25.24.2 Return Preparer Misconduct Victim Assistance Specialized Accounts Management Processing

Manual Transmittal

September 10, 2018

Purpose

(1) This transmits revised IRM 25.24.2, Return Preparer Misconduct Victim Assistance Specialized Accounts Management Processing.

(2) This manual provides procedures for the treatment and resolution of return preparer misconduct complaints.

Material Changes

(1) Editorial changes have been made throughout the IRM as well as updated IRM references throughout to clarify language and improve information delivery.

(2) IRM 25.24.2.1.1 - (1) Clarified description of preparer misconduct.

(3) IRM 25.24.2.1.4 - (1)(a) Clarified description of preparer misconduct.

(4) IRM 25.24.2.2 - Added Note regarding procedures when CIS case is assigned with all zeros.

(5) IPU 17U1709 issued 12-19-2017 IRM 25.24.2.2.1 - (1) Added information regarding interim letter requirements.

(6) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.2.5 - (3)(b) Added new criteria for routing procedures when RICS/IVO is involved.

(7) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.2.3(3) Updated 2nd example and Added 3rd example regarding updating priority codes.

(8) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.2.5(3) Reminder - Added reference for -L or -W freeze codes. (4) Added guidance when IDTVA-C receives case with no compliance involvement on any involved years. (5) Added exception for cases transferred to CI.

(9) IRM 25.24.2.3 - Chart consolidated rows 5-7 and updated procedures to include reassignment of cases determined to meet ID theft criteria. Remaining rows renumbered.

(10) IRM 25.24.2.3 - Chart - Added scenario Row 8 addressing invalid joint elections.

(11) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.3 - Replaced 916C letter with 5956C letter.

(12) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.3(1) Removed link to 21.5.3.4.6.3 to clarify not met procedures. (2) Row 3 and 5 clarified when no tax return is received with the RPM complaint. Row 3 removed IVO involvement information. Row 8 Removed note regarding non-receipt of refund cases should be elevated to HQ. Row 9 Added guidance when taxpayer is aware of the original filing; however, no refund or only portion of refund was received.

(13) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.3 - (2) chart Added guidance to the IDTVA-C column and clarified reminder below the chart. Row 8 - Added clarification regarding cases elevated to HQ.

(14) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.4 - Added information regarding correspondex letters, 5955C and 5956C.

(15) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.4.2.1 - (3) Added Note requiring input of TC 470 when account is in notice status.

(16) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.4.2.2(3) ( e) Added exception to elevate case information to HQ when CI requests the case be transferred to CI.

(17) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.4.2.4 - (5)(a) - Replaced 916C letter with 5956C letter.

(18) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.4.3(3) Added case note requirement. (4) Added reference for translation services.

(19) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.4.3.3 - Chart - Replaced 105C letter with 5956C letter.

(20) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.4.3.3 - (6) chart Added clarification to row 7.

(21) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.4.3.4(9) (a) Added in use of the IAT Missing Refund (CHKCL) Tool.

(22) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.4.3.4 - (8) Added requirement to attach the TCIS information to the CIS case. Added Reminder that additional documentation may be required from the taxpayer when the taxpayer states they do not own an account.

(23) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.4.3.5(3) Added information pertaining to redacted police reports. Moved information pertaining to pre-existing cases to a reminder under (5).

(24) IPU 17U1709 issued 12-19-2017 IRM 25.24.2.4.3.5 - (2) Clarified the Exception for law enforcement report items.

(25) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.4.3.5 - (1) Exceptions - Added in balance due scenario.

(26) IRM 25.24.2.4.4 - Chart updated procedures to include reassignment of cases determined to meet ID theft criteria.

(27) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.4.4 - Row 3 - Added 5956C.

(28) IPU 17U1709 issued 12-19-2017 IRM 25.24.2.4.4 - (2) Chart Added scenario where taxpayer did contact preparer regarding 1040X however unauthorized filing.

(29) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.4.4 - (2) Removed the requirement to review the 1040X. Inserted a reminder to refer back to compliance.

(30) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.4.5.2(2) Added instruction to not input any adjustments to the account.

(31) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.4.6 - (3) Replaced 916C letter with 5956C letter.

(32) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.4.6 Added procedures for P- freeze with a TC 841 DLN blocking series 77711, 77712 or 77713.

(33) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.4.6 - Added subsection containing new procedures for resolving complaints with RICS/IVO involvement.

(34) IPU 18U0326 issued 02-20-2018 IRM 25.24.2.5 - Renamed subsection from Taxpayer Correspondence to Taxpayer Contacts. (4) Added IDTVA toll free number contact information and CIS case note requirement when in telephone contact.

(35) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.5.1 - Added Subsection, RPM Specific Letters 5955C and 5956C. All subsequent subsections renumbered accordingly.

(36) IPU 18U0326 issued 02-20-2018 IRM 25.24.2.5.1 - (5)(c) - Added suspense letters must include contact information containing the IDTVA toll free number and extension.

(37) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.5.1 - (1)(a) Added exception regarding incomplete category 4 cases received after the RSED. (9) Added in guidance to turn auto interim off when corresponding with the taxpayer for missing information.

(38) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.5.2 - (5) Replaced 131C or equivalent with 5955C letter.

(39) IPU 18U0326 issued 02-20-2018 IRM 25.24.2.5.2 - (1) chart - Added row 7 addressing taxpayer calls, messages and secure e-mails.

(40) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.5.2 - (1) chart row 5 and 6 Consolidated 105C/106C information and added RSED information resulting in removal of row 7. (3) Added clarification regarding the RSED and added an example.

(41) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.5.3 - Chart - Replaced 105C letter with 5956C letter.

(42) IRM 25.24.2.6.1 - (2) Added in IRM reference to 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues.

(43) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.6.2 - Revised RSED consideration procedures.

(44) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.8.1(1) (a) Added in IAT Compliance Suite tool results supports no filing requirement.

(45) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.8.1 - (1)(a) Added note regarding when the preparer address is not required.

(46) IRM 25.24.2.8.1 - (9) Added reminder to ensure RSED issues are taken into account.

(47) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.8.2 - (1)(a) Added note regarding when the preparer address is not required. (9) Scenario 2 Chart - Row 2 Then column removed erroneous note regarding balance due and collection notices.

(48) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.8.3 - Chart - Replaced 106C letter with 5956C letter.

(49) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.8.3 - (1)(a) Added note regarding when the preparer address is not required.

(50) IRM 25.24.2.8.3 - (8) Added reminder to ensure RSED issues are taken into account.

(51) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.8.4 - Chart - Replaced 105C/106C letter with 5956C letter.

(52) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.8.4 - (1)(a) Added note regarding when the preparer address is not required.

(53) IRM 25.24.2.8.4 - (8) Added reminder to ensure RSED issues are taken into account.

(54) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.9(4) Added requirement to attach 3210, e-mail or fax to CIS records whenever contacting the AUR or Exam coordinators. (5) Added note that other RPM procedures need to be followed.

(55) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.9 - (1) Added Note regarding RPP cases. (2) Added guidance regarding AUR process code SI and (3) Added guidance to contact Exam upon receipt of the case for open AIMs cases.

(56) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.9.1 - (1) Added guidance to contact AUR if case cannot be closed within 120 days.

(57) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.9.1.1 - Chart - Replaced 105C/106C letter with 5956C letter.

(58) IPU 17U1709 issued 12-19-2017 IRM 25.24.2.9.1.1 - Clarified the Open AUR chart.

(59) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.9.1.1 - (4) Added requirement to leave a CIS case note indicating the TIN was sent to AUR.

(60) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.9.1.2 - Chart - Replaced 105C/106C letter with 5956C letter.

(61) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.9.1.2(1) Row 1 added that back-out procedures to nullify will be bypassed. (2) Added that back-out procedures to nullify will be bypassed and the account adjustment can be netted.

(62) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.9.2 - (2) Added guidance to research for open AIMS cases upon receipt of new inventory and make contact with Exam when applicable. (3) Added guidance for routing of open Field Exam cases.

