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21.4.6  Refund Offset

Manual Transmittal

September 20, 2016

Purpose

(1) This transmits revised IRM 21.4.6, Refund Inquiries, Refund Offsets procedures.

Scope

This transmits revised IRM 21.4.6, procedures for Refund Offsets. This section covers processing the offsets of tax overpayments for outstanding Federal tax debts, child support, Treasury Offset Program debts, and Form 8379Injured Spouse Allocation.

Material Changes

(1) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.2(4) , (5) & (6) - Added Bureau of the Fiscal Service change in processing Office of Child Support reversals

(2) IRM 21.4.6.2 Added Retention Records information

(3) IRM 21.4.6.4.2.1(8) b) Deleted b) duplicated information see link in a) above

(4) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.4, (1) - (5) New Sub-Section Child Support TOP Offsets

(5) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.9 Renumber Sub-Sections 4-11 now 5-12

(6) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.6(3) New Agency or Sub Agency Codes now shown on CC TXMOD and CC IMFOL

(7) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.7(4) Information regarding Agency/Sub-Agency Codes

(8) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.8(4) Deleted TC 898 or TC 971 Reference codes regarding showing Agency Codes

(9) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.9(1) Added IRM Reference for Child Support TOP Offsets

(10) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.11(2) Reminder to take all Child Support offsets into consideration

(11) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.4.2.12(1) , (2) & (5) New ID Theft procedures for Child Support offsets

(12) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.4.2.12(2) Removed CC, CS048 added Caution to input a TC 570

(13) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.1(1) Information regarding Agency/Sub-Agency Codes

(14) IRM 21.4.6.5.1(2) If And, Then chart changed business days to calendar days and 14 days to 2 weeks also added CHKCL information

(15) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.5.2(2) (7), (8) & Reminder Added new transfer number 1035 for Application 35

(16) IRM 21.4.6.5.2(3) Moved the Note before the listed exceptions

(17) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.5.2(7) (3) Added AM campus that worked the Form 8379

(18) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.7.1(1) b) - Added procedural or pipeline to processing error

(19) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.7.1(1) Added Note with IRM Reference for Child Support TOP Offsets

(20) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.7.2(1) & (2) - Changed Exception in (1) and moved the Exception as (2)

(21) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.7.2(1) j) New information regarding Unallowable Child Support offset reversals

(22) IRM 21.4.6.5.8.3(8) Deleted (8) duplicated information contained in IRM 21.4.6.5.2(3)

(23) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.5.8.3(18) j) Added instructions to contact Monitoring Offers in Compromise (MOIC)

(24) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.8.6(2) Added Reminder that offsets to Child Support do not apply to Injured Spouse cases

(25) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.8.3(18) f) - Added IVO information for -R Freeze with TC 971 and/or TC 972 AC 134

(26) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.8.6(4) - Added Note issuing manual refund on accounts with multiple TC 898 reversals

(27) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.8.11(1) - Added -E Freeze to If And Then Chart

(28) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.8.11 Added IRM Reference for Child Support TOP Offsets

(29) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.5.10(2) Added new transfer number 1035 for Application 35

(30) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.5.10(4) Added Note: Do not use the Form 8379-A Worksheets when one of the short cut methods apply.

(31) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.10.3(4) Added IRM Reference for Child Support TOP Offsets

(32) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.10.4(1) through (4) - Reworded and added additional instructions for calculating credit interest

(33) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.10.5(4) - Added Note regarding notification of TOP debt to the Injured Spouse

(34) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.10.6(2) e) - Added information regarding issuing manual refund on accounts with multiple TC 898 reversals

(35) IPU 16U0059 issued 01-06-2016 IRM 21.4.6.5.12(3) 2) a) - Added Reminder when issuing manual refund on accounts with multiple TC 898 reversals

(36) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.12.1(1) Added IRM Reference for Child Support TOP Offsets

(37) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.12.2(1) Added IRM Reference for Child Support TOP Offsets

(38) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.12.3(8) Added IRM Reference for Child Support TOP Offsets

(39) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.15.1(2) Added IRM Reference for Child Support TOP Offsets

(40) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.16(5) Added IRM Reference for Child Support TOP Offsets

(41) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.17(2) Added IRM Reference for Child Support TOP Offsets

(42) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.18(1) Added IRM Reference for Child Support TOP Offsets

(43) IRM 21.4.6.5.19(1) Added IRM reference for Child Support Top Offsets

(44) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.19(1) Added IRM Reference for Child Support TOP Offsets

(45) IPU 16U1046 issued 06-09-2016 IRM 21.4.6.5.19(1) & (3) Caution Added instructions for Child Support TOP Offsets

(46) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.20(1) e) Caution Added IRM Reference for Child Support TOP Offsets

(47) IPU 16U0214 issued 02-01-2016 IRM 21.4.6.5.21(3) Added IRM Reference for Child Support TOP Offsets

Effect on Other Documents

IRM 21.4.6, Refund Inquiries, Refund Offsets, dated October 1, 2015, is superceded. The following IRM Procedural Updates (IPUs), issued from January 6, 2016 through June 9, 2016 have been incorporated into this IRM: IPU 16U0059, IPU 16U0214 and IPU 16U1046.

Audience

All Internal Revenue Service employees working paper and phone Form 8379, Injured Spouse Allocation and Refund Offset inquires.

Effective Date

(10-01-2016)

James Clifford
Acting Director, Accounts Management
Wage & Investment Division

21.4.6.1  (10-01-2013)
Refund Offset Overview

  1. This section covers processing related to the offset of tax overpayments for outstanding Federal tax debts, child support, Treasury Offset Program debts, State Income tax obligations and Unemployment Compensation debts. Also covered is the processing of Form 8379,Injured Spouse Allocation, and Offset Bypass Indicator (BPI).

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

21.4.6.2  (01-06-2016)
What Is a Refund Offset?

  1. Internal Revenue Code IRC (§) 6402(a), (c), (d), (e) and (f) require a taxpayer's overpayment to be applied to any outstanding Federal tax debt, child support, Treasury Offset Program (TOP) debt, State income tax obligation or Unemployment Compensation prior to crediting the overpayment to a future tax or issuing a refund. This application of a tax overpayment is called a refund offset.

  2. Refund offsets to child support, TOP debts, State income tax obligations and Unemployment Compensation debts are handled by the Treasury's Bureau of the Fiscal Service through the Treasury Offset Program. This occurs after a refund is certified by Internal Revenue Service (IRS) for payment by Bureau of the Fiscal Service, but before the refund check is issued or a direct deposit is transferred to the taxpayer's bank account.

  3. All taxpayers, regardless whether they have an SSN, could have their refund offset.

  4. Effective January 2016, the Department of the Treasury, Bureau of the Fiscal Service (BFS), is amending its regulation governing the offset of tax refund payments to collect certain past-due child support obligations. This rule will limit the time period during which Treasury may recover certain tax refund offset collections from States, when the States have already forwarded such funds to custodial parents as required or as authorized by applicable laws.  This change will limit the time period during which Treasury may require States to return the offset funds to six months from the date of such collection.

  5. The six month limitation period, noted in (4) above, does not apply to the processing of Form 8379, Injured Spouse Allocation. Continue to process injured spouse cases as always.

  6. The Agency and Sub Agency codes will also be shown on the taxpayer’s account. The purpose of the Agency/Sub Agency code is for internal use only. Therefore, do not disclose this information to the taxpayer.

    Note:

    Do not use the Agency or Sub Agency codes found on CC TXMOD or CC IMFOL for processing an injured spouse allocation, nor for advising the taxpayer of the existence/non-existence of a TOP debt at Bureau of the Fiscal Service.

21.4.6.3  (09-20-2016)
Disclosure and Retention Records

  1. Before disclosing any tax information:

    • Be sure you are speaking with the taxpayer or authorized representative. Refer to IRM 21.1.3.2, General Disclosure Guidelines, for more information.

    • Review procedures in IRM 11.3.2.6.1, Leaving information on Answering Machines/Voice Mail, before leaving a message on a taxpayer's or authorized representative's answering machine or voice mail.

    • Review procedures in IRM 11.3.1.11, Facsimile Transmission of Tax Information, before faxing confidential information to the taxpayer or authorized representative.

  2. Per Document 12990, Records and Information Management Record Control Schedules, we are maintaining all paper and electronic records accordingly.

21.4.6.4  (03-04-2015)
Refund Offset Research

  1. There are two types of refund offsets:

    • Federal tax offset

    • Treasury Offset Program offset (effective 01/11/1999)

  2. Command Code (CC) INOLE contains debt liability indicators based on information received from the Bureau of the Fiscal Service. The indicators are used to identify a Federal tax debt, TOP debt, or both. You must thoroughly research for any outstanding Federal tax or TOP debts. Always attach the INOLES or IAT Results IS screens for both spouses showing the debt indicator at the time the Form 8379, Injured Spouse Allocation, is worked. Include BMF screens when there is a X-REF EIN. The debt indicators are:

    • (I) IRS Debt

      Note:

      The (I) indicator is not always set for all Federal tax debts. To determine if there is an outstanding Federal tax debt, you must also research Command Code (CC) IMFOL, CC BMFOL, and/or CC TXMOD as well as CC INOLES even on "N" indicator cases.

    • (F) Bureau of the Fiscal Service TOP Debt

    • (B) Both IRS and Bureau of the Fiscal Service TOP Debt

    • (N) No Debt

      Note:

      The IAT Results IS screen may respond with a debt indicator "N" when an invalid Social Security Number (SSN) indicator follows the Taxpayer Identification Number (TIN). The IAT Tool is designed to research CC INOLET when the invalid indicator is present. If CC INOLET does not display a debt indicator, then the IAT Results IS screen displays the "N" . Additional research is needed if the secondary TIN is invalid.

    ,

  3. A tax overpayment must offset to an outstanding Federal tax debt before it offsets to TOP debts or is applied to a credit elect. The priorities for offset are:

    1. Federal Tax, Primary Taxpayer Identification Number (TIN)

    2. Individual Retirement Account (additional tax reported on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts).

    3. Civil Penalty

    4. Federal Tax (Secondary TIN)

    5. Business Master File (BMF)

    6. Non-Master File (NMF)

    7. Treasury Offset Program

    8. Credit Elect

    Note:

    The Collection Statute Expiration Date (CSED) must be considered in all cases and the overpayment will offset to the earliest unexpired Imminent CSED for all MFT 29, MFT 30, MFT 31, MFT 35 or MFT 55 modules.

  4. The priority of offsets within Treasury Offset Program are:

    1. Office of Child Support Enforcement
      - Temporary Assistance to Needy Families (TANF) (payments to the state) and/or
      - Non-Temporary Assistance to Needy Families (non-TANF) (payments to the custodial parent through the state)

      Note:

      Bureau of the Fiscal Service will reduce the offset against the oldest certified debt first.

    2. Federal Agencies

    3. State Income Tax obligations

    4. Unemployment Compensation

  5. An indicator of "N" means no debt. However, a debt may exist at Bureau of the Fiscal Service , see IRM 21.4.6.5.8.3(9), Processing of Form 8379 Injured Spouse Allocation, for instructions.

  6. Generally, the IRS indicator (I) is set when the taxpayer has any one of the following conditions present on his/her account:

    1. Individual Master File (IMF) primary or spousal tax debt

    2. Business Master File (BMF) tax debt

    3. Non Master File (NMF) tax debt (V— freeze, Transaction Code (TC) 130 on entity

    4. Refund Freeze (TC 810)

    5. Taxpayer Delinquency Investigation (TDI)

    6. Bankruptcy (—V or —W freeze, TC 520 on account with closing code 60-67, 81 or 83-89 on the account.)

    7. Criminal Investigation Division (CID) (Z— or —Z freeze, TC 914/TC 916/TC 918)

      Caution:

      There are instances in which one of the above is valid, however if the (I) indicator is not set, see IRM 21.4.6.4, Refund Offset Research, paragraph (2).

  7. The Treasury Offset Program debt indicator (F) is set when Bureau of the Fiscal Service informs Internal Revenue Service (IRS) that at least one TOP debt exists and an offset may occur if a refund is authorized. The presence of this indicator does not guarantee a TOP offset will occur. The status of a debt, at Bureau of the Fiscal Service may change daily. The debt may be activated, inactivated or deleted within TOP before a refund is issued. Therefore, discrepancies may arise from one cycle to the next and IRS may not be aware of a TOP debt. Consequently, the refund will offset, resulting in having to reverse the offset to process the Form 8379, Injured Spouse Allocation. Also, the refund name line may not match the debtor's name in TOP, allowing a refund to be issued despite the presence of a TOP debt.

  8. The "B" indicator is set when both IRS and TOP debt indicators are present.

  9. Command Code (CC) TXMOD also contains the debt liability indicator, found directly below the Transaction Code (TC) 846 and is displayed in the form of the number "0" or "1" . The indicator is set at the time the TC 846 is generated on the module and is shown as: DMF-LIAB-IND>0 or DMF-LIAB->1.

    1. If the indicator on CC TXMOD is a "0" , the debt indicator on CC INOLE will be an "N" or an "I" . If the CC TXMOD debt liability indicator is a "1" the debt liability indicator on CC INOLE will be an "F" , or a "B" .

    2. If a "0" or "1" debt liability indicator is set on CC TXMOD, it does not guarantee that an offset will or will not occur. This is due to the timing involved in the data exchange between Bureau of the Fiscal Service and the IRS.

    3. A TC 898 or TC 971 AC 598 (manual input of TOP offset record) may be present on the tax module even though the indicator is set to 0. In addition, a TC 898 or TC 971 AC 598 may not be present when the indicator is set to 1. The debt indicator on CC INOLE is updated on a daily basis.

  10. Do not use the DMF-LIAB-IND> found on CC TXMOD or CC IMFOL for processing an injured spouse allocation, nor for advising the taxpayer of the existence/non-existence of a TOP debt at Bureau of the Fiscal Service. The only purpose of this indicator is to provide necessary information for use in IRS automated telephone responses.

21.4.6.4.1  (12-04-2014)
Tax Offset

  1. A refund offset to an outstanding IMF, BMF, or NMF tax debt is referred to as a tax offset. Tax offsets appear on a tax module as:

    • Transaction Code (TC) 820, manual credit transfer

    • TC 826, computer-generated tax offset

    • TC 896, computer-generated tax offset from IMF to BMF, Individual Retirement Account File (IRAF) or Shared Responsibility Payment (MFT 35) without an Agency/Sub-Agency (AG/SA) Code

      Reminder:

      TC 896 without an AG/SA code is not a DMF offset. Refer to Document 6209, Section 8 - Master File Codes, for additional information.

      Exception:

      A TC 896 with an Agency/Sub-Agency (AG/SA) Code reflects a computer-generated offset to the DMF made from 1984 through January 11,1999. It is not a DMF offset if there is no AG/SA code present. Refer to Document 6209, Section 5 - Debtor Master File (DMF), for agency listing.

  2. A tax offset will not occur in certain situations, see IRM 21.4.6.5.10.5Injured Spouse Refund - Tax Offset.

21.4.6.4.1.1  (10-01-2014)
Tax Offset Reversal

  1. A tax offset reversal may be required if the taxpayer's response to the tax assessment results in either a full or partial abatement on a married filing joint (MFJ) account. Any refund generated by the abatement must be paid jointly to both spouses unless one or more TC 706 credits is present and all four of the following items are true:

    • The spouses' names on the account do not both appear on the originating account. Meaning, the TC 706 credits must transfer from one spouse on the originating account either as a single or separate filer or as a joint filer with a new spouse.

      Example:

      Mary Doe filed single for 2013. Her 2013 overpayment offsets with TC 706 to the 2011 account filed as John & Mary Doe, married filing joint.

    • No payments or credits, other than a TC 706 credit, posted to the MFJ account since the tax assessment. Prohibited credits include TC 670, 640, 700, etc.

    • In the case of partial abatements, all TC 706 credits transferred from the same person. (Using the example above, only TC 706 credit(s) are from Mary Doe.)

    • All TC 706 credits occurred within two years before the date of the full or partial abatement.

      Note:

      Compare the TC 706 transaction date to the TC 150, 291, 301, 295, or 299 transaction date.

  2. If the TC 706 credit(s) is/are present and all four of the above items are true, move the applicable TC 706 credit(s) back to the modules where it/they originated.

    Example:

    Husband and wife file a joint return for tax year 2011. IRS assesses an additional $800.00 for their 2011 joint liability based on an examination of the return. The taxpayers divorce. The wife later files an income tax return for 2012 that claims a $500.00 overpayment. The husband does not file an income tax return for 2012 that claims an overpayment. Because of the outstanding tax assessment, the wife's $500.00 credit is transferred in April, 2013 to the married filing joint (MFJ) tax liability for 2011. No other payments or credits are made to the 2011 MFJ account. On September 1, 2013, the IRS partially abates $400.00 of the 2011 tax assessment. Because all four requirements in paragraph (1) above are met move the $100.00 credit that results from the partial abatement back to the wife's 2012 account to prevent the credit from refunding from the 2011 MFJ account.

