21.5.8 Credit Transfers

Manual Transmittal

September 12, 2017

Purpose

(1) This transmits revised IRM 21.5.8, Account Resolution, Credit Transfers.

Material Changes

(1) Editorial changes were made throughout IRM 21.5.8. The web addresses, IRM and legal resources were checked and corrected, where necessary.

(2) IRM 21.5.8.1 added Internal Controls.

(3) IPU 16U1518 issued 10-12-2016 IRM 21.5.8.4.1 added procedures to research Command Code IMFOLT or BMFOLT before inputting a credit transfer.

(4) IPU 17U0199 issued 01-30-2017 IRM 21.5.8.4.3 updated If and Then table for Form 1120 and Form 94XX when transferring credits already offset or applied as credit elects.

(5) IPU 17U0379 issued 02-27-2017 Exhibit 21.5.8-1 updated availability dates for TC 820/700 and TC 830/710.

Effect on Other Documents

IRM 21.5.8, Credit Transfers, dated September 02, 2016, (effective date 10-01-2016) is superseded. This IRM also incorporates the following Interim Procedural Updates (IPU): 16U1518 (dated 10-12-2016), 17U0199 (dated 01-30-2017), and 17U0379 (dated 02-27-2017).

Audience

All employees performing account work.

Effective Date

(10-01-2017)

Kevin Morehead
Director, Accounts Management
Wage and Investment Division

Programs Scope and Objectives

  1. Purpose: This IRM covers information on Credit Transfer processes to apply payment(s) and or credit(s) appropriately.

  2. Audience: The primary users of the IRM are all IRS employees in Business Operating Divisions (BODs) who are in contact with taxpayers by telephone, correspondence, or in person.

  3. Policy Owner: The Director of Accounts Management.

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

  5. Primary Stakeholders: The primary stakeholders are organizations that Accounts Management collaborates with; for example: Return Integrity & Compliance Systems (RICS), Compliance and Submission Processing.

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

Background

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

Authority

  1. Refer to 1.2.21, Policy Statements for Customer Account Services Activities, for information.

  2. The IRS adopted the Taxpayer Bill of Rights in June 2014. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3). For additional information about the Taxpayer Bill of Rights, refer to Taxpayer Bill of Rights (TBOR).

Responsibilities

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

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

Program Controls

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

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

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

Acronyms

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

Related Resources

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

Credit Transfers Overview

  1. A credit transfer moves a payment or credit from one account to another, or reverses a credit previously applied. This IRM provides guidelines for credit transfers that include:

    • IDRS

    • Correct Credit Transfer Format

    • No Source Documents

    • Source Document

    • CP 62Notice of Credit Transfer, CP 60Credit Reversal Adjustment Notice (IMF)

    • CP 225Missing Payment Applied, CP 260 Credit Reversal Adjustment (BMF)

    • TC 570 and Bypass Indicator

    • Posting Delay Code

    • Avoiding Unpostables

  2. Accounts Management employees who have access to the Integrated Automation Technology (IAT) Credit Transfer tool are required to use the tool when inputting credit transfers. For additional IAT information refer to the IAT website http://iat.web.irs.gov/. This tool provides a list of transferable payments, auto-fills reversal transaction codes (TCs), performs unpostable checks and ensures use of appropriate codes, amounts and dates to prevent unpostables.

Credit Transfer Research

  1. This section contains some general processing and research procedures for credit transfers. Credit transfer adjustments should not be input if another employee or organization has an open control base. Contact the person or organization with the open control base. DO NOT reassign or change the control base until this contact is made. Refer to IDRS – Unit and USR Database on the Servicewide Electronic Research Program (SERP) Home Page under the Who/Where tab, on SERP. Exceptions can be found in IRM 21.5.2.3, Adjustment Guidelines-Research.

  2. For information on credit transfers involving the Individual Retirement Account File (IRAF), refer to IRM 21.6.5.4.11.8, Individual Retirement Account File (IRAF) Credit Transfers, and IRM 21.6.7, Adjusting Individual Tax Accounts.

  3. For credit transfers to Non-Master File (NMF) accounts, refer to IRM 3.17.64.9, Credit Transfers.

  4. For detailed information on transferring estimated tax payments, refer to IRM 21.6.3.4.2.3, Estimated Tax (ES).

  5. Procedures for User Fee payment transfers are located in IRM 5.19.1.5.4.6.3, User Fee Payment Transfer/User Fee Abatements.

Determining Source Document Requirement for Credit Transfers

  1. A Source Document (SD) is required for:

    • Credit transfers between non-related accounts. Example: due to IRS error a payment is posted to an unrelated taxpayer, such as a payment posted to a Corporation and taxpayer requests payment to be moved to a Partnership or an Individual account

    • Related accounts resulting in a debit balance after the transfer. Example: the taxpayer requests a payment to be moved from a fully satisfied account to another account. Refer to paragraph 4 below for examples of related accounts

    Reminder:

    The Correspondence Imaging System (CIS) image is the source document and it remains on CIS for further recall if needed. CIS allows attachment of files to individual cases. This functionality allows documents to be saved to a CIS case for future reference, instead of associating the document with a paper case. Certain subject specific IRMs require attachment of documents to the adjustment. The CIS attachment function may be utilized in lieu of a paper attachment. Refer to IRM 21.5.1.5, Correspondence Imaging System (CIS) Procedures, for additional information on CIS documentation requirements.

