21.7.11 Additional Computer Paragraph Notices and Transcripts

Manual Transmittal

September 10, 2018


(1) This transmits revised IRM 21.7.11, Business Tax Returns and Non-Master File Accounts, Additional Computer Paragraph Notices and Transcripts.

Material Changes

(1) This IRM was revised to reflect various editorial and grammatical changes as well as the following changes:

IRM Reference Material Changes
IPU 18U0693 issued 04-23-2018 IRM Clarified the condition that generates a CP 186 per SERP feedback #201801298

Effect on Other Documents

IRM 21.7.11, Additional Computer Paragraph Notices and Transcripts, dated August 18, 2017 (effective October 1, 2017), is superseded. IPU 18U0693 issued 04-23-2018 is incorporated into this IRM.


The primary users of this IRM are Accounts Management employees. The IRM is intended for Customer Account Services issues involving Business Master File (BMF) returns.

Effective Date


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

Additional Computer Paragraph Notices and Transcripts Overview - Program Scope and Objectives

  1. This IRM section contains information and adjustment procedures for Business Master File employees working:

    • Internally generated computer paragraph (CP) notices/transcripts, and

    • Responses to notices issued to taxpayers

  2. Purpose: This IRM provides general information concerning business income tax returns internal transcripts and notices, and provides procedures for working responses to notices issued to taxpayers.

  3. Audience: The primary users of this IRM are Customer Service Representatives (CSRs) and/or Tax Examining Assistants (TEs) who work these Business Master File (BMF) internal transcripts, and the responses to these notices.

  4. Policy Owner: The Director, Accounts Management; Wage and Investment Division.

  5. Program Owner: Wage and Investment, Customer Accounts Services, Accounts Management, Process and Program Management, BMF & Specialty, Business Adjustments.

  6. Primary Stakeholders: Taxpayers, and the Wage and Investment (W&I), Small Business/Self Employed (SBSE) , Large Business and International (LB&I) divisions.

  7. Program Goals: The objectives for the program is to work the notices and transcripts correctly, and to provide taxpayer with timely and accurate responses to their inquiries. The program goals are provided in the Accounts Management Program letter as well as IRM 1.14.16, Accounts Management Guide for Managers.


  1. Employees in the Accounts Management (AM) organization follow the guidance in IRM 21.7.11 for working potential issues raised in the internal notices and transcripts, in addition to, working the responses to these notices. These procedures include instructions for employees working CP 108 Notices - Problems with Your Federal tax Deposit, CP 234 - Processing Potential Estimated Tax Penalty Notices, and CP 267/CP 268 - Notice of Excess Credits, and the action that must be input into the Internal Data Retrieval System (IDRS) to resolve these issues.


  1. The Internal Revenue Code (IRC) is the authority for the procedures in this Internal Revenue Manual. The IRC has been amended by Congress. Revenue procedures, acts, rules and regulations interpret the IRC. For example: IRC 6654 contains the procedures for determining whether an Estimated Tax Penalty should be charged on individual taxpayers and fiduciaries, and IRC 6655 contains the procedures for determining whether the Estimated Tax Penalty should be charged on Corporations. In addition,

  2. Treasury regulations (26 C.F.R.) commonly referred to as Federal Tax Regulations pick up where the Internal Revenue Code leaves off by providing the official interpretation of the IRC by the U.S. Department of the Treasury.

  3. In addition to participating in the promulgation of Treasury (Tax) Regulations, the IRS publishes a regular series of other forms of official tax guidance, including revenue rulings, revenue procedures, notices, and announcements. See Understanding IRS Guidance - A Brief Primer for more information about official IRS guidance versus non-precedential rulings or advice. The authoritative instrument for the distribution of all forms of official IRS tax guidance is the Internal Revenue Bulletin (IRB), a weekly collection of these and other items of general interest to the tax professional community.

  4. For example, Forms 8109 and Form 8109-B, FTD Coupons are no longer used to make Federal Tax Deposits. A regulatory change took effect January 1, 2011, that eliminated FTD coupons. Federal tax deposits must be made by Electronic Funds Transfer (EFT).

  5. IRM 1.2.21, Policy Statements for Customer Account Services Activities, contains the Policy Statements which relate to Customer Account Services activities. They are as follows:

    • Policy Statement 21-1 (Formerly P-6-1) - Service commitment to Taxpayer Service Program

    • Policy Statement 21-2 (Formerly P-6-10) - The public impact of clarity, consistency, and impartiality in dealing with tax problems must be given high priority

    • Policy Statement 21-3 (Formerly P-6-12) - Timeliness and Quality of Taxpayer Correspondence

    • Policy Statement 21-4 (Formerly P-6-13) - One-stop service defined

    • Policy Statement 21-5 (Formerly P-6-40) - Assistance furnished to taxpayers in the correction of accounts

Roles and Responsibilities

  1. Accounts Management’s Policy and Program Management Section has responsibility for the information in the IRM. The IRM is revised annually.

  2. The Director of Accounts Management is responsible for policy related to this IRM.

  3. IRM, Accounts Management, provides various guidance for Accounts Management employees including the following:

    • Data Management and Reports

    • Planning and Analysis

    • Joint Operations Center Representative

    • Process and Program Management (BMF)

    • Project Management Office and Support

    • Electronic Services and Programs

    • Policies, Procedures and Guidance

    • Chief Accessibility Coordinator

    • Field Directors, Accounts Management

  4. IRM 21.1.1, Accounts Management and Compliance Services Overview, provides guidance to employees assigned to the Accounts Management organization.

Program Management and Review

  1. IRM 1.4.16, Resource Guide for Managers - Accounts Management Guide for Managers, provides guidance for program management and review of programs assigned to Accounts Management.

Program Controls

  1. 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. The Embedded Quality Review Program is the system used by Accounts Management for reviewing employees’ quality. The Quality Review process provides a method to monitor, measure, and improve the quality of work. Quality Review data is used to provide quality statistics for the Service’s Business Results portion of the Balanced Measures, and/or to identify trends, problem areas, training needs, and opportunities for improvement.

  2. Centralized Quality Review System (CQRS) is operated by the Joint Operations Center (JOC) to provide independent quality review services for a number of product lines.

  3. Local reviews are performed to focus attention on areas that require improvement. The local quality reviews are performed by staffs reporting to the Quality Assurance Manager, CPAS Manager, and/or other units that have quality assurance duties. Local quality reviews are also used for employee development and on-the-job instruction. The Accounts Management function may also request that local quality reviews be performed on processes that are not subject to the national quality review. Managerial reviews, which are prepared on EQRS, measure employee performance.

  4. Quality Review data is used by management to provide a basis for measuring and improving program effectiveness and identifying areas where the IRS can improve the protection of taxpayer rights by identifying:

    • Defect(s) resulting from site or systemic action(s) or inaction(s),

    • Driver(s) of customer accuracy,

    • Reason(s) for defect occurrence,

    • Defect trends,

    • Recommendation(s) for corrective action, and

    • Training needs.