    Example:

    Husband and wife file a joint return for 2011. IRS assesses an additional $800.00 for their 2011 joint liability based on an examination of the return. Taxpayers divorce. The wife files an income tax return for 2012 that claims a $500.00 overpayment. The husband files an income tax return for 2012 that claims a $300.00 overpayment. Because of the outstanding tax assessment, the $500.00 and $300.00 credits are transferred in April, 2013 to the MFJ tax liability for 2011. No other payments or credits are made to the 2011 MFJ account. On September 1, 2013, the IRS fully abates the tax assessment on tax year 2011. Because all four requirements above are met, move the $500.00 credit back to the wife's 2012 account and the $300.00 credit back to the husband's 2012 account. To prevent the credits from refunding from the 2011 MFJ account, move the credit(s) before abating the tax on that year.

    Caution:

    If an adjustment is made to abate the tax, the appropriate hold code 1, 2 or 4 is needed to prevent the generation of the refund on the 2011 MFJ account and a TC 570 must be used for the credit transfer when posting the credit(s) back to the originating account(s). Otherwise, the computer will automatically offset the credit(s) back to pay the balance due.

    1. Reverse the TC 706(s) to the originating account and input TC 570 on the credit side. If credit interest was allowed on the offset, the credit interest must also be reversed with TC 772.

    2. Input TC 571 with Posting Delay Code 1 on the originating account to allow refund to issue after the adjustment to the joint account posts and satisfies that module.

    3. Input adjustment to the joint module, using the appropriate hold code 1, 2 or 4 as appropriate to ensure the overpayment does not offset.

21.4.6.4.2  (02-05-2014)
Treasury Offset Program (TOP) Offset

  1. Bureau of the Fiscal Service initiates refund offsets to outstanding federal agency debts or child support, State Income tax obligations and Unemployment Compensation debts. These offsets are referred to as TOP offsets. A TOP offset appears on the module as:

    • TC 898 or TC 971 AC 598 (manual input of TOP offset record) with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse

    • OTN - Starting with 1 indicates primary taxpayer debt

    • OTN - Starting with 2 indicates secondary taxpayer debt

  2. TOP offsets occur after the IRS has certified a refund to Bureau of the Fiscal Service for payment (TC 840/TC 846 on account), but before Bureau of the Fiscal Service directly-deposits the refund overpayment or mails the refund check.

  3. A TOP offset reduces the amount of the IRS refund by the amount of the TC 898 or TC 971 AC 598.

    Note:

    It is important to understand that the amount of a refund certified by IRS to Bureau of the Fiscal Service for payment may not be the amount that is issued by Bureau of the Fiscal Service to the taxpayer. The taxpayer may not receive any refund at all if the whole amount is offset.

21.4.6.4.2.1  (09-20-2016)
TOP Offset Bypass Indicator (BPI)

  1. A Treasury Offset Program Bypass Indicator is assigned to all manual and systemic refunds issued to Bureau of the Fiscal Service by IRS. The BPI is a one-digit indicator that identifies for BFS whether the refund is eligible for offset by TOP.

    Note:

    Certain BPIs also identify one of the spouses on a joint refund as eligible for offset. This is required for injured spouse allocation processing.

  2. Generally, a BPI is generated systemically, but when issuing a manual refund, you must input the BPI on CC RFUND.

    Caution:

    Non-Integrated Data Retrieval System (IDRS) manual refunds issued via Form 3753, Manual Refund Posting Voucher, are subject to TOP offset. A BPI is needed on these refunds, but is limited to BPI 0 and 3. If an offset occurs after Form 3753 has been issued, a Transaction Code (TC) 898 will not post to the account. A systemic offset reversal cannot be done. This will require a manual reversal. Contact the TOP Liaison ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for a manual reversal. Please allow 60 days for the manual reversal to post.

  3. The BPI is posted/displayed along with the TC 840/TC 846 on all output screens such as CC TXMOD, CC IMFOL, CC BMFOL, and on CC MFTRA transcripts. The BPI also shows with the pending transaction. See the following example:

    TC POSTED AMT CYCLE DLN BPI>
    846 04122014 1,586.00 20141405 28221–427–92005–4 0
  4. There are ten BPIs, 0 through 9.

    BPI Validity Eligibility for TOP Offset
    0 IMF and BMF Refund eligible for TOP Offset.
    1 IMF Bypass TOP offset for primary Social Security Number (SSN) debts. (Used when injured spouse is secondary filer.)
    2 IMF Bypass TOP offset for secondary SSN debts. (Used when injured spouse is primary filer.)
    3 IMF and BMF Refund not eligible for TOP Offset.
    4 IMF Bypass TOP offset for all debts other than child support. Eligible for TOP offset for child support only. (Used on all refunds other than injured spouse when combat zone —C Freeze is set.)
    5 IMF Bypass TOP offset for all primary SSN debts. Bypass TOP offset for all secondary SSN debts except child support. (Used when injured spouse is secondary and combat zone —C Freeze is set.)
    6 IMF Bypass TOP offset for all secondary SSN debts. Bypass TOP offset for all primary SSN debts except child support. (Used when injured spouse is primary and combat zone —C Freeze is set.)
    7 IMF and BMF Refund eligible for TOP offset to the Office of Child Support Enforcement and an automatic bankruptcy stay is in effect or when the creditor agency has obtained relief from the automatic stay.
    8 IMF Bypass TOP offset for primary SSN's debts and may offset to the Office of Child Support Enforcement for secondary SSN when an automatic stay is in effect or when the creditor agency has obtained relief from the automatic stay. (Used when the injured spouse is secondary filer.)
    9 IMF Bypass TOP offset for secondary SSN's debts and may offset to the Office of Child Support Enforcement for primary SSN when an automatic stay is in effect or when the creditor agency has obtained relief from the automatic stay. (Used when the injured spouse is primary filer.)
  5. BPI (0) indicates that any refund should offset for all TOP debts owed under the primary TIN, and secondary SSN if Filing Status 2 (FS2).

    1. It is generated on all refunds when no other condition or manual input results in the use of another BPI.

  6. BPI (1) indicates that any refund should bypass offsets to debts owed by the primary spouse and may offset to any debts owed by the secondary spouse.

    1. It generates on the first refund (TC 846) issued after the reversal of a TOP offset to a primary TIN's debt. This occurs when an input of TC 766 reverses a TC 898 with no debtor TIN. See IRM 21.4.6.4.2.9, TC 766 With OTN TOP Offset Reversal, and IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN, for more information.

    2. It must be input on all manual refunds resulting from an Injured Spouse Allocation form filed by the secondary taxpayer unless combat zone, BPI (5), applies. See paragraph (10) below.

    3. It generates on refunds (TC 846) issued after reference number (RN) 809/811 is input to release a refund when an injured spouse is the secondary.

  7. BPI (2) indicates that TOP should bypass offsets to debts owed by the secondary spouse and may offset to any debts owed by the primary spouse.

    1. It generates on the first refund, (TC 846) issued after the reversal of a TOP offset to a secondary TIN's debt. This occurs when a TC 766 reverses a TC 898 with a debtor TIN.

    2. It must be input on all manual refunds resulting from an injured spouse allocation form filed by the primary taxpayer, unless combat zone, BPI (6), applies. See paragraph (11) below.

    3. It generates on refunds (TC 846) issued after reference number (RN) 808/810 is input to release a refund when an injured spouse is the primary.

  8. BPI (3) indicates TOP should bypass the refund completely.

    1. It generates on systemic refunds not eligible for TOP offset. See IRM 21.4.6.4.2.2, IMF TOP Offsets, and IRM 21.4.6.4.2.3, BMF and Civil Penalty TOP Offsets, for conditions that result in the generation of BPI 3 on IMF and BMF refunds.

  9. BPI (4) indicates that TOP should bypass all debts except child support for both the primary and secondary SSN.

    1. It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

    2. It generates on all CC RFUND manual refunds issued from modules with the combat zone —C Freeze in effect.

  10. BPI (5) indicates that TOP should bypass all debts for the primary SSN and all debts except child support for the secondary spouse.

    1. BPI 5 is required if a manual refund will be issued to an injured spouse who is secondary, from a module with a combat zone —C Freeze.

    2. It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

  11. BPI (6) indicates that TOP should bypass all debts for the secondary SSN and all debts except child support for the primary spouse.

    1. BPI 6 is required if a manual refund will be issued to an injured spouse who is primary, from a module with a combat zone —C Freeze.

    2. It generates on systemic refunds issued from modules with a combat zone —C Freeze in effect.

  12. BPI (7) Indicates that TOP should offset for all TOP debts owed under the primary TIN (and secondary TIN if Filing Status 2 (FS 2) when the account module contains an unreversed TC 520 with closing code 60-67, 81, 83- 89 with transaction date 10/17/2005 and subsequent.

    1. BPI 7 generates on all refunds when no other condition or manual input results in the use of another BPI and the creditor agency has obtained relief from the automatic bankruptcy stay.

  13. BPI (8) Indicates that TOP should bypass offsets to debts owed by the primary spouse and may offset to any debts owed by the secondary spouse, and the account module contains an unreversed TC 520 with closing code 60-67, 81, 83-89 with transaction date 10/17/2005 and subsequent.

    1. BPI 8 generates on the first refund, TC 846, issued after the reversal of a TOP offset to a primary TIN's debt. This occurs when an input TC 766 reverses a TC 898 with no debtor TIN. See IRM 21.4.6.4.2.9, TC 766 with OTN TOP Offset Reversal, and IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN, for more information.

    2. BPI 8 is a required input on all manual refunds resulting from an injured spouse form submitted by the secondary taxpayer unless combat zone, BPI (5) applies. See paragraph (10) above.

      Reminder:

      Contact Insolvency prior to a reversal of a TOP offset for permission to release the refund either systemically or manually.

  14. BPI (9) indicates that TOP should bypass offsets to debts owed by the secondary spouse and may offset to debts owed by the primary spouse, and the account module contains an unreversed TC 520 with closing code (cc) 60-67, 81, or 83-89 with transaction date 10/17/2005 and subsequent.

    1. BPI 9 generates on the first refund (TC 846), issued after the reversal of a TOP offset to a secondary TIN's debt. This occurs when an input TC 766 reverses a TC 898 with a debtor TIN.

    2. BPI 9 is required input on all manual refunds resulting from an injured spouse allocation form filed by the primary taxpayer unless combat zone, BPI (6) applies. See paragraph (11) above.

      Reminder:

      Contact Insolvency prior to a reversal of a TOP offset for permission to release the refund either systemically or manually.


  15. CC RFUND has a field entitled "BYPASS INDICATOR" . This indicator is normally set to "0" . When CC RFUND is input on a Master File Tax (MFT) Code not eligible for offset, the indicator is set to "3" . When CC RFUND is input on a module with a (—C) combat zone freeze, the indicator is set to "4" . Refer to IRM 21.4.6.4.2.2, IMF TOP Offset, and IRM 21.4.6.4.2.3, BMF and Civil Penalty TOP Offsets, for additional information. The following validity checks are made for BPI's on CC RFUND.

    • BPI (1), (2), (5), (6), (8) and (9) are not valid unless block 9 (Injured Spouse) is used.

    • BPI (1) (2), (8) and (9) are not valid when the BPI was set to (4). BPI (5) or (6) must be used for injured spouse in combat zone

    • BPI (0) and (4) are not valid when block 9(Injured Spouse) is used

    • BPI (3) is always valid

    • BPI (4), (5), or (6) are valid, given the above conditions, even when the (—C) combat zone freeze is not on the module. This allows for manual verification of Combat Zone Status.

21.4.6.4.2.2  (12-04-2014)
IMF TOP Offset

  1. TOP offsets are made against any refund issued from MFT 29, MFT 30, MFT 31, MFT 35 and MFT 55 unless a Bypass Indicator (BPI) is generated on the TC 846 or input on a manual refund TC 840.

  2. When married taxpayers file using the "married filing joint" status either taxpayer (or both) may have outstanding obligations that qualify for a TOP offset. As a result, there can be one or two TC 898(s) for each refund issued. TC 898(s) will display the DEBTOR-TIN for offsets to the secondary taxpayer's debt and offsets to the primary taxpayer's debt will not display the DEBTOR-TIN.

    Note:

    The IRS refund file transmitted to Bureau of the Fiscal Service contains both the primary and secondary Social Security Number (SSN) on an Filing Status 2 (FS2) joint refund.

  3. A bankruptcy —V or —W Freeze, set by the posting of TC 520, with closing code 60-67, 81 or 83- 89 with a transaction date prior to 10/17/2005, generates a BPI (3) on a TC 846 issued from that module.

  4. A combat zone —C Freeze generates a BPI (4) on a TC 846 issued from that module.

  5. BPI (3) generates on all systemic and manual refunds issued from an individual NMF account, preventing TOP offset.

    Reminder:

    All manual refunds from IMF accounts require the input of the appropriate BPI, except as noted in paragraph (5) above.

21.4.6.4.2.3  (12-04-2014)
BMF and Civil Penalty TOP Offsets

  1. TOP offsets are made against any refund issued from MFT 02, 03, 08, 07, 10, 13, 34, 43, 44, 46 (Doc Code 88 only) , 52, 60, 63, 64, 77, 78 and 79, unless a BPI is systemically generated on the refund or input on a manual refund. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI).

  2. TOP offsets won't be made against refunds issued from an MFT not shown above. BPI (3) generates on all refunds from MFTs that are ineligible for TOP offset.

  3. BPI (3) generates on all systemic and manual refunds issued from a business NMF account to prevent a TOP offset.

21.4.6.4.2.4  (02-01-2016)
Child Support TOP Offsets

  1. The Department of the Treasury (Treasury), Bureau of the Fiscal Service (BFS), amended its regulation governing the offset of tax refund payments to collect past-due child support obligations. This change limits the time period in which Treasury may reverse a tax refund offset to collect a delinquent child support debt to six months. The change does not apply to the processing of Form 8379Injured Spouse Allocation .

  2. To address this change, IRS must limit the time to reverse a child support offset to 5 months (150 days) from the refund payment date. To determine the date of offset, use the RFND-PYMT-DT associated with the TC 846/840. The 5 month limit allows for internal system processing of the offset reversal request (TC 766 with an Offset Trace Number - OTN).

  3. Offsets that occur during processing year 2016 and beyond will post with the Agency and Sub-Agency code. If the Agency code is “1” or “2”, the offset is for a delinquent child support debt and the 5 month limitation rule applies except for a Form 8379, Injured Spouse Allocation. See Document 6209, Section 5, for Office of Child Support Enforcement Agency and Sub-Agency codes.

  4. Offsets due to delinquent child support occurring during processing years 2012-2015 will be identified by the posting of Transaction Code (TC) 971 Action Code (AC) 126. The Agency Code, OTN, and offset amount will be identified in the MISC field.

    Note:

    Offsets due to delinquent child support prior to 2012 will not have any indicators identifying which agency the refund offset to.

  5. To determine whether an offset to child support can be reversed, use the following chart:

    If And Then
    Processing Form 8379, Injured Spouse Allocation The Agency Code is 01 and/or 02 Reverse the offset(s).
    Processing any case other than injured spouse The posted offset(s) is to Agency Code 02 and is more than 5 months old
    • Do not reverse the offset.

    • Treat offset as if it was refunded to the taxpayer.

    • Follow Category D, Erroneous Refund procedures, if appropriate.

    Processing any case other than injured spouse The posted offset(s) is to Agency Code 02 and is less than 5 months old Reverse the offset(s).
    Processing any case other than injured spouse The posted offset is to Agency Code 01 and is more than 5 months old
    • Reverse the offset(s). and close your base.

    • Bureau of the Fiscal Service (BFS) will forward the reversal request to Child Support, pending conformation with the states that the funds are still available.

      Note:

      If BFS cannot recover the offset, the reversal request will be rejected.

    • If BFS rejects the reversal request, you will receive notification from the TOP Liaison Office, for any action needed.

    Processing any case other than injured spouse The posted offset is to Agency Code 01 is less than 5 months old Reverse the offset(s).
    Processing any case other than injured spouse. The Agency Code is any code other than 01 and/or 02 Reverse the offset(s).
  6. For any ID Theft case that cannot be reversed, refer to IRM 21.4.6.4.2.12.

21.4.6.4.2.5  (10-01-2013)
TOP Offset Tolerance

  1. Any refund under $25 is not offset by TOP. This tolerance applies to both IMF and BMF.

21.4.6.4.2.6  (02-01-2016)
TOP Offset Notice

  1. Bureau of the Fiscal Service issues a TOP offset notice when a taxpayer's refund is offset for child support, TOP debt, a state tax debt, or unemployment compensation debt.