  2. Use taxpayer correspondence as the source document (SD) or in the case of oral statement, prepare e-4442/Form 4442, Inquiry Referral, history sheet or phone documentation sheet, and use as the SD. The SD documentation must include the following:

    • Taxpayer must confirm the payment amount or the IRS endorsement information on the cancelled check

    • Payment Document Locator Number (DLN) (matching the transfer DLN)

    • Tax form for the applicable Master File Tax (MFT) Code, tax period, and payment date

    • Any additional pertinent information the taxpayer may provide

    Reminder:

    Corporate (more than one proprietor) Business Master File (BMF) accounts are excluded from oral statement authority when transferring between corporate accounts and either to non-corporate (BMF) accounts or any Individual Master File (IMF) accounts. Source documentation is required. Advise the taxpayer to fax the documentation stating which payment was misapplied to the corporate account and state where the payment should be applied, such as non-corporate (BMF) account or IMF account.

  3. When changing a payment date, and the payment is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , a source document and managerial approval are not required. If the payment is ≡ ≡ ≡ ≡ , both managerial approval (signature) and a source document are required. Refer to the If and Then Table in IRM 21.5.8.4.2, Determining Correct Credit Transfer Format.

  4. No Source Document (NSD) is required on credit transfers within the same TIN, or between related accounts if a credit is available. Examples of related accounts include:

    • Parent submits payment for minor child, but payment is applied to parent’s account

    • Taxpayer submits a payment intended for business account (sole proprietor), but it is applied to a personal account

    • Corporation with several subsidiaries submits payment which is applied to the wrong Employer Identification Number (EIN)

  5. Enter the appropriate information in the "Remarks" section of your credit transfer. Follow procedures in IRM 21.5.2.4.6, Remarks Field, and IRM 21.5.2.4.7, Remarks on Type of Adjustment, for proper use of remarks. Indicate the oral statement or back-up information for your actions. Additional information regarding oral statement remarks can be found in IRM 21.1.3.20.1, Oral Statement Documentation Requirements.

IDRS Guidelines for Credit Transfers

  1. You can transfer a credit if at least one of the tax modules is on the Integrated Data Retrieval System (IDRS). If not, activate an account to IDRS using Command Code (CC) MFREQ. Inputting a credit transfer with only one side active on IDRS will systemically MFREQ a dummy account on the corresponding (second) side of the credit transfer.

    Caution:

    If inputting an installment agreement (I/A) refer to IRM 21.3.12.3.4, Taxpayer Can Make Payments- Installment Agreements, prior to using CC MFREQ.

  2. Before inputting any credit transfer, research IDRS (including CC TXMOD, CC IMFOLT for IMF and CC BMFOLT for BMF) for both the to and the from accounts to view any recent account activity that may have taken place. Consider the effects of pending transactions, previous actions, freeze codes, module balances and posted penalty and interest adjustments. Also, consider the effects of the transaction being input.

  3. Credit transfers may be authorized through oral statement or correspondence received from the taxpayer. If the authorization is through oral statement, the taxpayer must confirm the payment amount or the IRS endorsement information on the cancelled check. Taxpayer may also provide additional pertinent information such as, tax form for the applicable Master File Tax (MFT) code, tax period, and payment document locator number (DLN) (matching the transfer DLN).

  4. Accounts Management employees who have access to the Integrated Automation Technology (IAT) Credit Transfer tool are required to use the tool when inputting credit transfers. For additional IAT information refer to the IAT website http://iat.web.irs.gov/. This tool provides a list of transferable payments, auto-fills reversal transaction codes (TCs), performs unpostable checks and ensures use of appropriate codes, amounts and dates to prevent unpostables.

  5. If an open control base is present, contact that employee. Refer to IDRS – Unit and USR Database on the SERP Home Page under the Who/Where tab, on SERP. You must coordinate actions on modules to prevent erroneous or duplicate adjustments. Exceptions can be found in IRM 21.5.2.3, Adjustment Guidelines - Research.

  6. Do not move payments until they post.

    Exception:

    Pending payments showing IDRS status AP, CU, PN, RS or TP can be moved if a posting delay code is used. Refer to IRM 21.5.8.4.6, Posting Delay Code. The IDRS Pending Status Codes can be found in Document 6209 Section 14.7, Pending Transaction Identification Codes/ IDRS Merge Related Transaction Codes.

    Reminder:

    When inputting a refund deletion request (CC NOREF), monitor the account and transfer credit after TC 841 posts. Refer to IRM 21.4.1.5.10, Refund Intercept CC NOREF with Definer "P" .

  7. Each credit transfer affects two modules unless the transfer is for the purpose of changing the payment date only. When using CC ADD34, the credit side of the CC FRM34 transaction will post one cycle after the debit side. Refer to IRM 20.1.4.24.2, Misdated Deposits, to determine when a Federal Tax Deposit (FTD) transaction date can be changed.

  8. Each credit transfer has two sides:

    • Debit Side - Where the credit is moved from

    • Credit Side - Where the credit is moved to

    Note:

    The generated IDRS format for a credit transfer will show the debit side as the upper portion and the credit side as the lower portion.

  9. To prevent the issuance of erroneous refunds or notices all actions need to post in the same cycle. Use posting delay codes when inputting multiple actions such as:

    • A credit transfer and tax adjustment. If both an adjustment and a transfer of credit into the module are needed, input a posting delay code of one cycle on the adjustment. In three weeks, the taxpayer receives a notice of adjustment with the correct module balance

    • Multiple credit transfers in and out of the same module

    Reminder:

    A Q- freeze on a BMF tax module will hold excess credit for 15 cycles and generate a CP 267No Math Error Credit Offset Notice, or CP 268Math Error Credit Offset Notice, before refunding. Take appropriate action to hold credit for transfer if the refund is imminent. For more information, refer to IRM 21.7.11.4.9, CPs 267/268 - Notice of Excess Credit.

