21.6.1 Filing Status and Exemption Adjustments

Manual Transmittal

September 04, 2018

Purpose

(1) This transmits a revised IRM 21.6.1, Individual Tax Returns, Filing Status and Exemption Adjustments.

Material Changes

(1) Editorial changes were made throughout IRM 21.6.1. The web addresses, IRM and legal resources were checked and corrected, where necessary.

(2) IRM 21.6.1.1.5 added acronym ODC information.

(3) IRM 21.6.1.4.1 added 2nd sentence that details what is needed to establish a joint nameline.

(4) IPU 18U0955 issued 06-18-2018 IRM 21.6.1.5.5 added clarification for claims received after the due date of the return.

(5) IRM 21.6.1.5.7 included additional detail that may lead to an invalid joint return.

(6) IRM 21.6.1.6 added Tax Cuts and Jobs Act of 2017 information that suspends the personal exemption.

(7) IRM 21.6.1.6.1 added Tax Cuts and Jobs Act of 2017 regarding CTC and SSN requirement.

(8) IPU 17U1543 issued 10-31-2017 IRM 21.6.1.6.2 added tax year 2018 Personal Exemption Amounts.

(9) IRM 21.6.1.6.2 removed tax year 2018 Personal Exemption Amounts, added Tax Cuts and Jobs Act of 2017 information.

(10) IPU 17U1543 issued 10-31-2017 IRM 21.6.1.6.3 added tax year 2018 Personal Exemption Phase-Out Amounts.

(11) IRM 21.6.1.6.3 removed tax year 2018 Personal Exemption Phase-Out Amounts and added Tax Cuts and Jobs Act of 2017 information.

(12) IRM 21.6.1.6.4 added details for a valid TIN.

(13) IRM 21.6.1.6.6.1 added Tax Cuts and Jobs Act of 2017 information pertaining to ITINs.

(14) IRM 21.6.1.6.6.2 added Tax Cuts and Jobs Act of 2017 information pertaining to Credit for Other Dependents and Math Error Notices.

(15) IPU 17U1619 issued 11-21-2017 IRM 21.6.1.6.6.2 updated ITIN Math Error procedures.

(16) IRM 21.6.1.6.8 added link for source code and reason code reference.

(17) IPU 17U1442 issued 10-16-2017 IRM 21.6.1.6.9 added clarification concerning Form 8332 requirements.

(18) IRM 21.6.1.6.9 added link for source code and reason code reference.

(19) IPU 18U0146 issued 01-19-2018 IRM 21.6.1.7.2 added procedures for DDBCK related to Additional Child Tax Credit and American Opportunity Credit.

(20) IPU 18U0361 issued 02-27-2018 IRM 21.6.1.7.2 added procedures for DDBCK related to Return Preparer Misconduct (RPM) cases.

(21) IRM 21.6.1.7.2 added Credit for Other Dependents (ODC) to DDBCK requirements.

Effect on Other Documents

IRM 21.6.1, Filing Status and Exemption Adjustments, dated September 12, 2017 (effective 10-01-2017) is superseded. This IRM incorporates Interim Procedural Updates (IPU) 17U1442 (dated 10-16-2017), 17U1543 (dated 10-31-2017), 17U1619 (dated 11-21-2017), 18U0146 (dated 01-19-2018), and 018U0955 (dated 06-18-2018).

Audience

All employees performing account work.

Effective Date

(10-01-2018)

Karen Michaels
Director, Accounts Management
Wage and Investment Division

Programs Scope and Objectives

  1. Purpose: This IRM covers information on Individual Tax Returns, Filing Status and Exemption Adjustments.

  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, Servicewide Policies and Authorities - Policy Statements for Customer Account Services Activities, for information.

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. A new credit was created with the Tax Cuts and Jobs Act of 2017, Credit for Other Dependent, the associated acronym is ODC.

Related Resources

  1. Refer to IRM 1.4.2.1.8, Related Resources, for information on related resources that impact internal controls.

Filing Status and Exemptions Adjustments Overview

  1. This section provides information on changes made to filing status and exemptions, usually after a tax return has been filed. It is designed to assist in making the appropriate changes to a taxpayer’s return, evaluate each situation and make a determination to adjust a taxpayer’s filing status and/or exemptions. Because of inflation, the amount allotted for each filing status and exemption usually increases yearly.

  2. There are two types of exemptions:

    • Personal

    • Dependency

What Are Filing Status Changes?

  1. A taxpayer may file an amended return to change the filing status claimed on the original return. Changes may involve the following:

    • From Married Filing Separately (MFS), Single, or Head of Household (HOH) to Married Filing Joint (MFJ), refer to IRM 21.6.1.4, Filing Status Research, and IRM 21.6.1.4.1, Married Filing Separate, Single, or Head of Household to Married Filing Joint Research

    • From MFJ to MFS, Single or HOH, refer to IRM 21.6.1.5.5, Married Filing Joint to Married Filing Separate, Single, or Head of Household Procedures

    • Other changes, such as Qualifying widow(er) with dependent child

Filing Status Research

  1. Verify using Command Code (CC) RTVUE if the change is a line item change and can be corrected by oral statement.

  2. If the filing status was changed during initial processing due to a Taxpayer Identification Number (TIN) related math error, consider a filing status correction if the taxpayer responds to the TIN issue.

    Example:

    The filing status was changed from Head of Household to Single, during original processing, because the taxpayer did not provide the correct TIN for the dependent.

    Refer to IRM 21.6.1.7, Command Code DUPED and DDBCK, and IRM 3.13.5, Individual Master File (IMF) Account Numbers, for additional information.

    Caution:

    Prior to release of any tax information to a taxpayer or the taxpayer’s representative, appropriate disclosure authentication must be made. For additional information, refer to IRM 21.1.3.2, General Disclosure Guidelines. If applicable, refer to IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail.

  3. To determine if an International filing status change is allowable, refer to IRM 21.8.1, IMF International Adjustments.

  4. Personal exemptions are limited to the taxpayer and the taxpayer’s spouse.

  5. Dependency exemptions are for anyone else the taxpayer can properly claim as a dependent on a return.

  6. The amount of one personal exemption and one dependency exemption is the same.

  7. Generally, filing status is determined by marital status on the last day of the year.

  8. Filing status will affect the standard deduction (unless the taxpayer itemizes), as well as the tax rate. Refer to IRM 4.19.14.5.7, Filing Status, for the guidelines to determine each filing status.

  9. A parent of a kidnapped child may qualify to file Head of Household (if the parent would otherwise have been entitled to claim the exemption if there had been no kidnapping) or Qualifying Widow(er) with Dependent Child. Refer to Publication 501, Exemptions, Standard Deductions and Filing Information, for additional information.

  10. Refer taxpayers to the Taxpayer Advocate Service (TAS) when the contact meets TAS criteria and you can’t resolve the taxpayer’s issue the same day. Refer to IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria. The definition of same day is within 24 hours. Same day cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer’s issue. Do not refer same day cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations. When you refer cases to TAS, prepare Form e-911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), via AMS or Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), if AMS is not available.

Married Filing Separate, Single, or Head of Household to Married Filing Joint Research

  1. Married taxpayers who previously filed as Married Filing Separately (MFS), Single, or Head of Household (HOH) may file a married filing joint return within three years from the due date of the original return without regard to extensions, provided the Service did not mail either spouse a notice of deficiency for which a petition was filed timely in the U.S. Tax Court, and neither spouse has commenced a lawsuit, or entered into a closing agreement, or offer-in-compromise.

    Note:

    Refer to IRM 25.6.1.9.4.4, Joint Return after Separate Return, for specific information regarding separate to joint returns and the Assessment Statute Expiration Date (ASED).

  2. To establish a joint name line, a TIN is needed for both spouses. Acceptable TINS include an SSN, ITIN or IRSN. For information on establishing an Internal Revenue Service Number, please refer to IRM 3.13.5.73, When Internal Revenue Service Numbers (IRSNs), are needed.

Filing Status Change Procedures

  1. Follow these procedures for filing status changes. Disallow filing status change if the spouses are not eligible to switch the filing status from married filing separate to married filing joint status and send the appropriate certified "C" letter (i.e., Letter 105C). Refer to IRM 25.6.1.10.2.10.2, Joint Returns, for statute information. Include appeal rights in the "C" letter.

  2. Update ENMOD on all filing status changes.

  3. In all cases, when an exemption and/or credit requiring Taxpayer Identification Number (TIN) validation is being allowed/removed due to a filing status change, use either Command Code (CC) DUPED or CC DDBCK to update the Duplicate TIN database. Refer to IRM 21.6.1.7, Command Code DUPED and DDBCK.

  4. Filing status changes may impact the Premium Tax Credit (PTC), refer to IRM 21.6.3.4.2.12, Premium Tax Credit. Terms used for PTC:

    • Excess Advance Premium Tax Credit Repayment - Amount of additional tax liability the taxpayer must pay with their tax return.

    • Premium Tax Credit - Amount of premium tax credit the taxpayer is entitled to receive as a refundable credit on their tax return after reconciling the total premium tax credit with advance premium tax credit.

    • Advance Premium Tax Credit (APTC) - Amount of advance premium tax credit paid to the insurer on behalf of covered individuals in the tax household.

    • Total Premium Tax Credit - Full amount of premium tax credit the taxpayer is entitled to receive without considering APTC paid.

    • Excess Advance Payment Above Limitation - When the additional tax limitation is applied, amount of excess advance payment the taxpayer is not required to repay.

  5. When changing the filing status (Single, Head of Household (HOH), Qualifying Widower (QW), Married Filing Separate (MFS), Married Filing Joint (MFJ)) use the table below to determine potential impact to PTC. This table is used ONLY for filing status change, if adding or deleting exemptions refer to IRM 21.6.1.6, Exemptions Procedures.

    Current Filing Status? New Filing Status? Is one of the 5 PTC data elements present on Master File? (Refer to IRM 21.6.3.4.2.12.7, Adjusting Accounts) Data element present is PTC or Excess Advance PTC Repayment or Either? Potential Impact to PTC based on FS change ONLY?
    Single HOH / QW / MFJ Yes PTC (credit) No
    Single HOH / QW / MFJ Yes Excess Advance PTC Repayment (tax) Yes, if amount is present in Excess Advance Payment Above Limitation data element
    Single/ HOH/ MFJ/ QW MFS Yes Either Yes
    Any Any No N/A No
    HOH Single/ MFJ/ QW Yes PTC No
    HOH Single Yes Excess Advance PTC Repayment Yes
    HOH MFJ / QW Yes Excess Advance PTC Repayment No
    MFJ Single/ HOH/ QW Yes PTC No
    MFJ Single Yes Excess Advance PTC Repayment Yes
    MFJ HOH/QW Yes Excess Advance PTC Repayment No
    MFS Single / HOH/ MFJ/ QW Yes PTC No
    MFS Single Yes Excess Advance PTC Repayment Yes
    MFS HOH/ MFJ/ QW Yes Excess Advance PTC Repayment No
    QW Single / HOH/ MFJ   PTC No
    QW Single   Excess Advance PTC Repayment Yes
    QW HOH/ MFJ   Excess Advance PTC Repayment No

"No Consideration" Filing Status Change

  1. "No Consider" the change to married filing joint status:

    If either taxpayer And Then
    Received an examination 30 day letter Requested an Appeals review for the period (denoted by an open Audit Information Management Systems (AIMS) Transaction Code (TC) 420 with a Status Code 80 or 81 indicates taxpayer's case is in Appeals) Send the appropriate "C" letter (i.e. Letter 916C). Forward to Appeals.