  1. The Reference Net Legal and Tax Research Service page provides an Acronym Database to research acronyms found within this IRM. In addition, a comprehensive listing of IRS acronyms, please refer to the Acronym Database.

Related Resources

  1. Below are additional websites, job aids, or electronic tools that are needed to assist in completing the work in Accounts Management:

    • The Correspondence Image System (CIS) for case inventory.

    • The Employee User Portal (EUP) to view corporate and individual electronic tax returns filed via MeF.

    • IRM 21.2.2-2, Accounts Management Mandated IAT Tools. These IAT tools simplify taxpayer account processing by assisting the user with IDRS research and input.

    • Servicewide Electronic Research Program (SERP) to view SERP Alerts, IPUs, Correspondex Letters and IRM Supplements among others.

    • The Electronic Publishing Website to research forms, instructions and publication, other Internal Revenue Manuals, revenue procedures and IRS announcements.

What are Additional Computer Paragraph Notices and Transcripts?

  1. Additional computer paragraph notices are those which are computer-generated and sent to the taxpayer or worked internally. Often, these notices and transcripts raise questions and may require further action by the employee to settle an issue.

Additional Computer Paragraph Notices and Transcripts Research

  1. Actions on additional computer paragraph notices and proper responses to the taxpayer inquiries require employees to access the Business Master File (BMF) and Non Master File (NMF). Select the appropriate notice below and follow the procedures.

  2. Employees may be required to carry out procedures concerning any of the following:

    • CP 108, Problem with your Federal Tax Deposit (FTD)

    • Electronic Federal tax Payment System (EFTPS) CP 108 inquiries received by telephone

    • Discrepancies between tax type indicated on an Electronic Funds Transfer Payment System (EFTPS) payment and established filing requirements

    • CP 108 reply indicating an irate taxpayer

    • An unnecessary reply to CP 108

    • CP 172, CP 192 - Form 3465, Request for Adjustment

    • CP 180, CP 181, CP 182, Missing Form or Schedule

    • CP 185 - TC 690, Penalty Payment, Module in Credit Balance

    • CP 186, Notice of Potential Manual Interest/Penalty Adjustment

    • 120 percent interest computation

    • Routing of CP 186 with U–, –V, –W, or TC 521 with closing codes 81 or 85 - 89

    • CP 186 involving estate tax return

    • CP 186 involving Form 5668

    • TC 342

    • TC 272

    • Computer Code Condition M

    • TC 240 Civil Penalty Module

    • CP 195, Unresolved Refund Freeze

    • CP 234, Processing Potential ES Penalty Notices

    • CP 267CP 268, Notice of Excess Credit

    • Undeliverable CPs 267/268

    • CP 270, Hold Code, Module in Debit Balance

    • POSSDELPEN (Possible Delinquency Penalty) Transcripts

  3. Cases meeting Taxpayer Advocate Service (TAS) criteria will be referred as outlined in IRM, Taxpayer Advocate Service (TAS).

  4. It is the responsibility of all IRS employees to report a significant volume of erroneous taxpayer correspondence being issued to taxpayers, or when there is a risk of issuing considerable volumes of erroneous correspondence. When this happens, follow procedures in IRM, Erroneous Correspondence Procedures - Report Erroneous Correspondence Process.

CP Notices and Transcripts Procedures

  1. The following are procedures for the various CP notices in this section.

CP 108 - Problem With Your Federal Tax Deposit (FTD)

  1. CP 108 generates when the type of tax and/or tax period cannot be determined on an Electronic Funds Transfer Payment System (EFTPS) payment. This notice advises the taxpayer where the credit was posted and provides a tear-off portion to return if the payment was posted incorrectly. A toll-free number is also provided if the taxpayer prefers to call rather than write. See IRM, CSRs - EFTPS CP 108 Inquiries Received by Phone, for more information.

  2. CP 108 notices generated after December 31, 2009 contain the return address code for Submission Processing (SP) and any replies to this notice are worked by SP (see IRM 3.10.72-3, Computer Paragraph (CP) Notices – Routing Guide). However, any replies received in Accounts Management (AM) will remain in AM and will be resolved using existing procedures.

  3. Action required:

    If Then
    Affected module has an immediate return due date (within two weeks of return posting) Suspend credit transfer action from the memo account (an account where the Transaction Code (TC) 150 has not yet posted) until the return posts and the module settles.
    Credits need to be transferred from an account other than a memo account Input any necessary credit transfers, per the taxpayer’s response. Note: If the credit transfer is to a full paid account, or will result in an overpayment, on command code (CC) ADC 34, overlay the bypass indicator with a 1 to bypass unpostable code 305.
    Taxpayer’s response indicates he/she is not required to file a form for the type of tax to which the payment was applied Transfer the payment and delete the Filing Requirements using CC BNCHG.
    Payment is an EFTPS payment and the taxpayer states he/she has no knowledge of correct application because his/her financial institution made payment Instruct the taxpayer to contact financial institution to determine correct application and have the taxpayer reply back to us as soon as possible.
CSR - EFTPS CP 108 Inquiries Received by Phone
  1. When the taxpayer calls regarding a CP 108 and the payment in question is an EFTPS payment:

    1. Determine account where the payment belongs.

    2. Try to determine if the taxpayer made an error when initiating EFTPS payment (helps prevent same error in the future).


      See IRM,EFTPS Enrollment, for more information on Treasury Financial Agent (TFA), including phone numbers.

    3. If the taxpayer knows why error occurred, input necessary credit transfer(s). (If payment posted to correct EIN, tax period, and MFT, no credit transfer necessary.)

    4. If the taxpayer does not know why error occurred, ask if the payment was an Automated Clearing House (ACH) debit the taxpayer initiated by voice response unit (VRU).


      VRUs are used to make an ACH debit. ACH debit is also known as EFTPS Direct.

    5. If payment was not initiated by VRU, ask the taxpayer where to apply payment. Follow table:

      If Then
      Taxpayer knows where to apply payment Make the necessary credit transfer.
      Taxpayer does not know where to apply payment Instruct the taxpayer to contact his/her financial institution or authorized agent and reply back to us as soon as possible.
    6. If the payment was initiated by VRU, ask the taxpayer the date entered for "tax period end date."


      Bank of America's VRU asks the taxpayer to enter the four-digit tax filing period (e.g., third quarter 2017 payment entered as 1709). For a fiscal year return (Form 1120, Form 1041, etc.) with a FY of 08, the taxpayer enters 1608 if making payment for a return for period ending August 31, 2016.