  10. Notices CP 60Credit Reversal Adjustment Notice, for IMF and CP 260Credit Reversal Adjustment, for BMF generate to the taxpayer when a credit transfer places the module into a debit balance over ≡ ≡ ≡ . Follow procedures for misapplied payments in, IRM 21.5.7.4.6.6, Payment Applied to a Different Taxpayer’s Account/TIN.

  11. The bypass indicator (BPI) field is a mandatory field. Input the correct BPI ("0" or "1" ), and if applicable a TC 570, and/or a posting delay code, when necessary to:

    • Suppress notices

    • Hold credits

    • Avoid unpostable conditions

    Refer to IRM 21.5.8.4.5, TC 570 and Bypass Indicator, for information on usage of TC 570 and applicable BPI.

  12. A TC 606 is computer generated to clear net module balances of less than ≡ ≡ ≡ ≡ ≡ .

    If And Then
    TC 670 payment is on the module. The TC 670 is equal to or less than the TC 606 amount. No action is required. The computer will reverse the TC 606 with a TC 607.
    TC 670 payment is on the module. The TC 670 is more than the TC 606 amount. Use CC ADD24 with a TC 672 for the amount and date the TC 670 posted, and a TC 670 for the amount and date of the TC 606 clearance. This generates a TC 607 and a TC 672 with the date of payment and TC 670 date of TC 606.

    Note:

    Do not transfer more than the TC 606 amount.

    Request for tax decrease is received. TC 606 is on the module. TC 606 will automatically reverse when the TC 291 is input.
    Request for a penalty abatement of less than ≡ ≡ ≡ ≡ is received. TC 606 has generated causing a zero balance. No adjustment is necessary.
  13. In order to successfully do a transfer, transaction codes must be compatible. Refer to Document 6209 Section 8A.2, Transaction Codes, for a list of transaction codes and document codes. Refer to Exhibit 21.5.8-1, Transaction Codes and Reversals.

  14. Request a manual lien release (TC 582 lien indicator) in the following situations:

    • The lien will not systemically release

    • The action you are taking will fully satisfy all outstanding liabilities and will not post within 30 days

    • It has been more than 30 days from the time when the account was fully satisfied

    Refer to IRM 5.12.3.3.1, Liability is Satisfied - IRC § 6325(a)(1), regarding manual lien releases. Employees with access to the Automated Lien System (ALS) should input the lien release. Employees without access to ALS should submit Form 13794, Request for Release or Partial Release of Notice of Federal Tax Lien, to the Centralized Lien Unit. The fax numbers can be found by selecting Centralized Lien Processing under the Who/Where tab on the SERP home page.

  15. Lien or Levy payments cannot be applied to MFT 35 or MFT 65, these payments can be identified by the Designated Payment Code (DPC). For additional information on MFT 35 and MFT 65, refer to IRM 21.6.4.4.21.3, Shared Responsibility Payment Overview. There are several types of lien and levy payments:

    • DPC 05 (most common levy)

    • DPC 06 (seizure and sale)

    • DPC 07 (payment received specifically for a full or partial payoff of the Notice of Federal Tax Lien)

    • DPC 15 (payments received with Form 8519-A, Taxpayer's Copy of Notice of Levy)

    • DPC 18 (primary TIN Federal Payment Levy Program (FPLP) anyone with a federal contract usually i.e., social security)

    • DPC 19 (secondary TIN Federal Payment Levy Program (FPLP) anyone with a federal contract usually i.e., social security)

    • DPC 20 (state income tax levy program – primary TIN)

    • DPC 21 (state income tax levy program – secondary TIN)

    • DPC 22 (Alaska permanent fund dividend (oil pipe line) – primary TIN)

    • DPC 23 (Alaska permanent fund dividend – secondary TIN)

    • DPC 30 (payment for municipal income tax levy)

    • DPC 32 (bulk electronic levy – from employer)

  16. When a credit or payment is moved to the Excess Collection File (XSF) or the Unidentified Remittance File (URF), a Transaction Code (TC) 971 with Action Code (AC) 296 must be input on the module where the credit or payment is posted. This provides an audit trail for the credit/payment and indicates research of the primary and related taxpayer identification numbers (TINs) was completed prior to the transfer to XSF or URF. Related TINs may include a secondary social security number (SSN) or an employer identification number (EIN):

    • Input a cross reference TIN in the X-REF TIN field. If no related TINs are found, input the primary TIN in the X-REF TIN field. If multiple TINs are researched, only one cross reference TIN needs to be input. Generally, input the TIN most closely related to the primary TIN

    • Only one TC 971 AC 296 is needed if several payments/credits are being moved off the module at the same time

    • Another TC 971 AC 296 must be input if additional payments/credits post after a previously posted TC 971 AC 296. This will show research was completed on the more recent payments prior to moving them to XSF or URF


    If further information from the taxpayer is needed to resolve the credit, in addition to any letters that may have been issued, you must attempt to contact the taxpayer by telephone to determine proper disposition of payment or credit prior to transferring the credit to XSF. You must document actions on Form 8758, Excess Collections File Addition. Large dollar credit modules of $100,000 or more must have originator's manager's signature of approval certifying that appropriate research has been exhausted prior to XSF application in the remarks section of Form 8758.

Credit Transfer Input on IDRS

  1. Prior to making a credit transfer adjustment, at least one of the tax modules involved must be present on IDRS. To initiate credit transfers, two command codes (CCs) are used in the following sequence:

    1. SUMRY and/or TXMOD (with definer)

    2. ADDnn or ADCnn (nn = document code 24, 34, or 48)

    Reference IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for more information on these command codes.