Returns With Missing Information

  1. Return the claim to the taxpayer with the appropriate "C" letter, requesting the necessary information if:

    • The amended return is not signed by both taxpayers

    • Someone other than an executor, administrator, or surviving spouse files an amended married filing joint return for a deceased taxpayer

    • Supporting forms, schedules, or documents are missing

    Caution:

    Numbered returns and Statute Imminent cases are never returned to the taxpayer, refer to IRM 25.6, Statute of Limitations.

    Reminder:

    Release the "-A" freeze.

    Note:

    For Correspondence Imaging System (CIS) cases, refer to IRM 21.5.1.5.6, Incomplete CIS Claims.

  2. If there is a tax increase/credit decrease adjust the account and send a letter to the taxpayer requesting the missing information. Refer to IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing, for additional guidance.

Processing Married Filing Separate, Single, or Head of Household to Married Filing Joint Adjustments

  1. Research for the filing of both returns. It is not necessary to request the returns if the married filing joint return information can be verified from research. To determine if the request for a married filing joint election is valid, refer to IRM 25.6.1.9.4.4, Joint Return After Separate Return.

  2. If there is an open Transaction Code (TC) 420 or an open "-L" freeze on either spouse's account, follow IRM 21.5.3.4.7, Processing Claims and Amended Returns with Examination Involvement.

    Note:

    When an open TC 420 with status code 80 or 81 is on the account, refer to IRM 21.6.1.5.1, No Consideration Filing Status Change.

  3. Math verify the married filing joint return and recompute the tax, if necessary. Determine if an estimated tax penalty needs to be assessed or recomputed using the married filing joint liability. Refer to IRM 20.1.3.2.1.1.2, Joint Return After Filing Separate Return(s).

  4. Domestic married filing separate to married filing joint claims are processed under category code "SPJT" and program code 40056. Separate to Joint claims should be scanned into CIS as "SPJT" , if not, update the category code.

  5. Update the DUPOL database. Refer to IRM 21.6.1.7, Command Code DUPED and DDBCK, for additional information.

  6. Update the secondary taxpayer's address if there is a change on the married filing joint return.

    Exception:

    Do not update if one of the following apply:

    • The primary taxpayer filed a later return with a different spouse

    • The primary taxpayer filed a later return with a filing status of single, head of household, qualifying widower or married filing separate indicating a different spouse

    • The secondary taxpayer has had an address update within the previous 52 cycles

  7. Consistent with Obergefell v. Hodges, 135 S. Ct. 2584, lawfully married same-sex couples filing married filing joint or married filing separate returns are married for all federal tax purposes.

    Reminder:

    DO NOT request ANY additional documentation from the taxpayer to validate the marriage, such as proof or date of marriage. Taxpayer is not required to provide ANY validity for the marriage, process the claim following normal procedures.

  8. Registered Domestic Partnerships (RDPs), civil unions and other similar formal relationships not recognized as marriage under state law are not recognized as marriages for federal tax purposes.

    Caution:

    Do NOT confuse Registered Domestic Partner (RDP) and Community Property Claims with lawfully married same-sex couples. Refer to IRM 21.6.1.5.10, Registered Domestic Partners and Community Property Procedures.

  9. Legally married same-sex couples must generally file their returns with either the married filing joint or married filing separate filing status.

  10. All items required to be reported on an original return, amended return, adjusted return, or claim for credit or refund that are affected by the filing status must be adjusted consistent with the status reported on the return or claim. If the claim is incomplete or additional information is needed, refer to IRM 21.5.1.5.6, Incomplete CIS Claims.

  11. For any statute related issues, refer to IRM 21.6.1.5.4, "Statute of Limitations" Procedures for Married Filing Separate to Married Filing Joint.

    Reminder:

    Lawfully married same-sex couples with related employee Excess FICA claims filed on Form 843, follow procedures in IRM 21.6.3.4.2.4, Excess Social Security and RRTA Tier I Tax Credits, and refer to a BMF campus (Cincinnati or Ogden).

  12. Additional information is located on the IRS website.

Married Filing Separate, Single, or Head of Household to Married Filing Joint and Both Taxpayers Previously Filed
  1. If both taxpayers previously filed a married filing separate, single, or head of household return and are now filing married filing joint, adjust the secondary account first. Take the following action on the secondary account:

    1. Back out the tax, income, item reference field, estimated tax penalty (Transaction Code (TC) 170 or TC 176), and any manual restrictions. When backing out an estimated tax penalty, use TC 171 with Reason Code (RC) 065 with Penalty Reason Code (PRC) 016. If no estimated tax penalty was previously assessed, refer to (c) below. Input a Priority Code (PC) "1" on the adjustment if an -L freeze is present on the secondary account. If applicable, net out (subtract) any tax offsets from the withholding.

    2. Input item reference code 999 for zero (.00) to prevent an Examination Multiple Filer case.

    3. If an estimated tax penalty was not backed out per (a) above, input a Transaction Code (TC) 170 for zero (.00) when decreasing withholding and/or transferring timely payments from the module and tax is also being adjusted when there is not a Computer Condition Code (CCC) "P" present.

    4. You MUST use a Hold Code (HC) "4" to prevent erroneous refunds or notices. If multiple adjustments are needed because of the number of credit reference numbers use a HC "4" on each adjustment.

    5. Input TC 971 with Action Code (AC) 001 to cross reference the primary taxpayer's account. Use the secondary taxpayer’s TC 150 RET-RCVD-DT on TXMOD as the Transaction Date for the TC 971.

    6. Transfer any extension or available credit/payments to the primary account. If a refundable credit was involved, determine if taxpayer is eligible for the credit. If the account has a First Time Homebuyer Credit (FTHBC), refer to IRM 21.6.3.4.2.10.7, First-Time Homebuyer Adjusting Accounts, and IRM 21.6.4.4.18.4, Manually Adjusting the Recapture Amount.

    7. Transfer any refund previously issued using TC 848 and TC 849. Refer to IRM 21.5.2.4.23.10, Moving Refunds, and IRM 21.4.6.5, Refund Offset Procedures.

    8. Update DDBCK and delete all the exemption(s).

  2. After adjusting the secondary account following the procedures above, take the following actions on the primary account:

    1. Correct the entity on the primary account to reflect the married filing joint information. Refer to IRM 3.13.5.118.10, Inputting Name Changes for Married Filing Jointly (MFJ) Taxpayers, and IRM 3.13.5.118, Correcting a Taxpayer’s Name.

      Reminder:

      When adding the secondary taxpayer's name, update the entity as shown on the Form 1040-X, Amended Return. Married filing joint taxpayers do not always use/have the same last name. Failure to update the entity to reflect the married filing joint filing information could result in an erroneous refund. Refer to IRM 21.4.5.6, Category D Erroneous Refund Procedures.

    2. Update DDBCK with the correct filing status and add secondary taxpayer (and dependents, if applicable). Adjust the primary account as necessary, using a Hold Code (HC) "1" when moving a refund from the secondary account to the primary account. You MUST use a HC "1" to prevent an erroneous refund while waiting for the TC 849 to post. If a refund is NOT being moved/transferred from the secondary account to the primary account use a Hold Code "0" or the applicable hold code. Refer to IRM 21.5.2.4.15, Rules on Hold Codes (HC).

    3. If health care responsibility (line 61 (1040), line 38 (1040A), line 11 (1040EZ)) is addressed on the married filing joint return for tax year 2014 and subsequent, such as an entry on Form 1040X, line 9, remove the Shared Responsibility Payment (SRP) from the separate account. If the SRP is not addressed, or not reported on a DUPF return, back out the SRP on the separate return and assess on the married filing joint return. For additional information on SRP, refer to IRM 21.6.4.4.21.3, Shared Responsibility Payment Overview.
      Example: $95 was originally reported on the separate account and Form 1040X column A shows $95 but no entry in column B or column C, the married filing joint account needs to reflect a $95 SRP. However, if Form 1040X column C shows $0, abate the SRP, or increase or decrease the SRP if column C shows an increase or decrease.

    4. To research and calculate the Premium Tax Credit (PTC), refer to IRM 21.6.3.4.2.12.6, Premium Tax Credit Amended Returns. The Form 8962, Premium Tax Credit (PTC) may or may not be attached.

    5. Use blocking series 05 for electronically filed tax returns, 00 when making an adjustment using the original return as the source document, or 18 when adjustment should be associated with the original return.

    6. Refer to IRM 21.6.3.4.2.7, Earned Income Tax Credit (EITC), for any necessary EITC changes.

    7. Any adjustment involving a married filing joint return after filing a married filing separate returns will require a manual estimated tax penalty computation and adjustment, even if there is no change to the penalty (TC 170 for zero amount). Refer to IRM 20.1.3.2.1.1.2, Joint Return After Filing Separate Return(s).

    8. If an offset occurred on the secondary account input TC 971 AC 173 (using the claim received date) to correct the withholding and cross reference the secondary taxpayer's account. If the withholding is less than the offset, correct the withholding to zero and then correct the refund amount to reflect the previous offset.

    9. When adjusting the primary account and transferring a refund from the secondary account, input a TC 470 with Closing Code 93 on the primary account to hold the balance due notice generated from the TC 849. If your adjustment included a HC 1, as detailed above, you must open a monitor control base and release the -K freeze with a 290 .00, after the adjustment posts.

      Reminder:

      The filing of a married filing joint return subsequent to separate return(s) may affect the Refund Statute Expiration Date (RSED) and/or the Assessment Statute Expiration Date (ASED). Refer to procedures in IRM 21.6.1.5.4, "Statute of Limitations" Procedures for Married Filing Separate to Married Filing Joint.

Married Filing Separate, Single, or Head of Household to Married Filing Joint and One Taxpayer Did Not Previously File
  1. If one spouse did not previously file a return, adjust the established account of the taxpayer that has filed to reflect the amended married filing joint return.

  2. Take the following actions on the established (now referred to as the primary) account:

    1. Correct the entity on the primary account to reflect the married filing joint filing information. Refer to IRM 3.13.5.118.10, Inputting Name Changes for Married Filing Jointly (MFJ) Taxpayers, and IRM 3.13.5.118, Correcting a Taxpayer’s Name.