    If And Then
    Refund is requested as a direct deposit or paper check Part or all of refund is offset Bureau of the Fiscal Service generates a notice on the day they process the payment. For example: If Bureau of the Fiscal Service receives a payment on 09/10/2013 with a payment date of 09/13/2013 the notice will go out before or by the payment date for both paper check and direct deposit.
    Refund is issued as paper check Part of refund was offset Notice is sent as an attachment to paper refund.
    Refund was to be issued as paper check All of refund was offset Notice is sent by itself the day check was to be mailed.
  2. The notice of offset informs the taxpayer that his/her Federal tax refund was offset for a debt owed to a particular agency(s). The notice details are as follows:

    • Payee Name

    • Payment Agency Name (IRS)

    • Amount of each offset

    • Payment Amount before Offset

    • Debtor's TIN

    • Agency(s) receiving the offset

    • Address and phone number of the agency(s)

    • Injured spouse rights

    • Phone number of the TOP Call Center at Bureau of the Fiscal Service

    • Bureau of the Fiscal Service offset trace number (this is not the same as the offset trace number posted with TC 898)

  3. If taxpayer inquires of an existence/non-existence of a TOP debt at Bureau of the Fiscal Service, do not use the Agency or Sub Agency codes found on CC TXMOD or CC IMFOL. Refer the taxpayers to the TOP Call Center at Bureau of the Fiscal Service at 1-800-304-3107, TTD 1–866–297–0517 for information. See IRM 21.4.6.5.1, Taxpayer Inquiries on TOP Offset..

21.4.6.4.2.7  (02-01-2016)
TOP Offset Research

  1. TOP offsets and related transactions post to the tax module where the refund creating the offset originated.

  2. The following Transaction Codes (TC) are used solely for TOP offsets:

    • TC 898 (TOP offset record generated by Bureau of the Fiscal Service)

    • TC 971 AC 598 (manual input of TOP offset record which is used when the TC 898 record, generated by Bureau of the Fiscal Service, is deleted in error)

    • TC 766 with Offset Trace Number (OTN) (IRS reversal of TOP offset)

    • TC 899 (TOP offset reversal record generated by Bureau of the Fiscal Service) See IRM 21.4.6.4.2.10, TC 899, Reversal or Agency Refund of TOP Offset, for the record type descriptions.

    • TC 971 AC 599 (manual input of TOP offset reversal record which is used when the TC 899 Type 1, 2, 3 or 4 record, generated by Bureau of the Fiscal Service, is deleted in error)

  3. IRS personnel do not have access to the TOP debtor database and cannot tell if a debt exists before a TOP offset occurs.

    Exception:

    In instances involving offset bypass refunds, IRS personnel are required to contact Bureau of the Fiscal Service for debt information before issuing a refund. See IRM 21.4.6.5.5, Hardship Refund Request.

  4. Offsets that occur during processing year 2016 and beyond will post with the Agency and Sub-Agency Code at the beginning of the Offset Trace Number (OTN). If the Agency Code is “1” or “2” offsets due to delinquent child support occurring during processing years 2012-2015 will be identified by the posting of Transaction Code (TC) 971 Action Code (AC) 126. The purpose of the Agency/Sub Agency Code is for internal use only. Therefore, do not disclose this information to the taxpayer.

    Note:

    Do not use the Agency or Sub Agency Codes found on CC TXMOD or CC IMFOL for processing an injured spouse allocation, nor for advising the taxpayer of the existence/non-existence of a TOP debt at Bureau of the Fiscal Service.

    .

21.4.6.4.2.8  (02-01-2016)
TC 898, TOP Offset

  1. A TOP offset appears on Command Code (CC) TXMOD as a Transaction Code (TC) 898 with an Offset Trace Number (OTN), the offset amount is shown as OFFST-AMT. If the secondary spouse owes the debt, the debtor TIN will also be shown DEBTOR-TIN. If there is no DEBTOR-TIN shown, the taxpayer with the primary TIN is the debtor.

  2. A TC 971 AC 598 will appear on TXMOD with the OTN shown as MISC field and the offset amount will be shown as MEMO-MONEY-AMT. The debtor TIN (primary or secondary) will be shown as XREF-TIN

    Reminder:

    TC 971 AC 598 is a manual input of a TOP offset record which is used when the TC 898 has been deleted in error.

  3. A TC 898 or TC 971 AC 598 must be netted against the refund it came from to determine the actual refund amount that Bureau of the Fiscal Service sends or deposits for the taxpayer.

  4. Each TC 898 or TC 971 AC 598 can represent an offset to one or more agencies for the same TIN.

  5. There can be one or two TC 898(s) or TC 971 AC 598(s) per refund.

    1. The Refund for both taxpayers on a joint return (FS2) could be offset for separate debts that are reported to IRS and shown as separate TC 898(s) or TC 971 AC 598(s).

    2. Both offsets must be subtracted from the original refund amount, TC 840/TC 846, to determine how much of the refund the taxpayers actually received.

  6. This example shows a TOP offset to the primary spouse's debt for $1000. The taxpayer was sent a refund of $586 ($1586 - $1000). If the DEBTOR-TIN was present and filed with the secondary spouse's SSN, the offset would have been to the secondary spouse's debt.

    Example of a TOP Offset
    TC POSTED AMT CYC DLN OTN
    846 03122011 1,586.00 20111005 28221-061–32956–1 BPI>0
    898 03122011   20111105 28277–061–32956–1  
    OTN-CD>10733–40509
    OFFST-AMT>1,000.00
  7. The TC 898 or TC 971 AC 598 TOP offset is dated the same as the prior posted TC 840 from which it originated. The TC 898 Document Locator Number (DLN) is the same as the prior TC 840 from which it originated.

  8. A TC 898 or TC 971 AC 598, originating from a computer generated refund, will match the date of the TC 846. A TC 898 originating from a computer generated refund, TC 846, has the same DLN except for the document code which is changed to 77.

  9. The OTN is an "offset trace number" used by IRS and Bureau of the Fiscal Service to "connect" offsets with related reversals and the refund from which they came. It is 10 characters in length separated by a hyphen in the middle. The OTN begins with a "1" if the offset was for a primary taxpayer and a "2" if the offset was for a secondary taxpayer.

  10. A TC 898 with document code 45, TOP offset of manual refund, re-sequences for 10 cycles, if TC 840 with the same DLN is not posted. After 10 cycles it unposts as Unpostable Code (UPC) 137 or UPC 437, RC 1.

  11. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437.

  12. In some instances, a TC 898 will unpost as UPC 151 RC 0 due to a name control mismatch when Bureau of the Fiscal Service returns the record to IRS. See IRM 21.4.6.5.23.3, UPC 151.

21.4.6.4.2.9  (02-01-2016)
TC 766 with OTN TOP Offset Reversal

  1. After an offset occurs, there are situations when we ask the Bureau of the Fiscal Service to reverse it. See IRM 21.4.6.5.7, Reasons to Reverse TOP Offset. For offsets involving child support, see IRM 21.4.6.4.2.4, Child Support TOP Offsets.

  2. A TOP offset reversal posts as a TC 766 with an Offset Trace Number (OTN) that is the same as the OTN of the TC 898 TOP offset being reversed. See IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN.

  3. The TC 766 is a credit to the taxpayer's account and posts with an actual money amount. It creates an IRS accounts receivable which is reimbursed by Bureau of the Fiscal Service through the reversal of the agency offset.

  4. The TC 766 posts with the return due date or return received date, whichever is later.

    Exception:

    The TC 766 posts with the date of the refund creating the offset when that refund includes credit interest. See IRM 21.4.6.5.10.4, Injured Spouse Refund TOP Offset, for instructions on computing credit interest when a TOP Offset that included credit interest is reversed and the subsequent refund will be computer generated.

  5. A TC 766 reversing a TC 898 with an OTN starting with 1 (indicates primary taxpayer debt) results in the generation of a TC 846 with BPI 1. This prevents a TOP offset to any debts owed by the primary filer.

  6. A TC 766 reversing a TC 898 with an OTN starting with 2 (indicates secondary taxpayer debt) results in the generation of a TC 846 with BPI 2. This prevents a TOP offset to any debts owed by the secondary filer.

  7. The following example shows a posted TC 766, TOP offset reversal, for $550.00, resulting from an injured spouse allocation form filed by the secondary taxpayer. It reversed the prior posted TC 898 with the same OTN and no DEBTOR-TIN. The refund generated from this reversal has a BPI of 1. This allows TOP to offset the refund to any debt owed by the secondary spouse and it prevents TOP from offsetting the refund to any debt owed by the primary spouse.

    Caution:

    Only allow the TC 766 posting to generate the TC 846 when the injured spouse refund will be issued in both names. Otherwise use a Hold Code 1 and release the refund using RN 810/811 or issue a manual refund if required. See IRM 21.4.6.5.10.6, Issuing the Injured Spouse Refund.

    Example of a TOP Offset Reversal for Injured Spouse Allocation
    TC POSTED AMT CYC DLN OTN
    846 03062012 1,586.00 20121209 28221–067–92005–2 BPI>0
    898 03062012   20121210 28277–067–92005-2  
    OTN>12345–67890
      OFFST-AMT>1,000.00 SPLIT-REFUND-CD>0
    290 04192012 .00 20121214 28254–109–00001–2  
      ADJ-RSN-CD>86      
    766 04152012 550.00- 20121214 28254–109–00001–2  
    OTN>12345–67890
    846 04192012 550.00 20121214 28254–109–00001–2 BPI>1
  8. A TC 766 TOP offset reversal may post to the taxpayer's account and still be denied by Bureau of the Fiscal Service in whole or in part when:

    1. The agency issued a refund of the TOP offset and IRS did not have a TC 899, type 2, posted yet.

    2. Bureau of the Fiscal Service is initiating a TOP offset reversal, TC 899, type 1, resulting from a returned or undelivered refund.


    See IRM 21.4.6.5.12.3, TC 766 Reject Listing, for additional information.

  9. TC 766(s) that are rejected in whole or in part by Bureau of the Fiscal Service are output on a weekly Bureau of the Fiscal Service TC 766 Reject Listing and provided to the TOP Liaison Office for resolution.

    Caution:

    NEVER input a TC 767 to reverse a TC 766 with an OTN. Only the TOP Liaisons are authorized to input the TC 767.

21.4.6.4.2.10  (02-13-2015)
TC 899, Reversal or Agency Refund of TOP Offset

  1. The Transaction Code (TC) 899 is generated by input from Bureau of the Fiscal Service (BFS) and the participating agencies to report an action taken on a particular offset. The TC 899 posts to the tax module with a type code (OFFST-REC-TYPE), amount, and the OTN of the TOP offset with which it is associated.

  2. There are four types of TC 899:

    • Type 1 - Bureau of the Fiscal Service TOP offset reversal

    • Type 2 - Agency refund of TOP offset

    • Type 3 - IRS Manual Reversal Request or Bureau of the Fiscal Service refund of TOP offset.

      Caution:

      When a Manual Reversal Request is submitted (identified as PENDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when there is a TC 899, Type 3 present.

      Exception:

      A TC 899 Type 3 is also used to correct an account due to a BFS or IRS processing error. If PENDMRR or MRRTONHQ is not present in the IDRS case control activity, then the TC 899 Type 3 is a BFS/IRS correction. There will not be a corresponding TC 700 with this type of reversal. Work the case.

    • Type 4 - Agency refund reversal

      Note:

      TC 971 AC 599 with a Type 1,2,3 or 4, represents a manual input of an erroneously deleted TC 899 Type 1,2,3 or 4 transaction. TC 971 AC 599 must be considered when netting the TOP offset amount.

  3. TC 899, type 1, with negative money amount, is used by Bureau of the Fiscal Service to report a TOP offset reversal. Bureau of the Fiscal Service generates this transaction when a partial offset occurs and the remainder is refunded, but later returned. Reasons for this include refund checks that are undeliverable, returned, uncashed after 13 months, lost, or stolen and require re-issuance.

  4. TC 899, type 2, with negative money amount, is used by the agencies participating in TOP to report a refund of a TOP offset.

    1. The agency is required to make the refund payable in the name or names that were on the IRS refund file at the time the original refund and TOP offset occurred.

    2. The amount may be for all or part of the TC 898 with the same OTN.

    Reminder:

    A TC 898 may consist of two or more offsets to different agencies. Therefore, the TC 899, type 2 amount may only be for part of the TOP offset.

  5. TC 899, type 3, with negative money amount, is used by Bureau of the Fiscal Service for an IRS Manual Reversal Request and for a refund issued by Bureau of the Fiscal Service.

    Caution:

    When a Manual Reversal Request has been submitted (identified as PENDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when there is a TC 899, Type 3 present.

    Note:

    A Type 3 is also used to correct an account due to a BFS or IRS processing error. If there is no PENDMRR or MRRTONHQ in the IDRS case control activity, then the TC 899 Type 3 is a BFS/IRS correction. There will not be a corresponding TC 700 with this type of reversal.


    Bureau of the Fiscal Service is required to make the refund payable in the name or names that were on the IRS entity and refund file at the time the original refund and TOP offset occurred.

    1. The amount may be for all or part of the TC 898 or TC 971 AC 598 with the same OTN.

  6. TC 899, type 4, with positive money amount, is used by the agencies participating in TOP to correct a previously reported refund of a TOP offset.
    TC 899 type 4 is netted against a prior TC 899, type 2, with same OTN, which is the true amount of the agency refund still remaining.

  7. In the following example, a TC 899, type 2, agency refund posted for $450.00. The agency refunded the remainder of the TOP offset originating from the TC 846 dated 03/06/2012 to the taxpayer. There is now no remaining TOP offset and the taxpayers received the following refunds totaling $1,586.00.

    • $586.00 dated 03/06/2012 (TC 846 $1,586.00 — TC 898 $1,000.00)

    • $550.00 to the injured spouse dated 04/19/2012

    • $450.00 from the agency that received the offset

    Example:

    TC POSTED AMT CYC DLN OTN
    846 03062012 1,586.00 20121209 28221-067-92005-2 BPI>0
    898 03062012 .00 20121210 28277-067-92005-2 OTN>12345-67890
    OFFSDT-AMT>1,000.00 XREF>OTN-CD>12345–67890
    290 04192012 .00   200114 29254–109–00001–2  
      ADJ-RSN-CD>86 …  
    766 04152012 550.00- 20121214 28254-109-00001-2 OTN-CD>12345-67890
    846 04192012 550.00 20121214 28254-109-00001-2 BPI>1
    899 03062012 .00 20121222 28221-067-92005-2  
    OFFST-AMT> 450.00–OFFST-REC-TYPE>2 OTN-CD>12345–67890
  8. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437, for TC 899 UPC 137 or UPC 437 resolution.

  9. In some instances, a TC 899 will unpost due to an erroneously deleted TC 898. See IRM 21.4.6.5.23, TOP Unpostable Conditions, for instructions.

    Note:

    You may see a TC 971 AC 599 with Type 1, 2, 3 or 4 which represents the manual input of an erroneous deleted TC 899. TC 971 AC 599 must be considered when netting the TOP offset amount.

21.4.6.4.2.11  (02-01-2016)
Netting TOP Offsets and Reversals

  1. The net TOP offset amount is needed to:

    1. Inform the taxpayer of the actual amount offset from his/her refund and still outstanding.

    2. Determine the amount of offset available for reversal.

  2. You must take into consideration all TOP transaction codes with the same OTNs to determine the net TOP offset amount. Disregard the signs (+ or −) of each transaction code when completing the steps below:

    1. Determine the TOP offset, TC 898 or TC 971 AC 598 and the OTN of the offset that is to be netted.

    2. Subtract from the TC 898 or TC 971 AC 598: all TC 899(s) or TC 971 AC 599(s), type 1, type 2, or type 3, with the same OTN.

    3. Subtract from the TC 898 all TC 766(s) with the same OTN.

    4. Add to the TC 898 or TC 971 AC 598: all TC 899(s) or TC 971 AC 599(s), type 4, with the same OTN.

    5. Add to the TC 898 all TC 767(s) with the same OTN.

      Reminder:

      Be sure to consider all offsets, including offset to child support, to determine whether the offset can/cannot be reversed, see IRM 21.4.6.4.2.4, Child Support TOP Offsets, for more information.

  3. Consider all unpostable conditions before reversing TOP offsets. You must ensure all unpostables (TC 898 or TC 899 types 1, 2, 3 or 4) are resolved before reversing the TOP offset amount for TOP transactions with the same OTN. See IRM 21.4.6.5.23, TOP Unpostable Conditions.