  2. The tax module accessed with CC TXMOD/SUMRY is the primary account for the credit transfer. Determine whether this tax module should be debited or credited:

    • If account should be debited, use CC ADDnn

    • If account should be credited, use CC ADCnn

  3. Input CC ADDnn or ADCnn and overlay the taxpayer identification number (TIN), MFT, tax period, and name control with the information relating to the other portion of the credit transfer (referred to as the secondary account). The secondary account may or may not reflect the same TIN, MFT, and tax period.

  4. When inputting credit transfers, you may need to use a non-IDRS Indicator listed in table below in the NON-IDRS-IND< field to indicate the secondary account/module is not on IDRS:

    • Primary − TXMOD overlay with CCs ADD24/ADC24, ADD34/ADC34, or ADD48/ADC48

    • Secondary − The other side of the credit transfer

    Non-IDRS indicator values are:

    Indicator value Value explanation
    = The Primary module in the transfer (auto generated)
    Blank Account and specific tax module for the Secondary are both on IDRS
    A Account for the Secondary is not on IDRS
    @ The specific tax module, that credit is being moved in or out of for the Secondary, is not on IDRS
  5. Use designated payment code (DPC) "00" when transferring a misapplied payment without a DPC, transaction codes 640, 670, 680, 694, 690, and 700.

    Note:

    DPC is not needed for CC ADD48/ADC48 credit transfers.

  6. Refer to IRM 5.19.1.5.4.6.3, User Fee Payment Transfer/User Fee Abatements, for User Fee payment transfer procedures.

  7. The credit transfer programming does not allow an IRS received date that is more than 1 year old. When inputting a credit transfer and the IRS received date is more than 1 year old use the current date as the IRS received date. This ONLY pertains to the IRS received date NOT the payment date.

Determining Correct Credit Transfer Format

  1. Use CC ADD24/ADC24, refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information to generate a transfer format CC DRT24 when:

    1. When changing a payment date, override code "2" is required.

      If Then
      Payment amount is over ≡ ≡ Obtain written managerial approval before changing the date. Source Documentation (SD) is required. Employees who have access to CIS should use Case Notes on CIS to obtain managerial approval. The Case Note should state - "Managerial approval required for payment date change" .
      Payment amount is zero on a TC 610 Do not change the date.
      Payment is a Federal Tax Deposit (FTD) Follow instructions in IRM 20.1.4.24.2, Misdated Deposits.
    2. Changing the transaction code of the payment (e.g., TC 610 to TC 670).

      Reminder:

      Remittance Processing System (RPS) Freeze "R-" generates if a credit balance is created when a TC 610 is transferred to a module already containing a RPS TC 610. If possible, change the payment to a TC 670. Otherwise, input TC 290 for zero to release the "R-" Freeze after transferring the payment as a TC 610.

    3. A secondary TC is needed (e.g., TC 570 or TC 180).

    4. Transferring between Master Files (e.g., IMF and BMF).

    5. Transferring with a TC 820.

  2. Use CC ADD34/ADC34, refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information to generate transfer format CC FRM34 when:

    1. Transferring within the same Master File. The posting routine of the CC ADD34/ADC34 prevents partial Master File posting of the transfer document (e.g., the credit side posts but the debit side goes unpostable). For this reason, use CC ADD34/ADC34 whenever possible.

    2. A secondary transaction is not necessary. A credit transfer notice (CP 62 for IMF and CP 225 for BMF) is generated to the taxpayer when the CORRESP-DT field is overlaid with the inquiry date. In general, the taxpayer will receive the credit transfer notice within four weeks from the date the credit transfer was input. Multiple credit transfers are combined and the taxpayer receives only one notice.

  3. Use CC ADD48/ADC48, refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information to generate transfer format CC DRT48 when:

    1. Transferring credits already offset or applied as credit elects.

      If Then
      Credit elect overpayment transfer consists of credits dated by the due date plus grace period. Refer to IRM 21.5.1.4.2.5, Received Date - Grace Periods. Transaction date of the TC 830 (debit) and TC 710 (credit) is the due date of the return, without regard to extensions.

      Exception:

      If the transfer is for a Form 1120 (MFT 02) module with a tax period ending in June, or an MFT 02 tax period beginning prior to 201601, the earliest dates for the debit (TC 830) and credit (TC 710) fields is one month past the un-extended due date of the return. Refer to IRM 21.7.4.4.4.2.1, Form 1120 Corporate Series Return Due Dates - Tax Years Beginning after December 31, 2015.


      Exception:

      If the transfer is for Form 94XX employment tax returns, refer to the appropriate IRM 21.7.2, Employment and Railroad Tax Returns.

      Credit elect overpayment transfer consists of a credit or partial credit dated after the due date of the return plus grace period. Refer to IRM 21.5.1.4.2.5, Received Date- Grace Periods. Transaction date of TC 830 (debit) and TC 710 (credit) is the 23C date of the payment. Input separate transfers to accommodate multiple late payments, or when an overpayment is comprised of both timely and late payments/credits.

      Exception:

      If the transfer is for a Form 1120 (MFT 02) module with a tax period ending in June, or an MFT 02 tax period beginning prior to 201601, the earliest dates for the debit (TC 830) and credit (TC 710) fields is one month past the un-extended due date of the return. Refer to IRM 21.7.4.4.4.2.1, Form 1120 Corporate Series Return Due Dates - Tax Years Beginning after December 31, 2015.

      Exception:

      If the transfer is for Form 94XX employment tax returns, refer to the appropriate IRM 21.7.2, Employment and Railroad Tax Returns.