      Reminder:

      When adding the secondary taxpayer's name, update the entity as shown on the Form 1040-X, Amended Return. Married filing joint taxpayers do not always use/have the same last name.

    2. To research and calculate the Premium Tax Credit (PTC), refer to IRM 21.6.3.4.2.12.6, Premium Tax Credit Amended Returns. The Form 8962, Premium Tax Credit (PTC), may or may not be attached.

    3. Transfer any available credit, payments, or extension to the primary account.

    4. Determine if an estimated tax penalty needs to be assessed or recomputed using the married filing joint liability. Refer to IRM 20.1.3.2.1.1.2, Joint Return After Filing Separate Return(s).

    5. Use blocking series 05 for electronically filed tax returns, 00 when making an adjustment using the original return as the source document, or 18 when adjustment should be associated with the original return.

    6. Update DDBCK and correct the filing status.

    Caution:

    Failure to update the entity to reflect the married filing joint information could result in an erroneous refund. Refer to IRM 21.4.5.6, Category D Erroneous Refund Procedures.

  3. Take the following actions, if applicable, on the account of the taxpayer who did not previously file:

    • If a Transaction Code (TC) 140 is present on the account, input TC 594 Closing Code 084 using command code FRM49

    • If a TC 971, Action Code 010 (generates a TC 976) is present, input a TC 971 Action Code 002 using command code REQ77 to cross reference the married filing joint account and release the E- freeze

  4. If the deadline for filing a separate to joint return has expired and the non-filing spouse has income, refer to IRM 25.6.1.9.4.4, Joint Return after Separate Return.

"Statute of Limitations" Procedures for Married Filing Separate, Single, or Head of Household to Married Filing Joint

  1. Care must be taken when processing statute year claims to prevent erroneous abatements and to prevent the generation of RSED-STAT transcripts. Refer to procedures in IRM 21.5.3.4.3, Tax Decrease and Statute Consideration. Substitute for Return (SFR), refer to IRM 21.5.3.4.10, Returns Prepared Under IRC Section 6020(b).

    Reminder:

    Verify the claim received date or the post mark date to determine if the claim for refund was timely filed. When adjusting the account input either the timely filed claim received date or timely post mark date in the "RFSCDT" field and use override code "S" .

  2. The filing of a married filing joint return subsequent to separate return(s) may affect the Assessment Statute Expiration Date (ASED). The Service will have at least one year from the actual filing of a married filing joint return to make an assessment, IRC Section 6013(b)(4).

    Reminder:

    When updating the ASED it does not update the RSED.

  3. Determine if the extended ASED is imminent (within 90 days). Refer to IRM 25.6.1.9.4.4, Joint Return After Separate Return, for specific instructions on conditions which extend the ASED.

  4. For Statute of Limitations Issues refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues.

    If the ASED And Then
    Is not imminent (due to a Separate to Joint filing status case)   Update the ASED (TC 560) using command code (CC) REQ77.
    Is imminent (within 90 days) No TC 560 posted on the account Update the ASED. Refer to IRM 25.6.1.9.4.4, Joint Return After Separate Return, for specific instructions to extend the ASED.
    Is imminent (within 90 days) of the extended ASED and claim is for a tax increase TC 560 posted on account Refer claim to the Statute Unit for manual assessment, follow procedures in IRM 25.6.1.9.9, Procedures for Processing Amended Returns - in General.

    Reminder:

    Use Document Locator Number (DLN) blocking series "70" on CC REQ77 to avoid an unpostable condition.

Married Filing Joint to Married Filing Separate, Single, or Head of Household Procedures

  1. Married taxpayers may file separate returns such as married filing separately, head of household, or single on or before the due date of their originally filed married filing joint return. If taxpayer changes filing status from Married Filing Joint (MFJ) or Married Filing Separate (MFS) to Single (S) or Head of Household (HOH), taxpayer MUST clearly be eligible, refer to Pub 501, Exemptions, Standard Deduction, and Filing Information, and Pub 17, Your Federal Income Tax (For Individuals).

    Exception:

    A personal representative may revoke an election to file a married filing joint return previously made by the surviving spouse alone. This is done by the filing a separate return for the decedent within one year from the due date of the return of the surviving spouse (including any extension). Refer to Publication 559, Survivors, Executors, and Administrators.

  2. Disallow all claims postmarked after the due date except:

    • Items listed in IRM 21.6.1.5.7, Married Filing Joint Election is Invalid or Filed with Incorrect Status

    • Taxpayers whose marriage was annulled or the subject of a court order holding that no valid marriage ever existed

  3. If the claim is received after the due date and the taxpayer does not provide the proper documentation such as court documents showing the marriage was not valid, copy of divorce decree or separate maintenance, documents verifying the taxpayers did not live together during the last six months, such as a lease agreement, utility bills, etc., refer to IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns.

  4. If the taxpayer has not allocated a previously received refund, return the claim to the taxpayer and request the allocation. The IRS cannot make the allocation determination of a previously received refund. Refer below to (2) Exception in IRM 21.6.1.5.8, Allocating Married Filing Joint Cases.

  5. When one spouse on a married filing joint return claims their signature was forged, refer the claim to Exam for deficiency procedures. Refer to IRM 21.5.1.5, Correspondence Imaging System (CIS) Procedures. ONLY refer claims to Exam when the additional assessment (net tax increase/credit decrease) is at least ≡ ≡ ≡ and the assessment statute expiration date (ASED) has at least ≡ ≡ ≡ ≡ ≡ ≡ remaining. The net tax increase/credit decrease does not include withholding. Do not send tax decreases or credit increases to Exam, Accounts Management (AM) has the authority to work these cases. If the claim does not meet Exam criteria above, remove the spouse’s name from the married filing joint account and change the filing status on the married filing joint return to married filing separate. Do not change any tax or credits on the married filing joint return.

Allowable Claims Procedures
  1. Adjust the married filing joint account income, deductions, tax, and credit amounts to reflect the separate return entries. Be aware of the rules governing Married Filing Separate (MFS) restrictions. Refer to Pub 17, Your Federal Income Tax (For Individuals), for information on:

    • Itemized deductions

    • Child care credit

    • Earned Income Tax Credit

    • Credit for the Elderly

    • Taxable Social Security benefits

    • Net operating loss

    • Schedule D Loss

    • Premium Tax Credit

  2. Do the following:

    1. Request records of both taxpayers’ accounts. Use Command Code (CC) RTVUE or TRDBV, if possible, in lieu of requesting the return.

    2. Math verify and recompute the tax and credits, as necessary, on each return.

  3. Update ENMOD:

    1. Delete the secondary spouse’s name and if applicable delete the Social Security Number (SSN).

      Reminder:

      DO NOT delete the secondary SSN on Married Filing Separately (MFS) accounts.

    2. Correct the filing status.

    3. Use a posting delay code (PDC) "1" if there is secondary Self Employment (SE) income on the married filing joint account belonging to the spouse being backed out of the account.

  4. Adjust the married filing joint account via the Integrated Data Retrieval System (IDRS), and:

    1. Use item reference number 887 to change the number of exemptions.

    2. Reverse/recover any previous Earned Income Tax Credit (EITC) to the amount allowable for the new filing status:

      If Then
      Only one taxpayer is requesting the change Recover the EITC from the taxpayer filing the claim. It becomes a civil matter between spouses in the event they do not agree.
      Both taxpayers are filing the claim Recover the EITC using the procedures in IRM 21.6.3.4.2.7.11, EITC and Filing Status Changes.
    3. Input Transaction code (TC) 170 on the primary account when decreasing withholding and/or transferring timely payments from the module and tax is also being adjusted when there is not a Computer Condition Code (CCC) "P" present.

    4. Determine if a recomputation and/or adjustment for the Estimated Tax (ES) penalty is needed if a TC 17X with an amount (other than .00) is present on the primary account. Refer to IRM 20.1.3.1.2, Manual Penalty Adjustments.

    5. Allocate payments evenly, unless the taxpayer indicates otherwise. Transfer the secondary taxpayer’s share of the married filing joint credit to the married filing separate account. Per the taxpayer(s) allocation transfer any refund previously issued using TC 848 and TC 849. Refer to IRM 21.4.6.5, Refund Offset Procedures, and IRM 21.5.2.4.23.10, Moving Refunds.

    6. Input the back out adjustment using a Hold Code (HC) "1" when moving a refund from the primary account to the separate primary account. If a refund is NOT being moved/transferred from the primary account to the separate primary account use a Hold Code "0" or the applicable hold code. Refer to IRM 21.5.2.4.15, Rules on Hold Codes (HC).

  5. Issue a manual refund in the primary spouse’s name only if the back out adjustment creates a credit balance for the primary taxpayer. On Command Code (CC) RFUND input the applicable offset Bypass Indicator (BPI), refer to IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI).

  6. If applicable, forward the secondary taxpayer’s return to the Processing function, for processing as an original unnumbered return, using local routing procedures.

  7. Refer to IRM 21.5.1.5.5, Processing/Reprocessing CIS Tax Returns.

Only One Spouse Requesting Filing Status Change

  1. If only one taxpayer is requesting the change, and the other taxpayer has income and/or credit:

    1. Prepare a return for the secondary taxpayer. Complete the entity, separate income, and tax information on Form 1040.

    2. Edit the itemized or standard deduction to correspond with the separate spouse’s deduction. If one spouse itemizes, so must the other spouse.

    3. Edit the withholding to reflect any previously refunded or offset amounts.

      Caution:

      You must back out offsets if prior to the Return Due Date (RDD).

    4. Write the tax examiner’s name and/or employee number on the signature line of the return being input. State the reason for the return (e.g., "Establish separate entity" ).

    5. Forward the unnumbered Form 1040 to the Processing function for input as an original return. Refer to IRM 21.5.2.4.23.11, Reprocessing "Dummy" Returns.

Married Filing Joint or Married Filing Separate is Invalid or Filed with Incorrect Status

  1. The married filing joint election is potentially invalid if the individuals were not legally married, did not consent to the joint return, or if the return contains a forged signature.

  2. Allow claims if the marriage was not legal for federal tax purposes (even if the claim is received after the due date) if the following is present:

    • Verification, such as court documents showing the marriage was not valid for the tax period involved: copy of divorce decree or separate maintenance; documents verifying that the taxpayers did not live together during the last six months of the tax year, such as a lease agreement, utility bills, etc.; or an affidavit, signed and sworn under penalty of perjury, stating the marriage does not exist.

    • Allocation of all return income, credits, and payments, refer to IRM 21.6.1.5.8, Allocating Married Filing Joint Cases.

    IF THEN
    All information is not present and the only change is to the filing status which includes allocation of income, credits and payments Do not allow the filing status change, follow procedures in IRM 21.5.3.4.6.3, No Consideration Procedures.
    All information above is not present and additional changes are requested Do not allow the filing status change. For the married filing joint account, determine if the other issues are allowable and follow IRM 21.5.3.4, General Claims Procedures, for applicable procedures.
    All information above is present Allow filing status change, follow procedures in IRM 21.6.1.5.5.1, Allowable Claims Procedures.