    Example:

    There is a TC 898 for $1,500.00 on the account. A TC 899 type 2 (agency refund) for $45.00 is posted. There is an unpostable TC 899 type 4 (agency offset reversal) for $45.00 and then there is another unpostable TC 899 Type 1 (Bureau of the Fiscal Service TOP offset reversal) for $1,500.00 (the full amount of the TC 898). You must take into consideration all TOP transaction codes with the same OTNs. To correct the account, you will request Unpostables to correct the TC 899 Type 4 first (this would negate the TC 899 Type 2 previously posted) and then request unpostables to correct the TC 899 Type 1 for $1,500.00. Once the unpostable conditions are corrected, the formula to Net the TOP Offset amount is:

    Net TOP Offset Amount for Above Example
    TC 898 ($1,500.00) – TC 899 types 2 ($45.00) +TC 899 type 4 ($45.00), – TC 899 type 1 ($1,500.00= 0

    Note:

    The OTN must be the same for all these transactions when computing the net TOP offset amount.

  4. Written as a formula, the above steps appear as follows:

    Net TOP Offset Amount
    TC 898 or TC 971 AC 598 – TC 899 or TC 971 AC 599 types 1, 2, or 3 – TC 766s + TC 899 or TC 971 AC 599 type 4 + TC 767s = Net TOP Offset Amount

    Note:

    The OTN must be the same for all these transactions when computing the net TOP offset amount.

    Exception:

    In some instances, the TC 898 was erroneously deleted which required a manual reversal request to bring back the TOP Offset. You may see a TC 971 AC 598 posted for audit trail purposes only. A TC 700 posts to the account for the amount of the TOP Offset reversal. You must consider the TC 700 when netting the TOP Offset amount. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset for more information.

21.4.6.4.2.12  (06-09-2016)
TOP Offsets Involving ID Theft

  1. When working ID Theft case(s) which include an offset to Child Support ( Agency Code 1 or 2), refer to the chart below for processing offset reversals. See IRM 21.4.6.4.2.4, Child Support TOP Offset, for a general overview of the new child support rule.

    If And Then
    Identity Theft or Fraudulent Return Processing Form 8379, Injured Spouse Allocation, for Agency Code 1 or 2 Reverse the offset(s).
    Identity Theft or Fraudulent Return The posted offset(s) is more than 5 months old for Agency Code 2
    • Offset(s) cannot be reversed.

    • Treat the offset as if it was refunded to the taxpayer.

    • Follow procedures in (2) below, if appropriate.

    Identity Theft or Fraudulent Return The posted offset(s) is less than 5 months old for Agency Code 2 Reverse the offset(s).
    Identity Theft or Fraudulent Return The posted offset is more than 5 months old for Agency Code 1
    • Reverse the offset(s).

    • BFS will forward the reversal request to Child Support.

    • If BFS cannot recover the offset, follow procedures in (2) below, if appropriate.

    Identity Theft or Fraudulent Return The posted offset is less than 5 months old for Agency Code 1 Reverse the offset(s).
    Identity Theft or Fraudulent Return The Agency Code is other than 1 or 2. Reverse the offset(s).
  2. Use Command Code (CC) CSO58, to transfer offsets from the taxpayer’s account when there is a child support offset that cannot be reversed due to the 6 month regulation change. The new command codes mirror existing command code IDT58. Information regarding the input for the new command code can be found in IRM 2.4.61.10, Command Code CSO58 - Request Formatted Input Screen.

    Caution:

    Input a TC 570 to stop any erroneous refund from occurring prior to the posting of the adjustments.

  3. Research and consider the following transactions on the module before inputting any adjustment for a TOP offset on a taxpayer's account:

    • TC 898,

    • TC 899 (types 1, 2, 3 or 4),

      Caution:

      If a TC 899 Type 2 (agency refund) is on the account, see IRM 21.4.5.5.1, Account Actions for Category D Erroneous Refunds.

    • TC 766 with OTN,

    • TC 767 with OTN,

    • TC 700 (manual reversal requests),

    • TC 971 AC 126 (Agency Code 1 or 2 for 2012-2015),

    • TC 971 AC 598, and

    • TC 971 AC 599.


    Refer to IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals, IRM 21.4.6.5.12, TOP Offset Reversals With Adjustments , and IRM 21.4.6.4.2.11 , Netting TOP Offsets for additional information.

  4. Ensure that there are no unpostable TC 898 or TC 899 transactions on the account. If an unpostable condition exists, the unpostable condition must be resolved and considered when netting the amount of the TOP offset reversal. See IRM 21.4.6.5.23, TOP Unpostable Conditions, and IRM 21.5.5.4.2, Resolving Unpostables.

    Caution:

    An unposted (UPC) or deleted (DU) TC 898 or TC 899 with an OTN indicates a TOP offset or TOP offset reversal has occurred and must be considered for netting purposes when determining the correct reversal amount.

  5. Use the following chart to determine when it is necessary to do a TOP offset reversal:

    Caution:

    If the case meets "No Move" criteria, disregard any instructions to place the account in debit balance and only submit the manual reversal request to the TOP Liaison.

    Reminder:

    Before reversing any child support offsets, see IRM 21.4.6.4.2.4, Child Support TOP Offsets and IRM 21.4.6.4.2.12 (1) & (2), TOP Offsets Involving ID Theft, above.

    IF THEN
    The TC 846 and TC 898 TOP offset are the same.

    Reminder:

    There is no "lost refund" .

    1. Zero out the account or math verify and adjust to the good return if one is present on the account, use HC 4.

      Reminder:

      See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals.


      Reverse the entire TOP offset if available.

      Caution:

      you must take into consideration all TOP transaction codes with the same OTNs to determine the TOP offset amount available to be reversed.

    2. Input the TOP Offset Reversal, TC 766 with OTN. Use HC 3, RC 087, and PC 8 when applicable and use the appropriate post delay code. See IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN.

      Note:

      If issuing a manual refund and/or processing a full account back-out, input HC 4.

    3. Complete ID Theft case processing.

      Reminder:

      Ensure no credit is left on the account.

    The TC 846 and TC 898 are NOT the same.
    1. Zero out the account or math verify and adjust to the good return if one is present on the account, use HC 4.

      Reminder:

      See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals.


      Reverse the amount of the entire TOP offset if available.

      Caution:

      You must take into consideration all TOP transaction codes with the same OTNs to determine the TOP offset amount available to be reversed.

      Note:

      If issuing a manual refund and/or processing a full account back-out, input HC 4.

    2. Input TOP Offset Reversal, TC 766 with OTN. Use HC 3, RC 087 and PC 8 when applicable and use the appropriate post delay code. Refer to IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals.

    3. Complete ID Theft case processing.

      Reminder:

      Ensure no credit is left on the account.

    There is a posted TC 740 or TC 841 and the account shows TC 899 type 1 with the same OTN of the posted TC 898.

    Reminder:

    There is no "lost refund" .

    Caution:

    A TC 899 Type 1 may not appear on the account. Ensure there is no open TC 899 Type 1 unpostable. If an unpostable condition exists, the unpostable condition must be resolved. See paragraph (2) above.

    1. Do not input a TOP offset reversal. See IRM 21.4.6.4.2.10(3), TC 899, Agency Refund of TOP Offset.

    2. Complete ID Theft case processing.

      Caution:

      The account may contain a credit balance due to the undeliverable or cancelled check TC 740/TC 841), see IRM 21.4.6.5.22, Returned Refund Check.

    The TOP offset is over 6 years old AND the TC 846 and TC 898 are the same.

    Reminder:

    There is no "lost refund" .

    Caution:

    If TXMOD shows an open base with MRR/NHQ do not submit request for a manual reversal. A request was previously submitted.

    1. Contact the TOP Liaison at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset.

    2. Adjust the account to put the account in debit balance when processing a full back-out or adjust to the good return if one is present on the account, use HC 4.

      Caution:

      If case meets no move criteria disregard any instructions to place the account in debit balance, and only submit the manual reversal request to the TOP Liaison.

    3. Take no further action on the account until the manual reversal request has completed.

      Note:

      When a manual reversal request is submitted (identified as PENDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when a TC 899 Type 3 is present, see IRM 21.4.6.4.2.10, Reversal or Agency Refund of TOP Offset.

    4. Complete ID Theft case processing.

      Reminder:

      Ensure no credit is left on the account.

      Note:

      A manual reversal request is needed if the TC 898 is either missing or deleted in error.

    The TOP offset is over 6 years old AND the TC 846 and TC 898 are NOT the same.

    Reminder:

    There is a partial lost refund when the TC 846 and the TC 898 are NOT the same.

    Caution:

    If there is an open base with MRR/NHQ do not submit request for a manual reversal. A request was previously submitted.

    1. Contact the TOP Liaison at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and that office will initiate manual reversal procedures. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset.

      Reminder:

      Do not input a TOP offset reversal when the 23C date is over 6 years old. Doing so will create an UPC 134, see IRM 21.4.6.5.23, TOP Unpostable Conditions.

      Reminder:

      DO NOT net the refund amount. Reverse the amount of the entire TOP offset if available. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals.

    2. Refer to IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals, to determine the amount of offset available for reversal prior to processing a full account backout to put the account into debit balance.

      Caution:

      If case meets no move criteria disregard any instructions to place the account in debit balance, and only submit the manual reversal request to the TOP Liaison.

    3. Take no further action on the account until the manual reversal request has completed.

      Note:

      When a manual reversal request is submitted (identified as PENDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when a TC 899 Type 3 is present, see IRM 21.4.6.4.2.10, TC 899, Reversal or Agency Refund of TOP Offset.

    4. Complete ID Theft case processing.

      Note:

      Ensure no credit is left on the account.

      Note:

      A manual reversal request is needed if the TC 898 is either missing or deleted in error.

    Caution:

    If a manual account transfer (TC 370/TC 400) is necessary, input the TOP offset reversal and transfer the credit to excess collections before moving the account. See IRM 25.23.4.12, Moving Specific Year Account Information.

21.4.6.5  (01-01-2001)
Refund Offset Procedures

  1. This section discusses procedures for refund offsets. Inquiries regarding offsets may originate from the non-receipt or reduction of a refund, from the receipt of an offset notice, or from other issues on an account that may cause an erroneous offset.

  2. It is important to first research the taxpayer's account to verify what type of offset(s) occurred before attempting to answer questions about an offset.

21.4.6.5.1  (09-20-2016)
Taxpayer Inquiries on TOP Offset

  1. The taxpayer is sent a notice of offset by Bureau of the Fiscal Service for Treasury Offset Program offsets. Inquiries relating directly to the TOP offset are referred to the agency listed on the notice, or to the TOP Call Center at 1-800-304-3107 or, TTD 1–866–297–0517, if a notice was not received. See IRM 21.4.6.4.2.6, TOP Offset Notice, for notice information. Also see The Source for Telephone Numbers on SERP for the hours of operation. Do not use the Agency or Sub Agency Codes found on CC TXMOD or CC IMFOL for processing an injured spouse allocation, nor for advising the taxpayer of the existence/non-existence of a TOP debt at Bureau of the Fiscal Service. See IRM 21.4.6.4.2.4, Child Support TOP Offsets.

  2. The following tables can assist you in resolving taxpayer inquiries related to TOP offsets, TC 898 (TOP offsets) or TC 971 AC 598 (manual input of TOP offset). Use Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, when responding to an inquiry in writing.

  3. For taxpayer inquiries regarding Refund Discrepancies:

    IF AND THEN
    Taxpayer claims he/she didn't receive a refund of overpayment.  
    1. Advise the taxpayer to allow five calendar days for direct deposit and 2 weeks for paper check to arrive.

    2. Provide the amount of the TC 846 issued.

    3. Advise the taxpayer to contact the agency on the notice if an offset occurs.

    Taxpayer claims he/she didn't receive a refund of overpayment there is a TC 898 or TC 971 AC 598 on the account, Determine if any of the refund amount was issued per IRM 21.4.6.4.2.8 and advise the taxpayer of the refund.
    Taxpayer claims his/her refund was less than expected, amount agrees with TC 846/840.   Research to resolve the discrepancy (processing error, math errors, or other tax or TOP offset). If applicable, refer taxpayer to TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517 for offset information.
    Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840, no TOP offset has occurred, Research to resolve the discrepancy (processing error, math errors, or other tax offset).
    Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840, a TOP offset has occurred and the TOP offset notice was not received. Refer Taxpayer to TOP Call Center above for offset information.
    Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840, a TOP offset has occurred and the TOP offset notice was received. Refer Taxpayer to agency on notice.
    Taxpayer is aware of offset made, but claims the remainder of the refund not received.   Advise taxpayer to allow five calendar days for direct deposit or 2 weeks for paper check to arrive. If not received, send taxpayer Form 3911, Taxpayer Statement Regarding Refund, to begin trace of refund check or input CC CHKCL. See IRM 21.4.2.4, Refund Trace Actions .
    Taxpayer claims agency has no record of offset.   Refer taxpayer to TOP Call Center above for offset verification.
  4. For Taxpayers, Disputing the Debt or TOP Offset:

    If And Then
    Taxpayer inquires about existence of a debt   Refer taxpayer to agency that notified him/her of the debt, or if unknown, refer taxpayer to TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517.
    Taxpayer claims he/she does not owe debt or he/she is not the debtor   Refer taxpayer to agency on the due process offset notice, or if unknown, to TOP Call Center above (agency must determine who owes debt and issue any subsequent refund).
    Taxpayer claims debt was discharged in bankruptcy 1. IRS was not aware of bankruptcy prior to issuing refund 1. Refer taxpayer to agency on offset notice, or if unknown, to TOP Call Center above (agency must issue refund). Contact Insolvency as necessary. Insolvency (Bankruptcy) National Field/Centralized Site Directory
    2. IRS was aware of bankruptcy and should have placed a BPI 3 on refund 2. Refer case to Insolvency. They may request that you reverse TOP offset and issue a refund with BPI 3. Insolvency (Bankruptcy) National Field/Centralized Site Directory
    Taxpayer is requesting a refund due to hardship and 1. Offset already occurred 1. Refer taxpayer to agency on notice. Advise the taxpayer that IRS cannot bypass a completed TOP offset for hardship. Review the return and determine if the taxpayer can get relief as an "Injured Spouse" and refer them to Form 8379 , Instructions.
    2. Offset has not occurred 2. See IRM 21.4.6.5.5, Hardship Refund Request.

    Note:

    IRS/TAS does not have the authority to bypass a TOP debt.

  5. For taxpayers inquiring about Other Issues:

    If Then
    Taxpayer indicates Form 8379,Injured Spouse Allocation, was filed Initiate procedures to verify offset and receipt of Form 8379. See IRM 21.4.6.5.2, Injured Spouse Inquiries.
    Taxpayer is requesting agency contact information Refer taxpayer to TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517, for agency address and phone number.
    Taxpayer is unable to resolve problem through contact with office of creditor agency listed on offset notice Refer taxpayer to TOP Call Center, they may provide a more helpful contact.

21.4.6.5.2  (06-09-2016)
Injured Spouse Inquiries

  1. An injured spouse may contact IRS before or after an offset occurs. Often, the spouse is aware that an offset will take place and wants to know how to get his/her share of the refund. The spouse may also call about the injured spouse Form 8379, Injured Spouse Allocation, rights which are provided in the Bureau of the Fiscal Service offset notice.

  2. When the taxpayer calls concerning his/her injured spouse allocation, TC 150 with Blocking Series (BS) 92 or TC 971 Action Code (AC) 071, use the following chart:

    If And Then
    Taxpayer calls concerning his/her injured spouse allocation There is a math error on the account Refer to IRM 21.5.4.4.7, Math Error with Injured Spouse..

    Caution:

    Do not make any changes to the account or release the refund without first contacting the area that worked the injured spouse allocation

    .
    Taxpayer inquires about his/her portion of refund prior to filing original return  
    1. Advise the taxpayer it may be necessary to obtain Form 8379 and file it with original return. Remind taxpayer to write (Injured Spouse) in the upper left hand corner of their Form 1040.

    2. Advise taxpayer to allow up to 11 weeks for ELF returns and up to 14 weeks for paper returns processing time.

    Taxpayer inquires about his/her portion of refund after filing original return Form 8379 was not filed with the original return,
    1. Advise the taxpayer to submit Form 8379 with signature, attach all Forms W-2, W-2G, or 1099 showing federal income tax withholding and send it to campus where the original return was filed.

    2. Advise the taxpayer NOT to include a copy of the tax return with the Form 8379 nor to file it with a Form 1040-X unless changes to the tax return need to be made.

    3. Advise taxpayer to allow up to 8 weeks processing time.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92 and tax or TOP offset has not occurred.
    • Advise taxpayer to allow 11 weeks for electronic filed returns and 14 weeks for paper processing time from the time the Form 1040, U.S. Individual Income Tax Return, was received. DO NOT issue 4442/e4442.

    • If 11-14 weeks has passed and the case has not been worked and is assigned to a CSR, send Form 4442 /e4442, Inquiry Referral, to the CSR working the case. See IRM 21.3.5.4.1 ,When to Prepare a Referral , for instructions. Advise the taxpayer to allow 30 days to process.

