21.4.3 Returned Refunds/Releases

Manual Transmittal

September 15, 2017

Purpose

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

Material Changes

(1) Various editorial changes were made throughout IRM 21.4.3. The web addresses, IRM and legal sources were checked and corrected, where necessary.

(2) IPU 17U0970 issued 06-07-2017 IRM 21.4.3.1 - Added internal controls information.

(3) IPU 17U0970 issued 06-07-2017 IRM 21.4.3.5.1(2) and (3) - Clarified 1098 listing is for informational purposes only and referred to paragraph 9 instructions.

(4) IPU 17U1162 issued 07-18-2017 IRM 21.4.3.5.3 (7) and (9) - Added IRM reference for trustee name changes and updated Note under (7)(e) to specify all CP 53 series notice inquiries require high risk authentication.

(5) IPU 17U0970 issued 06-07-2017 IRM 21.4.3.5.3 (6), (7), and (9) - Added online address change option is currently disabled. Added a Note with instructions not to issue a letter to request a current address on undeliverable refunds. Updated If/Then chart for undelivered refunds with incomplete/incorrect addresses.

(6) IRM 21.4.3.5.3.1 (2) - Reworded verbiage regarding classified waste.

(7) IPU 17U0970 issued 06-07-2017 IRM 21.4.3.5.3.1 - Added 533C letter is also to be treated as classified waste.

(8) IRM 21.4.3.5.4 - Updated External Leads address.

(9) IPU 17U0970 issued 06-07-2017 IRM 21.4.3.5.4 (2) - Added Note to include IRM reference link for required Form 3210 Document Transmittal, Managerial Review requirements.

(10) IRM 21.4.3.5.5 (4) - Updated If/Then section to include 45 day suspense period for 3rd party returned checks.

(11) IPU 17U0970 issued 06-07-2017 IRM 21.4.3.5.5 (4) - Added section to If/Then regarding 3rd party returned refunds.

Effect on Other Documents

IRM 21.4.3 dated August 17, 2016 (effective October 1, 2016) is superseded. This IRM incorporates IRM Procedural Updates (IPU’s) 17U0970 (dated 06-07-2017) and 17U1162 (dated 07-18-2017).

Audience

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

Effective Date

(10-01-2017)

Kevin M. Morehead
Director, Accounts Management
Wage and Investment Division

Programs 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

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. For information refer to

    • IRM 1.2.21, Policy Statements for Customer Account Services Activities,

    • Rev. Proc. 2010-16, and

    • IRC 6402, Authority to make credits or refunds.

Responsibilities

  1. The Wage and Investment Commissioner has overall responsibility for the policy related to this IRM, which is published on a yearly basis.

  2. Additional information is found in IRM 1.1.13.9.4, Accounts Management and IRM 21.1.1, Accounts Management and Compliance Services Overview.

Program Controls

  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.

  3. 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. For a comprehensive listing of any IRS acronyms, please refer to the Acronym Database.

Related Resources

  1. Refer to IRM 1.4.2.15, Related Resources, for information on related resources that impact internal controls.

  2. Additional related resources include the following (list is not all inclusive):

    • IRC 6402

    • Public Law 100-86, Title 4 of the Competitive Equality Banking Act of 1987

    • Bureau of Fiscal Service - Treasury Check Information System

    • Document 6209 (IRS Processing Codes and Information)

    • Integrated Automation Technologies (IAT) Tool Instructions

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 11.3.1.11, Facsimile 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).

  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.

  4. Refund checks returned to a Taxpayer Assistance Center (TAC) must be forwarded to the affiliated campus Refund Inquiry Unit, in the appropriate business operating division (BOD) for processing. 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, IDRS - Terminal Responses, Command Code IMFOL, for complete command code instructions.

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 21.4.1.4.10, Refund Intercept CC 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 instructions provided by taxpayer 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) (formerly FMS)).

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) (formerly FMS's) 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 21.4.1.3.5, 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 IDT or IVO involvement, see IRM 21.2.4.3.18, Integrity & Verification Operation (IVO) 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.

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

    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.

      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.

    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 2014, and it is made after January 1, 2015, you must use 2015 in the tax year field. If this same claim is received after January 1, 2016, you must use 2016 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. See IRM 3.13.5.27, Oral Statement/Telephone Contact Address Change Requirements.

    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" .

    Note:

    If the account had any CP 53 series notice issued, see IRM 25.25.5.11, Limited Direct Deposit Refund Procedures, follow the procedures in IRM 21.1.3.2.4, Additional Taxpayer Authentication, prior to updating the address. If the taxpayer cannot authenticate, direct them to a TAC office for assistance.