    Reminder:

    Correspondence should only be sent to the taxpayer filing the claim.

  3. When one spouse on a married filing joint return claims they did not consent to the joint filing, or their signature was forged, refer the claim to Exam for deficiency procedures. Refer to IRM 21.5.1.5, Correspondence Imaging System (CIS) Procedures. ONLY refer claims to Exam when the additional assessment (net tax increase/credit decrease) is at least ≡ ≡ ≡ ≡ ≡ and the assessment statute expiration date (ASED) has at least ≡ ≡ ≡ ≡ ≡ ≡ remaining. The net tax increase/credit decrease does not include withholding. Do not send tax decreases or credit increases to Exam, Accounts Management (AM) has the authority to work these cases. If the claim does not meet Exam criteria above, remove the spouse’s name from the married filing joint account and change the filing status on the married filing joint return to married filing separate. Do not change any tax or credits on the married filing joint return.

Allocating Married Filing Joint Cases

  1. Allocation means the taxpayer must designate/show which wages, deductions, withholding, EITC, tax liability, etc., belong to each taxpayer:

    • The allocation is necessary to determine the amount of overpayment due each taxpayer

    • Rev. Rul. 74-611 indicates married taxpayers (primary and secondary) who file a married filing joint return have a separate interest in the overpayment

  2. Return the claim to the taxpayer if a determination cannot be made because the taxpayer does not submit an allocation. Refer to IRM 21.5.1.4.3, Incomplete Inquiry.

    Exception:

    If the married filing joint return did not result in a previously issued refund and the Service can conclusively determine ownership of all income and payments claimed/allowed on the married filing joint return using internal information, the employee must prepare the allocation instead of rejecting the claim.

    If a married filing joint return was filed And Then
    The overpayment offset to a spouse’s liability incurred before marriage to the current spouse. The present spouse files an "Injured Spouse" claim. An allocation is required.
    The overpayment offset to a Business Master File (BMF) or Individual Master File (IMF) account of one spouse. The other spouse files a claim. An allocation is required.
    The taxpayer is subsequently divorced. Only one spouse files a claim. An allocation is required.

    Note:

    Refer to IRM 21.4.6.5.8.10, Time Period for Submitting Form 8379, for the time period for a spouse to file an "injured spouse" claim.

    Reminder:

    For procedures for allocating liability in section 6015(c) cases, refer to IRM 25.15, Relief from Joint and Several Liability, and IRM 25.15.3.9, IRC 6015(f) Equitable Relief.

  3. Accept the allocations as specified below:

    If Then
    The method used follows the separate tax liability formula. Accept the allocation.
    The taxpayer provides clear and convincing evidence for another allocation. Accept the allocation.
    The allocation is specified by a court order. Accept the allocation.
  4. The separate tax method allocates liabilities by dividing the married filing joint liability into separate liabilities:

    • Determine each taxpayer’s separate tax liability

    • Divide one taxpayer’s separate tax liability by the sum of both separate liabilities to determine the ratio (.xxx) attributable to each taxpayer

    • Multiply one taxpayer’s ratio times the married filing joint tax to determine that spouse’s share of the joint liability

  5. Subtract the taxpayer’s share of the new married filing joint liability from the taxpayer’s separate payments to arrive at the overpayment amount:

    • The refund from the claim is limited to this amount

    • The overpayment is also limited to the amount of tax actually paid by the taxpayer

    • Compute the tax at the MFS rate

    • Payments and deductions may be allocated differently in community property states

    Note:

    In some community property states, wages and withholding credits are considered split 50-50 between spouses. Refer to Pub 555, Community Property.

  6. Manually refund the proportionate share of the overpayment to the spouse filing the claim.

    If Then
    An offset has occurred.
    1. Input a credit transfer to reverse the portion of the offset applicable to the spouse’s share of the refund.

    2. Use a TC 570 on the credit portion of the credit transfer.

    3. Issue a manual refund. Refer to IRM 21.4.4, Manual Refunds.

    All items of income and credit belong to the spouse filing the claim. Refund the entire overpayment to that spouse.

Bankruptcy Assessments on Married Filing Joint Accounts

  1. Route the return to the Collection Operations when one spouse is discharged of a tax liability in a bankruptcy proceeding and a married filing joint return was filed.

Registered Domestic Partners and Community Property Procedures

  1. RDPs must each report half of their community income. A partner who amends a previously filed return to claim a credit or refund of tax paid must file the amended return before the Statute of limitations has expired to receive the credit or refund. Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues.

  2. Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States, is used to allocate income for community property states. The Form 8958 can be filed electronically.

  3. A RDP claim for refund must include:

    • the Form 8958, or

    • a copy of the partner's return showing the allocation, and

    • a reference on the claim that the taxpayer is an RDP

    If not, follow the "No Consideration" procedures listed in IRM 21.5.3.4.6.3, No Consideration Procedures.

  4. For a RDP claim for a tax increase/assessment without the documentation in (3) above, follow procedures in IRM 21.5.3.4.1, Tax Increase or Credit Decrease Processing.

  5. If a RDP files an amended return, there is no need to verify if the other domestic partner filed a claim to reduce or claim additional income.

  6. When adjusting the partner's account with a tax decrease, reducing withholding or previous credit claimed, input Transaction Code (TC) 170 for zero (.00) to restrict any erroneous Estimated Tax (ES) penalty assessment.

  7. Amended returns claiming a Net Operating Loss Carryback/Carryforward as Community Property Income, refer to IRM 21.5.9.5, Carryback Processing.

Exemptions Procedures

  1. The Tax Cuts and Jobs Act of 2017, enacted on Dec. 22, 2017, suspended personal and dependent exemptions for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026.

  2. For tax years 2017 and prior, exemptions are claimed in the entity portion of the return. A taxpayer is allowed one exemption for each qualifying person listed on the return.

  3. The Protecting Americans from Tax Hikes Act 2015 prevents some retroactive claims for the American Opportunity Tax Credit (AOTC), Earned Income Tax Credit (EITC), Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC), refer to IRM 21.6.3.4.2.11, American Opportunity Tax Credit, IRM 21.6.3.4.2.7.10, EITC Claims, and for CTC/ACTC claims, IRM 21.6.3.4.1.24.2Adjusting the Account.

  4. Refer to IRM 21.6.1.7, Command Code DUPED and DDBCK, for information on updating the DUPOL database.

  5. If an amended return is received and the taxpayer is adding or deleting an exemption determine if there is a potential impact to the Premium Tax Credit (PTC), refer to IRM 21.6.3.4.2.12.6, Premium Tax Credit Amended Returns.

  6. If a valid Taxpayer Identification Number (TIN) or Individual Taxpayer Identification Number (ITIN) is not provided for the primary taxpayer, the secondary taxpayer, or the dependents, refer to IRM 21.6.1.6.4, Missing or Invalid Exemption TINs Procedures.

Determining the Exemption Deduction

  1. A taxpayer is allowed only one exemption regardless of the number of returns on which they are listed. A dependent child may not claim his/her exemption when filing a return if eligible to be claimed on the parent’s return.

  2. A taxpayer must furnish a correct/valid Taxpayer Identification Number (TIN) for every exemption claimed. This number may be a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification Number (ATIN). Refer to IRM 3.21.263, IRS Individual Taxpayer Identification Number (ITIN) Real-Time System (RTS), and IRM 3.13.5.72, Assignment of Internal Revenue Service Numbers (IRSNs), for additional information.

    Note:

    For taxpayers indicating a religious (e.g., Amish/Mennonite) or conscience-based objection to obtaining a TIN, refer to paragraphs (6), (7) and (8) below.

    Reminder:

    If an SSN is redacted, and can be verified using IDRS, do not request it from the taxpayer if enough specific information is available with the claim or with the various Integrated Data Retrieval System (IDRS) command codes. Refer to IRM 21.5.3.4, General Claims Procedures.

  3. Taxpayers will be considered to have omitted a correct TIN if Social Security Administration (SSA) information indicates the social security number being used belongs to an individual who was deceased prior to the beginning of the tax year for which it is being used or if the social security number or ITIN being used does not match the name of the taxpayer based on SSA or IRS records.

    Note:

    To substantiate that the Date of Death (DOD) is incorrect, taxpayers must provide documentation from the Social Security Administration for verification. When the documentation is provided allow the exemption and use Command Code (CC) DM1DT to add, change, or delete data to correct the DOD. Refer to IRM 2.3.25, Command Codes DM1DT and DTVUE. CC DM1DT overrides an SSA DOD. After using CC DM1DT, the DOD field on CC INOLE will be replaced with the IRS DOD.

    Reminder:

    To delete a DOD, update CC DM1DT as add DOD with all zeroes for YYYYMMDD (00000000).

  4. Dependents, such as children and other relatives, must meet certain eligibility criteria. A dependent is either a qualifying child or a qualifying relative. Refer to Pub 17, Your Federal Income Tax (For Individuals), Part One, Chapter Three, Personal Exemptions and Dependents, for dependency qualifications.

  5. Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or similar statement must be attached to the taxpayer’s return when a noncustodial parent claims a child as a dependent as a result of the custodial parent’s release of claim to exemption for the child, or a custodial parent claims a child as a dependent as a result of a revocation of a release of claim to exemption for the child.

  6. The IRS will allow exemptions for primary, secondary or dependents identified as either "Amish" , "Mennonite" , or "Exempt - Form 4029" , even if the individual does not have a valid Taxpayer Identification number (TIN). If the exemption for such an individual was improperly NOT allowed during original processing, adjust the account.

  7. The IRS will initially disallow dependency exemptions or related credits for any return having a notation or attachment indicating a "religious or conscience-based" objection to providing TINs for dependents. Taxpayers will receive a math error notice stating their dependent exemption is disallowed because a TIN was not furnished.

  8. Taxpayers claiming a "religious or conscience-based" objection to obtaining a TIN will be allowed the dependent exemption or related credits when they provide specific documentation listed in paragraph 1 of the Letter 3050C. Do not allow the EITC because it requires taxpayers and dependents to have an SSN. Do not allow the CTC for a qualifying child for tax years 2018-2025 unless the child has an SSN.

    1. If the taxpayer contacts IRS stating they have a religious or conscience based objection to providing a TIN, follow the procedures listed below:

      If contact is by And Then
      Phone Taxpayer inquires regarding TIN for dependent exemption.
      1. Inform the taxpayer they will receive a letter within 10 - 15 days instructing them to provide specific information. Taxpayer should provide the required documentation and respond using the enclosed envelope within 30 days of receipt of the letter.

      2. Initiate a Letter 3050C, include the information in the Note below this table.

      Walk In
      1. Taxpayer inquires regarding TIN for dependent exemption.

      2. The taxpayer is providing the information listed in the Letter 3050C.

      3. The information provided is incomplete.

      1. Using the Letter 3050C include the information in the Note below this table and also inform the taxpayer what is required for us to allow the dependency exemption.