      If Then
      Date is not equal to a valid tax period end date for the type of tax or date is not in correct YYMM format (e.g., the taxpayer making a payment for his second quarter 2017 Form 941 would enter YYMM format as 1706) Instruct the taxpayer how to determine correct tax period end date (e.g., for quarterly returns, Forms 720, Forms 941, etc., March 31, June 30, September 30, December 31). Enter as the MM in the YYMM format as:
      1st qtr. March 31-03
      2nd qtr. June 30-06
      3rd qtr. September 30-09
      4th qtr. December 31-12
      Taxpayer does not know what he/she entered Inform the taxpayer the tax period end date may have been entered incorrectly and provide instructions on the correct format and date to enter for future payments.
    7. If the taxpayer entered a valid tax period end date, he/she may have entered an invalid tax form code. Direct the taxpayer to Appendix A of the EFTPS Payment Instruction Booklet to determine if the tax form code used is valid for type of tax. If the taxpayer does not know what he/she entered, inform the taxpayer that the tax form code may have been entered incorrectly.

    8. If the taxpayer does not understand the questions above and cannot identify the correct account to apply the payment, instruct the taxpayer to call his/her financial institution for resolution and to reply back to us as soon as possible. (Taxpayers using ACH credit method for initiating payments may be using software provided by their financial institutions. Financial institutions also create ACH credit transaction records.)

    9. Always make any necessary credit transfers to move any incorrectly posted payments to the correct EIN, tax period, and MFT. Even if the taxpayer does not know what error he/she made, make the necessary credit transfer, if the taxpayer can identify the account to which the payment belongs.

Discrepancy Between Tax Type Indicated on EFTPS Payment and Established Filing Requirements
  1. Forms 8109 and Form 8109-B, FTD Coupons are no longer used to make Federal Tax Deposits. A regulatory change took effect January 1, 2011, that eliminated FTD coupons. Federal tax deposits must be made by electronic funds transfer (EFT).

  2. When a discrepancy between the tax type indicated on the EFTPS payment and established filing requirements occurs, and the correct tax type cannot be determined from in-house research, the FTD unit in Accounting Function attempts to:

    1. Contact the taxpayer for verification of tax type

    2. Correct the FTD record

  3. If unable to contact the taxpayer or to resolve the discrepancy:

    1. Letter 3064C (or other appropriate letter) is sent stating where the FTD payment was applied.

    2. Reply requested only if the payment needs to be applied to a different type tax and/or tax period.

    3. Taxpayer replies are routed to the initiator. If a credit transfer is required, the reply is forwarded to the functional area which works CP 108 replies.

    4. Process these cases using the chart in IRM

CP 108 Reply Indicates Irate Taxpayer
  1. These CP 108 replies must be answered with a phone call or letter, including:

    1. An apology

    2. An explanation of the error

    3. Advice to prevent the error in the future


      Ensure you are talking to the taxpayer or an authorized representative. See IRM 21.1.3, Operational Guidelines Overview, for authentication guidelines.

Unnecessary Reply to CP 108
  1. There is no need to reply to the taxpayer when the taxpayer unnecessarily replies to a CP 108.


    A taxpayer’s CP 108 indicates payment was applied to 01-201706 and the taxpayer’s reply confirms payment should be applied to the second quarter of 2017.

CP 172/CP 192 - Form 3465, Request for Adjustment

  1. CP 172 and CP 192 are internal (campus) notices issued through the Accounts Management System to Exempt Organization Entity for processing.

  2. CP 172 is issued to verify the status of an entity established as a nonprofit organization exempt from filing Form 940 (Employment Code (EC) "W" ), but required to file Form 941 or Form 944 (FR 01). For more information, see IRM, CP 172.

  3. If money has posted to Form 940 and the organization is not liable, Entity or Entity Unpostables will prepare a Form 3465 or a Form 3244 to request a manual refund and forward to Accounts Management (AM) for processing.

  4. CP 192 is issued when:

    1. State or local government subject to withholding tax only (EC"G" ), files Form 941 or Form 944 reporting Federal Insurance Contribution Act (FICA) wages, or

    2. Entity not subject to Federal Unemployment Tax Act (FUTA), files Form 940 and the account has Employment Code "F" , "W" , or "T" . For more information, see IRM, CP 192.

  5. For a CP 192 involving Form 941, Entity verifies whether the taxpayer entered into a Section 218 agreement electing social security coverage.

    1. If Section 218 was not elected, the case file is forwarded to Accounts Management on Form 3465.

    2. Accounts Management calls or corresponds with the taxpayer to resolve the Form 941 issue before abating any FICA tax.

  6. For CP 192s involving Form 940, Entity verifies whether the taxpayer is subject to FUTA tax. If the taxpayer is not subject to FUTA tax and Form 940 reflects a taxable wage amount, the case is forwarded to Accounts Management on Form 3465. Upon receipt, Accounts Management:

    1. Abates assessed FUTA tax and FUTA wages


      Use Priority Code (PC) 3 for IRS initiated adjustments. See IRM, 45-Day Rule and IRS Initiated Adjustments.


      Some Federal Agencies with Employment Codes "A" or "F" , are required to file Form 940. Therefore, prior to preparing Form 3465, Entity is required to contact the Federal Agency Delinquency (FAD) Unit and notate the word "FAD" on Form 3465 if the tax should be refunded. If Form 3465 is not notated, contact the FAD Unit. See the Who/Where Tab on SERP for the phone number of the Federal Agency Delinquency (FAD) Campus Contacts. Also, see IRM, CP 192, for additional information.

    2. Issues Letter 858C to notify the taxpayer he/she is not liable for filing Form 940.

    3. If Form 3465 or Form 3244 is requesting a manual refund for any payments made on other periods, process accordingly.


      Delete Form 940 filing requirements, see IRM, BMF Response Form 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return, unless already corrected by Entity. Do not delete the filing requirements until after the refund posts.

CP 180, CP 181, and CP 182 Notices - Missing Form or Schedule

  1. The following computer paragraph notices (CP) generate and are sent to the taxpayer when a Form 990-T, Form 1041, or Form 1120 series return is input to the BMF without the appropriate forms or schedule and one or more of the following Missing Schedule Codes (MSC) are assigned to the return. The credit is not allowed.

  2. A CP 180 Notice generates when any of the following forms or schedule are missing from the return and the return is assigned a MSC.

    Forms and Schedules
    MSC 30 - F1120-PH
    Forms 1120 Only
    MSC 47 - F8826 MSC 63 - F8900 MSC 70 - F5884A
    MSC 32 - Schedule D MSC 51 - F8845 MSC 64 - F8904 MSC 71 - F8909
    MSC 33 - F4255 MSC 52 - F8846 MSC 65 - F8906 MSC 72 - F8912
    MSC 34 - F4626 MSC 53 - F8847 MSC 66 - F8907 MSC 73 - F8931
    MSC 35 - F4797 MSC 54 - F8844 MSC 67 - F8908 MSC 74 - F8932
    MSC 45 - F8611
    Also, F8609 for Forms 1041 Only
    MSC 61 - F8864 MSC 68 - F8910  
    MSC 46 - F8827
    Forms 1120 Only
    MSC 62 - F8896 MSC 69 - F8911  
  3. A CP 181 Notice generates when any of the following forms are missing from the return and the return is assigned a MSC.