(63) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.9.2.1(3) Added reminder to attach the Form 3210 or e-mail/fax to CIS case.

(64) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.9.2.1 - Replaced 105C/106C letter with 5956C letter.

(65) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.9.2.1 - (1) Under chart Added Reminder for the use of HC 4 when the refund is frozen on the account and returning to Exam. Moved Note under the chart regarding RPP cases to 25.24.2.9. (3) Corrected referral links and added requirement to leave a CIS case note.

(66) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.9.2.2 - Replaced 105C/106C letter with 5956C letter.

(67) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.9.2.2(3) Added it may be necessary to request the Exam closure package to review documents.(4) Added note to elevate to HQ when determination is made that the SNOD was not properly issued. (5) Row 1 added that back-out procedures to nullify will be bypassed. (5) Row 2 Added that back-out procedures to nullify will be bypassed and the account adjustment can be netted. Removed reminder below chart and moved to Row 2 regarding advising taxpayer to contact Exam department. Added reminder regarding recertification indicators.

(68) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.9.2.2 (2) - Added guidance for closed Appeals cases (PBC 6XX). Clarified information in the chart.

(69) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.10.1 - Replaced 105C letter with 5956C letter. Added guidance for requirements within the 5956C letter and required account actions. Removed suggested verbiage as the language was incorporated into the 5956C letter.

(70) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.10.1(3) Scenario 2 chart Row 1 - Removed Note in then column and added guidance when previous adjustments are present on the account. (3) Scenario 2 chart Row 2 - For clarification purposes, moved ASED information to the If column and clarified case elevation to HQ in the remaining note. Added note with guidance for cases with erroneous CATA response as "accepted".

(71) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.10.1 - (1)(c) Added Cat 4 claims will be disallowed if received after the RSED. (3) Scenario 1 - Added balance due returns to scenario 1.(4) Exception - Added guidance to include appeal rights and right to file suit in disallowance letter for CAT 4 claims received after the RSED.

(72) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.10.2 - Replaces 106C letter with 5956C letter. Added guidance for requirements within the 5956C letter and required account actions. Removed interim procedures regarding the 916C letter in lieu of the 106C letter.

(73) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.10.2 Added scenario taxpayer may have received the benefit of the refund and is not aware.

(74) IPU 17U1709 issued 12-19-2017 IRM 25.24.2.10.2 - Added guidance to use a certified 916C letter in lieu of the 106C letter when appeal rights are not required.

(75) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.11.2(5) Added clarification for split refunds.

(76) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.11.2 - (4) Added Note to address when more than one account is involved and TC 848/849 is present. (7)(b) Added Note for clarification.

(77) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.11.3 - (1) Added Exception - 5956C letter will be used instead of the 510C letter. Moved existing note regarding ERSED to (2).

(78) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.11.4 Added subsection Recertification Indicators.

(79) IPU 17U1709 issued 12-19-2017 IRM 25.24.2.12.1 - (8) Added guidance to use CC DUPED if applicable.

(80) IPU 18U0911 issued 06-06-2018 IRM 25.24.2.12.2 - (9) Added guidance to use the 5956C closing letter.

(81) IPU 18U0734 issued 04-30-2018 IRM 25.24.2.12.2(3) Added instruction to use RC 131. (4) Added reminder to prepare 4442 to IVO if P- freeze with a TC 841 DLN blocking series 77711, 77712 or 77713 is present.

(82) IPU 17U1453 issued 10-17-2017 IRM 25.24.2.12.2 (5) - Added Note to ensure auto interim is turned off when sending for DIF score.

Effect on Other Documents

IRM 25.24.2 dated August 24, 2017 (effective October 01, 2017) is superseded. The following IRM Procedural Updates (IPU), issued from October 17, 2017 through June 6, 2018, have been incorporated into this IRM:17U1453, 17U1709,18U01326, 18U0734, 18U0911.

Audience

Identity Theft Victim Assistance (IDTVA) Accounts Management employees performing account work related to return preparer misconduct.

Effective Date

(10-01-2018)

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

Return Preparer Misconduct (RPM) Program Scope and Objectives

  1. This manual discusses processing guidelines for Return Preparer Misconduct (RPM) complaints received in Identity Theft Victims Assistance (IDTVA). The information and guidance provided is for use by AM IDTVA employees specialized in performing account work related to RPM with and without compliance activity.

  2. The owner of the policies contained herein is the Director, Accounts Management.

  3. Identity Protection Strategy & Oversight (IPSO) is the internal organization responsible for the administration, procedures, and updates related to the RPM program.

  4. The program objective is to assist taxpayers who report they are victims of return preparer misconduct. The IRS may provide relief to taxpayers when the return preparer has altered a taxpayer’s tax data and/or misdirected a portion or all of a refund. Taxpayers who claim to be a victim of RPM may submit a complaint and the required documentation to the IRS to request assistance and relief.

Background

  1. Unscrupulous return preparers may alter taxpayer tax data without the taxpayer’s knowledge or consent (for example, by falsifying dependent information, expenses, deductions, credits, income, refund amount, etc.) and/or misdirect a portion or all of the refund for their personal benefit. Taxpayers may become aware of misconduct through taxpayer initiated contact (Toll-Free, Field Assistance, Taxpayer Advocate Service, etc.) or through IRS enforcement investigative processes Revenue Agent (RA) or Tax Compliance Officer (TCO) contact, Automated Underreporter (AUR) correspondence, campus examination correspondence, Revenue Officer (RO) contact, Criminal Investigation (CI) inquiries, etc.).

Authority

  1. The policy statement relating to RPM can be found in IRM 1.2.24.2, Policy Statement 25-2.

  2. IRC § 6201 provides the IRS authority to assess taxes imposed by Title 26. IRC § 6402 authorizes the IRS to make credits and refunds.

  3. Per the Taxpayer Bill of Rights (IRC §7803 (a)(3)), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. IRS employees must be informed about taxpayer rights and be conscientious in the performance of their duties to honor, respect and effectively communicate those rights. Refer to https://www.irs.gov/Taxpayer-Bill-of-Rights, for additional information.

Responsibilities

  1. IDTVA employees specialized in RPM will be responsible for the evaluation and resolution of RPM complaints.

  2. IDTVA employees are required to use the mandated Integrated Automation Technologies (IAT) tools per IRM 21.2.2.4.4.14, Integrated Automation Technologies.

Key RPM Terminology and Acronyms

  1. Key RPM terminology used throughout this guidance is defined below.

    1. Preparer Misconduct: Return preparer misconduct generally involves the orchestrated preparation and filing of false income tax returns (in either paper or electronic form), including Form 1040X, Amended U.S. Individual Income Tax Return, by unscrupulous preparers without the taxpayer’s knowledge or consent. Preparers may change direct deposit information or claim tax benefits improperly. Examples of improper claims for tax benefits include:
      • Inflated personal or business expenses;
      • False deductions;
      • Excessive exemptions; or
      • Fraudulent tax credits such as the Earned Income Tax Credit (EITC).

      The preparer's clients do not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns.

      Example:

      A taxpayer used a preparer in 2015 to prepare and file Form 1040. The preparer changed the return by increasing the withholding tax claimed and diverted the resulting refund into the preparer’s personal account.

      Example:

      A taxpayer used a preparer in 2015 to prepare and file Form 1040. The preparer subsequently files a Form 1040X without the taxpayer’s knowledge or consent. The filing of the unauthorized amended return by the preparer may be considered RPM.

    2. Return Preparer Definitions: The preparer definitions below are for the purposes of this guidance only.
      Signing Preparer – Preparer information appears on the processed tax return. An individual who prepares federal tax returns for compensation is required to have a Preparer Tax Identification Number (PTIN) issued by IRS and must enter it on every tax return prepared for compensation along with the preparer’s name and signature. Any preparer with a PTIN is in the business of preparing tax returns or has held themselves out as in the business of preparing tax returns.
      Ghost Preparer/Non-Signing Preparer – No preparer information appears on the processed tax return. An individual who prepares a tax return but does not sign the return as a preparer. These returns may be reflected as "self-prepared" and do not appear to evidence 3rd party involvement.

