    1. Transfer the credit to the

      1. "4620" or

      2. "6800" account

      See IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks). For procedures on moving credits to the 4620 account see IRM 21.5.8.4 (16), IDRS Guidelines for Credit Transfers.

    2. Close control.

    3. File case using TC 290 .00.

  2. If the criteria above are not met, the refund check cannot be issued in one name. The Service cannot determine the refund allocation. The issue is considered a civil matter between the spouses that may be addressed under local law.

Resolving Returned Expired Refunds Limited Payability

  1. Under Title 4 of the Competitive Equality Banking Act of 1987 (known as Limited Payability provision), checks issued October 1, 1989 or later expire the last business day of the 12th month after issuance. The credit for an expired refund will post as a TC 740, blocking series/serial number "66666" , approximately three weeks into the 14th month. Upon completion of the case, destroy the original expired refund check as classified waste. Do not send an original check to files.

  2. If the taxpayer contacts IRS and either returns or wants to return a refund check that is over 1 year old (known as a "stale dated" check) use the following chart to determine your response:

    If Then
    S- freeze is present
    1. Follow S- freeze procedures. See IRM 21.4.3.5.3, Undeliverable Refund Checks.

    2. Advise the taxpayer to destroy the expired check if it is still in their possession.

    S- freeze is present on TXMOD, but not on IMFOL and a TC 388 is present
    1. Input CC RECON to activate the module. The refund will generate once the TC 389 posts. Advise the taxpayer to allow 4-6 weeks.

    2. Refer to IRM 21.4.2.4.9, Processing Limited Payability (LP) Cancellations on Checks Dated After 09/30/1989

    No S- freeze is present
    1. Check the tax module for a TC 740, with blocking series 66666, and matching posting date after the TC 846.

    2. If the TC 740 is present and another TC 846 or TC 826 is posted after the TC 740, advise the taxpayer their refund has been re-issued or offset.

    3. Advise the taxpayer to destroy the expired check if it is still in their possession.

    No S- freeze is present or refund cancellation credit on the module Conduct Research. Check the account for subsequent refund transactions TC 740, TC 841, TC 846, TC 840, or TC 826.
    1. If no subsequent refund is found, and it’s been 12 months past the refund issue date but no more than 14 months, prepare a Form 4442, Inquiry Referral, to the issuing campus Refund Inquiry Unit for CC CHKCL input. Advise the taxpayer to allow 4-6 weeks for refund to be reissued.

    2. Refund Inquiry employees: Input CC CHKCL to post the credit for the check. Use the “N” non-receipt code on CC CHKCL. If a P- freeze needs to be set, use non-receipt code “H”. See Exhibit 21.4.2-4, Stop Reason Codes Conversion Guide, for available codes.

    3. Do not allow additional interest if the IRS is not at fault.

    4. If the refund check is between the 14th month and 7 years after the issue date, inform the taxpayer to return the refund check to the Refund Inquiry Unit for further research. Advise taxpayer to write void in the endorsement area on the back of the check and mail the check with a letter of explanation to the issuing campus RI Unit. The issuing campus location is on the front, at the bottom of the check, and displays all or the first six letters of the campus. See the Refund Inquiry Unit Addresses for the appropriate address. Once research has been completed the taxpayer will receive the refund or a letter.

    No S- freeze is present or refund cancellation credit on the module If no refund cancellation credit transaction is found on the module and it’s after 7 years of the issue date of the refund check, advise the taxpayer by telephone or Letter 2218C, Refund Inquiry; Check Claim Disallowed, Check Endorsed/Paid, that the check cannot be reissued.

    Note:

    If the original refund was a manual refund, you may need to reissue as a manual refund. Refer to IRM 21.4.4, Manual Refunds.

  3. For refunds meeting or related to TRNS46 transcripts (STAT-08 and AMX-08) with decedent refunds, refer to IRM 21.2.4.3.20, Processing TRNS46 Cases, to address refund.

Resolving Limited Payability Retention Cases
  1. Returned refunds on "Unrecoverable Retention Register" accounts must be worked at the issuing campus. If an original check is returned and the account has dropped to retention (no longer available on Masterfile):

    1. Research CC IMFOR for the vestigial record of the account. This is a read-only command code and will not restore the module. If not available on CC IMFOR, research CC IMFOLV for necessary information and request a microfilm record of the account using CC ESTABMZ. See IRM 2.3.18, Command Code ESTABM, for more information.