    Forms and Schedules
    MSC 29 - F1118 MSC 40 - F6765 MSC 49 - F8834 MSC 58 - F8881
    MSC 30 - F1116
    Forms 990-T and Forms 1041 Only
    MSC 42 - F8820 MSC 50 - F8835 MSC 59 - F8882
    MSC 37 - F5735 MSC 43 - F3800 MSC 55 - F8861 MSC 60 - F8884
    MSC 38 - F5884 MSC 44 - F8586
    Also, F8609 for Forms 1120 Only
    MSC 56 - F8860 MSC 75 - F5884-B
    MSC 39 - F6478 MSC 46 - F8801
    Forms 990-T and Forms 1041 Only
    MSC 57 - F8874 MSC 76 - F8941
  4. A CP 182 Notice generates when Form 3468 is missing from the return and the return is assigned MSC 31.

  5. See the following IRMs for more information on MSC for the forms below:

    • Form 990-T, IRM, Part IV Perfection

    • Form 1041, IRM Exhibit 3.11.14-20, Missing Schedule Codes

    • Form 1120 Series, various subsections in IRM 3.11.16

  6. To resolve a CP 180 Notice, CP 181 Notice, or a CP 182 Notice:

    1. Use Corporate File On Line (CFOL) command codes. (Secure original return only when absolutely necessary.)

    2. Determine the correct tax and/or credits by reviewing information from the taxpayer.

    3. If the taxpayer submits the proper form(s), adjust tax, penalties, interest and/or credits, as necessary. Input hold code 0 with the adjustment to allow a CP 210/CP 220 Notice to generate to the taxpayer.

    4. Disallow any credit claimed if the taxpayer did not provide the supportive form. (See procedures in IRM, General Claim Procedures, for no consideration/disallowance claims.)

CP 185 - TC 690 Penalty Payment, Module in Credit Balance

  1. A CP 185 is generated when all of the following conditions occur:

    • TC 690 (designated payment of penalty) posts to a module

    • There is no posted un-reversed penalty in the module

    • The payment puts the module in credit balance

  2. A freeze from refund and offset is set in the same cycle the CP 185 is generated. The H- freeze is systemically released eight cycles later, if other actions which release the freeze do not occur. See IRM, H- freeze, for more information. The freeze is released when one of the following conditions occur:

    1. Reversal of the credit

    2. Posting of a penalty

    3. Input of TC 290 or TC 300 with a penalty

    4. Automatic 8 cycle release

  3. Resolve the CP 185 by researching the Integrated Data Retrieval System (IDRS) to determine if there is a pending or unpostable penalty transaction. Follow the table below:

    If Then
    A penalty transaction is pending 1. Hold CP 185 for two cycles.
    2. Destroy CP 185 when the penalty posts.
    A penalty transaction is unpostable 1. Use CC UPCAS with definer Z to advise Unpostables how to correct the transaction.
    2. Destroy CP 185.
    A penalty transaction has posted Destroy CP 185.
    A TC 180 $.00 in Blocking Series (BS) 14 has posted and the taxpayer has been notified that no penalty was assessed Destroy CP 185.
    There is no pending or unpostable transaction


    If a payment is remitted in response to a CP 276A or CP 276B notice, follow the procedures in IRM, CP 276A and CP 276B Notices (FTD Penalty Waiver).

    1. Request the TC 690 document (does not apply to EFTPS).
    2. Input TC 570 to prevent the payment from refunding because of the automatic eight cycle release.
    3. Assess penalty and attach CP 185 if the posting document indicates penalty should have been assessed; or
    4. If the posting document does not show a penalty transaction, forward the posting document to the organization responsible for having secured the payment.
    5. Destroy the CP 185, and transfer payment to the correct module if research indicates it belongs elsewhere.
    After following the above procedures, if the payment was made via EFTPS and research indicates the payment was not intended to pay a penalty
    NOTE: Some taxpayers using EFTPS have been inadvertently inputting the payment in a manner which causes it to post as a TC 690 when it was intended to be a TC 650/TC 660 (payment of tax). By changing TC 690 to TC 650 in a module subject to FTD penalty, this allows the computer to include the payment in its penalty computation, whereas a TC 690 is disregarded.
    Input a credit transfer to change the TC 690 payment to a TC 650 (or TC 660 if appropriate).
    1. Use CC ADD24.
    2. Input electronic payment indicator of '1'.
    3. Input TC 570 on both sides of the credit transfer. It is not necessary to input a TC 570 on the credit side if a TC 150 has not posted to the module.
    4. Input TC 571 with a posting delay code (PDC) 1 to release the TC 570 if a return has posted and the taxpayer should receive a refund.

CP 186 - Notice of Potential Manual Interest/Penalty Adjustment

  1. A CP 186 generates two cycles after a payment or credit creates a credit or zero balance in a module that is restricted from generating interest and/or Failure to Pay (FTP) penalty. A module restricted from computing interest or FTP penalty has one or more of the following conditions present:

    • - I freeze (interest is restricted by TC 340 or TC 341)

    • G- freeze (FTP penalty is restricted by TC 270 or TC 271)

    • Doc code 52 transaction posted in module (restricts interest and FTP penalty, but does not set freeze codes)

    • TC 150 has doc code 51 and blocking series other than 100 - 199 (restricts interest and FTP penalty, but does not set freeze codes)

  2. Changes to FTP penalty and interest must be manually computed when the module is restricted and the computer cannot recompute the correct amounts.

    1. Use command code COMPA, COMPA4, or COMPAP for debit interest computations. In addition to these command codes, the Automated Computation Tool (DMI/ACT) can be used for most interest computations and is recommended for more complex interest computations. See IRM, Interest Computation Tools and Reports, Systemically Calculated Interest, for a complete listing of interest computation methods.


      Although the Service approves and supports the use of CC COMPA and ACT/DMI to perform interest computations, ACT/DMI is the preferred interest computation tool.

    2. Use CC COMPAF for FTP computations.


      Refer to IRM 20.2, Interest, and IRM 20.1.2, Failure To File/Failure To Pay Penalties.

  3. Request the source document, if necessary, to determine the reason for the restriction.

  4. Review the penalty on the original assessment to verify if correct assessments were made.

    1. If the original assessment was incorrect, use the correct figures when resolving the CP 186.

    2. Do not reassess any amounts associated with a previous FTP abatement for first-time abatement (FTA), reasonable cause (RC) or general penalty relief.

    3. If the maximum FTP penalty has been reached and a TC 971 action code 262 has not generated, input TC 971 action code 262.