      Note:

      "3rd party" refers to the individual the taxpayer alleges to be his/her preparer.

    3. RPM Complaint: Taxpayers alleging preparer misconduct are required to provide Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit, signed under penalties of perjury, and Form 14157, Return Preparer Complaint, along with additional required documentation to support their allegations.

    4. Complete Complaint: Sufficient documentation is provided AND the preparer information is considered verified and valid.

    5. Acceptance of Complaint: Acceptance of an RPM complaint is dependent upon the receipt of sufficient documentation, verification of the preparer and the facts and circumstances of each complaint gathered from the taxpayer’s documentation and account research. When a complaint is accepted, the IRS will determine the type of relief the taxpayer is entitled to receive.

    6. Actual Return or Return As Intended To Be Filed: The taxpayer’s tax return submitted with the RPM complaint reflecting the return unaltered by the preparer and as intended to be filed.

    7. Relief/Resolution: Relief and resolution is based upon the specific category defined in (i) and may consist of a combination of the following:
      • The taxpayer’s actual return (return as intended to be filed) is accepted as the return of record and account is adjusted to reflect that return.
      • Removal of the preparer portion of the refund attributable to preparer misconduct using a General Ledger (GL) account.
      • Issuance of an additional refund, with applicable interest.

    8. Refunds:
      Taxpayer portion of refund – Any portion of the refund received or determined to be received by the taxpayer and/or any portion of the refund where the taxpayer received benefit (e.g., Refund offset to legitimate liability including BFS offsets.)
      Preparer portion of the refund – Portion of the refund resulting from the altered data on the processed tax return or portion of the refund misdirected to the preparer.
      Additional refund – An additional refund is the amount of the refund still due to the taxpayer.

    9. RPM Categories: RPM complaints have been categorized into four (4) basic fact patterns. Within each of the 4 categories, different procedures may apply depending upon the specific facts and circumstances, such as whether there is a signing preparer or a non-signing preparer (ghost), and/or the method of refund issuance (e.g., refund anticipation check (RAC), split refund, paper check). These facts and circumstances, the specific documentation requirements for each category, verification requirements and account information will determine the treatment stream and whether the taxpayer is entitled to a refund or a portion of the refund misdirected by the preparer.
      1. Category 1: Unauthorized filing. The taxpayer was in contact with a preparer for the year of filing and ≡ ≡ ≡ ≡ ≡ ≡ did not sign or authorize the filing of a return, but a return was filed with their name and taxpayer identification number (TIN).
      Potential relief/resolution: The IRS will administratively adjust the taxpayer’s account to reflect the taxpayer’s valid return and remove the portion of the refund attributable to preparer misconduct. The taxpayer shall receive a refund of the entire overpayment reported on his/her valid return, less any amounts already received.
      2. Category 2: Authorized filing, Altered return information and No Additional Refund Due to the Taxpayer. The taxpayer was in contact with a preparer for the year of filing and did authorize a return filing, but states tax data (exemptions, income, expenses, deductions, credits, etc.) on their return were altered before it was filed or the return otherwise includes items which they did not authorize.
      The taxpayer may have received a refund for the amount he/she expected and it matches their return as intended to be filed, or taxpayer received a refund in excess of the amount to which he/she is entitled. In addition, the taxpayer may not have received a refund, but did not expect a refund and the return as intended to be filed is a balance due.
      Potential relief/resolution: The IRS will administratively adjust the taxpayer’s account to reflect the taxpayer’s valid return and remove the portion of the refund attributable to preparer misconduct. If the taxpayer is in a balance due situation as indicated on his/her valid return and/or the taxpayer received a portion of the refund that exceeds the refund amount to which they are entitled, then the taxpayer is liable for the amount owed and/or will be asked to repay any refund received to which he/she was not entitled.
      3. Category 3: Authorized filing, Altered return information and Taxpayer Requesting Additional Refund. The taxpayer was in contact with a preparer for the year of filing and did authorize a return filing, but states tax data (exemptions, income, expenses, deductions, credits, etc.) on their return were altered before it was filed or the return otherwise includes items which they did not authorize.
      The taxpayer states he/she only received a portion of the refund he/she expected or he/she received no refund. The taxpayer may have received a portion of the inflated refund but he/she has not received the refund he/she expected per the return submitted as intended to be filed.
      Potential relief/resolution: The IRS will administratively adjust the taxpayer’s account to reflect the taxpayer’s valid return and remove the portion of the refund attributable to preparer misconduct. The taxpayer shall receive a refund of the entire overpayment reported on his/her valid return, less any amounts already received.
      4. Category 4: Misdirected Refund Only and Taxpayer Requesting Additional Refund. The taxpayer was in contact with a preparer for the year of filing and did authorize a return filing, but states although no tax data were altered, the direct deposit information or mailing address for the refund check was altered diverting all or a portion of the refund to the preparer.
      The taxpayer states that he/she only received a portion of the refund or he/she received no refund.
      Potential relief/resolution: The IRS will administratively remove the portion of the refund misdirected to the preparer. The taxpayer shall receive a refund of the entire overpayment reported on his/her valid return, less any amounts already received.

  2. Refer to the table below for a list of acronyms used throughout this guidance.

    Acronym Definition
    AC Action Code
    ACSS Automated Collection System Support
    AIMS Audit Information Management System
    AM Accounts Management
    AMS Account Management Services
    ASED Assessment Statute Expiration Date
    AUR Automated Underreporter
    BFS Bureau of the Fiscal Service
    BL Blocking Series
    BMF Business Master File
    CC Command Code
    CCC Computer Condition Code
    CEAS Correspondence Exam Automated System
    CET Correspondence Examination Technician
    CI Criminal Investigation
    CIS Correspondence Imaging System
    CSR Customer Service Representative
    DITA Designated Identity Theft Adjustments unit
    DOJ Department of Justice
    EGC Employee Group Code
    EIN Employer Identification Number
    ERSED Erroneous Refund Statute Expiration Date
    ES Estimated Tax
    EUP Employee User Portal
    FMS Financial Management Service
    FRP Frivolous Return Program
    FTC Federal Trade Commission
    FTF Failure to File
    FTP Failure to Pay
    GL General Ledger
    HC Hold Code
    HQ Headquarters
    ICT Image Control Team
    IDRS Integrated Data Retrieval System
    IDTVA Identity Theft Victim Assistance
    IDTVA-A Identity Theft Victim Assistance - Accounts Management
    IDTVA-C Identity Theft Victim Assistance - Compliance
    IMF Individual Master File
    IRM Internal Revenue Manual
    IRN Item Reference Number
    IVO Integrity & Verification Operations
    LITC Low Income Taxpayer Clinic
    MeF Modernized e-File
    OAR Operations Assistance Request
    OMM Operation Mass Mailing
    P & A Planning & Analysis
    PACER Payments Claims and Enhanced Reconciliation
    PBC Primary Business Code
    PC Priority Code
    POC Point of Contact
    PRC Penalty Reason Code
    PTIN Preparer Tax Identification Number
    QRP Questionable Refund Program
    RA Revenue Agent
    RAC Refund Anticipation Check
    RAL Refund Anticipation Loan
    RBA Restitution Based Assessment
    RC Reason Code
    RDD Return Due Date
    RI Refund Inquiry
    RICS Return Integrity and Compliance Services
    RO Revenue Officer
    RPD Return Processible Date
    RPM Return Preparer Misconduct
    RPO Return Preparer Office
    RRD Return Request Display
    RSED Refund Statute Expiration Date
    SC Source Code
    SDC Scheme Development Center
    SERP Servicewide Electronic Research Program
    SIDN Site Identification Number
    SLA Service Level Agreement
    SNOD Statutory Notice of Deficiency
    SP Submission Processing
    SPEC Stakeholder Partnerships, Education & Communication
    SSN Social Security Number
    TAC Taxpayer Assistance Center
    TAO Taxpayer Assistance Order
    TAS Taxpayer Advocate Service
    TC Transaction Code
    TCE Tax Counseling for the Elderly
    TCIS Treasury Check Information System
    TCO Tax Compliance Officer
    TIGTA Treasury Inspector General for Tax Administration
    TIN Taxpayer Identification Number
    TOP Treasury Offset Program
    TPP Taxpayer Protection Program
    VITA Volunteer Income Tax Assistance
    W & I Wage and Investment

Related Internal Revenue Manuals (IRMs)

  1. Employees are responsible for familiarizing themselves with and utilizing all linked/referenced IRMs, as appropriate. This includes, but is not limited to, sections within the following:

    • IRM 3, Submission Processing

    • IRM 4, Examining Process

    • IRM 5, Collecting Process

    • IRM 20.1, Penalty Handbook

    • IRM 21, Customer Account Services

    • IRM 25, Special Topics

    • IRM 25.23, Identity Protection and Victim Assistance

  2. IRM 25.24.1, Return Preparer Misconduct Victim Assistance - General Overview, should be used in conjunction with specific functional RPM guidance.