      2. Review the information for completeness and make the appropriate account adjustment (follow local procedures for account adjustment).

      3. Reiterate to the taxpayer what is required as listed in the Letter 3050C, paragraph 1.

      Paper
      1. The taxpayer is responding to a math error.

      2. The taxpayer is providing the information listed in the Letter 3050C, paragraph 1.

      3. The information provided by the taxpayer is incomplete.

      1. Initiate a Letter 3050C and include the information in the Note below this table. Suspend the case following normal procedures.

      2. Review the information for completeness and make the appropriate account adjustment.

      3. Disallow the dependency exemption following normal claim disallowance procedures.

      Note:

      When initiating a Letter 3050C include the following: "If you have a religious or conscience-based objection to securing a Taxpayer Identification Number for the dependents or exemptions, please forward a statement outlining your objection and documentation from the following lists to verify the dependents."

Computing the Personal Exemption Deduction

  1. For tax years ending before Jan. 1, 2018, the taxpayer is allowed one exemption for each qualifying person listed on the return. Allow one exemption for:

    • The primary taxpayer

    • The secondary taxpayer

    • Each qualifying child

    • Each qualifying relative

    Note:

    A dependent is either a qualifying child or qualifying relative. Refer to Pub 17, Your Federal Income Tax (For Individuals), for additional information.

  2. The exemption allowance is different for each year. Refer to the year of the tax return for the correct amount:

    Personal Exemption Deduction Tax Year
    $4,050 2016 & 2017
    $4,000 2015
    $3,950 2014
  3. There are no personal exemption amounts for the tax years 2018 to 2025. Due to the Tax Cuts and Jobs Act of 2017, this exemption is suspended for taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2026.

Personal Exemption Phase-Out

  1. The personal exemption deduction begins to phase out when the Adjusted Gross Income (AGI) exceeds the following amounts:

    Filing Status 2014 Amount 2015 Amount 2016 Amount 2017 Amount
    Married Filing Joint and Qualifying Widow(er) $305,050 $309,900 $311,300 $313,800
    Head of Household $279,650 $284,050 $285,350 $287,650
    Single $254,200 $258,250 $259,400 $261,500
    Married Filing Separately (MFS) $152,525 $154,950 $155,650 $156,900

    REMINDER: There are no personal exemption amounts for the tax years 2018-2025 as established by the Tax Cuts and Jobs Act of 2017.

  2. For tax years beginning before Jan. 1, 2018, the amount for each exemption is reduced by 2 percent for each $2,500 ($1,250 for MFS), or fraction thereof, in excess of the applicable threshold.

Missing or Invalid Exemption TINs Procedures

  1. If a valid Taxpayer Identification Number (TIN), (including an Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN)) is not provided for the primary taxpayer, the secondary taxpayer, or the dependents, the exemption is disallowed for the person listed with the invalid TIN. The IRS considers a TIN to be missing if it isn't provided or if it is obviously incorrect. If the exemption was disallowed during initial processing, a math error taxpayer notice code (TPNC) appears on the module.

    Exception:

    If the taxpayer asked IRS to compute the tax liability, there will not be any TPNCs, a CP 51 will be issued. The "-G" freeze code will not be on the module.

    Caution:

    Disallowance of an exemption may also affect filing status, take in consideration when determining an adjustment to an account.

  2. Verify the exemption field on CC TXMOD, RTVUE, and IMFOL screens:

    1. Verify the number of exemptions the taxpayer was allowed during original processing.

    2. Divide the total exemption amount shown on RTVUE-PER COMPUTER by the exemption amount for the tax year in question.

      Note:

      Does not apply to phase-out situations.

    3. If an adjustment is made for exemptions, input Item Reference Number (IRN) 887 if the new total number of exemptions differ from the number shown in the exemption field on CC TXMOD/IMFOL.

  3. If the taxpayer submits correspondence indicating someone used his/her TIN or the TIN of a dependent, refer to IRM 25.23.4.4.1, Taxpayer Inquiries Involving Questionable Ownership of a Primary, Secondary or Dependent TIN on a Filed Return.

  4. Taxpayers may call or correspond regarding Individual Taxpayer Identification Numbers (ITINs), refer to procedures in IRM 3.21.263.8, Accounts Management (AM). For ITIN math error procedures, refer to IRM 3.21.263.8.7, Math Errors. For invalid TIN, refer to IRM 21.4.1.5.4, Invalid SSN/TIN.

    Reminder:

    When correcting an SSN, 3rd party verification Coverage Data Repository (CDR) must be conducted to verify if Advance Premium Tax Credit (APTC) was paid on behalf of the person for whom the exemption is being allowed. Refer to procedures in IRM 21.6.3.4.2.12.5, Premium Tax Credit Math Error Notice Responses.

    If the taxpayer responds with Then
    An invalid TIN/Rejected ITIN
    • Research RTS if taxpayer responds with the same invalid/rejected ITIN and a -A freeze is on the account close control as a "True DUPF" , input a TC 290.00. Do not send the Letter 3050C, ITIN will respond to the taxpayer with the rejected ITIN information.

    • If a math error has NOT posted on the account refer to IRM 21.5.4.5.1, Setting the Initial Math Error Action. Send the Letter 3050C to thoroughly explain the math error issue.

    • If taxpayer is responding to a math error or a math error is already posted on the account (-G freeze), refer to IRM 21.5.4.5.3, Processing Responses to Math Error Notices.

    A valid SSN/ITIN Allow the exemption using normal procedures. If Earned Income Tax Credit (EITC) is claimed, refer to IRM 21.6.3.4.2.7, Earned Income Tax Credit (EITC).

    Reminder:

    EITC is not allowed for individuals with ITINs, the individual must have a valid SSN. For tax years 2018-2025, a child must have an SSN to be a qualifying child for the CTC/ACTC.

  5. When working math error returns processed by Austin Submission Processing ITIN unit indicating the valid/invalid ITIN(s), follow procedures above.

  6. If a Form W-7, Application for IRS Individual Taxpayer Identification Number is attached to the Form 1040-X, or the taxpayer requests additional information in order to complete processing Form W-7, refer to the following address:
    Austin Submission Processing Campus
    ITIN Operation Stop: AUSC 6090 P.O. Box 149342
    Austin, TX 78714-9342

Exemption Claim Procedures

  1. A taxpayer may respond to a math error concerning the number of exemptions allowed on the original return or the taxpayer may file a claim (amended/duplicate/informal) to request a change to exemptions.

    If Then
    An exemption is claimed Taxpayer must provide the exemption's TIN, name and, if applicable the date of birth. To determine if date of birth verification is required, refer to IRM 21.6.3.4, Credits Procedures. The TIN may be either an SSN, an ITIN or an ATIN (for dependent only).
    Child is in the process of a domestic adoption, an SSN from Social Security Administration (SSA) may not be issued immediately The parent must apply for an ATIN for the child. Refer to Form 8839, Qualified Adoption Expenses, for more information.
    Child was born and died in the same tax year
    1. The taxpayer must supply the child's TIN, if a TIN was issued for the child.

    2. If a TIN was not issued for the child, the taxpayer must provide a copy of the child's birth certificate, if a birth certificate was issued for the child.

    3. If the taxpayer has difficulty in obtaining a birth certificate for a child who lived only a brief time, the taxpayer must document the birth with the copy of hospital medical record or a signed statement by a doctor or midwife, who attended the birth (on letterhead with business address and telephone number).

    Child is in the process of a foreign adoption and is not yet eligible for an SSN from SSA The parent must obtain either an ITIN or ATIN for the child. Refer to Form W-7, Application for IRS Individual Taxpayer Identification Number, or Form W-7 A, Application for IRS Adoptions Taxpayer Identification Number for more information.
  2. If taxpayer is adding or deleting an exemption, refer to IRM 21.6.3.4.2.12.6, Premium Tax Credit Amended Returns, to determine if there is a potential impact to the Premium Tax Credit (PTC).

  3. Verify the validity of the name(s) and TIN(s) submitted by the taxpayer. For a math error reply, the dependent with the missing/invalid TIN is recorded on RTVUE:

    1. Use CC INOLE/NAMES to verify the SSN and name.

    2. Use CC INOLE/NAMES or access ITIN RTS refer to IRM 3.21.263.9, General Instructions for ITIN Navigation (ITIN RTS), to verify ITIN and name.

    3. Use CC ATINQ to verify the ATIN and name.

    4. Verify the name and TIN (and date of birth for EITC and Child Tax Credit). For date of birth, ensure the information provided by the taxpayer is accurate.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. On RTVUE, the dependent field is followed by an indicator showing which dependent(s) was included in the math error condition; "2" means "account is not present on the NAP" and "9" means "invalid TIN" .

    6. Refer to IRM 3.13.5.19, Social Security Administration (SSA) Requirements, and IRM 3.13.5.16, Weekly NEW SSA Name Control (N/C) Indicator Files, for correction of entity issues involving missing/invalid TINs for the primary and/or secondary taxpayer.

    If And Then
    TIN, name, and applicable date of birth match IRS records   Allow the exemption Reminder: Consider filing status if changed during original processing.
    TIN, name and date of birth do not match IRS records Taxpayer is responding to a math error notice
    1. Do not allow the exemption.

    2. Follow IRM 21.5.4, General Math Error Procedures.

    TIN, name, and date of birth do not match IRS records A math error is not involved (e.g., taxpayer claiming an additional exemption)
    1. Close the case per IRM 21.5.3.4, General Claims Procedures.

    2. Send a Letter 3050C and include only the name of the dependent for which the information provided did not validate.

  4. If taxpayer makes a statement, asks a question, or indicates a misunderstanding of an exemption math error notice:

    • Refer to IRM 21.5.4.5.3, Processing Responses to Math Error Notices

    • Follow "no consideration" procedures in IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns, if a claim or amended or duplicate return is included with statement

    • Close the case with a Letter 3050C explaining the exemption requirements

  5. If taxpayer responds to a math error notice within 60 days, refuses to obtain/provide the correct information and requests the account adjustment be made (after a full explanation of the legislative provisions was given), follow unsubstantiated math error procedures in IRM 21.5.4.5.5, Math Error Unsubstantiated Protest Processing.

  6. When changing the number of exemptions (or adjusting credits requiring TIN validation for allowance), refer to IRM 21.6.1.7, Command Code DUPED and DDBCK, for more information.

IRS Individual Taxpayer Identification Number (ITIN)

  1. The IRS Individual Taxpayer Identification Number (ITIN) is a nine digit number issued by the Internal Revenue Service (IRS) to individuals who are required, for U.S. tax purposes, to have a U.S. taxpayer identification number, but who do not have, and are NOT eligible to obtain, a social security number (SSN) issued by the Social Security Administration (SSA).

  2. The ITIN is for federal tax purposes ONLY. It does NOT entitle the holder to social security benefits and does NOT change their immigration status or their right to work in the United States.