      Note:

      For additional information on determining the availability dates for overpayments refer to IRM 20.2.4.3, Availability Dates for Overpayments.

    2. When transferring or reversing an overpayment to the next module, the credit must be available before TC 830 can be used to transfer the credit. BPI "0" must be input on CC ADD48/ADC48/DRT48 credit transfers.

      Exception:

      If multiple actions (such as ADJ54 adjustment and a credit transfer) are necessary and the correct overpayment is determined, all actions can be input at the same time. Refer to IRM 21.5.8.4.6, Posting Delay Code.

  4. When inputting an adjustment creating a credit and a credit elect at the same time, you must use either a hold code "1" or hold code "2" on your adjustment to prevent an erroneous refund. Refer to IRM 21.4.5, Erroneous Refunds, for additional information. When adjusting a Mixed Entity or ID Theft account, refer to IRM 25.23.4.6, Multiple Individuals Using the Same TIN - General Guidance for MXEN, and Identity Theft Cases. When the credit elect posts to the account (TC 830), the -K freeze is released and an adjustment notice is sent to the taxpayer. No additional correspondence is needed. Refer to IRM 21.5.2.4.15, Rules on Hold Codes (HC), for more information on using hold codes.

  5. For general information regarding credit transfer formats, refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48.

  6. When transferring an Electronic Federal Tax Payment System (EFTPS) payment, the EFTPS indicator of "1" , must be input on CC ADD/ADC24. Refer to IRM 21.5.8.4.7, Avoiding Credit Transfer Unpostables, for additional information. To assist in identifying EFTPS payments, refer to IRM 3.17.277.5.3, EFT Number, for EFTPS number configuration.

IMF Notices of Credit Posting/Reversal Adjustment

  1. CP 62 (IMF), Notice of Credit Transfer, generates if the CORRESP–DT field on CC FRM34 is overlaid. This notice is similar to the Letter 672C, Payment(s) Located and/or Applied. When CC ADD34/ADC34 is used and the credit transfer fully resolves the taxpayer’s inquiry and no other issues were involved, the CP 62 is an adequate response.

  2. Overlay the CORRESP–DT field with the taxpayer contact date (correspondence date/inquiry date) if known. If contact date is unknown, enter the IRS received date. On multiple transfers, a date must be entered in this field for each payment transferred.

  3. CP 62 does NOT generate if another "Notice of Demand" is generated in the same cycle.

  4. A "Notice of Demand" is considered an adjustment notice. This notice cannot be suppressed and generates when:

    • An adjustment ADJ54 is input, or

    • Timely payments are credited to a tax module causing recomputation of posted Failure to File (FTF) and/or Estimated Tax (ES) penalties.

  5. When the CP 62 will not be generated, written notification to the taxpayer is necessary, such as Letter 672C.

  6. When inputting IMF credit transfers using DRT24/DRT48 which will place the module into debit balance over ≡ ≡ ≡ ≡ ≡ , CP 60, Credit Reversal Adjustment Notice, will automatically generate to the taxpayer.

BMF Notices of Credit Posting/Reversal Adjustments

  1. CP 225 (BMF), Missing Payment Applied, generates when CC ADD34/ADC34 is used and the CORRESP–DT field on CC FRM34 is overlaid. There are two versions of this notice, complete and incomplete.

  2. On multiple credit transfers, enter a date in the CORRESP-DT field for each payment transferred.

  3. The complete CP 225 notice is similar to the Letter 672C, Payment(s) Located and/or Applied.

  4. The incomplete version generates if another "Notice of Demand" is generated in the same cycle. Another CP 210/220"Notice of Demand" is considered an adjustment notice.

    Note:

    An adjustment (ADJ54) input with a TC 290 for zero with or without item reference numbers does not generate a CP 210/220 adjustment notice, unless the TC 290 for zero releases a credit frozen on the module (i.e., Q- freeze, -A freeze, R- freeze, etc.).

  5. Transferring timely credits into a module containing a posted TC 166 (Failure to File penalty), TC 176 (Estimated Tax penalty), TC 186 (Federal Tax Deposit penalty), or TC 276 (Failure to Pay penalty) will cause these penalties to recompute and generate an adjustment notice CP 210/ CP 220. Other penalties may also recompute but will not generate an adjustment notice.

    Note:

    You cannot suppress this type of adjustment notice. You can stop the notice for a manually transferred payment.

  6. An incomplete CP 225 and a CP 210/220 will generate when:

    • A timely payment is transferred into a module AND

    • A recomputation of the FTD, FTF, FTP, and/or ES penalties occurs AND

    • CC FRM34 is used to transfer the payment(s) with the CORRESP-DT field completed

    These notices provide an adequate response to the taxpayer; therefore no additional "C" letter is needed.

  7. When adjusting and transferring credit(s) into the same module using CC FRM34 with no CORRESP-DT, input a posting delay code of one cycle on the adjustment (ADJ54). In three weeks, the taxpayer will receive a notice of adjustment with the correct module balance.

  8. When transferring a misapplied payment, you must check the filing requirements on CC ENMOD to determine if the misapplied payment established the filing requirement. If it did, remove the filing requirement using CC BNCHG. If you are unable to determine if the filing requirement should be removed through IDRS research, request the information from the taxpayer either verbally or in writing.

  9. When inputting BMF credit transfers using DRT24/DRT48 that will place the module into debit balance over ≡ ≡ ≡ , CP 260, Notice of Credit Reversal Adjustment, will automatically generate to the taxpayer.