RPM Complaints Overview

  1. Compliance complaints: A complaint from a taxpayer who has current or previous compliance involvement with the Service will be worked by the IDTVA-Compliance (IDTVA-C) Specialty Exam team located in Kansas City. A compliance complaint includes but is not limited to an account of a taxpayer who became aware of return irregularities/inconsistencies as a result of:

    • Audit notice or assessment (-L freeze, Transaction Code (TC) 420/424, TC 300)

    • AUR notice; such as CP 2501 or CP 2000

    • Collection notices

    • Contact by a Revenue Officer (RO), Revenue Agent (RA), Tax Compliance Officer (TCO), or other Field employee

      Note:

      All RPM complaints received on closed Field Exam cases will be referred to the IDTVA-C team in accordance with IRM 4.13, Audit Reconsideration. RPM complaints received from Field and Specialty Collection or Field Exam that require account adjustment only will be worked by the Designated Identity Theft Adjustments (DITA) team.

    1. RPM complaints meeting IDTVA-C criteria will be scanned to the Correspondence Imaging System (CIS) with Doc Type COMP RPM. The Category Code will be IDII and program code 710-85431.

  2. Non-compliance complaints: A complaint from a taxpayer who has no current or previous compliance involvement or Return Integrity and Compliance Services (RICS) involvement will be worked by the IDTVA-Accounts Management (IDTVA-A) teams located in Memphis and Atlanta. A non-compliance complaint includes but is not limited to an account of a taxpayer who became aware of the potential for return irregularities/inconsistencies through friends who used the same preparer, through media releases or received a notice/letter from the Service.

    1. RPM complaints meeting IDTVA-A criteria will be scanned to CIS with Doc Type Return Preparer Misconduct, Category Code RPMC and Program Code 710-85440.

    Note:

    If a CIS case is assigned to all zeros, research to locate a TIN for the taxpayer. If a TIN cannot be located and there is sufficient mailing information on the complaint, issue correspondence to the taxpayer requesting the taxpayer’s TIN and any other required RPM documentation. If no response is received, issue a 5956C letter to advise the taxpayer no action can be taken since we have no record of a response being received. If correspondence cannot be issued then leave a CIS case note stating insufficient information to issue correspondence and close the case no action.

RPM Receipts

  1. Taxpayers claiming to be victim(s) of RPM must submit a complaint and the required documentation to the IRS to request relief. Policy Statement P-21-3 applies and interim letters will be systemically generated through CIS. Refer to IRM 21.3.3.4.2.2, Interim Responses, for additional information.

  2. The Return Preparer Office (RPO) may also send Form 14157 or its equivalent, without the Form 14157-A, to IDTVA when there is indication that the taxpayer is requesting account resolution. RPO does not make account determinations. Do not reject these cases. IDTVA will continue with resolution of these cases.

  3. RPM complaints can also be received from non-specialized functions identifying IDTVA criteria.
    If a case is referred in error:

    • Case is inappropriately designated as RPM - return case to originator and provide an explanation.

      Note:

      If returning case to the originator, be sure to update the CIS data back to the original information. Review TXMOD controls to determine the previous category code if unable to determine case type. Use the corresponding Document type and the program code should automatically update. If necessary, refer to IRM 3.13.6-1, Appendix A - Document Types, Category Codes, IMF, for complete listings.

    • Case is appropriately designated as RPM but is sent to the inappropriate IDTVA specialized function - reassign CIS case to the correct specialized RPM function directly.

Case Batching for IDTVA-C Only

  1. All RPM allegations that come into an IDTVA - C specialty team must be controlled on CIS. All correspondence should be researched on IDRS and CIS to determine whether there are existing open CIS cases.

  2. Prior to sending a case to ICT for batching:

    • Perform research to ensure that the case meets the requirements to be worked in IDTVA.

    • Address all collection activities. See IRM 25.23.4.5.6, Collection Activity - Form 14394/13794.

  3. If a Form 14394, Identity Theft/RPM Case Collection Alert, or Form 13794, Request for Release or Partial Release of Federal Tax Lien, will be sent to Automated Collection System Support (ACSS) or Collection Advisory, include a copy of the completed form with the other documents being sent to ICT for imaging.

    Exception:

    ACSS does not complete Form 14394, therefore they are not responsible for submitting a copy of the form to ICT.

  4. Any new correspondence received on an open RPM CIS case must be associated with the existing open case. Complete a CIS Association sheet and send to ICT.

    Note:

    DO NOT request the scanning of like documents with no new information that are already on CIS.

  5. Any cases that were previously closed and re-opened must be updated to the correct case type, category code and program code immediately after re-opening the case. Cases should only be re-opened if worked and closed in the same day.

  6. When it is determined there is no open CIS case, the IDTVA - C specialty teams receiving correspondence will complete the IDTVA - RPM Batch Sheet for each piece of correspondence. This form and its instructions can be found under Compliance Only heading on the IDTVA Hub.

  7. Make sure that the Image Control Team Batch Cover Sheet contains all necessary information so the case can be accurately controlled.

    1. All IDTVA-C RPM cases, regardless of the function the case is assigned to, will contain category code IDII. See IRM 25.23.2-16, IDRS Category Controls by Function.

    2. Input priority codes on the ICT batch sheet as appropriate following IRM 25.24.2.2.3, Priority of IDTVA-C Cases.

Priority of IDTVA- C Cases

  1. All RPM cases should be treated as priority; however, some cases require immediate attention.

  2. When sending a case to ICT for CIS batching, certain cases will require a priority code to be noted on the batch sheet, per the chart below.

    Priority Code Definition
    Priority 1
    • TAS case - Form 12412, Operations Assistance Request (OAR).

    • ITAR case - Form 14103, Identity Theft Assistance Request (ITAR).

    • Global Review Referral - Form 14027 B, Identity Theft Case Referral.

    Priority 2 Statute imminent case; and any case that has had a Statutory Notice of Deficiency (SNOD) issued and in which the taxpayer still has time to petition the U.S. Tax Court.
    Priority 3 All open AUR cases.

    Note:

    Open AUR cases must be worked within 120 days of receipt into IDTVA.

    Priority 3 All open Exam cases.

    Note:

    Open Exam cases also include those cases closed with a disposal code 12 or 37.

    Blank All other inventory will be worked in IRS received date order.
  3. It may be necessary to update the priority code of a case as it is being processed.

    Example:

    Case was originally built with no priority code. During the time the case is waiting to be worked, TAS issues an OAR for the account. The priority code would need to be updated to priority ‘1’ using the ‘Update Data’ button in the Case Data section of your CIS case.

    Example:

    Case was originally built with no priority code. During the time the case is waiting to be worked the account comes within 90 days of the ASED expiring. The priority code would need to be updated to priority ‘2’.

    Example:

    Case was updated to priority code 2 due to time to petition remaining on the Statutory Notice of Deficiency issued. During the time the case is waiting to be worked the time to petition expires. The priority code would need to be updated to priority ‘3’ or blank.