    4. For disaster assistance and emergency relief information, see IRM 25.16.1, Program Guidelines.

  5. Verify the interest assessed on the account.

    1. Do not correct the interest assessment, unless it can be determined the previous computation was in error.

    2. If the method of computation can be determined to be in error, then it is not necessary to order the previous adjustment document(s).


      See IRM 20.2, Interest, for further information.

  6. If additional penalty and/or interest is due, input an adjustment to assess the additional amount. Follow the table below:

    If Then
    The available credit is less than the total additional penalty/interest due Assess the total additional penalty/interest.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    The available credit is more than the additional penalty/interest Assess only the total additional penalty/interest due and let the balance refund.
    No other adjustment action is necessary PC 5 can be used to force the computer assessment of unrestricted interest or FTP penalty and issue a balance due notice to the taxpayer. (See IRM,Clearance Tolerances, for more information on use of PC 5.)
  7. If no additional interest/penalty is due, transfer the credit to the correct period or input TC 290 $.00 to release the J- freeze. Input Hold Code (HC) 0 to allow a CP 210/CP 220 Notice to generate.

Routing of CP 186s With U-, -V, -W, -Y, or TC 521 With Closing Code 81
  1. Route CP 186 cases with any of the conditions listed below to:
    Internal Revenue Service
    Mail BLN 4–N31.142
    2970 Market St.
    Philadelphia, PA 19104

    • U-, current or immediate prior status 6X

    • TC 521 with cc 81, and -W freeze on another module

  2. If the CP 186 has been scanned into the Correspondence Imaging System (CIS), refer the case through CIS to mail stop 4-N31.142.

  3. Accounts with the freezes below should no longer generate CP 186 transcripts. Offer in Compromise (OIC) transcripts generate on these accounts and Bankruptcy AIS (Automated Insolvency System) automation accomplish the same objective. If a CP 186 does generate, destroy as classified waste if paper or close no action if CIS case.

    • -V, TC 520 bankruptcy

    • -Y freeze TC 480, TC 780, TC 782 Offer in Compromise (OIC)

    • -W, TC 520 litigation pending


CP 186 Involving Estate Tax Return (Form 706)
  1. Route any CP 186 involving an estate tax return to:

    Cincinnati Compliance Campus
    Estate & Gift Tax Division
    Mail Stop 824G
    201 W. Rivercenter Blvd.
    Covington, KY 41011

CP 186 Involving Form 4668
  1. CP 186 notices generated on Form 4668 cases can usually be identified by one of the conditions below:

    • Form 941 with TC 300 and TC 336 (may be TC 308 or TC 340)

    • Partial abatement of exam assessment with a manual interest abatement, TC 341

  2. See IRM, Processing Procedures for Forms 4669 and 4670, to determine if interest needs to be adjusted.

  3. If it cannot be determined how interest was computed, request the adjustment document and/or Form 4668.

TC 342
  1. Manual restrictions on interest should not be automatically input to an account.

  2. TC 342 removes the interest restriction previously set by either a TC 340 or TC 341. TC 342 must be input with Priority Code (PC) 5 to allow Master File to post accrued interest. Master File considers all posted TC 19X, TC 34X, and TC 33X amounts when assessing or abating additional interest as a result of a re-computation. See the instructions in IRM, Manual Computations, for all the requirements for removing the interest restriction with the input of TC 342.

  3. If an account must be recomputed using interest netting procedures, see IRM 20.2.14, Netting of Overpayment and Underpayment Interest.

TC 272
  1. Do not restrict FTP penalty, unless absolutely necessary.

  2. TC 272 removes the restriction on computer computation of FTP penalty set by a previously posted TC 270 or TC 271 (without RC 62) and allows the computer to recompute normal FTP penalty. Follow the guidelines below when inputting TC 272:

    • TC 272 can only be input when it is determined from the source document(s), the FTP penalty restriction was unnecessary.

    • BS "00" must be used with TC 272.


      The original return must be attached when using BS 00.

Computer Condition Code "M"
  1. For tax periods prior to January 1, 2009, computer condition code (CCC) "M" was input during pipeline processing on employment returns with mis-classified employees. Input of CCC "M" generates a TC 340 $.00 and restricts interest.

TC 240 Civil Penalty Module

  1. These penalties are assessed at MF with TC 240 and a three-digit reference number which identifies the specific type of penalty. (See IRM 20.1.1, Introduction and Penalty Relief, IRM Exhibit 20.1.1-4, Penalty Reference Numbers (500 Series), IRM Exhibit 20.1.1-5, Penalty Reference Numbers (600 Series) and IRM Exhibit 20.1.1-6, Penalty Reference Numbers (700 Series), for the specific reference numbers, IRC sections and an explanation of the penalties.

CP 195 - Unresolved Manual Refund Freeze (-X Freeze)

  1. The -X manual refund freeze is created by one of the following conditions:

    1. A manual refund is input and TC 840 posts to the account. A corresponding adjustment is input without the appropriate hold code (HC), causing a duplicate refund to generate.

    2. A TC 840 posts without a TC 150 on the account.

    3. A TC 150 with CCC 0 posts to the account without a TC 840.

    4. A TC 840 posts to an account in debit balance.

  2. A CP 195 Notice generates seven cycles after a TC 840 posts to a module and the TC 150 was not coded with computer condition code (CCC) 0, or 20 cycles if the TC 840 was blocked 6XX. These notices indicate the manual refund created a balance due condition and a Taxpayer Delinquent Account (TDA) notice is scheduled to be issued.

    1. The notice is forwarded to Files to pull the manual refund document.

    2. Files forwards the CP 195 to the manual refund originator.

    3. Area Office input is forwarded to campus Accounts Management.

  3. Take the initial steps described below:

    1. Examine the transcript and tax module for any pending action.

    2. Request the return, if necessary, and the TC 840 document if not included with the case file.

    3. Research the taxpayer's account for unpostable or rejected credits on the module and contact the appropriate areas to resolve the debit condition.

    4. Research for any missing credits and make the necessary credit transfers.

    5. Take all necessary actions to resolve the debit balance before releasing the freeze and resuming notice issuance.

  4. Review the manual refund document. If the manual refund was input to a balance due module by a Compliance Service Collection Operation (CSCO) employee, Input TC 290 $.00 with hold code 3 and priority code 8 to release the –X freeze.