TC 570 and Bypass Indicator

  1. Use a bypass indicator (BPI) "1" or Transaction Code (TC) 570 to override the unpostable condition 305/198. Unpostable condition 305/198 is created when a credit:

    • Attempts to post to a full paid module, or

    • Is greater than the balance due on the account.

  2. The transaction codes affected by the unpostable condition are:

    • IMF - 430, 660, 670, 760

    • BMF - 650, 660, 670, 760

  3. As of January 1, 2003, the bypass indicator (BPI) field is a mandatory field. Follow the chart below to determine the correct BPI.

    Situation
    (Credit portion of transfer Only)
    Bypass Indicator ″0″ Bypass Indicator ″1″ TC 570
    Credit transfer and the overpayment should not refund or offset

    Exception:

    IMF only TC 760

    Yes No

    Yes
    Yes
    Credit transfer and the overpayment should refund No Yes No
    Credit transfer amount is less than the debit module balance Yes No No
    Credit transfer full pays the module Yes No No
    Credit transfer to module with no TC 150

    Exception:

    BMF only


    1. Status 06 and TC 594/599 posted

    2. Status 06 and other TC 59X posted

    Yes


    Yes

    No
    No


    No

    Yes
    No


    No

    No
    Credit transfer to correct payment date. Refer to IRM 21.5.8.4.2, Determining Correct Credit Transfer Format, for signature requirements when correcting payment dates.

    Note:

    Refer to IRM 21.5.8.3.1, Determining Source Document Requirement for Credit Transfers.

    Yes No Yes
    Situation
    (Debit portion of transfer only)
    Bypass Indicator TC 570
    Prevent refund or offset of any remaining credit after transfer N/A Yes
    To suppress CP 260/60 Notice N/A Yes

    Reminder:

    TC 570 must be input with the credit transfer in order to hold the credit. A TC 570 input as a separate transaction with CC FRM77 will not prevent refund or offset. When the Debit portion of the credit transfer has a remaining credit balance and should not refund or offset, select the Integrated Automation Technologies (IAT) Credit Transfer Tool options, "Debit Freeze" and "Override ALL ADD34 with ADD24" listed under the "Post All Credits With Section" . Selecting these options generate a TC 570 on the debit side of the transfer preventing the credit from refund or offset.

  4. Do not freeze a credit without a valid reason. The tax examiner/customer service representative inputting the TC 570 must ensure the freeze is released when applicable.

  5. To reverse a TC 570, input TC 571 on CC REQ77 with a posting delay code of one cycle. Refer to IRM 2.4.19, Command Codes REQ77, FRM77 and FRM7A.

    Exception:

    Do NOT input TC 571 if a TC 29X or 30X will be input at a later date, or there is an open "-L" Freeze on the module. Refer to procedures in IRM 21.5.6.4.24, -L Freeze. If there is a TC 971 AC 665 this indicates a manual assessment was processed by Accounting and any credits on the module should NOT ne released.

    Note:

    Generally, payments should not be removed from an account in debit status, or in zero balance, or if the transfer results in a debit balance.

Posting Delay Code

  1. Use posting delay code (PDC) on an adjustment or credit transfer when multiple transactions are required to adjust an account and some must post in later cycles.

  2. You can use the PDC with all credit transfer formats.

  3. Input CC ADD34/ADC34 with PDC on the debit side only. The credit transaction does not attempt to post until at least one cycle after the debit posts.

  4. On BMF accounts, use PDCs to bypass Unpostable 316 when:

    1. Transferring multiple TCs 826 with the same payment date and the computer split the corresponding credit into multiple TC 706 causing a money mismatch. Reverse the largest TC 706 first and use PDCs on the remaining TC 706.

      Reminder:

      When you are also adjusting an account, use a HC 3 to suppress additional notices to the taxpayer, when using PDCs to cycle the remaining TC(s) 706.

    2. Transferring multiple credits or payments with the same payment date and the amounts are equal to, or less than, the posted payment amount. Transfer the largest payment first, then cycle the subsequent payments using PDCs.

  5. The PDC extends the IDRS "PN" Status. It does not post with the transaction or appear with the IDRS pending transaction.

Avoiding Credit Transfer Unpostables

  1. To avoid unpostables, use the correct reversal transaction codes and correct dates as applicable. When using CC DRT24, the EFTPS-ELEC-DPST-IND "1" must be present when the original payment was received through EFTPS. For non-electronic payments, the EFTPS-ELEC-DPST-IND indicator must be blank.

    Reminder:

    The debit and credit dates are different on some transactions, e.g., TC 792/ TC 892.

  2. Input a bypass indicator (BPI) "1" or TC 570 when transferring payments to an account in zero or credit balance. Follow procedures in IRM 21.5.8.4.5, TC 570 and Bypass Indicator.

  3. Use CC ADD34/ADC34 to transfer EFTPS payments, unless required to use CC ADD24/ADC24. Do all preliminary research to locate EFTPS payments using CC EFTPS before performing a credit transfer. For additional information for this command code refer to IRM 2.3.70, Command Code EFTPS.

  4. Research IDRS for a generated transfer such as TC 666 and TC 667 before reversing the credit elect TC 712 (including re-sequence transactions, Command Code IMFOLQ).

  5. Ensure the account is active. Refer to IRM 21.5.2.4.13, Reinstating Retention Register Accounts, for reinstating retention register accounts.

  6. When a credit transfer is input incorrectly, the same person who input the credit transfer can use the Command Code TERUP the same day to delete the credit transfer. Only the Debit TIN should be deleted, it is not necessary to delete the Credit side since the Debit is the primary and controlling transaction. Refer to IRM 2.4.13.2, Command Code TERUP.