  4. IDTVA-C cases must be worked in priority order due to agreements with the referring functions (AUR & Exam).

Return Preparer Office Notification Requirements

  1. Refer RPM cases involving allegations against a return preparer to the Return Preparer Office (RPO). Refer only the cases received for the current processing year or any of the prior 3 years. This includes:

    1. Complaints against a preparer that meet RPM criteria, regardless of the completeness of the complaint.

    2. ID theft involving a preparer.

  2. If any of the scenarios below apply, do not notify the RPO. Leave an appropriate case note.

    1. There is an indication the case was previously sent to RPO or indication the case originated in RPO (for example, RPO control number, RPO date stamp or RPO routing sheet is present).

    2. Reroute criteria are met. The receiving function will forward to RPO, if applicable.

    3. There is a general account or tax return issue that otherwise demonstrates it is an issue other than RPM (for example, math error present, transposition error, open Exam issue not involving RPM) and it is determined no misconduct has occurred.

    4. RPM complaint that does not involve a preparer (for example, complaint against a spouse, dependent issues, etc.) and RPM criteria are not met.

    5. Return preparation at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites including AARP.

    6. Return preparation at Taxpayer Assistance Centers (TAC).

  3. If no exceptions apply, customer service representatives (CSRs) and correspondence exam technicians (CETs) will:

    1. Work the complaint following current procedures and take any required action.

    2. Create a spreadsheet and notate the taxpayer identification number (TIN), taxpayer name and tax periods involved, for each case.

    3. Leave a case note: "TIN to RPO" on CIS to indicate information was sent.

    4. Weekly - Send secure e-mail with spreadsheet attachment and subject line: "IDTVA (site name) - Form 14157" to: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Reroute/Reassignment Criteria

  1. In a typical RPM case, there will be single point of contact for a taxpayer when allegations of RPM involve multiple years.

  2. Employees are required to perform Integrated Data Retrieval System (IDRS) research to determine whether reroute/reassignment criteria exists and determine:

    • If there are controls for related cases

    • If there are multiple controls on the account e.g., AUR, Exam or AM

  3. When multiple years are involved and at least one year has Compliance involvement, all years will be worked by IDTVA-C with some exceptions.

    Example:

    A taxpayer alleges their preparer altered their 2014 and 2015 tax return. The 2014 return has an Exam assessment (TC 420/TC 300). The 2015 has no compliance activity. IDTVA-C will work both years.

    Exception:

    If -L freeze posts after any actions have been taken on the account (for example, There was no -L freeze on the account initially, correspondence was sent to the taxpayer and while the case was in suspense, a -L freeze posted), IDTVA-A will continue to work the case if the AIMS status code is 08 or less. Once final closing determination has been made, send an e-mail to Exam per the Employee Group Code (EGC) Listing Contacts chart on Servicewide Electronic Research Program (SERP), advising of the actions taken. If AIMS status code is over 09, reassign to IDTVA-C team per (4) below.

    Reminder:

    For IDTVA-C - If -LW freeze on account with Office of Appeals involvement, only refer the year under its jurisdiction. All other years will be retained and worked in IDTVA-C. See IRM 25.23.10.10.1, Cases with -L or -W Freeze Codes, for additional information.

  4. Accounts showing another function or team is responsible for resolution should be routed/reassigned per IRM 25.24.1.4.1, Routing Information - Paper.

    1. Compliance involvement received in IDTVA-A

      Exception:

      Accounts in status 22 with no other compliance involvement (e.g., Exam or AUR) will be resolved in IDTVA-A. Refer to IRM 25.24.2.4.2.1, Collection Activity - Form 14394/13794 Referrals, for additional information.

    2. No compliance involvement on any involved years received in IDTVA-C

    3. RICs/IVO Involvement and RPM claim involves the original return - Route to RICS/IVO only when 1 or more of the following conditions are met:
      • Open RICS/IVO control
      • Open TPP unpostable - TC 971 AC 121 or TC 971 AC 124 with UPC 126 and return has not posted
      • Unreversed RICS/IVO indicators are present, the tax return is posted but the refund is frozen by RICS/IVO

      Note:

      Do not refer to IVO if the refund is being held by another function, for example refund held by Error Resolution (ERS) or Exam.


      • TC 971 AC 129 is present and the refund is frozen

    4. Frivolous Return Program (FRP) involvement - FRP involvement takes precedence over any other compliance involvement. Route only the year with the frivolous filing indicators. Any other years will be retained and worked in accordance with the guidance set forth in IRM 25.24, Return Preparer Misconduct Program, as applicable. For example:
      • F- freeze and an unreversed TC 971 AC 089
      • MFT 55 or MFT 13 account with posted TC 240 reference code 666

  5. Send an 86C letter if required per IRM 21.3.3.4.2.1, Use of 86C Letter - Referring Taxpayer Inquiry/Forms to Another Office.

    Exception:

    Cases transferred to Criminal Investigation will not be issued an 86C letter.

    Note:

    If an Operations Assistance Request (OAR) is received in IDTVA and the account reflects RICS involvement, follow IRM 21.1.3.18.1 (d), Operations Assistance Requests (OAR’s) Accounts Management Guidelines. The site TAS liaison should not forward OAR directly to RICS. If there is compliance involvement, the site TAS liaison can send OAR per the Wage and Investment (W&I) IDTVA addendum to the Service Level Agreement (SLA) with TAS at http://idtva.web.irs.gov/Documents/IDTVA SLA Addendum.docx. If a Taxpayer Assistance Order (TAO) is received in IDTVA -A and the account reflects compliance or RICS involvement, refer the case back to the IDTVA P&A POC for proper routing.

RPM Criteria Not Met

  1. There will be instances when the taxpayer's complaint will not meet the Service's guidelines for relief under the RPM Program. The RPM complaint will be no considered.

    Example:

    A taxpayer may have submitted documentation claiming he/she is a victim of preparer misconduct due to non-receipt of a refund; however, the reason a refund was not received may be due to a frozen credit or refund offset.

    Note:

    Be aware, however, that even if the complaint doesn’t meet RPM guidelines, there may be procedures to deal with certain situations that could result in some assistance or relief for the taxpayer. Take any applicable actions following normal procedures.

  2. Issue a no consideration 5956C letter and:

    • Provide the reason(s) RPM criteria was not met.

    • Input TC 290.00 with the appropriate blocking series (00 or 05) and include reason code 131.

      Exception:

      If no TC 150 is present on the account, the TC 290 cannot be input. Leave applicable case note.

  3. Although not all inclusive, follow the chart below to identify and address situations that do not meet criteria for RPM. Use the applicable Then column for your complaint type.

      If the ... IDTVA-A will Then ... IDTVA-C will Then ...
    1. Taxpayer’s only issue is a lost, stolen, or unintentional misdirected refund (such as an incorrect routing or account number due to transposition error not attributable to preparer misconduct). Refer to IRM 21.4.1.4.4, Refund Issued but Lost, Stolen, Destroyed or Not Received.
    Also:
    • Advise the taxpayer a review of the account and the information provided demonstrates it is likely an issue other than RPM.
    • Provide an explanation of account conditions.
    • Update CIS data to reflect the appropriate Category Code TPRQ.
    • Close the CIS case.
    Refer to IRM 21.4.1.4.4, Refund Issued but Lost, Stolen, Destroyed or Not Received.
    Also:
    • Advise the taxpayer a review of the account and the information provided demonstrates it is likely an issue other than RPM.
    • Provide an explanation of the account conditions.
    • Document actions taken using CIS and functional system, if applicable.
    • Return case to the appropriate Compliance function, as applicable, following normal procedures. See Reminder at end of chart for additional information.
    • Close the CIS case.
    2. Taxpayer submits documentation; however, research identifies a reason for the reduced refund that demonstrates no preparer misconduct occurred. For example, a math error, frozen refund, refund offset, other general account issue, or usual inquiries by Exam or AUR not related to RPM.