    2. When retention register is received, review the account for evidence of a previous cancellation of the refund and if found, advise the taxpayer of the disposition (reissue or offset).

    3. If the account shows no evidence of a prior cancellation and the refund is to be reissued, research CC IMFOLT to see if the module is recoverable from retention.

    4. If the IMFOLT screen shows "Recoverable Retention Register" , input CC IMFOLB to generate a TC 013 and TC 370 to reestablish a name line and tax module on Master File. For more information on restoring retention accounts, see IRM 21.2.2, Research.

    5. If IMFOLT shows "Unrecoverable Retention Register" , prepare Form 5248, Transfer Request, to restore the account or prepare Form 3753, Manual Refund Posting Voucher, to issue the refund from Non Master File. Do not reestablish a retention account unless the refund is to be reissued.

      Note:

      A module cannot be easily restored if there are transactions pending or posted on the dummy module (TC 840). Therefore, do not issue a manual refund or post any transactions to the account before it is restored.

    6. Before restoring an account, ensure there is an established name line for the year in question. If more than one year is being restored, establish the name-line year on the oldest year. Be aware of possible disclosure issues on a name change.

    7. Monitor until the TC 841 posts and release refund.

      Caution:

      If the original refund was a manual refund, the replacement may need to be manual. See IRM 21.4.4, Manual Refunds.

    8. If a TC 777 generates to reverse credit interest that has already been manually reversed by TC 772, correct the account using TC 770 prior to closing case.

Use of Listings to Monitor Returned Refund Cases

  1. The two Category Codes that pertain to returned refund checks (excluding undeliverables) are 3913 and 841P, but these may change depending on actions taken on the account.

  2. Unexpired refund checks are input on the automated Returned Refund program in AMS, which opens a control base on IDRS in 2-3 days in Category Code 3913. When the check is sent to the Bureau of Fiscal Service (BFS) RFC for cancellation, a TC 841 will post in about 4 - 6 weeks at which time the Category Code changes to 841P.

    Note:

    Checks that are Limited Payability (LP) expired (more than one year old) are not sent to the RFC and a TC 841 will not post, therefore the Category Code will not change.

    Caution:

    A check that is returned directly to the RFC by the taxpayer is known as a "Code 3" cancellation (on the SF1098 listing). RFC cancels the check and forwards any taxpayer correspondence to IRS. The TC 841 for these checks should already be posted when the correspondence is received, but the Category Code "3913" will not automatically change to "841P" . If this occurs, change the Category Code to "841P" .

  3. Returned refunds in Category "3913" age in 45 days from the received date. When the category updates to "841P" , action must be taken in 14 days to avoid becoming overaged. Use the following chart for required follow-up action time frames on these categories:

    Category Code Activity Code 1st day Overage from applicable date Action to take if "HMMMing" in HMMM column
    3913 Usually a batch number 45 days from received date If the Category Code has not updated to "841P" , check for one of the following:
    1. Unpostable TC 841. The most common TC 841 unpostable is the credit attempting to post with the wrong date. Accounts merged or resequenced to another TIN after the refund was issued will also cause the TC 841 to unpost.

    2. A TC 740 posted for the expired check. Take immediate action.

    3. Code 3 cases from the RFC. The TC 841 posted before the control was opened. The aged list would show Category 3913 but there is a P- freeze. Update the control base to "841P" and work case.

    4. Check Payments Claims and Enhanced Reconciliation (PACER), Treasury Check Information System (TCIS), or the SF 1098 listing for refund cancellation. You may need to contact Accounting so they can post the TC 841.

      Note:

      Do not wait 45 days before checking CC TXMOD for these conditions. Try to perform needed research, document request, suspense letters or interim actions as soon as possible so action can be taken as soon as the TC 841 posts

      Caution:

      Input CC STAUP or a TC 470 on balance due modules while waiting for the TC 841 to post.

    841P Same unless performing research 14 days from Action date When the TC 841 posts, take appropriate action to resolve the case.

    Note:

    If case cannot be closed within 60 days, send a Letter 288C, Interim Reply; Adjustment Request Considered.