TRANSACTION CODES AND REVERSALS

Reminder: Accounts Management (AM) employees who have access to the Integrated Automation Technologies (IAT) Credit Transfer tool are required to use the tool when inputting credit transfers.

The table below is not all inclusive for additional guidance, refer to 6209 Code Retriever.

CC ADD34/ADC34 and CC ADD24/ADC24
Use CC ADD34/ADC34 Whenever Possible

Note:

Use designated payment code (DPC) "00" when transferring a misapplied payment without a DPC, transaction codes 640, 670, 680, 694, 690, and 700. When transferring these payments, input "00" on the credit side of the Doc Code 24 or 34 screen immediately after DESG-PYMT-CD<__ unless the payment has another code (01-14 or 99). When moving a cash bond or IRC § 6603 deposit from one tax module to another, to maintain the identity of the deposit on the receiving module use DPC "12" on the credit side of the transfer.

To Move Posted TC Reverse Credit with TC (Debit) Input Credit with TC (Credit) CC ADDxx or CC ADCxx Explanation of when to use
Previous credit held on account 820 700 24 Transfer lump sum credits to the receiving module when not reversing a previous transfer.
For TC 820 and TC 700 use the date the credit became available, which is the later of the return due date (determined without regard to any extension of time for filing), or the date of the credit creating the overpayment. If the TC 820 date is prior to the date the credit is available, interest and penalty will erroneously assess on the losing account.

Exception:

When an overpayment is applied to a liability dated after the date the credit comprising the overpayment is available, the date of the TC 700 is the due date of that liability, in which case it may be necessary to compute interest on the transfer, refer to IRM 20.2.4.6.1, Interest on Offsets.


Caution:

Input separate transfers to accommodate multiple late payments, or when the overpayment is comprised of both timely and late payments/credits.


Reminder:

Do not use the combination of TC 820 and TC 6XX when moving an overpayment to a future tax period.

Various TCs that created the overpayment 830 710 48 Transfer overpayment to the following period (credit elect). For TC 830 and TC 710, use the later of the return due date, (determined without regard to any extension of time for filing), or the date of the credit creating the overpayment. If all payments or credits are timely, use the return due date. If the TC 830 date is prior to the date the credit is available, interest and penalty will erroneously assess on the losing account.

Exception:

If the transfer is for a Form 1120 (MFT 02) module with a tax period ending in June, or a MFT 02 tax period beginning prior to 201601, the earliest dates for the debit (TC 830) and credit (TC 710) fields is one month past the un-extended due date of the return. Refer to IRM 21.7.4.4.4.2.1, Form 1120 Corporate Series Return Due Dates – Tax Years Beginning after December 31, 2015.


Note:

When adjusting employment tax returns refer to IRM 21.7.2.4.6, Adjusted Employer's Federal Tax Return or Claim for Refund, to determine the correct transaction date.


Caution:

Input separate transfers to accommodate multiple late payments, or when the overpayment is comprised of both timely and late payments/credits.