  5. After taking the steps in (3) above, use the table below to complete resolution of the CP 195.

    If And Then
    A TC 840 posts creating a debit balance without the offsetting credit received from The Bureau of Fiscal Services (BFS) (TC 841) after the 7 cycles IDRS shows an open control and the activity code is "841 to post" and the TC 841 will create a zero balance on the account Close the case as "no action" and refile the document.
    IDRS shows an opened or closed control base from a prior refund inquiry (activity code is either "3911TORDCC " , "1184TORFC" , or "3859messag" )   1. Forward the CP 195 to the respective function for association with their case.
    2. Refile the TC 840 document.
    3. DO NOT release the freeze.
    4. DO NOT allow the TDA notice to generate.
    There was an erroneous refund   Follow erroneous refund procedures in IRM 21.4.5, Erroneous Refunds.
    Adjustment action is necessary   Input TC 29X with PC 8 to release the freeze.
    TC 840 posted to the correct module TC 150 posted to the incorrect module Reprocess the return per IRM, Reprocessing Returns/Documents, and make any necessary adjustments.
    TC 840 posted to the incorrect account TC 150 posted to the correct account Follow instructions in IRM 21.4, Refund Inquiries, and IRM 3.17.79, Accounting Refund Transactions.
    TC 840 posted to the correct account The credits are not in the account Transfer the credits to resolve the -X freeze.
    Taxpayer is not liable for a return   Input TC 590 closing code 75.
    Case cannot be closed prior to issuance of a TDA An erroneous refund was issued Notify Collection to destroy the TDA.
    TDA was issued There is still a balance due on the account Notify Collection of the action taken.

CP 234 - Processing Potential ES Penalty Notices

  1. CP 234s were moved to the Alternative Delivery System (ADS) in January 2009. The CP 234 notice is no longer printed. An inventory record (CHRGOUT234) is now electronically generated through Correspondence Imaging System (CIS)/AMS with the basic information to identify the account.

  2. A CP 234 generates when the computer computation of the Estimated Tax (ES) penalty differs from the amount computed by the taxpayer (TC 170) by ≡ ≡ ≡ ≡ ≡ ≡ .

  3. A CP 234 generates when there is no TC 170 posted and the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and one of the conditions below is present:

    1. CCC A is present (indicates a non-penalty Form 2220 was submitted).

    2. Form 1120 is a consolidated return.

    3. Form 1120-F was filed with tax which included effectively and non-effectively connected income.

  4. In addition to the criteria above, a CP 234 also generates on Form 1041 if the Fiduciary Code is other than 9 and the computer computation of the ES Penalty is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and either of the following apply:

    1. Immediately prior tax year is not present.

    2. Immediately prior tax year is present and:
      TC 150 is not present and Status is other than 2 or 3, or,
      TC 150 is present but the prior year ES Tax Base is zero and the return is for a full 12 month period; or,
      TC 150 has document code 51 or 52 and Total Tax Settlement is zero.

  5. CP 234s are received with the original return. The computer computation of the ES penalty is shown as "CP 234" in the "Notice History Section" of CC TXMODA. The TC 170 is the penalty amount computed by the taxpayer.


    Do not use the computer computation of the ES penalty to adjust the ES penalty, except for situations described in IRM See IRM, Original Return Not Received With CP 234. Manual computation of the penalty amount is required in all other situations.

  6. See IRM 20.1.3, Estimated Tax Penalties, for information on the penalty computation, exceptions to the penalty, and the application of payments when re-computing the penalty. See IRM, CCC "Y" – Short Period Return for Change of Accounting Period, IRM, Short Period – Editing Proof of Entitlement, andIRM, Tax Period, to determine if the prior year is a Short Period Return.

  7. If a CP 234 generates on a Form 1041 or Form 1120 account, and the adjusted seasonal or annualized income installment method is used, and the annualization worksheet is attached to the return, ≡ ≡ ≡ math verify the Form 2210/Form 2220 or Form 8804, Schedule A.


    If a significant discrepancy is identified, see IRM, Form 2210 or Form 2210-F Discrepancies, and IRM,Significant Discrepancies.

    If no significant discrepancies are identified input TC 170 $.00 and put the following remarks in the source document field, "CP 234 generated in error, annualized income installment method utilized."


    The above procedure applies only to the original filed Form 2210/2220. You must verify the annualization computation on a subsequent filed Form 2210/2220.

  8. If the adjusted seasonal or annualized income installment method is not used, verify the accuracy of the taxpayer's distribution of the tax liability: e.g., did the taxpayer follow Large Corp. rules, etc. If the taxpayer's distribution of the tax liability is correct, and the penalty result differs from the Services computation, verify whether the credits claimed by the taxpayer match those posted on the account. If they do not match, attempt to locate any missing payments. Follow table below:


    Be sure to consider the information in (9) below, when computing the ES penalty. See IRM, Determining the Penalty Amount, for specific examples for adjusting accounts per the chart below

    If Then
    Math verification results in an increase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1. Input TC 170 for the amount of the increase using the appropriate BS.
    2. Send Letter 369C or Letter 1320C to the taxpayer explaining the penalty increase, such as, the payments claimed did not match those on the account. Include a copy of the penalty computation (COMPAS) in your correspondence or a DMI print as long as it matches the penalty computation. You may prepare page 1 of Form 2210/Form 2220, but it is not mandatory.
    3. Attach or capture a print of the penalty computation for documentation to the case file.
    Math verification results in a decrease ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1. Input TC 171 for the amount of the decrease using the appropriate BS.
    2. Use penalty reason code (PRC) 016.
    3. Use PC 3 when inputting an adjustment which is IRS initiated for the 45 day interest-free period.
    4. Send Letter 369C/Letter 1320C to the taxpayer explaining the penalty decrease, such as, we based your penalty on your prior year tax. Include a copy of the penalty computation (COMPAS) in your correspondence or a DMI print as long as it matches the penalty computation. You may prepare page 1 of Form 2210/Form 2220, but it is not mandatory.
    5. Attach or capture a print of the penalty computation for documentation to the case file.
    Math verification results in an increase/decrease of less than ≡ ≡ 1. Input TC 170 $.00 using the appropriate BS.
    2. Close case as "no change" .
    3. Attach or capture a print of the penalty computation for documentation to the case file.
  9. The IRS has extended the due dates on certain estimated tax payments for business entities due to Statutory Exceptions and Administrative Waiver. Also, see the IRS Disaster Assistance Program website, for other payment dates that have been postponed due to various Presidentially declared disasters. See the October 1, 2008 revision of this IRM when calculating the ES penalty for the following relief:

    • September 11, 2001, Terrorist Attack

    • Section 801 of the Economic Growth and Tax Relief Reconciliation Act of 2001

    • The Tax Relief Extension Act of 1999, "Penalty Relief Under Notice 2000-5"

    • Section 501 of H. R. 2, the Jobs and Growth Tax Relief Reconciliation Act of 2003

    • Hurricanes Katrina and Rita

  10. The ‘‘Tax Increase Prevention and Reconciliation Act of 2005’’ changed estimated tax payments as follows:

    • Increases corporate estimated tax payments due July 2006 through September 2006 for corporations with assets in excess of $1 billion to 105 percent of the otherwise required amount.

    • Delays the due date until October 1 for a percentage of corporate estimated taxes that are otherwise due on September 15 in certain years (20.5 percent in 2010 and 27.5 percent in 2011).