    • If 11-14 weeks has passed and the case has not been worked and the case is controlled to a clerical, site specialized control number or there is an open control base not assigned to a specific CSR, annotate the taxpayer's account as follows:

      1. Enter a Case Note (CN) with the information obtained from the caller if you have access to CIS, or

      2. Annotate AMS with the information obtained from the caller if you do not have access to CIS.

      3. Inform the taxpayer we have added a note to their case and to allow 30 days to process.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92, the Form 8379 allocation has been worked and a tax or TOP offset has occurred. Research the CIS archived case files if necessary. Advise the taxpayer of the reason for the offset.

    Note:

    If you work at a remote call site and you don't have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations, transfer the call to Application 35 using ACD = 92035 or IUP = 1035 DO NOT transfer the call if the taxpayer is simply asking about the status of their claim.

    Reminder:

    Provide a transfer PIN per IRM 21.1.3.2.5, Initial Authentication Transfer Procedures/Transfer PIN.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92, the Form 8379 allocation has been worked and a tax or TOP offset has NOT occurred. Research the CIS archived case files if necessary.

    Note:

    If you work at a remote call site and you don't have access to CIS or do not work injured spouse allocations, transfer the call to Application 35 using ACD = 92035 or IUP = 1035. DO NOT transfer the call if the taxpayer is simply asking about the status of their claim.

    Reminder:

    Provide a transfer PIN per IRM 21.1.3.2.5, Initial Authentication Transfer Procedures/Transfer PIN.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is blocked 92, a TOP offset has or has not occurred and Form 8379 was not worked and the case is closed.
    1. Send 4442/e-4442 to the AM Function where the return is located. Indicate taxpayer's phone number and whether taxpayer can provide a copy of Form 8379.

      Exception:

      For returns previously closed by , Philadelphia, send 4442/e4442 to Memphis.

    2. Advise taxpayer to allow 6 to 8 weeks.

    .
    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is not blocked 92 and a paper return was filed.
    1. Prepare Form 4442/e-4442 to forward case to the appropriate AM Function where the taxpayer filed their original paper return. Indicate taxpayer's phone number and whether taxpayer can provide a copy of Form 8379.

    2. Advise taxpayer to allow 6 to 8 weeks.

    Taxpayer says Form 8379 was filed with his/her original return and no refund was received. TC 150 is not blocked 92 and an ELF return was filed. If the return was an ELF return, do not forward a referral. Explain to the taxpayer that our records show the Form 8379 was not filed with the return. Request the taxpayer provide a signed copy of the Form 8379.
    Taxpayer says Form 8379 was filed after offset and no refund was received. TC 971, AC 071 is posted. Advise taxpayer to wait 45 days from transaction date (TC 971 posting date) for a response.
    Taxpayer says Form 8379 was filed after offset and no refund was received. More than 45 days have passed since TC 971, AC 071 was input, and there is no case control.
    1. Advise the taxpayer to resubmit a signed Form 8379.

    2. Advise the taxpayer to allow up to 8 weeks from the time they re-file the Form 8379.

    Taxpayer says Form 8379 was filed after offset and no refund was received. More than 45 days have passed since TC 971, AC 071 was input, and the case is controlled to a clerical, site specialized control number or is not controlled to a specific CSR Annotate the taxpayer's account as follows:
    1. Enter a Case Note (CN) with the information obtained from the caller if you have access to CIS, or

    2. Annotate AMS with the information obtained from the caller if you do not have access to CIS.

    3. Inform the taxpayer we have added a note to their case and allow 30 days to process.

    Taxpayer says Form 8379 was filed after offset and no refund was received. There is an open control base to a CSR and 8 weeks has passed and the case has not been worked Send Form 4442 /e4442, Inquiry Referral, to the CSR working the case. See IRM 21.3.5.4.1 ,When to Prepare a Referral, for instructions. Advise the taxpayer to allow 30 days to process.
    Taxpayer says Form 8379 was filed after offset and no refund was received. There is no TC 971, AC 071. Advise the taxpayer it may be necessary to re-file Form 8379, Injured Spouse Allocation, if more than 45 days have passed. Advise the taxpayer to allow up to 8 weeks from the time they re-file the Form 8379.
    Taxpayer says Form 8379 was filed after offset and no refund was received. A TC 840/TC 846 posted after receipt of Form 8379; and IRS processed Form 8379 and issued a refund.
    1. Check for TOP offset to a debt of the spouse.

    2. Take necessary action if refund was not received and follow refund trace procedures. See IRM 21.4.1.3.4, Refund Issued But Lost, Stolen, Destroyed or Not Received.

    Taxpayer says Form 8379, Injured Spouse Allocation was filed with or without original return. IRS sent Letter 916CClaim Incomplete for Processing; No Consideration .,. . Research CIS for an explanation of the no consideration and explain the reason for the no consideration to the taxpayer.
    Taxpayer says Form 8379, Injured Spouse Allocation was filed with or without original return. IRS previously denied Form 8379, a Letter 105C ,Claim Disallowed or Letter 106C, Claim Partially Disallowed, was sent and a TC 290 for .00, blocking series 98/99 (input after receipt of Form 8379). Research CIS for an explanation the previous denial and explain the reason for the denial to the taxpayer.
    Refer to IRM 21.5.3.4.6.2, Appeals and Responses to Letter 105C and 106C, IF/AND/THEN chart to assist the taxpayer.
    Taxpayer filed Form 8379 in any manner. A refund was not issued and the taxpayer may or may not be experiencing a financial hardship.
    1. Consider whether the case should be referred to the Taxpayer Advocate Service. See IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines.

    2. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward it to TAS.

    3. Advise taxpayer to be prepared to send a copy of Form 8379 to the TAS Office where the Form 911 was submitted.

    4. If a hardship exists, refer to IRM 21.4.6.5.5, Hardship Refund Request.

    Taxpayer filed Form 8379 in any manner. The Injured Spouse's share of the refund was processed as filed and the taxpayer is now requesting to change their allocation (e.g. exemptions and/or dependents not allocated correctly when first filed).

    Note:

    If taxpayer is requesting an explanation of the allocation see paragraph (7) below.

    1. Advise the taxpayer to resubmit a signed Form 8379.

    2. Advise the taxpayer to allow up to 8 weeks from the time they re-file the Form 8379.

  3. There are always exceptions to the situations described above. Analyze each inquiry carefully to determine the correct course of action. Issuance of a letter is not required per IRM 21.3.3.2, What is the Definition of Correspondence? – Policy Statement P-21.3 (Formerly P-6-12) Exclusion List, when releasing the refund for the either exception below.

    Exception:

    If Form 8379 was filed for any filing status other than Married Filing Joint (FS 2) release the refund with a TC 571.

    Exception:

    If the taxpayer states they filed the Form 8379 in error or no longer wants the Form 8379, Injured Spouse Allocation, to be considered:

    1. Verify the request is from the injured spouse who filed the allocation.

    2. Notate on CIS or AMS (if you do not have access to CIS), the injured spouse requested that Form 8379 not be considered.

    3. Input TC 571 if TC 570 (-R FRZ) is on the account.

  4. If the taxpayer's Form 8379, Injured Spouse Allocation, can be processed with a faxed copy of Form 8379 request a copy and work the case.

  5. In the event of a mis-blocked form, the block must be pulled to look for other Form 8379s. Accounts Management will work all Form 8379s found in the block. Command Code ESTAB is used to request the entire block using the Document Locator Number (DLN). See IRM 2.3.17.5, Request Codes for CC ESTAB and IRM 2.3.17-1, Input Format, CCESTAB—Document Request for information on requesting the entire block.

  6. Send Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, or Letter 285C, Refund/Overpayment Applied to Account, when responding in writing to injured spouse inquiries regarding TOP and tax offsets respectively.

  7. When the taxpayer disagrees or does not understand the injured spouse allocation by the IRS:

    • If you work at a remote call site, and you don't have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations, transfer the call to Application 35 using ACD = 92035 or IUP = 1035, if it meets the criteria in paragraph 8 below.

    • If you work injured spouse allocations, verify the Form 8379 Allocation Worksheet. After verifying the allocation is correct, advise the taxpayer how the allocation was computed. Send the taxpayer a copy of the Form 8379 Allocation Worksheet only if they ask for it. The Form 8379 Allocation Worksheet should be on the CIS case file, if not pull the Form 8379 Allocation Worksheet.

    Exception:

    If you are an employee assigned to Application 21 and you do not have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations:

    1. Prepare Form 4442/e-4442

    2. Check the Spanish box in Line 21, if applicable

    3. Forward the case to the appropriate AM campus that worked the Form 8379.

  8. Effective February 28, 2011, Application 35, an Injured Spouse Allocation (ISA) telephone application was enabled for CSRs who are fully trained in Injured Spouse Allocation processing issues. If you are on Application 20 or Application 186 and a call meets the following criteria, transfer the call to Application 35 using ACD = 92035 or IUP = 1035:

    • How we determined the Injured Spouse's share of the refund

    • Injured Spouse disallowance issues.

    • Injured Spouse no consideration issues Letter 916C, Claim Incomplete for Processing; No Consideration.

    • Injured Spouse's share of the refund offset

    • Wrong Spouse offset

    • Hardship cases

    • Injured Spouse manual refund S- freeze TC 740

    • Taxpayer received Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, or other letter related to the Injured Spouse issue

      Exception:

      Do not transfer if the letter is a Bureau of the Fiscal Service letter. Refer taxpayer to TOP Call Center at 1–800–304–3107.

    Note:

    If the case does not meet TAS criteria or the criteria above, prepare Form 4442/e4442, Inquiry Referral, and refer to the appropriate AM function where there is an open control. See IRM 21.3.5.4.1 , When to Prepare a Referral, for instructions. Do not transfer the call when a Form 4442/e4442 is required.

    Reminder:

    Any application requiring specific criteria to be met before transferring the call is only listed in the IRM. The Telephone Transfer Guide directs you to this specific IRM reference to ensure the above criteria is met before transferring to Application 35 using ACD = 92035 or IUP = 1035. You will not find 92035 or 1035 listed in the TTG as a direct transfer.

  9. Injured spouse cases originally worked and closed in Philadelphia should be directed to Memphis Accounts Management.

  10. If a taxpayer calls and wants to update their address after filing Form 8379, refer to IRM 21.3.4.11.2, Taxpayer Requests for Address Change for instructions.

  11. All Application 20 and Application 186 employees will answer all procedural and Injured Spouse/Refund Offset inquiries for which they have been trained.

  12. Employees staffing Application 35 will not transfer calls to lower level account applications.

21.4.6.5.3  (04-15-2014)
Congressional Correspondence

  1. Injured Spouse Congressional inquiries are referred to the appropriate Local Taxpayer Advocate Office (LTA) for control and assignment. Refer to IRM 13.1.8.2, Control Principles.

    Note:

    For other types of Congressional inquiries, refer to IRM 21.1.3.18(2), Taxpayer Advocate Service (TAS) Guidelines.

    The Local Taxpayer Advocate, (LTA) forwards Congressional inquires that deal strictly with TOP offsets (to child support or TOP debts) to the Bureau of the Fiscal Service at the following address:

    Bureau of the Fiscal Service
    Legislative & Public Affairs Office
    401 14th Street SW
    Room 556 C
    Washington, DC 20227

21.4.6.5.4  (10-01-2013)
Agency Inquiries

  1. All letters or documents from an agency and addressed to IRS are referred back to agency headquarters or Bureau of the Fiscal Service if they concern:

    • The amount of the debt owed

    • Removal of the debtor from the Treasury Offset Program

    • A refund of the offset amount

  2. Agency correspondence "certifying" a debtor, or requesting that a debtor's tax refund be offset, is returned to the agency. Advise correspondents to contact their headquarters office for debt collection.

  3. The AM Function may receive copies of legal documents regarding support obligations. They are intended for the Full Collection program. Forward to the Non-Master File unit. See IRM 21.4.6.5.25, Non-Master File Child Support.

  4. Any notices received by IRS from an agency must be returned to that agency. Do not call the agency.

    Exception:

    Notices received from an agency that are addressed to a taxpayer using the IRS Campus address are disposed of as classified waste. These are due process notices and there is no requirement that IRS return them to the agency or forward them to the taxpayer.

  5. Do not forward agency correspondence to IRS Headquarters unless directed to do so by Headquarters. Agency inquiries must be answered by the IRS campus or territory office receiving the correspondence.

21.4.6.5.5  (10-01-2014)
Hardship Refund Request

  1. Consider whether the taxpayer contact that meets any of the Taxpayer Advocate Service (TAS) criteria listed in IRM 13.1.7.2, TAS Case Criteria, should be referred to TAS. If criteria is met, follow procedures outlined in IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, to refer the taxpayer to TAS, use Form 911, or Form e-911,Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), if AMS is not available.

  2. A taxpayer may submit a Form 911 or request a hardship refund of all or a portion of the overpayment on the return even though he/she may owe a Federal tax debt, child support or TOP debt.

  3. In general, IRS may honor a hardship refund request if the taxpayer has no debt or owes only Federal taxes. See IRM 21.4.6.5.11.1(12)(5), Offset Bypass Refund (OBR), for an exception to that rule.

  4. If you intend to honor a hardship and a tax debt exists, See IRM 21.4.6.5.11.1, Offset Bypass Refund (OBR), before taking any action.

  5. When issuing a hardship refund under any circumstance, inform the taxpayer that if he/she owes a child support or Federal agency debt submitted for tax refund offset, Bureau of the Fiscal Service may apply his/her refund to the debt through TOP. IRS has no say in this matter. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals, for levy proceeds. You can tell the taxpayer:

    1. IRS no longer maintains child support or TOP debts.

    2. Bureau of the Fiscal Service maintains these debts and affects the offset through TOP.

    3. He/she may contact the TOP Call Center at 1-800-304-3107, TTD 1–866–297–0517 to determine if a debt is owed and whether an offset will occur. See IRM 21.4.6.5.1, Taxpayer Inquiries on TOP Offset.

    4. Only the agency to which the debt is owed can honor a hardship request for a TOP offset.

21.4.6.5.6  (04-15-2014)
Credit Elect

  1. IRC § 6402(b) provides that a taxpayer can elect to have an overpayment applied to a future tax, once all tax and TOP debts subject to offset under IRC § 6402(a), (c), (d), (e) and (f) are satisfied.

  2. Bureau of the Fiscal Service maintains the TOP debts subject to offset under IRC § 6402(c), (d), (e), and (f). Bureau of the Fiscal Service provides a file, with each debtor’s TIN, name control, and the total amount of debt owed, to the Enterprise Computing Center at Martinsburg (ECC-MTB) on a weekly basis.

  3. ECC-MTB searches this file after any applicable tax offsets are determined but before crediting the credit elect amount.

    1. The amount of credit elect is reduced by the total amount of debt owed.

    2. Any amount remaining in excess of debt owed is credited as requested.

    3. The amount of credit elect, up to the amount of the debt owed, is released for refund and includes any applicable interest.

    4. A CP 45, Reduced Credit Elect is issued to inform the taxpayer of the reduction in the amount of his/her credit elect and the possible need to make additional estimated tax payments.

    5. Bureau of the Fiscal Service matches the refund through TOP and offsets the amount to the agency debt(s).

  4. When the amount of a credit elect is reduced by a TOP offset, but the credit later becomes available as a result of an injured spouse allocation, no comparison is made against the BFS debtor file. If the tax year has not ended, the credit is applied systemically. If the tax year has ended, input a credit transfer, TC 830/TC 710, using CC ADD48.

21.4.6.5.7  (04-15-2014)
Reasons to Reverse TOP Offset

  1. This information is intended as a guide to determine when it is acceptable to reverse a Treasury Offset Program offset and when the offset should remain on the account. It is not all-inclusive. You may encounter situations that require an opinion by IRS Chief Counsel.

21.4.6.5.7.1  (02-01-2016)
Allowable TOP Offset Reversals

  1. A reversal of a TOP offset can be done to:

    1. Issue a refund to an injured spouse.

    2. Correct IRS initiated procedural or pipeline processing errors such as math errors, data input errors, or misapplied payments. Levy proceeds that result in offsets are not considered misapplied payments.

    3. Satisfy the balance due on a superseding return.

    4. Resolve bankruptcy cases originating from Insolvency in the territory offices.

    5. Re-sequence an account when the offset is on the "from" account. See IRM 21.4.6.5.19, Re-sequence Cases.

    6. Reprocess a return to another TIN.

    7. Reprocess a return to another tax period.

    8. Resolve Combat Zone cases, see IRM 21.4.6.5.16, Combat Zone Cases.

    9. Recover a refund issued as a result of a totally false return; (e.g., returns detected by the Questionable Refund Program, Criminal Investigation, Integrity & Verification Operation etc.).

    10. Levy proceeds which do not create an overpayment and are within 9 months of making the levy, must meet the criteria in IRC § 6343(d).

      Note:

      Before reversing child support (Agency Code 1 or 2) offset, see IRM 21.4.6.4.2.4, Child Support TOP Offsets.