    Example:

    The taxpayer mistakenly believes he/she is a victim of preparer misconduct; e.g.,
    •The taxpayer did not receive the refund expected because there was a math error on the original return and the refund was reduced.
    • The taxpayer did not receive his/her correct refund because the taxpayer’s earned income tax credit was frozen due to selection for examination.

    • Make any necessary adjustments to account following normal procedures, if applicable. Including use of TC 971 AC 850 on current year accounts.
    • Advise the taxpayer that a review of the account and the information provided does not support RPM.
    • Provide an explanation of account actions taken or not taken (such as the correction of a math error or additional information needed to correct the account).
    • Update CIS data to reflect the appropriate Category Code TPRQ.
    • Close the CIS case.
    • Inform the taxpayer that a review of the account and information provided does not support RPM.
    • Document account actions taken or not taken (e.g., correction of math error or additional information needed to verify the AUR or Exam issue.) using CIS and functional system, if applicable, following normal procedures.
    • Return case to the appropriate Compliance function, as applicable. See Reminder at end of chart for additional information.
    • Close the CIS case.
    3. Taxpayer's account does not show a posted return. (The taxpayer may assume the preparer filed an unauthorized return because of media attention.)
    • Advise the taxpayer that no tax return was filed using his/her TIN.
    • If a tax return was not submitted with the RPM complaint, advise the taxpayer to file a tax return, if required.
    • If a return was submitted with the RPM complaint by the taxpayer, advise the taxpayer that it will be forwarded for processing and if a refund is due, it may take up to six to eight weeks.
    • Edit the return for processing per IRM 21.5.1.5.5, Processing/Reprocessing CIS Tax Returns.
    • Document action taken using CIS.
    • Forward the return to Submission Processing.
    • Close the CIS case.

    • Advise the taxpayer that no tax return was filed using his/her TIN.
    • If a tax return was not submitted with the RPM complaint, advise the taxpayer to file a tax return, if required.
    • If a return was submitted with the RPM complaint by the taxpayer, advise the taxpayer that it will be forwarded for processing and if a refund is due, it may take up to six to eight weeks.
    • Edit the return for processing per IRM 21.5.1.5.5, Processing/Reprocessing CIS Tax Returns.
    • Forward the return to Submission Processing.
    • Document action taken using CIS and functional system, if applicable.
    • Return case to the appropriate Compliance function, as applicable. See Reminder at end of chart for additional information.
    • Close the CIS case.
    4. Taxpayer's complaint does not fit into any of the four RPM fact patterns but involves preparer tax identification number (PTIN) misuse, misrepresentation of credentials, employment taxes and other issues.

    Example:

    The taxpayer is not requesting relief/correction of personal tax return. He/She is reporting or informing on a person who misused taxpayer information as a preparer.

    "Other issues" examples might be:
    • Extreme fees
    • Did not provide copies or explanations
    • Advise the taxpayer of the review of the account and the reason the complaint does not meet the IRS guidelines for relief. The preparer information will be forwarded to the Return Preparer Office. No adjustments to their account are required and no further action is necessary on their part.
    • Advise the taxpayer he/she may want to contact the Federal Trade Commission (FTC), State Consumer Agencies, Better Business Bureau (BBB) etc., per the RPM policy statement. Refer to IRM 1.2.24.2, Policy Statement 25-2.
    • Include the case on the RPO notification spreadsheet per guidelines in IRM 25.24.2.2.4, Return Preparer Office Notification Requirements.
    • Close the CIS case.
    • Advise the taxpayer of the review of the account and the reason the complaint does not meet the IRS guidelines for relief. The preparer information will be forwarded to the Return Preparer Office. No adjustments to their account are required and no further action is necessary on their part.
    • Advise taxpayer he/she may want to contact the Federal Trade Commission (FTC), Better Business Bureau (BBB), State Consumer Agencies, etc., per policy statement. Refer to IRM 1.2.24.2, Policy Statement 25-2.
    • Document actions taken using CIS and functional system, if applicable.
    • Return case to the appropriate Compliance function, as applicable. See Reminder at end of chart for additional information.
    • Notify the Return Preparer Office per IRM 25.24.2.2.4, Return Preparer Office Notification Requirements.
    • Close the CIS case.
    5. Taxpayer did not visit a preparer for current year; however, preparer filed a return without authorization utilizing information obtained from a prior year visit resulting in an identity theft scenario.
    OR
    Taxpayer provides preparer name and company name and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ resulting in an identity theft scenario.
    • Advise the taxpayer he/she is a victim of identity theft and not a victim of preparer misconduct. We are forwarding their complaint to the appropriate function for resolution.
    • X out Form 14157-A and write in Form 14039 Identity Theft.
    • Leave a CIS case note: Taxpayer is victim of identity theft not victim of preparer misconduct.
    • Update the CIS data to reflect the appropriate Category Code IDT1 along with the other applicable codes per IRM 25.23.4.4, Multiple Individuals Using the Same TIN.
    • Ensure that a TC 971 AC 522 with a correct MISC code has been input or history item is entered, if necessary. See IRM 25.23.2.15, Initial Allegation or Suspicion of Tax-Related Identity Theft - IMF Identity Theft Indicators and subsequent applicable subsections, for information on the specific requirements.
    • Include the case on the RPO notification spreadsheet per guidelines in IRM 25.24.2.2.4, Return Preparer Office Notification Requirements.
    • Reassign the CIS case to the designated IDTVA contact for ID theft resolution.

    Exception:

    If there is an existing open IDT control in IDTVA, link the cases together and close RPM case using "Close as MISC" button.

     

    Note:

    If statute is imminent on the return as intended to be filed, send a secure e-mail to the IDTVA contact or existing controlling employee, advising a case was reassigned with statute implications for immediate review. Provide the case information.

    • Advise the taxpayer he/she is a victim of identity theft and not a victim of preparer misconduct. We are forwarding their complaint to the appropriate function for resolution.
    • X out Form 14157-A and write in Form 14039 Identity Theft.
    • Leave a CIS case note: Taxpayer is victim of identity theft not victim of preparer misconduct.
    • Update the CIS data to the appropriate Doc type, category code IDI1/IDI2, OFP 710 402XX and priority code (if applicable).
    • Ensure that a TC 971 AC 522 with a correct MISC code has been input or history item is entered, if necessary. See IRM 25.23.2.15, Initial Allegation or Suspicion of Tax-Related Identity Theft - IMF Identity Theft Indicators and subsequent applicable subsections, for information on the specific requirements.
    • Include the case on the RPO notification spreadsheet per guidelines in IRM 25.24.2.2.4, Return Preparer Office Notification Requirements.
    • Reassign the CIS case to the designated IDTVA contact for ID theft resolution.

    Exception:

    If there is an existing open IDT control in IDTVA, link the cases together and close RPM case using "Close as MISC" button.

     

    Note:

    If statute is imminent on the return as intended to be filed, send a secure e-mail to the IDTVA contact or existing controlling employee, advising a case was reassigned with statute implications for immediate review. Provide the case information.

           
           
    6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Example:

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

    • Advise the taxpayer that their documentation shows that they were aware of the original tax return filed and does not meet the guidelines for RPM relief.
    • Treat the taxpayer’s return as intended to be filed (if included) as an amended return following normal procedures.
    • Close the CIS case.
    • Advise the taxpayer that their documentation shows that they were aware of the original tax return filed and does not meet the guidelines for RPM relief.
    • Treat the taxpayer’s return as intended to be filed as an amended return following normal procedures, if included.
    • Return case to the appropriate Compliance function, as applicable. See Reminder at end of chart for additional information.
    • Close the CIS case.
    7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

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

    Note:

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

    Treat the issue of non-receipt of the refund as a CAT 4 complaint, following normal CAT 4 RPM procedures.
    If allowable then:
    1. Remove the preparer portion of the refund.

    2. Treat the return as intended to be filed as an amended return.

    3. Follow any other applicable normal procedures.

    4. Close CIS case.


    If disallowed then:
    1. Follow normal disallowance procedures per IRM 25.24.2.10.1, Disallowance.