  11. Section 1212 of the American Recovery and Reinvestment Act (ARRA) of 2009, provides for a lower required annual payment for certain small business taxpayers with tax years beginning in 2009. See IRM, Special Rule for Tax Periods Beginning in 2009, for additional information.

Form 2210/Form 2220 Not Received With Return
  1. If a Form 2210/2220 is not received with the return, take the following action:

    1. Increase or decrease the ES penalty when the computer and the taxpayer's computation differs ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .


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


      Use PC 3 when inputting a decrease for the 45 day interest-free period. See IRM, 45-Day Rule and IRS Initiated Adjustments, for more information.

    2. Send Letter 369C/Letter 1320C to the taxpayer advising of the action taken. For example, we refigured the penalty based on either the prior year tax or current year tax. If penalty is being increased, request a Form 2210/Form 2220 be submitted if the taxpayer believes he/she qualifies for relief of the penalty per the form.

Original Return Not Received With CP 234
  1. If the original return is not received with the CP 234, recompute the penalty based on the available information such as command code PIEST and command code COMPAE.

  2. If a determination cannot be made, initiate a "special search" .

  3. If still unable to secure after special search, contact the taxpayer to request a copy of Form 2210/ Form 2220.

  4. If no response is received:

    1. Increase the penalty to the proposed CP 234 penalty amount, found in the "Notice History Section" on TXMODA.

    2. Notify the taxpayer of the increase.

    3. Request another Form 2210/Form 2220 be submitted if the taxpayer believes he/she qualifies for relief of the penalty per the form.

Large Corp. CP 234s
  1. Large corporations must utilize a special penalty calculation method. See IRM, Large Corporations, for the special penalty calculation method.

  2. A large corporation (for determining the estimated payments installment requirements) is defined as a corporation, or a member of a controlled group, that had, or whose predecessor had, taxable income of $1 million or more in any of the three years immediately preceding the current year, or if less than 3 years, the number of years the corporation has been in existence. See Regulation section 1.6655-4.

  3. Taxable income for this purpose, is modified to exclude net operating loss and capital loss carrybacks and carryovers. Members of a controlled group, as defined in section 1563, must divide the $1 million amount among themselves under rules similar to those in IRC section 1561.


    For a list of controlled group types, see Form 1120 Schedule O.

  4. Research IDRS to determine if the corporation is a large corporation.


    Taxable income of $1 million or more does not necessarily reflect the corporation is a true Large Corporation as defined in IRM, Large Corp Unit. Therefore, a taxpayer who must follow the large corporation installment requirements may not have their account marked as a Large Corp.


    Only contact the Large Corp./Technical Unit if the account has the Large Corporation Indicator as explained in IRM, Campus Contacts for Large Corp Cases.

  5. When a corporation identifies itself as a large corporation on Form 2220, Code and Edit enters a Reserve Code "4" , see IRM, Reserve Code. You can check CC BRTVU for Reserve Code "4" .

CP 234 Corporate Returns Computed with Incorrect Return Due Date 201612 and Subsequent
  1. A programming problem has been identified with the CP 234 – Processing Potential ES Penalty Notices, for 201612 and subsequent. The CP 234 notices are not computing the Estimated Tax (ES) Penalty correctly on corporate income tax returns. Programming is using the incorrect return due date (RDD) when calculating the ES Penalty.

  2. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, P.L. 114-41 changed the return due date for C corporations and is effective for taxable years beginning after December 31, 2015. The federal income tax return for the Form 1120 family of returns (except Form 1120-C, Form 1120S and Form 1120-IC-DISC) is due on or before the 15th day of the fourth month following the close of the C corporation’s tax year, with one exception as follows:

    • The income tax return of a C corporation that ends its tax year on June 30 remains due on or before the 15th day of the third month following the close of the fiscal year for tax years beginning after December 31, 2015 and before January 1, 2026.


      See IRM, Form 1120 Corporate Series Due Dates – Tax Years Beginning before January 1, 2016, and IRM, Form 1120 Corporate Series Due Dates – Tax Years Beginning after December 31 2015 for more information.

  3. The penalty amount on the notice cannot currently be relied upon unless all installments were paid by the previous RDD. For 201612, if all installments were satisfied on or before March 15th the penalty does not need to be re-computed. If the liabilities are not paid in full by March 15th, re-compute the penalty using the correct RDD of April 15th and adjust accordingly. Follow the chart in IRM, if/when adjusting the penalty.

  4. When a taxpayer inquiry is receive requesting an explanation of a systemically generated Estimated Tax Penalty (TC 176) on a corporate return for 201612 and subsequent, re-compute the ES penalty using the correct RDD and adjust accordingly. If this results in an increase to the penalty, explain that there was a programming issue that cause the penalty to be computed incorrectly. Apologize for the inconvenience.

CP 267/CP 268 - Notice of Excess Credit

  1. When a module contains more credits than claimed by the taxpayer, a Q- freeze is established and a CP 267 or CP 268 generated.

    1. CP 267 is a non-math error notice.

    2. CP 268 is a math error notice.

  2. These notices list up to 39 credits and request the taxpayer to explain if the credits should be applied to other accounts or refunded. A 15 cycle freeze releases when any of the conditions below are met:

    1. TC 652/TC 662 posts resolving the discrepancy between the credits claimed and the credits posted ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . (Reducing credits posted to less than credits claimed releases the Q- freeze.)

    2. The module balance becomes zero or debit.

    3. TC 290 $.00 with PC 4 (with no secondary TCs or reference numbers) posts. (See IRM, Q- Freeze/Offset.)

    4. The 15 week cycle hold expires.

  3. These notices must be worked on an expedite basis. Make every effort to correct other issues involving the taxpayer's account, rather than resolving only the notice tax period.


    CP 267 notices generated after December 31, 2009 will contain the return address code for Submission Processing (SP) and any replies to this notice will be worked by SP (see IRM Exhibit 3.10.72-4, Computer Paragraph (CP) Notices – Routing Guide). However, any replies received in Accounts Management (AM) will remain in AM and will be resolved using existing procedures.