  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 21.6.6.3.22, 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 21.7.7.5.4.5.3, Form 8038-CP Manual Refund Guidelines, for additional information regarding manual refunds.

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

    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 is being reissued.

    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

    Input CC CHK64.
    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), below.

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

Undelivered Refund Notices - Computer Paragraph (CP) 31 for Individual Master File (obsolete 01-2016) and CP 231 for Business Master File
  1. The CP 31, Undelivered Refund Notice, (obsolete 01-2016) or 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 31 (obsolete 01-2016), 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:

    Beginning July 2011, a "2-D Bar Code" pilot program involving various CP notices (including CP 31) will be implemented. Some of the notices will still display the entire SSN while others will have the SSN redacted/masked (e.g., XXX-XX-1234). In order 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. Additional CP notices utilizing this configuration requiring the bar code scanner will be rolled out periodically in the future.

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 will 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.

    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/Form 1040A/Form 1040EZ instructions. See IRS Mailing Addresses. See IRM 21.4.1.4.7.1 (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 IVO. 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, Securing Returned Refund Checks for Transit, for documentation and packaging to ensure the security of the check.

    Note:

    Managers should refer to IRM 1.4.16.5 (5), 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 affiliated campus Refund Inquiry Unit, in the appropriate business operating division (BOD) for processing. 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 IVO (previously AMTAP) 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 IVO (previously AMTAP) 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 IVO (previously AMTAP) 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 IVO 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 IVO (previously AMTAP) 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 IVO (previously AMTAP) 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 25.23.2.16, Identity Theft Supporting Documentation-Overview, for codes and additional information.

      Note:

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

    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

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.

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. 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 51315 (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 photocopy 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.

    4. Send the check, Form 3210 and Form 3913 to the RI Unit at your campus.

    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.

  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 21.6.6.3.22.2, 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 21.6.6.3.22.2, 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.

    • 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.

  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 interest 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. 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.

    3. If a taxpayer originally requested that he or she received 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.

    4. 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 21.5.8.3.6, TC 570 and Bypass Indicator.

  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. 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 .00

    2. TC 770 for .00

    3. Hold Code "3"

    1. TC 290 .00

    2. TC 770 .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 .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 21.5.8.1 (11), Credit Transfers Overview, for procedures on moving money into Excess Collection.

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.

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. Send follow-up letter if no response within 45 days.

    BMF refund check No response to follow-up letter after 30 days
    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 21.5.8.1 (11), Credit Transfers Overview.

    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. Send follow-up letter after 45 days.

    IMF refund check No response to follow-up letter after 30 days
    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 21.5.8.1 (11), Credit Transfers Overview.

    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. Team addresses can be found on the SERP - Who/Where tab at Refund Inquiry Unit Addresses.

    If Then
    One spouse is overseas 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 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 Follow procedures in IRM 21.4.4, Manual Refunds.
    You determine check should not be reissued in one name
    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)" .

    Required information as noted above is missing Send Letter 1219C to request missing items.
    Sufficient documentation received Process request. See IRM 21.4.3.5.5, Resolving Returned Refunds (Unexpired Checks).
    No response to request after 45 days Send follow up letter.
    No response to follow up letter after 30 days
    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 21.5.8.1 (11), Credit Transfers Overview.

    2. Close control.

    3. File case using TC 290 .00.

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. Credit for an expired refund will post in approximately the third week of the 15th month after issuance. These credits are identified by TC 740, blocking series/serial number "66666" . 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
    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.

    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.

    No refund cancellation credit on the module Research for the credit.
    1. If not found and the current date is before the 15th day of the 14th month after the refund issue date, input CC CHKCL to post the credit for the check. Use the appropriate non-receipt code on CC CHKCL. Determine whether or not a P- freeze needs to be set. See Exhibit 21.4.2-4, Stop Reason Codes Conversion Guide for available codes.

    2. If past the CC CHKCL deadline above, monitor for TC 740 until the end of the 16th month after the issue date. If necessary, release the S- freeze. Do not allow additional interest if the IRS is not at fault.

    3. If between the 16th month and 7 years after the issue date, inform the taxpayer to return the refund check to the RI Unit for further research.

    4. If after 7 years of the issue date, 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.

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, IDRS Terminal Responses, 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) (formerly Financial Management Services (FMS)) RFC for cancellation, a TC 841 will post in about three 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.