430 662 660 24 or 34 Transfer as an estimated tax payment. Use the TC 430 payment date on TC 662 and TC 660. For detailed information on transferring estimated tax payments refer to IRM 21.6.3.4.2.3, Estimated Tax (ES).
430 662 670 24 Transfer estimated payment that should be posted as a subsequent payment (e.g., received after RDD). Use the payment date of the TC 430 on the TC 662 and TC 670.
610 612 610 24 or 34 Transfer a payment received with a return when the same return is being reprocessed to the receiving module. Use the TC 610 payment date on TC 612 and TC 610.
610 612 670 24 Transfer a payment received with a return when a TC 150 has previously posted to the receiving account and the payment should be posted as a subsequent payment (e.g., received after original return received). Use the TC 610 payment date on TC 612 and TC 670.
620 622 620 24 or 34 When moving an extension to another module, transfer the payment received with the extension request Form 7004, Form 8736, or Form 5558. The payment posts as a tentative liability, which is the tax amount, allowed installment payment privilege. Use the TC 620 payment date on TC 622 and TC 620.
620 622 670 24 Transfer a payment as a subsequent payment when it was not meant as an installment payment with an extension. Use the TC 620 payment date on TC 622 and TC 670.
640 642 670 24 Transfer an advanced payment as a subsequent payment when it was processed in error or not meant to be an advanced payment of a deficiency. Use the TC 640 payment date on TC 642 and TC 670.
640 642 640 24 or 34 Transfer an advanced payment as a subsequent payment on the receiving module. Use the TC 640 payment date on TC 642 and TC 640.
640 642 660 24 Transfer an advanced payment as an estimated payment when it was processed in error or not meant to be an advanced payment of a deficiency. Use the TC 640 payment date on TC 642 and TC 660.
650 652 670 24 Transfer a FTD (TC 650) payment on the BMF account to the IMF account as a subsequent payment if the date of the payment is after the due date of the receiving account. Use the TC 650 payment date on TC 652 and TC 670.
650 652 650 24 or 34 Transfer a FTD (TC 650) payment on BMF account. Use the TC 650 payment date on TC 652 and TC 650.
650 652 660 24 Transfer a FTD (TC 650) payment on the BMF account to the IMF account as an estimated tax payment if the date of the payment is prior to the due date of the receiving return (TC 150). Use the TC 650 payment date on TC 652 and TC 660.
660 662 660 24 or 34 Transfer an estimated tax payment received before the due date of the receiving module. Use the TC 660 payment date on TC 662 and TC 660.
660 662 670 24 Transfer an estimated tax payment received after the due date of the receiving module. Use the TC 660 payment date on TC 662 and TC 670.
660 662 650 24 Transfer an estimated tax payment on Form 941 or Form 1120. Use the TC 660 payment date on TC 662 and TC 650.
670 672 670 24 or 34 Transfer payments as subsequent payments when the due date of the receiving module is before the date of the payment. Use the TC 670 payment date on TC 672 and TC 670.
670 672 660 24 Transfer as estimated tax payment when the received date of the payment is before the due date of the return. Use the TC 670 payment date on TC 672 and TC 660.
670 672 610 24 Transfer a subsequent payment, which should have posted as a payment with the original return (TC 150). Use the TC 670 payment date on TC 672 and TC 610.
678 679 678 24 Transfer an estimated tax paid by treasury bonds. Applies only to State tax. Use the TC 678 payment date on TC 679 and TC 678.
680 682 680 24 or 34 Transfer a designated payment as a designated payment of interest if the payment was meant to be a payment of interest. Use the TC 680 payment date on TC 682 and TC 680.
680 682 670 24 Transfer a designated payment of interest as a subsequent payment if the payment was not meant to be applied as a designated payment. Use the TC 680 payment date on TC 682 and TC 670.
690 692 690 24 or 34 Transfer a designated penalty payment as a designated penalty payment if the payment was meant to be applied as a designated payment. Use the TC 690 payment date on TC 692 and TC 690.
690 692 670 24 Transfer a designated penalty payment as a subsequent payment per taxpayer request, or if the payment was not meant to be applied as a designated penalty payment. Use the TC 690 payment date on TC 692 and TC 670.
694 695 694 24 Transfer a designated payment of Fees and Collection costs. Will unpost if there is no TC 360 present on the debited module. Use the TC 694 payment date on TC 695 and TC 694.
694 695 670 24 Transfer a designated penalty payment as a subsequent payment if that is the taxpayers intent. Use the TC 694 payment date on TC 695 and TC 670.
700 702 700 24 Reverse lump sum credits to the receiving module when not reversing a previous transfer. Use the date the credit became available. If a date is used prior to the date the credit became available, interest will be assessed on the debit account. If the receiving account has a due date after the date the credit became available; it may be necessary to compute interest on the credit.
700 702 822 24 Reverse a prior manual transfer of a lump sum credit. Use the same dates that are being reversed (the TC 702 date must match the TC 700 date, the TC 822 date must match the TC 820 date.
706 701 821 24 Reverse a computer generated over payment credit offset. Posted as TC 826 and TC 706. The dates of TC 826/706 will not be the same on BMF accounts.
706 701 700 24 Transfer a computer generated lump sum credit (offset) when not reversing the entire amount of the computer generated transfer. Use the TC 706 date with the TC 701. The same date should be used on the TC 700. If the due date of the receiving modules is after the date that the credit became available, interest may need to be computed.
706 701 821 24 Reverse a computer generated lump sum credit transfer (offset). Use the date of the TC 706 on the TC 701 and use the date of the TC 826 on the TC 821.
710 712 832 48 Reverse a manually transferred credit elect. Receiving module must contain a TC 830 or TC 836. Use date of the TC 710 on the TC 712 and the date of TC 830 on the TC 832.
710 712 710 48 Transfer a manual credit elect to another account (for example, a spouse’s account). Use the date of the TC 710 on the TC 712 and TC 710.
716 712 832 48 Reverse a computer generated credit elect. The receiving module must contain a TC 830 or TC 836. The same dates must be used as the posted date. Use date of TC 716 on the TC 712 and the date of the TC 836 on TC 832.
716 712 710 48 Transfer a computer generated credit elect to another account (for example, a spouse’s account.) Use the TC 716 date on TC 712 and TC 710.
730 732 730 24 Transfer manually transferred interest on accounts. Use the TC 730 date on TC 732 and TC 730.
736 731 730 24 Transfer a computer generated interest to another account. Use the TC 736 date on TC 731 and TC 730.
736 731 851 24 Transfer a computer generated interest back to where it came from. Use the date of the TC 736 on the TC 731 and the date of the TC 856 on the TC 851.
790 792 892 24 Transfer a manually transferred overpayment from IMF to BMF or IRAF. Use the date of the TC 790 on the TC 792 and the date of the TC 896 on the TC 892.
796 792 892 24 Transfer a Shared Responsibility Payment (MFT 35 and MFT 65) or a computer generated overpayment from IMF to BMF and IRAF. Use the date of the TC 796 on the TC 792 and date of the TC 896 on the TC 892 (input a credit override indicator of "2" on both the credit and the debit side).
800 802 800 48 Transfer a manually input credit for withholding taxes. Use the TC 800 payment date on TC 802 and TC 800.
806 802 800 24 Transfer a computer generated posted withholding taxes. Use the TC 806 payment date on TC 802 and TC 800.
821 820 700 24 Transfer a manually transferred credit. Use the TC 821 payment date on TC 820 and TC 700.
840 or 846 849 848 48 Transfer a manual or computer generated IMF or NMF refund (MFT 29, 30, 31 and 55) in whole or part. Use the TC 840 or TC 846 date on TC 849 and TC 848.
896 792 892 24 Transfer a computer generated overpayment to IRAF accounts and from IMF to BMF, and MFT 29. Use the date of the TC 796 on the TC 792 and date of the TC 896 on the TC 892 (input a credit override indicator of "2" on both the credit and the debit side).
976 612 610 24 or 34 Transfer a payment received with a subsequent return when the return is being reprocessed to another account. Use the date of the TC 976 on the TC 612 and TC 610.
976 612 670 24 Transfer a payment received with a subsequent return when the receiving account has a previously posted TC 150. Use the date of the TC 976 on the TC 612 and TC 670.