  4. If not previously controlled on lDRS, control using "LETERCP267" or "LETERCP268" as the activity code.

  5. If less than three weeks remain before the freeze expires, do not input any credit transfers. See table below

    If Then
    Taxpayer requests a refund 1. Allow the computer to issue refund and advise the taxpayer that they will receive a refund within 3-4 weeks if they owe no other taxes.
    2. If refund has already been issued and an interim letter has not been sent, close case as the refund received will be the response to the taxpayer. Send a closing letter if an interim was sent.
    Taxpayer request we move the credit(s), however, a refund has already occurred. 1. Notify the taxpayer we were unable to comply with the request on the CP 267/CP 268.
    2. Advise the taxpayer to return the refund check un-cashed with information on where to apply the payment, and write void on the back of the refund check.
    3.If the refund check was already cashed, a replacement check must be submitted for payment.
    Taxpayer request we move the credit(s), however, the credit will refund before any action can be taken 1. Follow refund deletion procedures in IRM , Refund Intercept CC NOREF with Definer P.
    2. Once refund has been deleted and TC 841 is posted, move credit(s) per the taxpayer's request.
    3. If unable to stop refund, follow the instructions in the Then box directly above.
    The credit(s) offset to a module other than where the taxpayer requested 1. Reverse the offset and transfer to the correct account.
    2. Advise the taxpayer that they will receive a CP 138 Notice, stating that the overpayment on the return was offset against another tax period with a balance due and to disregard the notice as we have applied the credit(s) as requested.
    Taxpayer has or will submit an amended return. 1. If time permits, follow refund deletion procedures in IRM, Refund Intercept CC NOREF with Definer P.
    2. If it is too late to stop the refund, advise the taxpayer to return the refund check un-cashed with information on where to apply the payment, and write void on the back of the refund check.
    3. If the refund check was already cashed, a replacement check must be submitted for payment.



    Also see paragraph (7) below if the taxpayer states that credit/payment does not belong to him/her.

  6. If three weeks or more remain before freeze expires, follow table below:

    If taxpayer And Then
    Request a refund There are no balance due on other modules 1. Input TC 290 $.00 with PC 4.
    2. Use HC 0 if the refund will be for the amount expected by the taxpayer and allow the CP 210/CP220 Notice to generate. If amount is different input HC 3 and advise the taxpayer of the difference.
    Request a refund There are balances due on other modules 1. Input TC 290 $.00 with PC 4 and HC 3.
    2. Inform the taxpayer a refund will be issued if no other taxes are owed.
    NOTE: Do not manually offset the overpayment to a balance due. Let the computer perform the offset, unless there is an –E freeze on another module. The –E freeze prevents an offset for 10 weeks. You must manually transfer the payment to the balance due account using the appropriate transaction codes, if the credit transfer will post before the release of the –E freeze.
    EXCEPTION: If there is a balance due on another module with an open control, coordinate with that area (if possible) to determine if a credit transfer is appropriate.
    Requests a credit transfer   1. Input the credit transfer, per the taxpayer's request.
    2. Notify the taxpayer who received the CP 267 Notice of the action taken by phone, letter or notice.


    If the taxpayer requests the overpayment be applied to the immediately succeeding tax period, move the overpayment using TC 830/TC 710. See IRM, Estimated Tax Overpayment, Credit Elect - General, for more information on credit elects. If the taxpayer requests that the actual payment be moved, use the appropriate transaction codes, e.g., TC 652/TC 650.

    Indicates he/she will send an amended return or 94X-X   Input TC 570 on the account to prevent the overpayment from refunding.
    Payment(s) posted to the account after CP 267CP /268 was generated Proper credit disposition cannot be determined from a review of the account 1. Contact the taxpayer by phone to resolve the discrepancy.
    2. If unable to contact by phone, pull payment document to determine if payment(s) is correctly posted.
    Taxpayer provides an insufficient response   1. Contact the taxpayer by phone to resolve the discrepancy.
    2. If unable to contact by phone, and you cannot determine what the taxpayer is requesting, take no action to release the freeze.
  7. If the taxpayer states that the excess payment/credit does not belong to them:

    1. If the payment was not made through the EFTPS system, request the payment document to determine where the payment belongs. Research account and:

      If Then
      The payment belongs to the taxpayer Contact the taxpayer for the proper disposition.
      The payment belongs to another taxpayer Transfer to the proper account.
      You cannot determine where the payment belongs
      • If the credit is less than one year old, prepare Form 2424 for Unidentified Remittance File.

      • If payment is more than one year old, prepare Form 8758 for Excess Collection File.

      • If three weeks or more remain before the freeze expires, input a TC 570 to ensure an erroneous refund is not issued. Otherwise, follow refund deletion procedures before routing the Form 2424 or Form 8758 to Accounting.

      • If moving the credit(s) to XSF or URF, input TC 971 AC 296 on the module credit(s) posted to, to indicate that the proper research was completed.

      • See IRM, Applying Unresolved Credits, and IRM, Excess Collection File (XSF) for AMRH, for specific information on transferring the credit(s).

    2. If the payment was made through the EFTPS system, research the account and contact the taxpayer (by telephone, if possible) and ask him/her to check his/her records, bank statements, subsidiaries records, etc. If the taxpayer still insists that the credit is not theirs, follow instructions in the Then box immediately above.

  8. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, if the case meets TAS criteria.

Undeliverable CP 267/CP 268
  1. If CP 267/CP 268 is returned undeliverable:

    1. Analyze the account to verify the notice is still valid.

    2. Use IDRS/CFOL command codes to research for a better address and/or telephone number.

    3. Contact the taxpayer by telephone if a telephone number is secured.

    4. If a more current address is found, re-mail notice.


      Extreme care must be taken to ensure that only the material relative to the taxpayer(s) to which the correspondence is addressed is enclosed in the envelope. See IRM, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors.

    5. If a more current address is not found, associate the notice with the original return using local procedures.

    6. Do not release the Q- freeze.


      For more information regarding undeliverables, refer to IRM 21.3.3, Incoming and Outgoing Correspondence/Letters.

CP 270 - Hold Code, Module in Debit Balance

  1. A CP 270 generates when both the criteria below are met:

    1. An Examination or DP adjustment with HC 2 or 4 posts to a debit balance module.

    2. The condition has been on MF for more than seven cycles.

  2. To resolve the CP 270:

    1. Determine the cause for delay in posting the appropriate transactions, or release of the HC, by reviewing the transactions on the CP 270.

    2. Research available IDRS information.

    3. Expedite posting of the transaction, or release the freeze created by HC 2 or 4.

  3. Input TC 290 $.00 to release the freeze if all of the following conditions are met:

    1. The balance due is correct.

    2. The account will update to TDA status.

    3. A notice has not been sent.

  4. Prevent status update if the balance due is not correct by inputting the proper transactions to eliminate the balance due amount.

  5. A CP 270 containing a TC 30X with HC 2 or HC 4 does not require a TC 290. Notices are generated at their normal cycle.

POSSDELPEN (Possible Delinquency Penalty) Transcript

  1. POSSDELPEN transcripts are used to verify the correct penalty amounts and generate when:

    1. A TC 460 posts to a module containing a manual delinquency penalty transaction (TC 160).

    2. A disaster due date posts or updates in the module, and the module is restricted by TC 160/TC 161.

  2. Use table below to resolve these transcripts:

    If Then
    Only a TC 160 $.00 is present, or the net of the TC 16X transactions is zero Destroy the transcript and close your control base.
    The sum of the TC 16X transactions is greater than zero Refer to IRM 20.1.2, Failure to File/Failure to Pay Penalties, for penalty computation and abatement procedures.