21.4.6.5.7.2  (02-01-2016)
Unallowable TOP Offset Reversals

  1. A reversal of a TOP offset cannot be input to:

    1. Solely satisfy an audit or under-reporter deficiency posted after the offset occurs unless the offset resulted from a TC 640/TC 670 payment intended specifically for the tax audit increase. The taxpayer must have specified that the payment is a cash bond.

    2. Satisfy a balance due on a tax return that posted after the return which created the offset; this includes multiple year filings where an overpaid return(s) posts before a balance due return(s).

    3. Satisfy a balance due that resulted from an amended return received after the due date on the module where the offset occurred.

    4. Refund or credit a tax account because the offset resulted from an over-collected or erroneously collected levy which creates an overpayment per IRC § 6402, unless the IRS erroneously levied another taxpayer's account.

    5. Honor a credit election.

    6. Honor a disaster claim.

    7. Honor an Offset Bypass Refund (OBR) hardship request. See IRM 21.4.6.5.5, Hardship Refund Request, and IRM 21.4.6.5.11.1, Offset Bypass Refund (OBR).

    8. Reverse a TOP offset to the Office of Child Support Enforcement that occurred after October 17, 2005 due to an automatic stay for bankruptcy.

    9. Reverse a TOP offset to a creditor agency (other than the Office of Child Support Enforcement) that occurred after October 17, 2005 when the tax module contains an unreversed TC 520 with closing code 60–67, 81, or 83-89. The creditor agency may have obtained relief from the automatic stay.

      Note:

      If it is determined that the creditor agency did not obtain relief from the automatic stay, then the TOP offset may be reversed.

    10. Reverse a TOP offset to the Office of Child Support Enforcement (Agency Code 2), over 5 months old (150 days) from the refund payment date. To determine the date of offset, use the RFND-PYMT-DT associated with the TC 846/840. The 5 month limit allows for internal system processing of the offset reversal request (TC 766 with an Offset Trace Number - OTN). For more information and offsets to the Office of Child Support Enforcement (Agency Code 1), see IRM 21.4.6.4.2.4Child Support TOP Offsets.

  2. If the injured spouse is not responsible for any part of the debt which offset, always reverse the injured spouse's share of the refund when working a Form 8379, Injured Spouse Allocation. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals.

21.4.6.5.8  (04-15-2014)
Form 8379 Injured Spouse Allocation

  1. The spouse, whose portion of a joint income tax overpayment was or will be offset to a Federal tax debt or TOP debt for which he/she is not liable, is known as the "injured spouse." The injured spouse must file Form 8379, Injured Spouse Allocation, to request his/her portion of the joint refund.

    Caution:

    An injured spouse is not the same as an "innocent spouse." Refer to IRM 25.15, Relief from Joint and Several Liability.

  2. When a taxpayer wants a Form 8379, Injured Spouse Allocation, but mistakenly uses Form 8857, Request for Innocent Spouse Relief, return the Form 8857 to the taxpayer, advising him/her of the mistake. Include a blank Form 8379 with instructions.

  3. When a taxpayer wants to claim innocent spouse relief, but mistakenly uses Form 8379, Injured Spouse Allocation, return the Form 8379 to the taxpayer. See IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures for instructions.

  4. The injured spouse must have made payments such as Federal Income Tax Withheld from wages or estimated tax payments, unless they are entitled to one or more refundable credits claimed on the joint return, such as Federal Income Tax Withholding, Earned Income Credit, or Additional Child Tax Credit, etc.

    Exception:

    Joint filers whose principal home was in a community property state at any time during the tax year may not have to meet the requirement in paragraph (4) above. See IRM 21.4.6.5.9, Community Property Allocation.

21.4.6.5.8.1  (10-01-2007)
Filing Form 8379

  1. Form 8379, Injured Spouse Allocation, may be filed as an attachment to the original individual tax return or by itself.

  2. A surviving spouse is entitled to file a Form 8379 and receive a refund on behalf of the deceased injured spouse even though the surviving spouse owes the obligation.

21.4.6.5.8.2  (10-01-2015)
Receipt of Form 8379

  1. Taxpayers may file an Injured Spouse Allocation by attaching a Form 8379, Injured Spouse Allocation, to their tax return and noting Injured Spouse in the upper left corner of the Form 1040 series.

    • Form 1040, U.S. Individual Income Tax Return

    • Form 1040A, U.S. Individual Tax Return

    • Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents

    , , . .

  2. For Form 8379 received with the original return (Form 1040 series) indicating "Injured Spouse" in the upper left corner of the form:

    1. The return is processed using Blocking Series (BS) 920–929,

    2. When the TC 150 posts, a CP 36D notice generates to the AM Function,

    3. The BS sets a TC 570 -R freeze to hold the credit until the Form 8379 is worked, and

    4. The CP 36D notices for paper returns continue to print in Files for association with the original return and are shipped to AM to be scanned through the Correspondence Imaging System (CIS).



    See IRM 21.4.6.5.8.3, Processing of Form 8379 Injured Spouse Allocation, for more information.

  3. Form 8379 received with an electronically filed return:

    1. The return is processed using Blocking Series (BS) 920–929,

    2. When the TC 150 posts, A CP 36D notice systemically generates through the Correspondence Imaging System (CIS) to AM; however, there is no image of the electronically filed return.

    3. The BS sets a TC 570 -R freeze to hold the credit until the Form 8379 is worked, and

    4. Electronic filed returns can be viewed on CC TRDBV and Modernized e-File (MeF) returns will be displayed in the Return Request Display (RRD) by accessing the Employee User Portal (EUP).



    See IRM 21.4.6.5.8.3, Processing of Form 8379 Injured Spouse Allocation, for more information.

  4. Form 8379(s) received without the original return are not numbered.

    1. Form 8379 is forwarded to the Accounts Management (AM) Function,

    2. A (TC) 971, Action Code (AC) 071, is input when the case is controlled.

      Note:

      When a TC 971, AC 071 was input on the wrong account, update the CIS case to the correct account and input the TC 971, AC 071 on the appropriate account.



    See IRM 21.4.6.5.8.3, Processing of Form 8379 Injured Spouse Allocation, for more information.

  5. If there is a return attached to Form 8379 and research indicates that there is no TC 150 on the account, see IRM 21.6.7.4.2.5, TC 150 Not Located — Duplicate or Amended Return Obtained, to process the return. Send a Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, with paragraph "k" informing the taxpayer of the delay in processing the Form 8379, Injured Spouse Allocation.

21.4.6.5.8.3  (09-20-2016)
Processing of Form 8379 Injured Spouse Allocation

  1. When Form 8379, Injured Spouse Allocation, filed with the original return, is received in Accounts Management, it must be worked within the 45-day interest free period.

    To determine whether the 45-day interest-free period has been met, consider these three dates:

    • Return due date (determined without regard to any extension of time for filing the return).

    • Return received date (used when the return is filed after the return due date, determined without regard to any extension of time for filing the return).

    • Return processible date (RPD) (date return was received in processible form).


    To the latest of these three dates, add 45 calendar days. If the date of the refund check is not on or before that date, interest must be allowed on the refund. See IRM 20.2.4.7.5.2, 45-Day Rule and All Original Tax Returns, for the dates of systemically generated refunds. The 45-day interest-free charts (located here) may also be used for determining what date your adjustment must be input in order to meet the 45-day interest-free period for a systemically generated refund.


    When a manual refund is required, Form 5792 must be processed no later than the 42nd day when the 43rd day is a work day. Form 3753 must be processed no later than the 43rd day.

    Note:

    If you are issuing a refund due to a returned check, see IRM 21.4.3.4.5 ,Resolving Returned Refunds (Uexpired Checks) .

  2. If the 45-day interest-free period is missed, allow credit interest on the overpayment. Generally, credit interest is allowed from the availability date of the overpayment to the refund schedule date (less the applicable back-off period). See IRM 20.2.4, Overpayment Interest. The availability date of the overpayment is determined by the payment(s) and/or credit(s) of which it is comprised.

    If the Payment/Credit is a Then the availability date of the overpayment is the
    Prepaid or timely credit (e.g., estimated tax payment, withholding, or a payment before the due date (determined without regard to any extension of time for filing). Due date of return (determined without regard to any extension of time for filing).
    Subsequent payment/credit made dated on or after the due date (determined without regard to any extension of time for filing). Payment received date/credit date.

    Caution:

    Interest may be computed from other than the availability date of the overpayment when the original tax return was filed late (IRC 6611(b)(3)), or in unprocessible form (IRC 6611(g)). In the event the return was filed late/unprocessible, interest on an overpayment is allowed from the later of the date of the overpayment, the delinquent return received date or the Return Processible Date (RPD).

    If the return is Then allow interest from the later of
    Timely filed (i.e., return received by the original or extended due date). The return due date (determined without regard to any extension of time for filing), the date of the overpayment (as determined in the preceding table), or the return processible date (if the RPD is after the extension date).
    Late filed (i.e., return not received by the original or extended due date). The late return received date, the date of the overpayment (as determined in the preceding table), or the return processible date.
  3. Research Command Code INOLES or IAT Results IS tool under both the primary and secondary Social Security Number (SSN), for the debt indicator:

    1. "N" - No debt

    2. "F" - TOP debt

    3. "I" - IRS debt

    4. "B" - Both Federal tax debt and Treasury Offset Program debt

    See IRM 21.4.6.4, Refund Offset Research.

    Note:

    Consider the period of limitations for both Federal tax offset and TOP offset. See IRM 21.4.6.5.8.10, Time Period for Submitting Form 8379.

  4. The (I) indicator is not always set for all Federal tax debts. Research any cross reference TINs along with CC IMFOL, CC BMFOL, CC TXMOD, MFT 29 and MFT 31, etc. for any outstanding tax debts. Always capture and/or attach INOLES or IAT Results IS screens for both spouses showing the debt indicator (I), (F), (B) or (N) at the time the Injured Spouse Allocation is being worked.

    Note:

    The IAT Results IS screen may respond with a debt indicator "N" when an invalid SSN indicator follows the TIN. The IAT tool is designed to research CC INOLET when the invalid indicator is present. If INOLET does not display a debt indicator, then the IAT Results IS screen displays "N." Additional research is needed if the secondary TIN is invalid.

  5. When working an injured spouse allocation with a Federal tax offset "I" debt, the control base must be changed from DMFC (97140 paper)/DMFE (97144 electronic) to DMFT (40110 Tax Debt).

    Exception:

    If the only "I" debt is due to MFT 35, Shared Responsibility Payment (SRP), do not change the control base to DMFT.

    Note:

    Do not change your control base for (B) debts which are both tax and TOP.

  6. The status of a debt at Bureau of the Fiscal Service may change daily and the debt indicator on CC INOLE is also updated daily. The debt may be activated, inactivated or deleted within TOP before a refund is issued. Therefore, discrepancies may arise from one cycle to the next and IRS may not be aware of a TOP debt. Consequently, the refund will offset, resulting in having to reverse the offset to process the Form 8379, Injured Spouse Allocation.

  7. When working a Form 8379 and the debt indicator on CC INOLE is "N" for both taxpayers, do not release the overpayment with a TC 571. You will work the injured spouse case and issue a refund to the injured spouse for his/her share of the overpayment. In addition, retain the IDRS category code as DMFC (97140 paper)/ DMFE ( 97144 electronic).

  8. When the wrong spouse is identified as the injured spouse on Form 8379, Injured Spouse Allocation, and the form is filed with an original signed Form 1040, Form 1040X, or a duplicate filed return, process the form without contacting the taxpayer if either the following apply:

    1. You can determine, without doubt, who the injured spouse is.

    2. The taxpayer's main home was in a community property state.

      Note:

      When the wrong spouse is identified on Form 8379 and you are issuing a manual refund, you must notate in the remarks section INJ SP Incorrect on F8379, of Form 5792, Request for IDRS Generated Refund (IGR) or Form 3753, Manual Refund Posting VoucherIf this notation is not included in the remarks section the manual refund will be rejected.

  9. On all Forms 8379 (Rev. 11–2014 (MeF) and Rev. 2–2015), issue the Injured Spouse's portion of the refund in "one name only" unless line 11 on the form is checked to "Issue in both names" . For all Form 8379 revisions prior to 11-2014, issue the Injured Spouse's portion of the refund in "one name only" even if line 11, one name only box is not checked.

  10. If the injured spouse is not entitled to any overpayment from tax year 20XX, the allocation should not be considered. See IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures.

  11. Verify the Form 8379 has been processed in BS 920–929. All Forms 1040 series indicating "Injured Spouse" in the upper left corner are blocked in BS 920–929. This blocking series permits the CP 36D, Injured Spouse Claims Notice, to be issued. Two copies of the CP 36D notice, with a transcript of the account are generated. One copy of the CP 36D notice is used as a "charge out" in files; the other is scanned into CIS or forwarded to the Accounts Management Function with the Form 8379,Injured Spouse Allocation.

  12. When the CP 36D, Injured Spouse Claims Notice, is received in the AM Function, use Command Code (CC) RTVUE, (CC) TRDBV or Return Request Display (RRD) to view the return on-line and work the Form 8379. You must complete Form 8379 Allocation Worksheet and attach the Form 8379 Allocation Worksheet to the CIS case. If the refund will be computer generated, input the adjustment with a 290 .00, RN 808/RN 810 or RN 809/RN 811.

    Exception:

    If a manual refund is issued, a TC 290 .00, HC and PDC are not needed, provided that Blocking Series 9 is input on your manual refund document.

  13. If there is an outstanding IRS obligation for the primary or secondary taxpayer, compute the Injured Spouse refund. See IRM 21.4.6.5.10, Allocation of Injured Spouse Form 8379.

  14. When the overpayment has not offset and there is an IRS obligation, follow the IF/AND/THEN Chart below:

    IF AND THEN
    There is an IRS obligation on the primary taxpayer's account The injured spouse is the secondary taxpayer Issue a manual refund using BPI 1 and BS 9. Any remaining overpayment will release to any outstanding debt. See exception below.
    There is an IRS obligation on the secondary taxpayer's account The injured spouse is the primary taxpayer Issue a manual refund using BPI 2 and BS 9. Any remaining overpayment will release to any outstanding debt. See exception below.

    Exception:

    The following is a list of conditions (not all inclusive) when the remaining overpayment will not offset if the secondary taxpayer owes a Federal tax debt. In these instances, you will need to manually transfer the credit to the secondary taxpayer's tax debt.

    • The Federal tax debt is under a previous spouse's SSN.

    • The account does not have a XREF EIN/SSN.

    • Future year debt owed by the secondary taxpayer.

    • Invalid SSNs (name control mismatch, etc.).

    • Clearance of overpayment for amounts less than $5.00.

  15. The following conditions do not require a manual refund:

    • If both taxpayers owe a married filing joint debt and it is the only Federal tax debt owed, input RN 808/RN 809 or RN 810/RN 811 for the difference of the Injured Spouse's portion of the overpayment and joint liability. Any remaining overpayment will release to the joint outstanding debt.

    • If only one taxpayer owes a Federal tax debt and the remaining overpayment will full pay the debt(s).

    • If an active combat zone case involves a Federal tax debt. See IRM 21.4.6.5.16(2), Combat Zone Cases, for additional information.

  16. Send an explanation of the action taken to the taxpayers if applicable. Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, see IRM 21.4.6.5.10.4(4), Injured Spouse Refund-TOP Offset, for the information to include in the letter. Letter 285C, Refund/Overpayment Applied to Account, see IRM 21.4.6.5.10.5(4), Injured Spouse Refund—Tax Offset, for the information to include in the letter.

    Note:

    See IRM 21.6.7.4.1, Source and Reason Codes — CP 21/CP 22 Notices, for conditions when a notice will/will not generate.

  17. Some entity or module freeze may need to be resolved before the Form 8379, Injured Spouse Allocation, can be processed. Some freezes and the actions required to process the injured spouse allocation are:

    1. Invalid SSN entity freeze: Resolve problem with the SSN before processing the Form 8379.

      Note:

      If the secondary SSN is invalid and a refund is requested in one name only, a manual refund is required.

    2. The -B Freeze is set when the Statute of Limitations for refund has expired. See IRM 21.5.6.4.4, -B Freeze, IRM 21.5.2.3, Adjustment Guidelines Research, and IRM 21.5.3.4, General Claim Procedures to resolve the -B Freeze.

    3. (-G) Math Error Freeze, Forms 8379 received with an original return that shows a math error on the return should not be processed without first attempting to resolve the math error. Refer to IRM 21.5.4.4.7, Math Error with Injured Spouse. If you are unable to resolve the math error, work the allocation based on the information you have.

    4. (I—) Credit Interest Freeze, sometimes set by the posting of TC 150, CCC U, indicating no reply by taxpayer to IRS letter requesting missing information: Identify the missing information on the original return, if available, and write the taxpayer requesting it, explaining that the injured spouse Form 8379 can not be processed until the information is received. Suspend the case for 40 days with a new IRS received date. Send no-consideration letter and re-file the Form 8379 with the original return if no reply is received.