    2. Apply ≡ ≡ ≡ ≡ ≡ rules for treatment of the return as intended to be filed.

    3. Follow any other applicable normal procedures.

    4. Close CIS case.

    Treat the issue of non-receipt of the refund as a CAT 4 complaint, following normal CAT 4 RPM procedures.
    If allowable then:
    1. Remove the preparer portion of the refund.

    2. Treat the return as intended to be filed as an amended return.

    3. Follow any other applicable normal procedures.

    4. Close CIS case.


    If disallowed then:
    1. Follow normal disallowance procedures per IRM 25.24.2.10.1, Disallowance.

    2. Apply ≡ ≡ ≡ ≡ ≡ ≡ rules for treatment of the return as intended to be filed.

    3. Follow any other applicable normal procedures.


    • Return case to the appropriate Compliance function, as applicable. See Reminder at end of chart for additional information.
    • Close the CIS case.
    8. The taxpayer’s complaint involves a primary filed married filing joint return without the secondary taxpayer’s knowledge

    Note:

    If the taxpayer’s complaint involves a primary filed married filing joint return by the secondary taxpayer without the primary taxpayer’s knowledge, then elevate case information to ITVA HQ.

    • Follow procedures in IRM 21.6.1.5.7, Married Filing Joint or Married Filing Separate is Invalid or Filed with Incorrect Status, paragraph 3.
    • Advise the taxpayer that their claim involves a potential invalid joint election and not return preparer misconduct. We are forwarding their complaint to the appropriate function for resolution.

    Exception:

    If the case does not meet Exam referral criteria, advise the taxpayer their claim involves a potential invalid joint election and not return preparer misconduct. We have removed his/her name from the married filing joint account.


    • Close the CIS case.
    • Follow procedures in IRM 21.6.1.5.7, Married Filing Joint or Married Filing Separate is Invalid or Filed with Incorrect Status, paragraph 3.
    • Advise the taxpayer that their claim involves a potential invalid joint election and not return preparer misconduct. We are forwarding their complaint to the appropriate function for resolution.

    Exception:

    If the case does not meet Exam referral criteria, advise the taxpayer their claim involves a potential invalid joint election and not return preparer misconduct. We have removed his/her name from the married filing joint account.


    • Return case to the appropriate Compliance function, as applicable. See Reminder at end of chart for additional information.
    • Close the CIS case.

    Reminder:

    Open AUR or Exam cases should be referred back to the originating function in accordance with IRM 25.24.2.9.1.1, Open AUR Issues or IRM 25.24.2.9.2.1, Open Exam Issues. If an AUR or Exam reconsideration, or ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Exam cases closed as disposal code (DC) 12 or 37, no other actions are required.

RPM Criteria Met

  1. This section provides an overview of the research path and verification requirements that should be followed when RPM criteria is met. The subsequent subsections provide specific guidance for these requirements.

  2. When RPM criteria are met, all of the facts and circumstances provided by the taxpayer and a complete review of the taxpayer's account must be taken into consideration. The specific documentation requirements for each category, verification requirements and account information will determine the treatment stream and whether the taxpayer is entitled to a refund or a portion of the refund misdirected by the preparer. Acceptance of the complaint is dependent upon the receipt of sufficient documentation and the verification results of the preparer.

  3. The responsibilities of the IDTVA RPM employees evaluating the complaint includes:

    1. Identifying the RPM category

    2. Applying referral/consultation criteria - RPM complaints with Criminal Investigation (CI) involvement, International issues, Volunteer Return Preparation Programs involvement

    3. Determining if the complaint is complete

    4. Verifying the preparer information

  4. In specific instances, supplemental research and verification must be performed. The outcome of this research and verification will be used to determine the treatment stream and the extent of relief to which the taxpayer may be entitled. This research and verification consists of:

    1. Refund Deposit Verification – Verify the receipt or non-receipt of a refund by researching whether a refund was issued or deposited into an account in the taxpayer’s name.

    2. Law Enforcement Agency Report Verification – Verify the information provided is consistent with the complaint/affidavit.

  5. If there is missing documentation and/or the preparer information is incomplete, then correspondence will be issued to the taxpayer. This will be discussed further in a subsequent section IRM 25.24.2.5.2, Incomplete Complaints.

  6. Based on the research and verification requirements above, the applicable treatment stream will be applied and the necessary account actions taken for resolution.

  7. Two correspondex letters specific for RPM processing are available. The 5955C letter, Return Preparer Misconduct – Case Incomplete for Processing Request, and the 5956C letter, Return Preparer Misconduct (RPM) – Resolution Closing Letter, will be referenced when applicable.

Special Handling for Cases Tax Year 2013 (and prior) Received On or Before 12/31/2015

  1. Specific information from Interim Guidance Memorandum WI-25-1215-004, have been incorporated into various sections of this IRM relating to the cases prior to tax period 2014 received on or before 12/31/2015, that were being held pending policy decision. The cases meeting this criteria will be referred to as "pre-existing cases" throughout this guidance.

  2. All normal procedures regarding the evaluation of the complaint, research and verification requirements and account adjustment apply with two (2) accommodations:

    • If a law enforcement report is required, the taxpayer is still required to provide a law enforcement agency report or attempt to secure a police report, that contain the required elements. However, if the taxpayer is not able to submit an official report from a law enforcement agency, an alternative statement documenting the taxpayer’s attempt to secure a police report signed under penalties of perjury along with a statement from TAS documenting their assistance/attempt in obtaining a police report will be accepted. The taxpayer statement should contain the return preparer’s first and last name and description of the preparer misconduct and theft of refund.

    • If the taxpayer’s actual return reflects a tax liability and the tax return is late or the tax is not paid before or on the due date of the return, no penalties will be charged.

  3. Additional guidance and reminders for these "pre-existing cases" are provided within the applicable subsections throughout this IRM.

Referral Criteria

  1. In certain instances it will be necessary to refer the complaint information to a specific function as notification of an existing RPM complaint and to confirm with that function that there will be no implications when resolving the complaint in IDTVA. If the RPM complaint or account condition involves any of the following, the employee will follow the guidance in the specific subsection for referral.

    1. Collection Activity

    2. Criminal Investigation (CI)

    3. International Issues

    4. Return Preparation Programs (e.g., Volunteer Income Tax Assistance (VITA))

Collection Activity - Form 14394/13794 Referrals
  1. While the taxpayer’s complaint is under RPM review, balance due collection activity must be suspended. If after resolution the account still reflects a tax liability balance due, ACS must be notified to resume collection activity.

    Note:

    Collection activity is suspended for the entire account and not specific tax modules. Therefore, if any module remains in balance due, regardless if there were RPM issues on that module, ACS must be notified to resume collection activity. For example, RPM issue on tax year 2015; however, tax years 2014 and 2015 are in collection status. RPM is allowed for 2015 and no longer reflects a tax liability. ACS must still be notified to resume collection activity for 2014.

  2. Form 14394, Identity Theft/RPM Case Collection Alert Instructions, will be faxed or e-mailed to the applicable liaison per the instructions on the form. Form 13794, Request for Release or Partial Release of Federal Tax Lien, will be faxed or e-mailed to the applicable Collection Advisory contact.

  3. Follow procedures in IRM 25.23.4.5.6, Collection Activity - Form 14394/13794.

    Note:

    If the account is in a balance due and it does not meet the criteria for Form 14394/13794 because the account is in notice status, input TC 470 to hold notices while under RPM review.

Criminal Investigation (CI) Involvement
  1. RPM complaints indicating CI involvement may be worked by IDTVA after contact is made with CI for guidance prior to taking any action on the account.

  2. Indications of CI involvement may include (but are not limited to) the following:

    • Z freeze present on the taxpayer’s or the preparer’s individual account.

    • Taxpayer indicates he/she was contacted by CI.

    • CI Agent’s business card included in documentation.

    • Restitution indicators, refer to IRM 25.24.2.4.5.1, Criminal Restitution involving Department of Justice (DOJ).