  3. An ITIN is formatted like an SSN. The ITIN begins with a "9" and has a unique identifying 4th and 5th digit range of:

    • 50-65

    • 70 - 88

    • 90 - 92

    • 94 - 99

  4. Income earned in the United States is taxable regardless of the individual’s immigration status. Individuals earning income in the United States and have NOT been granted work authorization by the United States Citizenship and Immigration Services (USCIS) must meet their tax obligations.

  5. To obtain an ITIN, an individual must complete the Form W-7, Application for IRS Individual Taxpayer Identification Number, or the Spanish version, Form W-7SP, and submit the required supporting identification documentation along with their valid U.S. Federal income tax return or exception documentation, as required.

  6. ITIN applications must show they need an ITIN for Federal income tax purpose.

    • A U.S. Federal income tax return must be attached to the ITIN application unless the applicant meets one of the five exceptions discussed in Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number (ITIN).

  7. All ITIN applicants must submit supporting identification documentation:

    • The 13 acceptable identification documents are listed in the instructions for the Form W-7 and Form W-7SP, Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number (ITIN), and in IRM 3.21.263, IRS Individual Taxpayer Identification Number (ITIN) Real Time System (RTS).

  8. Follow ITIN procedures in IRM 3.21.263.8, Accounts Management (AM). Expired ITINs refer to procedures in IRM 3.21.263.8.2, Inquiries Regarding Expiration of ITIN/Letter 5821 or CP48/748, or IRM 3.21.263.2.3, Request to Reactivate an ITIN, if ITIN was deactivated/expired in error. Status of application refer to IRM 3.21.263.8.3, Inquiries Regarding Status of Application.

ITIN Restrictions
  1. Although an ITIN is required for certain individuals to file a valid Federal U.S. tax return, it has limited use on the tax return.

  2. An ITIN does NOT allow a filer to claim Earned Income Tax Credit (EITC). Refer to IRM 21.6.3.4.2.7.3, EITC SSN Requirements.

  3. An ITIN does allow filers to claim the AOTC, and CTC/ACTC. Refer to Exhibit 21.6.3-1,TIN Requirements for Exemptions and Credits.

  4. The Tax Cuts and Jobs Act of 2017 prohibits an individual from claiming the CTC by amending (or by filing an original or supplemental return for) tax years 2018-2025 if the qualifying child did NOT have an SSN before the due date, or extended due date, of the tax return. Refer to IRM 21.6.3.4.1.24, Child Tax Credit.

ITIN Renewal Math Error Adjustments
  1. ITINs with the middle digits listed in IRM 3.21.263.8.2, Inquiries Regarding Expiration of ITIN/Letter 5821 or CP48/748, and ITINs that have not been used on a tax return at least once will expire on December 31 of the third consecutive tax year. Taxpayers were instructed to renew their ITIN or dependents ITIN(s) by filing the Form W-7, Application for IRS Individual Taxpayer Identification Number. Refer to procedures in IRM 3.21.263.8.2, Inquiries Regarding Expiration of ITIN/Letter 5821 or CP48/748. There will be a TC 971 AC 194 and a TC 971 AC 804 on ENMOD/IMFOLE for the primary taxpayer of the return the ITIN was present on, indicating a CP 48 was issued.

  2. If an ITIN was NOT renewed prior to being used on a federal income tax return, the expired ITIN(s) and any related exemptions and credits were disallowed in processing and math error notices issued.

  3. Taxpayers may call with questions about the math error notice. Research primary taxpayers account using command code (CC) RTVUE to determine which ITIN(s) were disallowed. There may be several ITINs that were disallowed, therefore each ITIN will need to be researched on RTS to determine if the ITIN had been renewed/reactivated. CC INOLES and the INOLEX will also show the status of the ITIN, the original ITIN assigned date, the ITIN deactivated date, and the ITIN reactivated date. A Form W-7 must be filed to renew/reactivate each ITIN. If the Form W-7 was filed and processed RTS will show the ITIN status as "Active" and CC INOLES and INOLEX will show "A" for "Active" . If the Form W-7 has not been filed or processed ITIN status will show as "Inactive" and CC INOLES and INOLEX will show "I" for "Inactive" . Refer to procedures in IRM 3.21.263.8.2, Inquiries Regarding Expiration of ITIN/Letter 5821 or CP48/748. If an ITIN owner became a U.S citizen or legal resident alien and now has a social security number (SSN), they do NOT need to renew their ITIN. Refer to IRM 3.21.263.8.2, Inquiries Regarding Expiration of ITIN/Letter 5821 or CP48/748.

  4. The table below lists the Taxpayer Notice Codes (TPNC) pertaining to ITIN math error(s):

    Notice Code Description
    315 We didn’t allow your personal exemption on your tax return because your individual taxpayer identification number (ITIN) has expired. Each exemption on your tax return must have a valid ITIN or other valid taxpayer identification number (TIN).
    316 We didn’t allow your spouse’s personal exemption on your tax return because your spouse’s individual taxpayer identification number (ITIN) has expired. Each exemption on your tax return must have a valid ITIN or other valid taxpayer identification number (TIN).
    317 Each exemption on your tax return must have a valid individual taxpayer identification number (ITIN) or other valid taxpayer identification number (TIN). One or more of your dependents has an expired ITIN. As a result, we didn’t allow those exemptions on your tax return. This change may affect your taxable income, tax, or any of the following credits:
    • Credit for child and dependent care expenses

    • Child tax credit

    • Additional child tax credit

    • Credit for Other Dependents

    318 Your Individual Taxpayer Identification Number (ITIN) has expired. As a result, we didn’t allow certain credits on your return claimed for one or more of your dependents. This change may affect your taxable income, tax, or any of the following credits:
    • Child tax credit

    • Additional child tax credit

    • Credit for Other Dependents

    319 The Individual Taxpayer Identification Number (ITIN) for you and/or your spouse has expired. As a result, we didn’t allow the amount you claimed as additional child tax credit on your tax return. (Spanish Translation)
    320 The Individual Taxpayer Identification Number (ITIN) for you and/or your spouse has expired. As a result, we didn’t allow the amount you claimed as additional child tax credit on your tax return.
    464 We didn’t allow some or all of the amount you claimed as additional child tax credit on your tax return because the individual taxpayer identification number (ITIN) for one or more qualifying persons has expired.
    467 We didn’t allow some or all of the amount you claimed as credit for child and dependent care expenses on line 47 of your Form 1040NR because the individual taxpayer identification number (ITIN) for one or more qualifying persons has expired.
    642 We didn’t allow your personal exemption on your tax return because your individual taxpayer identification number (ITIN) has expired. Each exemption on your tax return must have a valid ITIN or other valid taxpayer identification number (TIN).
    643 We didn’t allow your spouse’s personal exemption on your tax return because your spouse’s individual taxpayer identification number (ITIN) has expired. Each exemption on your tax return must have a valid ITIN or other valid taxpayer identification number (TIN).
    644 Each exemption on your tax return must have a valid individual taxpayer identification number (ITIN) or other valid taxpayer identification number (TIN). The ITIN for one or more of your dependents has expired. As a result, we didn’t allow those exemptions on page 2 of your tax return. This change may affect your taxable income, tax, or any of the following credits:
    • Credit for child and dependent care expenses

    • Education credits

    • Child tax credit

    • Additional child tax credit

    • Credit for Other Dependents

    645 We didn’t allow some or all of the education credits you reported on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), and claimed on page 2 of your tax return because one or more students listed on the form has an expired individual taxpayer identification number (ITIN).
    646 We didn’t allow some or all of the amount you claimed as credit for child and dependent care expenses on page 2 of your tax return because the individual taxpayer identification number (ITIN) for one or more qualifying persons has expired.
    817 The Individual Taxpayer Identification Number (ITIN) for you and/or your spouse has expired. As a result, we didn’t allow certain credits on your return claimed for one or more of your dependents. This change may affect your taxable income, tax, or any of the following credits:
    • Education credits

    • Child tax credit

    • Additional child tax credit

    • Credit for Other Dependents

  5. If taxpayer inquires with questions/concerns for a math error notice listed above follow procedures in the table below:

    If And Then
    Taxpayer states the Form W-7(s) was submitted for ITIN renewal. RTS is showing ITIN(s) status as Active. Command Codes (CC) INOLES and INOLEX do not show Active. Send Form 4442, Inquiry Referral to the ITIN Unit per IRM 3.21.263.2.3(3) , Request to Reactivate ITIN, and follow 1 thru 3 below.
    Taxpayer states the Form W-7(s) was submitted for ITIN renewal. RTS is showing ITIN(s) status as "Active" . Command Codes (CC) INOLES and INOLEX will also show the status as "A" for "Active" .
    1. Research CC RTVUE to determine if the primary taxpayer claimed the renewed ITIN(s) on the tax return. Research the primary account to determine if the account has already been corrected. If already corrected, refer to (3) below.

    2. If primary account was NOT previously corrected, then correct ONLY the math error(s) related to the renewed ITIN(s) (limited to the amount shown on the original return). If there is another type of math error do NOT correct, taxpayer will need to respond to the math error notice NOT related to the Form W-7 ITIN renewal. For math error procedures, refer to IRM 21.5.4, General Math Error Procedures.

      Reminder: The primary and secondary (if applicable) must have valid TIN(s) before allowing the Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), Education Credit or Credit for Other Dependent (ODC).

    3. Inform taxpayer of the adjustment. Refer to IRM 21.4.1.4, Refund Inquiry Response Procedures, and tell taxpayer the timeframe for receiving their refund. If adjustment was input BEFORE February 15 of the current processing year, refer to Reminder below this table.

    Taxpayer states they filed the Form W-7(s) to renew the ITIN(s). RTS is showing ITIN(s) status as "Inactive" . Command Codes (CC) INOLES and INOLEX will also show the status as "I" for "Inactive" .
    1. Determine when taxpayer filed the Form W-7.

    2. Taxpayer should allow 7 weeks from the mailing date of the Form W-7, for the IRS to notify them of their ITIN application status, 9 to 11 weeks if submitted during peak processing periods (January 15 through April 30) or if filing from outside of the United States.
      If taxpayer calls and it is past the timeframe(s) above, apologize and instruct them to file another Form W-7. Remind taxpayer to use the most current Form W-7 (Rev. 9/2016) and to be sure to check the box at the top right hand corner "Renew an Existing ITIN" to expedite the renewal process.

    Taxpayer did NOT file the Form W-7 to renew the ITIN(s). RTS is showing ITIN status as "Inactive" . Command Codes (CC) INOLES and INOLEX will also show the status as "I" for "Inactive" . Tell taxpayer to file the most current Form W-7 (Rev. 9/2016) and to be sure to check the box at the top right hand corner Renew an Existing ITIN to expedite the renewal process. We cannot allow the exemptions/credits until the Form W-7 to renew the expired ITIN(s) has been filed and processed. Please allow 7 weeks from mailing date for processing.
    Taxpayer states they filed with the ITINs within the last 3 years, but have not received the refund. Research shows that the ITIN(s) was deactivated in error. Do not request documentation from the taxpayer. Send a Form 4442 to the ITIN team per IRM 3.21.263.2.3 , Request to Reactivate ITIN.