    5. (—R with Julian date 999) TDI Refund Freeze: Contact TDI to determine if the freeze will be released or whether the injured spouse may have his/her portion of the overpayment by issuing a manual refund. See IRM 25.12.1.12.4, Processing Injured Spouse Allocations for instructions.

    6. (-R with TC 971 and/or TC 972 AC 134) IVO Involvement: Process the injured spouse allocation without regard to IVO indicators when the income data is verifiable on CC IRPTRL. Disregard the instructions in IRM 21.5.6.4.35.2, Resolving –R Freeze.

      Note:

      If the income data wages/withholding is not verifiable, submit an E4442 to RICS/IVO requesting a determination of the return. If IVO advises the return has been referred to the appropriate function, issue a Letter 916C, Claim Incomplete for Processing; No Consideration, informing the taxpayer that upon completion of the review of their tax return, they can re-submit a new Form 8379, Injured Spouse Allocation, if needed.

      If the taxpayer claims identity theft and provides the required documentation, follow IRM 21.6.2.4.2Scrambled SSN Case Procedures.

    7. (—V) Bankruptcy Freeze: Contact Insolvency to determine if the injured spouse’s portion of the refund may be issued manually and whether a BPI 3 is necessary due to the bankruptcy. See IRM 21.4.6.5.15(1), Bankruptcy Cases Involving Tax Offset, for instructions.

      Reminder:

      When Insolvency approves the manual refund, you must indicate approval on Form 5792. Annotate in Box 20, Remarks, Approved by Insolvency (or Technical, if applicable). Be sure to check Box 23, Bankruptcy Code Case. Remarks must also reflect which tax module the TC 520 is on and No TC 521 is pending. For additional information, refer to IRM 3.17.79.4.1(2)(ac), Case Review and Command Code REFAP (Refund Approval).

    8. (V—) Outstanding Liability Freeze: Research to determine the liable spouse and issue a manual refund to the injured spouse for the amount of his/her portion of the refund that exceeds the amount for which he/she is liable.

    9. (—W) Failed Banks/Litigations Freeze: Complete thorough research of the account and modules to identify the -W (Litigations) freeze status. See IRM 21.5.6.4.46, -W Freeze, for instructions.

    10. (—Y) Offer in Compromise (OIC): - Follow instructions in IRM 21.5.6.4.50, -Y Freeze, and contact OIC to determine if the injured spouse's portion of the refund can be issued manually. You will need to contact Monitoring Offers in Compromise (MOIC) before any account can be adjusted if an OIC indicator and a TC 780 is present. See SERP, Who/Where, Offer-in-Compromise (OIC) Compliance Campus Locations, for more information.

21.4.6.5.8.4  (10-01-2015)
Review the Form 8379 for Completeness

  1. Rev. Rul. 80–7 intends that income, deductions, personal exemptions, credits, and payments shown on the joint return be allocated to the spouse to whom they belong.

  2. The Form 8379, Injured Spouse Allocation, must be reviewed to determine that all income shown on the joint return has been properly allocated. Verify the allocated items with Form(s) W-2 and/or CC IRPTR, IMFOL, RTVUE, TRDBV or Return Request Display.

  3. The taxable amount of Unemployment Compensation or Social Security Benefits shown on the joint return must be used when allocating the separate Adjusted Gross Income (AGI) for each spouse who received the benefit(s).

  4. Items of income, expenses, credits and deductions must be allocated to the spouse who would have entered the item on his or her separate return. Dependent related credits should be allocated to the spouse claiming the dependent.

    Example:

    Student loan interest deduction, IRA deduction, etc. would be allocated to the spouse whom, if filing separately, would have reported it on his/her separate return.

    Reminder:

    If using the IAT IS Results Allocation Worksheet and the base tax after non-refundable credits is zero, allocate the entire non-refundable credit to the injured spouse, regardless of who is claiming the credit or dependents on Form 8379.

  5. Withholding credits must be verified and allocated to the spouse to whom they belong.

    If verification reveals Then
    Withholding credit is more than reported on the joint return and the income has been reported on the joint return Allow the additional credit (TC 806) with the injured spouse adjustment. Input the TC 806 first, then input your TC 808./809/810/811 with a PDC for 1 cycle.
    Withholding credit is less than reported on the joint return Do not adjust if within IRS tolerance guidelines per IRM 21.5.1.4.12, Tolerances.
  6. When a breakdown is not provided by the taxpayer, allocate estimated tax payments as follows: Divide the injured spouse's Married Filing Separate (MFS) tax by the sum of the MFS tax for both spouses and multiply that amount by joint estimated tax payments.

    Injured spouse’s MFS tax Both spouses' MFS tax × Joint estimated tax payments = Injured spouse’s portion of estimated tax payments
  7. Earned Income Tax Credit (EITC) must be allocated if the injured spouse has qualifying earned income and EITC was included on the original tax return.

    Reminder:

    We are responsible for correcting the taxpayer's account to reflect the correct information. Refer to IRM 21.5.1, General Adjustments, for tolerance considerations.

  8. Review question 5 on Form 8379 to determine if the taxpayer resides in a community property state. Refer to IRM 21.4.6.5.9 (3), Community Property Allocation, for a list of community property states.

    Caution:

    The domicile of a person does not change merely because of entry into the military and being stationed in another jurisdiction. For further information, see IRM 25..15.5.4 , Domicile.

    If And Then
    Question 5 is checked "yes" or "no" Box checked is correct for state taxpayer resides Process Form 8379 based upon box checked.
    Checked "yes" A non-community property state is entered on line 5 Process Form 8379 without regard to community property laws.
    Checked "yes" A community property state is entered and the address on ENMOD is a non-community property state Process Form 8379 based upon the box checked and state provided.
    Checked "no" A community property state is entered Process Form 8379 based upon community property laws of that state.
    Checked "no" Information indicates taxpayer resided solely in a community property state Process Form 8379 based upon community property laws of that state.
    Left blank Information on return, W-2s, or entity indicates taxpayer resided solely in a non-community property state Process Form 8379 without regard to community property laws.
    Left blank Information indicates taxpayer resided solely in a community property state Process Form 8379 according to community property laws of that state.
    Left blank or checked "yes" Information indicates taxpayer may have resided in both types of states, or in two or more community property states
    1. Attempt to telephone taxpayer. See IRM 21.4.6.5.8.7(2), Incomplete Form 8379 Signed or Filed with Original Return.

    2. Accept an oral response to line 5.

    3. If unable, to reach taxpayer by telephone see IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures.

    Checked "Yes" or "No" Information indicates taxpayer resided solely in a community property state and taxpayers provided a signed premarital agreement. Accept the taxpayer's allocation of income and other items on the Form 8379 and process Form 8379 without regard to community property laws.
    Checked "Yes" or "No" Information indicates taxpayer resided solely in a community property state and taxpayers mention premarital agreement, but did not provide the signed agreement. Send a 3179CRefund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, letter to request the signed premarital agreement and suspend the case for 40 days.
    1. If a signed premarital agreement is received, process Form 8379 without regard to community property laws.

    2. If no response is received, process Form 8379 based upon community property laws of that state.

    Note:

    If the injured spouse indicates on Form 8379, line 5b, that his or her marriage was recognized under the laws of the community property state(s) listed on line 5a, allocate items based on the instructions provided in the table above. However, if injured spouse indicates on Form 8379, line 5b, that his or her marriage was NOT recognized under the laws of the community property states(s) listed on line 5a, allocate items based on the instructions provided in IRM 21.4.6.5.8.4.1, Same-Sex Spouses

  9. If the Form 8379 , Injured Spouse Allocation, is filed with the original return and the account is in zero or debit balance with no math error, do not consider the Form 8379. If the Form 8379 is filed by itself, and there was no offset on the module or a corrected math error has created a balance due, you should not consider the Form 8379. See IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures, for instructions.

21.4.6.5.8.4.1  (10-01-2015)
Same-Sex Spouses

  1. In Obergefell v. Hodges, 576 U.S. ___ (2015), the United States Supreme Court held that (1) all states must allow same-sex couples to marry on the same terms and conditions as opposite-sex couples, and (2) states must recognize lawful same-sex marriages performed in other states. Because the Service recognizes marriages that are validly entered into under state law, couples in same-sex marriages must be treated the same as couples in opposite-sex marriages for federal tax purposes, including procedures for processing Form 8379.

    • For federal tax purposes, the terms spouse, husband, and wife mean an individual lawfully married to another individual. The term husband and wife means two individuals lawfully married to each other.

    • The terms spouse, husband, and wife do not include individuals who have entered into a registered domestic partnership, civil union, or other similar formal relationship not denominated as a marriage. The term husband and wife does not include couples who have entered into such a formal relationship, and the term marriage does not include such formal relationships. The term marriage also does not include a marriage entered into under foreign law unless that marriage would be recognized in a state, possession, or territory of the United States.

    • .

  2. The rules for applying state community property laws for injured spouse allocations differ from non-community because the state law determines whether the couple is subject to community or non-community property laws.

  3. Whether a State recognizes same-sex marriage during the tax year on the Form 8379 does not affect if a taxpayer is entitled to injured spouse relief. It does not matter where a taxpayer resides. The question is only whether the taxpayer is legally married, i.e., was married in a state or other jurisdiction that recognizes same-sex marriage. If the answer is yes, the taxpayer qualifies for injured spouse relief.

    Note:

    Community property allocations are dependent upon whether the states recognized community property rights for same-sex marriage. We cannot properly calculate their entitlement to injured spouse allocations (for federal tax purposes) without knowing whether the state community property laws apply.

  4. For same-sex couples residing in a non-community property state, process the Form 8379 the same as opposite-sex couples.

  5. For same-sex couples residing in community property states, the application of community property laws in processing the Form 8379 filed by a same-sex spouse will depend on whether the couple’s state of domicile recognized same-sex marriage during the tax year for which the injured spouse claim is made. Once a state recognizes a same-sex marriage, community property laws apply to property held by those spouses.

    • Of the 9 community property states, only Louisiana and Texas did not recognize same-sex marriages before Obergefell was decided.

    • Arizona, Idaho, Nevada, and Wisconsin recognized same-sex marriages starting in late 2014.

    • California and New Mexico recognized same-sex marriages starting in mid to late 2013. Washington recognized same-sex marriages starting in late 2012.

  6. Process the Form 8379 using non-community property rules if the taxpayer marks "No" for question 5b on Form 8379 because his or her marriage was NOT recognized under the laws of the community property state(s) listed on Form 8379. However, ignore the "No" answer to question 5b and process the Form 8379 the same as opposite-sex couples if the tax year listed on Form 8379 meets the following:

    If the state where same-sex couple resided during the tax year listed on Form 8379" is Then the refund of tax year listed on Form 8379 for which community property laws may be applied if the tax year is
    Louisiana and Texas 2015 and after
    Arizona, Idaho, Nevada, and Wisconsin 2014 and after
    California and New Mexico 2013 and after
    Washington 2012 and after

21.4.6.5.8.5  (03-17-2015)
Form 8379 Pre-Offset

  1. On all Forms 8379, issue the Injured Spouse's portion of the refund in "one name only" unless the revised Form 8379 (Rev. 11-2014 (MeF and Rev. 2-2015) "Issue in both names" box on line 11 is checked. For prior revisions of Form 8379, always issue the Injured Spouse's portion of the refund in "one name only" even if the one name only box on line 11 is not checked.

    1. If the injured spouse is the primary taxpayer and Part II, line 11, is not checked on Form 8379 (Rev. 11-2014 (MeF) and Rev. 2-2015), input a TC 290 for .00 with RN 810, RC 086, SC 7 and the dollar amount of the allocated refund.

    2. If the injured spouse is the primary taxpayer and Part II, line 11, box is checked on Form 8379 (Rev. 11-2014 (MeF) and Rev. 2-2015), issue the refund in both names. Input a TC 290 for .00 with RN 808, RC 086, SC 7 and the dollar amount of the allocated refund.

    3. If the injured spouse is the secondary taxpayer and Part II, line 11, is not checked on Form 8379 (Rev. 11-2014 (MeF) and Rev. 2-2015), input a TC 290 for .00 with RN 811, RC 086, SC 7 and the dollar amount of the allocated refund.

    4. If the injured spouse is the secondary taxpayer and Part II, line 11, box is checked on Form 8379 (Rev. 11-2014 (Mef) and Rev. 2-2015), issue the refund in both names. Input a TC 290 for .00 with RN 809, RC 086, SC 7 and the dollar amount of the allocated refund.

    Note:

    The above results in generating 2 refunds (TC 846) and the appropriate Bypass Indicator (BPI) will automatically be set with the input of the RN 808/RN 810 or RN 809/RN 811. Do not make an entry in the Amended Claims Date (AMD-CLMS-DT) field.

  2. If there are no IRS debts, which must be by-passed and the address on ENMOD is not different than the address on the Form 8379, refer to paragraph (1) above to input the adjustment for the injured spouse’s portion of the overpayment.

    Note:

    RNs 808/809 will generate the refund in both names. RNs 810/811 will generate the refund in one name only.

  3. Ensure there is no freeze codes on the account that would release by the input of a TC 290 other than the -R freeze.

  4. If there are any IRS debts which must be by-passed or the address on ENMOD is different than the address on the Form 8379, issue a manual refund for the injured spouse’s portion of the overpayment.

21.4.6.5.8.6  (02-01-2016)
Form 8379 Post-Offset

  1. On all Forms 8379, issue the Injured Spouse's portion of the refund in "one name only" unless the revised Form 8379 (Rev. 11-2014 (MeF) and Rev. 2-2015) "Issue in both names" box on line 11 is checked. For prior revisions of Form 8379, always issue the Injured Spouse's portion of the refund in "one name only" even if the one name only box on line 11 is not checked.

  2. Determine the TC 898 offset to be reversed. There may be more than one on the account. See IRM 21.4.6.5.10.3, Determining the Injured Spouse's Refund.

    Reminder:

    The time limit for reversing an offset to Office of Child Support Enforcement (Agency Codes 1 and/or 2) does not a apply when processing Injured Spouse Allocation cases.

  3. Compare the Injured Spouse's refund allocation with the TC 898 on the module and only reverse the amount needed for the injured spouse's refund.

    Note:

    Net all TOP offset transaction codes with the same Offset Trace Number (OTN) to determine the TOP offset amount available to reverse. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals

    .

  4. Input TC 766 with the OTN to reverse the TC 898 with the same OTN , RC 086, SC 7 & HC 1 with the correct blocking series.

    Note:

    If the account requires the reversal of three or more TC 898’s, you must issue a manual refund. See IRM 21.4.6.5.10.6 (3) e), Issuing the Injured Spouse Refund.

    Reminder:

    Unpostable conditions must be resolved before inputting any TOP offset reversal.

  5. Input 290 .00, RN 810 or RN 811, RC 086, SC 7 with the appropriate PDC or issue a manual refund if applicable.

    Caution:

    An account may have both a tax offset and a TOP offset. Reverse the TOP offset first using the appropriate hold code and then transfer any additional amount allocated to the Injured Spouse from the tax offset. In this situation, a manual refund is required to issue the refund to the injured spouse.

21.4.6.5.8.7  (10-01-2014)
Incomplete Form 8379 Signed or Filed with Original Return

  1. Review the form for the signature of the injured spouse, unless it was filed with an original signed return.

    Note:

    Request the original return from Files, if it was not received with Form 8379 and the TC 150 is blocked 92.

  2. If the Form 8379, Injured Spouse Allocation, is incomplete, attempt to contact the taxpayer or authorized representative by phone and request the missing information such as:

    • Allocation of income to each taxpayer

    • Allocation of itemized deductions (Schedule A)

    • Allocation of exemptions other than personal exemptions

    • Allocation of credits to each taxpayer

    • Form W-2, Wage and Tax Statement. If unable to verify with original return, use command codes (CC) IRPTR, SUPOL, IMFOL, RTVUE, TRDBV, or Return Request Display (RRD).
      Make two telephone attempts within 3 business days of each other and document CIS case notes with the dates and times of these attempts. If leaving a message for the taxpayer or authorized representative, request a call back within 2 business days. If unable to contact the taxpayer or authorized representative by telephone then send a 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries letter to request the missing information and suspend the case for 40 days. See IRM 21.4.6.3, Disclosure, for guidelines for general disclosure and leaving information on answering machines or voice mail.


    If unable to reach the taxpayer by telephone and no reply is received, see IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures and return a copy of the Form 8379, if available.

21.4.6.5.8.8  (10-10-2012)
Form 8379 Unsigned and Filed Without Original Return

  1. If a Form 8379, Injured Spouse Allocation, is unsigned and was not filed with the original signed return or attached to a signed Form 1040-X, Amended U.S. Individual Income Tax Return:

    1. Determine all other missing information.

    2. Input a TC 971, AC 071 if needed.

    3. Request that the taxpayer send a signed copy of the form via fax or mail and provide any other missing information. See IRM 21.4.6.5.8.7(2), Incomplete Form 8379 Signed or Filed with Original Return for instructions and suspend the case for 40 days.