    Reminder:

    Any refunds related to Additional Child Tax Credit (ACTC), will NOT be issued BEFORE February 15 of the current processing year. Refer to IRM 21.5.6.4.5.1, C- Freeze - Refund Holds.

Resolving CP 54 Notice with Math Error Involvement

  1. When the primary taxpayer’s TIN is invalid, the taxpayer may receive a CP 54, Inquiry Regarding Name and SSN, and/or a math error notice. Written responses to CP 54 notices that do not involve Earned Income Tax Credit (EITC) math errors are worked in Entity. If taxpayer attaches correspondence in response to a math error notice or attaches correspondence inquiring about a math error issue, Accounts Management will work the response.
    Caution: Refer to IRM 21.6.2.4.1, Resequencing Accounts, on resequencing accounts prior to the merge. Process CP 54 responses with math error involvement as follows:

    If the primary exemption was disallowed Then
    Primary TIN and/or name control was transposed or transcribed incorrectly
    1. Correct the invalid primary TIN. Refer to IRM 3.13.5.89, Researching Using CC ENMOD to Initiate Entity Changes.

    2. Review the math error code(s) to identify all additional math error conditions.

    3. Refer to IRM 21.6.3.4.2.7, Earned Income Tax Credit (EITC), if EITC is involved.

    Invalid primary TIN condition was the result of an IRS error
    1. Update the return processable date (RPD) with the original due date or date received, whichever is later. Credit interest is allowed.

    2. Resequence the invalid account to the valid number. Credit transfers are not necessary.

    .
  2. Taxpayer may provide a different name or primary TIN:

    • Research CC INOLE/NAMES if the number is an SSN/ITIN

    • Research CC ATINQ if the number is an ATIN

    Note:

    Refer to IRM 21.6.2.4, TIN-Related Problems Procedures, on resequencing accounts prior to the merge.

    If Then
    Primary number provided is valid Correct the invalid TIN. Refer to IRM 21.6.2.4.1, Resequencing Accounts, if account will not merge.
    Invalid primary TIN condition is not due to an IRS error
    1. Update the RPD with the date the taxpayer contacted the IRS (verbally or in writing).

    2. Review the math error code(s) to identify all additional math error conditions.

    3. Follow IRM 21.6.3.4.2.7, Earned Income Tax Credit (EITC), if the EITC is involved.

    4. Resequence the invalid account to the valid number. Credit transfers are not necessary.

    Primary TIN provided is not valid DO NOT RELEASE THE REFUND.
    Exception: Refer to "taxpayer changed their surname/last name" below.
    Taxpayer changed their surname/last name but did not notify the SSA and the prior name is valid on IRS records
    1. Refer to IRM 3.13.5.89, Researching Using CC ENMOD to Initiate Entity Changes, and IRM 3.13.5.88, Using CC INCHG Instead of CC IRCHG, for correction of entity issues involving missing/invalid TIN's. CC INCHG is used to make corrections to the invalid account on Master File.

      Reminder:

      Only correct a taxpayer’s account with CC IRCHG when the taxpayer provides legal documentation or when research conducted clearly shows the taxpayer is using the correct TIN.

    2. Review the math error code(s) to identify all additional math error conditions.

    3. Follow IRM 21.6.3.4.2.7, Earned Income Tax Credit, if the math error condition is for EITC.

    4. Make the necessary adjustments to the account using a Post Delay Code "1" allowing the Entity to update.

      1. Update the RPD with the original return due date or the received date, whichever is later.

      2. Release any verified withholding credit for refund, without regard to other math error conditions.

Adjusting the Exemption Deduction

  1. To change the exemptions, the taxpayer must:

    1. Meet the dependency test for the exemption change.

    2. Submit a valid SSN, ITIN, or ATIN for each dependent.

    3. Provide the exemption information.

  2. Review the claim for Examination criteria:

    1. Refer to Examination for Category-A (CAT-A) review, if necessary.

    2. Refer to IRM 21.5.3, General Claims Procedures, for CAT-A criteria.

  3. Changes to the exemptions change the taxable income. Change the exemptions on the Master File as follows:

    1. Adjust the number of exemptions with item reference number 887.

      Note:

      Do not reduce the exemptions below zero.

    2. Decrease the exemptions with (-).

    3. Adjust the taxable income with reference number 886.

      Note:

      Do not decrease the taxable income below zero (00).

    4. Use Reason Code (RC) 006 and the appropriate Source Code (SC) and blocking series. See IRM 21.6.7.4.1, Source and Reason Codes - CP 21/CP 22A Notices, for more information.

  4. When changing the number of exemptions, refer to IRM 21.6.1.7, Command Code DUPED and DDBCK, for procedures on updating the Duplicate TIN database (DUPOL).

  5. Refer to IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns, for claim rejection and disallowance information.

Verifying Form 8332

  1. A custodial parent may release his/her claim to a child’s exemption. The custodial parent:

    1. Completes and signs Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or similar statement.

      Note:

      Per Treasury Regulation Section 1.152-4(e)(1)(ii), a written declaration not on Form 8332 must conform to the substance of that form. For tax years beginning after 7/2/2008, a court order or decree or separation agreement may not substitute for a Form 8332. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the non-custodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.

    2. Gives the form to the non-custodial parent to claim the exemption.

    3. Releases the exemption for a single year, a specified number of years, or all future years.

  2. The non-custodial parent must attach a copy of the Form 8332 to the return for each year the non-custodial parent claims the child as a dependent.

    Note:

    If a Form 8332 was executed after the return has been filed, Chief Counsel Advice (CCA) 200646014 may be considered when determining which parent is entitled to the exemption.

  3. Upon receipt of a math error notice response concerning a missing or incomplete Form 8332 (or similar statement) take the following actions:

    1. Review Command Code (CC) RTVUE to determine if sufficient information is available to adjust the account.

    2. Secure the related return, if needed, to determine the reason for issuance of the notice.

    3. Correspond with the non-custodial parent, enclose a blank Form 8332.

    4. Request taxpayer to complete and return the Form 8332, signed by the custodial parent.

    5. Tell the taxpayer that the IRS will reconsider the request when the appropriate information is provided. Refer to IRM 21.5.3.4.6, No Consideration and Disallowance of Claims and Amended Returns.

  4. Upon receipt of the completed Form 8332:

    1. Reopen the case if not assigned on CIS.

    2. Secure the return, if needed, to verify taxpayer submitted the appropriate information.

    3. If the response does not clearly show the non-custodial parent is entitled to the exemption, send the correspondence and tax return to Examination.

  5. If taxpayer provides the appropriate documentation, and the tax year is prior to 2018, allow the exemption as follows:

    1. Decrease the tax (Transaction Code 291), but not below zero.

    2. Decrease the taxable income (item reference number 886), but not below zero.

    3. Increase the exemptions (item reference number 887).

    4. Input Reason Code 006 and the appropriate blocking series and source code. See IRM 21.6.7.4.1, Source and Reason Codes - CP 21/CP 22A Notices, for more information.

    5. Update the Return Processable Date (RPD) if the Form 8332 is a late reply to a "U" coded return (RPD 99999). Refer to IRM 21.5.1.4.2.10, Late Replies.

Command Code DUPED and DDBCK

  1. CC DUPED and DDBCK allows a user to update the Duplicate TIN database (DUPOL).

  2. In all cases, when an exemption and/or credit requiring TIN validation is being allowed/removed, use either DUPED or DDBCK to update the database. The conditions which apply to the use of each of these command codes are provided below.

    Caution:

    There are conditions which do not allow the use of CC DUPED or CC DDBCK.

  3. Refer to IRM 21.6.1.7.1, Command Code DUPED, for specific information on CC DUPED.

  4. Refer to IRM 21.6.1.7.2Command Code DDBCK, for specific information on CC DDBCK.

Command Code DUPED

  1. Command Code (CC) DUPED must be used to update the Duplicate TIN database (DUPOL) for current processing year returns (i.e., from January 1, to December 31, only the current processing year returns are updated) for:

    • CP 09 responses

    • Responses (via correspondence, amended return, or by phone) to TIN related math errors when CC DDBCK cannot be used

    • Claims (amended return/Form 8862, Information to Claim Earned Income Credit After Disallowance) when CC DDBCK cannot be used

    Exception:

    Do not use CC DUPED when processing math error 653 responses, instead use CC DDBCK unless the tax year involved does not allow for the use of CC DDBCK. Refer to IRM 21.6.1.7.2, Command Code DDBCK, for the list of exceptions of when DDBCK cannot be used.

  2. CC DUPED should not be used to update DUPOL if the taxpayer is:

    • Claiming EITC for self/spouse only, or

    • Requesting a filing status change which does not affect exemption/credit allowance

      Note:

      If EITC was disallowed during original processing but other exemption/credit amounts were not addressed due to no effect upon taxable income or total tax, determine if the TIN was used for these allowances and update DUPOL accordingly.

  3. Command Code DUPED does not replace masterfile account action. Appropriate account transactions are still required.

  4. Do not disclose DUPED data. Taxpayers are not entitled to know who else has claimed the dependent exemption or EITC credit.

    Note:

    Do not use Command Code DUPED or DUPOL to determine if the taxpayer is entitled to claim the exemption or credit (including EITC). The database is not to be used to determine the taxpayer's eligibility.

  5. Refer to IRM 2.4.53, Command Code DUPED, for information on the input of the command code.

Command Code DDBCK

  1. Command Code DDBCK must be used on all current processing year and two years prior for:

    • Amended returns when exemptions and/or certain credits requiring TIN validation (including children/other dependents who have an ITIN) are being allowed/removed

    • Responses (via correspondence, amended return, or by phone) to TIN related math errors

    • Responses to math error 653, 814-816, or 819-824, whether a Form 8862 is attached to a Form 1040X or is filed alone

    Caution:

    Do not use CC DDBCK on return preparer misconduct (RPM) cases or when processing a Transaction Code (TC) 976 return that involves identity theft, RPM, mixed entity, or scrambled SSN's. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ IRM 21.5.2.4.23.6, DIF SCORE or CLASSIFICATION "Send Return(s) to Examination for Review" , must be followed when working these returns.

    Exception:

    Telephone assistors only: If math error 653, 814-816, or 819-824 is present do not access command code DDBCK, tell the callers we will correct their accounts when they submit the Form 8862 by mail. The Form 8862 cannot be faxed it must be received by mail.

  2. Always use Command Code (CC) INOLES to verify the TIN/NAME/DOB and TIN assignment date before using CC DDBCK. Even though CC DDBCK will validate age, TIN, and name information when the taxpayer is claiming additional dependents and/or credits requiring TIN validation, it will not provide an error message unless ACTC, AOTC, CTC, EITC, and/or ODC is involved and then only if one of the math errors listed above is present or the taxpayer is claiming one of those credits for the first time.

  3. When processing an amended return/Form 8862 and ACTC, AOTC, CTC, EITC and/or ODC, is being increased, Command Code DDBCK will identify account conditions which require Exam involvement. If credit recertification is required, see IRM 21.6.3.5, Credit Recertification.

  4. DDBCK must be used when the following is being allowed or removed:

    • Exemptions (including exemptions who have an ITIN or previously had an ITIN and now have an SSN)

      Note:

      If TIN is an ITIN, use the INOLES assignment date

    • Adoption Credit

    • Child Tax Credit/Additional Child Tax Credit

    • Child and Dependent Care Credit

    • Credit for Other Dependents

    • Education Credit

    • EITC

  5. Exceptions for when CC DDBCK cannot be used:

    Condition If current processing year claim should CC DUPED be used?
    CP 27 response
    or
    Amended return where taxpayer is claiming EITC for self/spouse only
    No
    TIN has been merged or resequenced.

    Example:

    Primary taxpayer filed originally with an Individual Taxpayer Identification Number (ITIN) and NOW obtained a valid Social Security Number (SSN) and a Form 1040X needs to be processed.

    Yes
    Child Care Credit and dependent child turned 13 during the tax year, he/she is a qualifying person for part of the year he/she was under age 13. Refer to IRM 21.6.3.4.1.3, Child and Dependent Care Credit. Yes
    Requesting filing status change which does not affect exemption/credit allowance No
    EITC increase due to additional Form W-2 No
    EITC NON-TIN related Math Errors (ME) pertaining to either correspondence or Forms 1040X.

    Exception:

    ME 653, 814-816, or 819-824

    No
    Taxpayer is a fiscal year filer Yes
    CP 09 response Yes
    DDBCK Input Screen is full (6 dependents were previously claimed) Yes
    Tentative Carrybacks (TENTs) Yes
    Mixed Entity Cases Yes
    Scrambled SSN Cases Yes
    After the resolution of an ID Theft case and the "good" return has been identified, update as applicable refer to IRM 25.25.4.5, Identity Theft Category 7 — Single Return/Deceased/X-REF (No Lost Refund) Process. Yes
    Child Care Credit and the qualifying dependent is over the age of 12 but disabled Yes
    Recertification Indicator 2, 3, or 4 is present and tax year is < EL-TXPD No
    Employee does not have access to command code DDBCK

    Note:

    If the case involves an increase to the Earned Income Tax Credit refer to Exhibit 21.5.3-3, Examination Criteria (CAT-A) - Credits. If the case does not meet CAT-A criteria and all other requirements are met then allow the EITC.

    Yes
    ASFR returns worked in AM contain a TC 599/089.
    Note: If input, CC DDBCK response will be "POSTED RETURN NOT FOUND FOR XXXX12" .
    No
    Return Preparer Misconduct (RPM) Cases Yes

    Reminder:

    For additional DDBCK Examination criteria, refer to Exhibit 21.5.3-3, Examination Criteria (CAT-A) – Credits.

  6. CC DDBCK does not update DUPOL on cases when the response includes "Follow IRM" , "Selected" , or "Send as CAT-A" .

    1. If working a current processing year claim and CC DDBCK's response includes "Follow IRM" and following the applicable IRM procedures results in the adjustment being made, CC DUPED must be used to update DUPOL. Example of a DDBCK response "ITIN - Follow IRM" , refer to IRM 21.6.1.6.4, Missing or Invalid Exemption TINs Procedures.

    2. If working a current processing year claim and CC DDBCK's response is "Selected" , do not use CC DUPED to update DUPOL. The claim is being referred to Examination for further review.

    3. If working a current processing year claim and CC DDBCK's response is "Send as CAT-A" and the claim is later returned by Examination "accepted as filed" , CC DUPED must be used to update DUPOL.

    4. If working a current processing year claim that is timely filed prior to April 15 and CC DDBCK's response is "Date Cannot be a Future Date" use the current date for the input.

  7. Input Category Code "EICN" in the category code field when working a case and:

    • EITC is not involved (amended return/CP 36/DUPF)

    • EITC is decreased (amended return/CP 36/DUPF)

    • Correcting Non-EITC TIN related math error based on taxpayer correspondence, phone call, or amended return


    When the Category Code is "EICN" input:

    • Claim Amount "0"

    • Schedule C (SCHED-C) indicator "N"

    • AGI (L1) INC/DEC "0"

    • EIC (L13) INC/DEC "0"

    • RefCR (L15) Amount of ACTC and/orAOTC

  8. For cases involving an increase to EITC, refer to IRM 21.6.3.4.2.7.14, EITC and Command Code DDBCK, for information on the appropriate "Category Code" , "Claim Amount" , and "SCHED-C" indicator to enter.

  9. Take the following account action per DDBCK:

    Note:

    If the account contains a Transaction Code (TC) 971 Action Code (AC) 010 and DDBCK's response indicates case has been "Selected" , manually input the TC 971 AC 013.

    Reminder:

    If DDBCK's response indicates case has been "Selected" or to "route case to CAT-A" , refer to IRM 21.5.3.4.7, Processing Claims and Amended Returns with Examination Involvement, for additional instructions. If the claim or amended return contains CAT-A criteria and a -L freeze (TC 420/424) is NOT present, input all tax increases and credit decreases. Input TC 470 to hold balance due notices. Use the appropriate blocking series and hold code. Refer to Examination.

    If the following literal displays Then
    OK to input ADJ54, Do Not Use Blocking Series 74 Input the adjustment following the appropriate procedures for the specific issue.

    Note:

    Do not use Blocking Series 74

    OK to input ADJ54, if eligibility met
    OK to adjust AOTC/EITC/ACTC if eligibility met
    OK to adjust EITC/ACTC if eligiblity met
    OK to input ADJ54, enter reason code 103 Input the adjustment for the qualifying child (QC) case following the appropriate procedures and use RC 103.

    Note:

    Do not use Blocking Series 74

    Adjust ACTC using Unsubstantiated ME procedures Adjust account using unsubstantiated math error procedures found in paragraph 4 of IRM 21.5.4.5.5, Math Error Unsubstantiated Protest Processing. Route to your local Examination, using appropriate routing procedures after the adjustment has been made.
    Adjust AOTC using Unsubstantiated ME procedures
    Adjust EITC using Unsubstantiated ME procedures
    Send as CAT-A Refer to reminder in (9) above. Route to Examination as "Suspend 2CATA" and use the referral reason "Earned Income Credit" .
    Send as CAT-A EITC
    Selected, DDBCK reroute to EITC Refer to reminder in (9) above. Route to your local Examination, using appropriate routing procedures.
    Selected, DDBCK route to EITC XXXX

    Note:

    "XXXX" = CAMPUS

    Refer to reminder in (9) above. Route to Examination at XXXX using appropriate routing procedures.

    Note:

    If "Selected, DDBCK reroute to EITC KCSC" then refer to IRM 21.6.3.5, Credit Recertification.

    DDBCK Selected ACTC Refer to reminder in (9) above. Route to your local Examination, using appropriate routing procedures.
    Reject/Disallow Claim The TIN assignment was after the due date of the return. Claims for Child Tax Credit, refer to IRM 21.6.3.4.1.24.2, CTC - Adjusting the Account. Claims for the Credit for Other Dependents (ODC) refer to IRM 21.6.3.4.1.24.3 , Credit for Other Dependents. Claims for Earned Income Tax Credit (EITC) refer to IRM 21.6.3.4.2.7.10, EITC Claims. Claims for the American Opportunity Tax Credit (AOTC), refer to IRM 21.6.3.4.2.11, American Opportunity Tax Credit.
    Disallow AOTC 4 yr rule AOTC being claimed for more than 4 years. Disallow following normal disallowance procedures.
    Partially disallow AOTC, OK to adjust ACTC/EITC if eligibility met AOTC being claimed for more than 4 years. Disallow AOTC and allow ACTC/EITC if eligibility met following normal partial disallowance procedures.
    Partially disallow AOTC, OK to adjust ACTC/EITC if eligibility met, see Note
    1. If Note applies for alternative proof, then Refer to reminder in (9) above. Route to your local Examination, using appropriate routing procedures.

    2. If Form 1098-T is attached, adjust AOTC following normal procedures.

    3. Otherwise, no Form 1098-T available on IRPTR. Disallow AOTC and allow ACTC/EITC if eligibility met following normal partial disallowance procedures.

    No consider AOTC no 1098-T No Form 1098-T available on IRPTR. No consider using normal no consideration procedures.
    No consider AOTC no 1098-T, see Note
    1. If Note applies for alternative proof, then Refer to reminder in (9) above. Route to your local Examination, using appropriate routing procedures.

    2. If Form 1098-T is attached, adjust AOTC following normal procedures.

    3. Otherwise, no Form 1098-T available on IRPTR. No consider AOTC following normal no consideration procedures.

    Selected, DDBCK reroute to EITC, possible citizenship issue Do not adjust. Route to local Examination, using appropriate routing procedures.
    Send as CAT-A - possible citizenship Do not adjust. Follow normal CAT-A routing procedures.
    FS Case Joint to Separate after the due date - Follow IRM Refer to IRM 21.6.1.5.5, Married Filing Joint to Married Filing Separate, Single or Head of Household Procedures.
    Possible Statute of Limitations - Follow IRM prior to sending as CAT-A Follow normal CAT-A routing procedures.
    ITIN - Follow IRM Refer to IRM 21.6.1.6.4, Missing or Invalid Exemption TINs Procedures.
    Open AIMS Present - Follow IRM Refer to IRM 21.5.3.4.7, Processing Claims and Amended Returns with Examination Involvement.
    Prior Year Possible Statute - Follow IRM Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues.
    Selected, Input ADJ54 using BS 74 then Route to EITC Adjust account using unsubstantiated math error procedures found in paragraph 4 of IRM 21.5.4.5.5, Math Error Unsubstantiated Protest Processing. Route to your local Examination, using appropriate routing procedures after the adjustment has been made.
    Selected, Input ADJ54 using BS 74, reroute to EITC BSC
    or
    Selected ME 653 - Reroute to EITC XXXX

    Note:

    "XXXX" = CAMPUS

    Adjust account using unsubstantiated math error procedures found in paragraph 4 of IRM 21.5.4.5.5, Math Error Unsubstantiated Protest Processing. Route the case after the adjustment has been made.

    Note:

    DDBCK has selected this case and the account will be opened on AIMS before the adjustment input posts to master file.

    RECERT IND Present - Follow IRM Refer to IRM 21.6.3.5.1,Credit Recertification Math Errors
  10. Response screens addressing the action to be taken will be displayed after the appropriate data is input. For DDBCK input, refer to IRM 2.4.58, Command Code DDBCK / DDBCV / DDBCS, for additional information.