  2. If the taxpayer does not provide the missing information within 40 days, see IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures, for instructions.

21.4.6.5.8.9  (10-01-2015)
Form 8379, No Consideration Procedures

  1. Form 8379, Injured Spouse Allocation, should not be considered:

    1. If a Form 8379 is filed for any filing status except Married Filing Joint.

    2. If the Form 8379 is not attached to the joint Form 1040 or Form 1040X, but is instead filed separately (after offset), and is received after the time period allowed. See IRM 21.4.6.5.8.10, Time Period for Submitting Form 8379.

    3. If Married Filing Joint Federal tax debt is owed (by the same two spouses) and the debt is more than the existing overpayment.

    4. The injured spouse has no payments or refundable credits.

    5. The injured spouse's portion of tax exceeds their refundable credits.

    6. If the Form 8379 is filed with the original return and the tax period being worked is in zero or debit balance with no math error.

    7. If the Form 8379 is filed by itself, and there was no offset on the tax period being worked or a corrected math error has created a balance due.

      Note:

      For either situation (f) or (g) above, advise the taxpayer that the Form 8379 cannot be processed when there is a balance due or no overpayment exists on the account. If, at a later date, they file an amended return and a credit or overpayment is generated from the amended return, he/she could, at that time, file a new Form 8379, Injured Spouse Allocation.

    8. The case is suspended for missing and/or additional information and no reply is received within 40 days.

    9. If the taxpayer wants to claim Innocent Spouse Relief, but mistakenly uses Form 8379, Injured Spouse Allocation. Return the Form 8379 to the taxpayer advising of the mistake and include a blank Form 8857, Request for Innocent Spouse Relief, with instructions and Pub 971, Innocent Spouse Relief.

    10. If a Letter 105C, Claim Disallowed was previously sent because the return was not timely filed, advise the taxpayer that we cannot consider Form 8379, Injured Spouse Allocation.

    11. An agency refund (TC 899 or TC 971 AC 599) was issued for the entire amount of the offset.

    12. The injured spouse is not entitled to a refund, based on community property laws (tax offsets only).

      Note:

      The above list is not all inclusive, there maybe other situations that may warrant no consideration.

  2. Send the taxpayer a Letter 916CClaim Incomplete for Processing; No Consideration, letter advising the taxpayer why the allocation is not being considered.

    Exception:

    Use the following explanations for tax or TOP offset when not considering Form 8379 due to the time period limitations per IRM 21.4.6.5.8.10(4) (a) and (4)(b):

    1. If the time period for submitting Form 8379 is not met for a tax offset, advise the taxpayer "We are sorry, we cannot process your Form 8379, Injured Spouse Allocation. Your Form 8379 was received on (enter date) and the overpayment from tax year (20XX) was applied to the (20XX) Federal tax debt on (enter date). This is beyond the period when we will consider allocating a joint refund that was already paid or offset."

    2. If the time period for submitting Form 8379 is not met for a TOP offset, advise the taxpayer "We are sorry, we cannot process your Form 8379, Injured Spouse Allocation. Your Form 8379 was received on (enter date) and the overpayment from tax year (20XX) was applied to a Treasury Offset Program outstanding debt on (enter date). This is beyond the period when we will consider allocating a joint refund that was already paid or offset."

  3. Input a TC 290 .00 with the appropriate blocking series (e.g. blocking series 00 if the original return is attached to the allocation or blocking series 05 if the original return is not attached), see IRM 21.5.3.4.6.3, No Consideration Procedures.

    Note:

    If TC 150 or TC 976 is in blocking series 92 in error (Injured Spouse is not annotated on the top of the Form 1040 and no Form 8379 is attached to the document), input TC 571 to release the -R freeze or TC 290 .00 to release the -A freeze, do not send 916C letter. Change your control base from DMFC/DMFE to DUPF. However, if there is no -R or -A freeze, there is nothing to release. Do not input a TC 571 as it will create an UPC 168 RC 0. A TC 290 .00 is also not required if there is no credit balance to release. Close the base as no action

  4. If the taxpayer responds to a Letter 916C, Claim Incomplete for Processing; No Consideration, research CIS for an explanation for the previous no consideration. If the taxpayer sends additional information and the Form 8379, Injured Spouse Allocation, can be allowed, follow normal injured spouse processing procedures. If the Form 8379 cannot be allowed, send the taxpayer a Letter 916C with the explanation for the no consideration.

  5. If the taxpayer responds to a previous Letter 105C, Claim Disallowed, or Letter 106C, Claim Partially Disallowed, research CIS for an explanation of the previous denial and explain the reason for the denial to the taxpayer. If the taxpayer sends additional information and the Form 8379, Injured Spouse Allocation, can be allowed, follow normal injured spouse processing procedures. If the injured spouse allocation cannot be allowed, do not send another disallowance letter. See IRM 21.5.3.4.6.2, Appeals and Responses to Letter 105C and 106C, for further instructions.

21.4.6.5.8.10  (10-01-2014)
Time Period for Submitting Form 8379

  1. Form 8379, Injured Spouse Allocation, is not a separate claim. See IRM 21.5.3.2(3), What Are Claims for Credit, Refund, and Abatement?. It is an avenue the non-debtor spouse uses to provide additional information regarding his or her share of the overpayment shown on a jointly filed original tax return (Form 1040, U.S. Individual Income Tax Return, or amended return Form 1040-X, Amended U.S. Individual Income Tax Return.

  2. Taxpayers may file Form 8379 with the return or after offset.

    1. Some taxpayers will attach Form 8379 to their joint Form 1040 or Form 1040X, see IRM 21.4.6.5.8.10.1, Form 8379 Attached to Joint Form 1040/Form 1040X.

    2. Others may file Form 8379 after filing Form 1040 or Form 1040X, see IRM 21.4.6.5.8.10.2, Form 8379 Not Attached to Joint Form 1040/Form 1040X.

  3. If the IRS offsets the refund claimed on a Form 1040/Form 1040X (in whole or in part) to a Federal tax debt or a TOP debt, the IRS does not issue a Notice of Claim Disallowance, as nothing is being disallowed.

  4. If the Form 8379 is not attached to the joint Form 1040 or Form 1040X, but is instead filed separately, the time period for filing Form 8379 is as follows:

    1. Federal Tax Debts - Within 2 years from the cycle of offset.

      Caution:

      For late filed returns with pre-paid credits, you must figure the 2-year period from the cycle of offset. Use the IDRS Online Input Table to determine the date to use.

      Example:

      Form 1040 for 201012 is a late filed return with prepaid credits (e.g. withholding, estimated payments, etc.), the TC 150 carries the 23C date (assessment date) of 12162013; however, the overpayment offsets (TC 826) to a prior year balance due account in cycle 20140405 with the original due date (04152011) of the 201012 tax return because of the withholding credit. To determine the actual effective date of offset, you will use the Doc. 6209, 2014 - IDRS Online Input Table, find cycle 201404 under the column titled "OUTPUT CYCLE NUMBER" and the date to the left of that cycle under the column titled "ASSESSMENT OR SCHEDULED 23-C DATE" will be the date to use to determine if the Form 8379 was filed timely. In this example, if Form 8379 was filed within two years of 2/10/2014, it will be considered timely.

    2. Treasury Offset Program Debts - Within 6 years from the date of offset.

      Note:

      To determine when the Bureau of the Fiscal Service notified the non-debtor spouse of the offset, use the TC 846/TC 840 date from which the offset occurred.

    3. Both Federal Tax Debt and Treasury Offset Debt on the same account - You must consider the 2 year rule for the tax offset and the 6 year rule for the TOP offset.

      Example:

      Form 1040 for 201112 filed on March 26, 2012 and tax offset occurred to a prior year balance due account. A TOP offset also occurred on March 26, 2012. The Form 8379 was received on April 7, 2014. Do not consider the tax offset since the 2 year period for receiving the Form 8379 has expired. You will consider the TOP offset because the Form 8379 was filed within the 6 year period. Send a 285C letter explaining to the taxpayer that the tax offset did not meet the 2 year period, however, the TOP offset can be refunded because it meets the 6 year period of TOP offsets.

21.4.6.5.8.10.1  (10-01-2014)
Form 8379 Attached to Joint Form 1040/Form 1040-X

  1. If the Form 8379 is attached to the joint Form 1040 or Form 1040X and the Form 1040 or Form 1040X is timely under IRC § 6511, the Form 8379 is timely for any refund requested on Form 1040 or Form 1040X.

  2. If a timely Form 1040-X is filed, AM must also consider the 2 year time period for submitting Form 8379 for all prior Federal tax offsets. See IRM 21.4.6.5.8.10(4), Time Period for Submitting Form 8379.

  3. If the jointly filed claim on Form 1040, U.S. Individual Income Tax Return, or Form 1040-X, Amended U.S. Individual Income Tax Return, was not timely per IRC § 6511(a), or IRS determines there is no overpayment available for credit or refund per § 6511(b), then the Form 8379, Injured Spouse Allocation, is not considered as there would be no joint credit or refund to offset and the allocation irrelevant.

  4. If the Form 1040 or Form 1040-X was not timely per IRC § 6511(a) and a 105C, Claim Disallowed, letter was previously sent, send a 916C, Claim Incomplete for Processing; No Consideration, letter and advise the taxpayer that we cannot consider Form 8379, Injured Spouse Allocation, since the return was not timely filed. See IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures.

  5. If the non-debtor spouse resubmits the Form 8379 with required documentation for Appeals consideration during this period, AM may reconsider its rejection of the allocation before forwarding the new Form 8379 to Appeals. If AM accepts the resubmitted allocation it is unnecessary to forward the case to Appeals. See IRM 21.4.6.5.10, Allocation of Injured Spouse Form 8379.

  6. If the Form 1040 or Form 1040X has been determined to have no overpayment available for credit or refund then a 916C letter must be sent to advise the taxpayer why the allocation is not being considered. See IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures.

21.4.6.5.8.10.2  (04-15-2014)
Form 8379 Not Attached to Joint Form 1040/Form 1040-X

  1. If the jointly filed claim on Form 1040, U.S. Individual Income Tax Return or Form 1040-X , Amended U.S. Individual Income Tax Return, was not timely per IRC § 6511 (a), or IRS determines there is no overpayment available for credit or refund per IRC § 6511 (b), then there would be no joint credit or refund to offset and Form 8379 allocation filed by itself is irrelevant.

  2. If the jointly filed claim on Form 1040 or Form 1040-X was timely per IRC § 6511(a), and IRS determines an overpayment exists, and an amount is available for credit or refund per IRC § 6511(b), then IRS and Bureau of the Fiscal Service will offset the joint overpayment by allocating it in favor of the debtor spouse's creditors. The non-debtor spouse may submit Form 8379, Injured Spouse Allocation, to request his/her share of the joint overpayment. The Form 8379 must be received within the period for submission per IRM 21.4.6.5.8.10, Time Period for Submitting Form 8379.

    • For Federal tax debts, The IRS will issue a CP 49 notice advising the taxpayer to which account the overpayment was applied.

    • For TOP offsets, BFS issues the Notification of Offset that provides the creditor agency contact information.

  3. If the IRS receives the Form 8379 from the non-debtor spouse more than 2 years after the offset against a Federal tax debt send a 916C letter and advise the taxpayer that we cannot process the allocation because Form 8379 was not submitted within two years of the tax offset. See IRM 21.4.6.5.8.9(2)(a), Form 8379, No Consider Procedures, for instructions on what to include in the letter.

  4. When the refund is offset to a TOP debt, the non-debtor spouse must file Form 8379 no later than six years from the date the Bureau of the Fiscal Service (BFS) notifies him/her of the offset. If the IRS receives the non-debtor-spouse’s Form 8379 later than 6 years after the offset against a TOP debt, send 916C letter and advise the taxpayer that we cannot process the Form 8379 because it was not submitted within 6 years of the TOP offset. See IRM 21.4.6.5.8.9(2)(b), Form 8379, No Consider Procedures, for instructions on what to include in the letter.

21.4.6.5.8.11  (02-01-2016)
Exam, CI and IVO Cases

  1. Form 8379, Injured Spouse Allocation, are not sent to EXAM. However, an EXAM freeze on an account which also has a —R freeze, may affect the timing when the injured spouse allocation is worked. The following table may assist you in resolving injured spouse cases when an EXAM freeze (-L, -Q, - E), CI freeze (-Z or Z-) or IVO Freeze (-E) is present. Before reversing any offset to Office of Child Support Enforcement (Agency Codes 1 and/or 2), see IRM 21.4.6.4.2.4, Child Support TOP Offsets.

    Note:

    Do not route a copy or your original injured spouse case to EXAM Criminal Investigation (CI) or IVO.

    Caution:

    Use appropriate Priority Code when adjusting accounts with an open -L freeze.

    IF And Then
    Taxpayer's account has a -E freeze with a TC 971 AC 128 and a TC 810, refer to IRM 21.5.6.4.10 (3)-E Freeze, for a list of TC 810 conditions. A TC 811 has posted in the same cycle to release the portion of the refund not related to the audit issue. Issue a letter to inform the taxpayer of the amount due to them with the exception of the TC 810 currently under review.

    Caution:

    When the overpayment consists of Premium Tax Credit (PTC) only or other various audit combinations (i.e. EITC, ACTC, and /or Adoption Credit) and a TC 811 is not present, do not consider the Form 8379 allocation. Send a Letter 916C , Claim Incomplete for Processing; No Consideration, informing them upon completion of the review they can resubmit a new Form 8379, Injured Spouse Allocation, if needed. Refer to IRM 21.5.3.4.6.3No Consideration Procedures.

    Taxpayer's overpayment is being held by EXAM (-L or -a freezes) pending review of his/her tax return AIMS status is 08 or less and no EITC is involved Work your case.
    Taxpayer's overpayment is being held by EXAM (-L or -LE freezes) pending review of his/her tax return AIMS status is 08 or less and EITC is involved Work your case up to the amount of EITC.
    Issue a letter to the taxpayer informing them upon completion of his/her Examination they can resubmit a new Form 8379, Injured Spouse Allocation, if needed. Explain to the taxpayer that any amount of EITC allowed will be allocated to the spouse who earned the income upon which the EITC is based.
    Taxpayer's overpayment is being held by EXAM (-L or -LE freezes) pending review of his/her tax return AIMS status is greater than 08 Issue a letter to the taxpayer informing him/her that the allocation of Form 8379 will be computed after the examination is completed.
    Suspend your case and change your control base to a monitor (M) status.
    Upon completion of the examination, work your case. Secure a copy of the return, if necessary.
    Contact Exam for a copy of the return.
    Contact the taxpayer to obtain a copy of the return, if not readily available from Exam.
    If offset has occurred   Work the case regardless of EXAM status.
    Taxpayer's overpayment is not being held by EXAM, however, there may be a -L or -LR freeze on the account by EXAM pending review of his/her tax return The TC 570 creating the -R freeze has the same DLN as the original return with blocking series 92 Process the case regardless of the AIMS status.
    Taxpayer's overpayment is being held by -Q Freeze. There is a TC 576 on the module Hold until the -Q freeze is released with TC 572 by EXAM or IVO.
    Suspend your case and change your control base to a monitor (M) status.
    You have an Injured Spouse and the case is suspended to CAT-A for the First-Time Homebuyer Credit (FTHBC), Earned Income Tax Credit (EITC) and/or Adoption Credit The case is Selected Work the case up to the amount of the FTHBC, EITC and/or Adoption Credit. Issue a letter to the taxpayer informing them upon completion of their Examination they can resubmit a new Form 8379, Injured Spouse Allocation, if needed for any additional credit that is allowed. For more information on FTHBC, refer to IRM 21.4.6.5.28, First-Time Homebuyer Credit , See Exhibit in IRM 21.5.3-4, First-Time Homebuyer Credit – Additional CAT-A Criteria or IRM 21.6.3.4.2.11, First-Time Homebuyer Credit.
    Taxpayer's overpayment is being held by CI pending review of his/her tax return There is a -Z or Z- Freeze on the account Questionable Refund Program (QRP) Do not refer your case to CI or EXAM. Do not send a letter to the taxpayer. If the tax module shows a Project Code of 0173, 0263, 0390, 0584, 0603 or 0611, these QRP cases are under the control of CI SDC and notice has been sent to the taxpayer. If you receive a call and the account shows any type of CI involvement you may advise the taxpayer that their return is being reviewed but do not advise of CI involvement.
    Suspend your case and change your control base to a monitor (M) status.
    Upon completion of the examination, work your case. Secure a copy of the return, if necessary.
    Contact Exam or CI for a copy of the return.
    Contact the taxpayer to obtain a copy of the return, if not readily available from Exam or CI.

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