  3. The following steps will be taken when a referral is required:

    1. Complete RPM CI Referral form http://serp.enterprise.irs.gov/databases/irm-sup.dr/return-preparer-misconduct/rpm-ci-referral-form.pdf (located on Servicewide Electronic Research Program (SERP) Return Preparer Misconduct resource page under IRM Supplements tab).
      • Insert a response due date (7 business days from the referral date).
      • Include taxpayer and preparer information and information signifying CI involvement.
      • Complete employee contact information and date on bottom of the form.
      • Attach form to CIS case.

    2. Send secure e-mail with referral attached to the CI point of contacts (POCs) named on referral form.
      • Subject line: "ACTION: RPM CI Referral - Please respond by (date)" .
      • Include in e-mail any other information or question not addressed on referral form.

    3. Suspend CIS case awaiting CI response.

    4. If no response is received from CI by the requested date, forward the original e-mail as follow up and request response in 3 business days.

      Note:

      If no response is received after 3 business days forward e-mail to your IDTVA P&A POC for elevation to ITVA HQ.

    5. Upon receipt of the response from CI:
      • Attach completed referral with CI response to CIS case.
      • Take appropriate actions based on CI guidance for the disposition or resolution of RPM case.

      Exception:

      If CI requests case to be transferred to CI, elevate case information to ITVA HQ.

RPM Complaints with International Issues
  1. RPM complaints that involve international issues may be worked by IDTVA after contact via referral is made with IDTVA International point of contact for guidance prior to taking any action on the account.

  2. A referral is required when the taxpayer’s return as intended to be filed contains an international issue and guidance from IDTVA International is needed in order to verify the tax return. Refer to IRM 21.8.1.1.22, International Forms Processing, and IRM 21.6.3.4.1.6(4), Form 1116, Foreign Tax Credit, for additional guidance.

  3. The following steps will be taken when a referral is required:

    1. Complete the Return Preparer Misconduct International Referral form http://serp.enterprise.irs.gov/databases/irm-sup.dr/return-preparer-misconduct/rpm-intl-referral-form.pdf, (located on SERP Return Preparer Misconduct resource page under IRM Supplements tab).
      • Insert a response due date (10 business days from the referral date).
      • Include taxpayer information, including tax years involved and CIS ID’s. Please indicate which page in the document images the taxpayer’s return as intended to be filed is located.
      • Indicate whether the complaint is complete and RPM correspondence is required.

      Note:

      If IDTVA International needs additional information from the taxpayer also, the RPM employee will include this information in their correspondence along with the request for the missing information for the RPM complaint.


      • Complete employee contact information and date on the form.

    2. Send a secure e-mail (subject line: RPM International Case) with the referral attached to the IDTVA International point of contacts (POCs).

    3. Suspend the CIS case and allow 10 business days for IDTVA International to respond.

      Note:

      If the RPM complaint is complete, but the IDTVA International requests additional time to secure needed forms or information, negotiate a new response date and suspend accordingly.

    4. If no response is received by the requested date, forward the original e-mail as a follow-up and request response in 3 business days. If no response is received after the follow-up request, forward the e-mail to your IDTVA P&A POC for elevation to ITVA HQ.

  4. IDTVA International response and required actions:

    1. If the referral response indicates that the taxpayer’s tax return as intended to be filed can be accepted as submitted or to set a math error, then proceed following normal RPM procedures, and incorporate the guidance if adjusting the account to reflect the taxpayer’s return as intended to be filed is required. Be sure to include any codes required as specified on the referral response.

    2. If the referral indicates that additional information is needed from the taxpayer, include the specifics in the RPM correspondence along with the request for the missing information for the RPM complaint. Resubmit referral back to IDTVA International when the taxpayer responds with the requested information or after the suspense time frame and the taxpayer has not responded. IDTVA International will review and determine whether the return can be accepted with or without the additional information if no response was received from the taxpayer. They will provide adjustment guidelines and advise to accept the return as filed or will advise to set a math error, if applicable. RPM employees will follow normal RPM procedures for case resolution incorporating the guidance provided in the referral.

    3. Upon receipt of the response from IDTVA International, attach the completed referral with the response to the CIS case.

      Note:

      If IDTVA International advises there are any BMF International issues that need addressing, elevate to HQ for coordination with BMF.

RPM Complaints Involving Return Preparation Programs
  1. RPM complaints indicating return preparation at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites may be worked by IDTVA after contact via referral is made with Stakeholder Partnerships, Education & Communication (SPEC) Headquarters.

    Note:

    Return preparation by AARP is a part of TCE.

  2. The taxpayer will usually indicate that their tax return was prepared at a VITA or TCE site and provide the location in the complaint. CC TRDBV and/or MeF usually show the preparer as “VITA or TCE” and contain the location of the site along with the site identification number (SIDN). It appears on CC TRDBV and MeF as "Preparer STIN" . The SIDN can be verified using CC RPVUE for the year in question.

  3. The referral will be a means to notify SPEC in regard to the allegations, verify the site ID number and to request confirmation that the VITA/TCE partner has not provided relief to the taxpayer, prior to the IRS considering the RPM complaint.

  4. The following steps will be taken when a referral is required:

    1. Complete the Return Preparer Misconduct SPEC Referral form http://serp.enterprise.irs.gov/databases/irm-sup.dr/return-preparer-misconduct/rpm-spec-referral-form.pdf, (located on SERP Return Preparer Misconduct resource page under IRM Supplements tab).
      • Insert a response due date (10 business days from the referral date).
      • Include taxpayer and VITA/TCE site information.
      • Complete employee contact information and date on the bottom of form.

    2. Send a secure e-mail with the referral attached to the SPEC point of contacts (POCs) - Chief of Oversight, Products & Quality and Senior Tax Analyst, named on the referral form.

    3. Suspend the CIS case and allow 10 business days for SPEC to respond.

      Note:

      If SPEC requests additional time to secure information, negotiate a new response date and suspend accordingly.

    4. If no response is received by the requested date, forward the original e-mail as a follow-up and request response in 3 business days. If no response is received after the follow-up request, forward the e-mail to your IDTVA P&A POC for elevation to ITVA HQ.

    5. Upon receipt of the response from SPEC, attach the completed referral with the SPEC response to the CIS case.

      Note:

      If the referral response indicates that the taxpayer was reimbursed, ensure that the refund amount is present. If not, send back to SPEC for the specific amount reimbursed to the taxpayer. The employee must take into account the amount the VITA/TCE site reimbursed to the taxpayer when determining the category of the case and the preparer portion of the refund, if any, in order to follow normal RPM procedures toward resolution.

  5. Categorizing the RPM case will depend on the taxpayer’s complaint and whether the VITA/TCE partner has or will be reimbursing the taxpayer. Account adjustments may still be necessary and guidance should be followed for the applicable category of the case.

    1. If the VITA/TCE partner determines the discrepancy in bank information is due to an unintentional act (e.g. mistake due to transposition error), and the referral response indicates the partner reimbursed the taxpayer, this is not considered RPM. Send 5956C letter to taxpayer advising that the error was not due to preparer misconduct and our records show the VITA/TCE partner reimbursed them their refund. Input TC 290.00 with the appropriate blocking series (00 or 05) and include reason code 131.

    2. If the VITA/TCE partner determines the discrepancy is due to an intentional act (without the taxpayer’s knowledge or consent), and the referral response indicates the partner will or will not reimburse the taxpayer, then follow the applicable category 3 or category 4 chart for the treatment stream procedures to resolve the case.

Evaluating RPM Complaints

  1. Complete research must be performed to determine the appropriate actions to take on a case. The employee must review the documentation provided by the taxpayer along with the account information from CIS, Account Management Services (AMS), and IDRS etc. to assist with a determination. Compare the tax return as taxpayer intended it to be filed with the posted information to determine if the taxpayer complaint is supported. Perform complete IDRS research to confirm a tax return was filed or the taxpayer does not have a filing requirement. Research should include but is not limited to the use of command codes TXMOD to review posted information; RTVUE, TRDBV and/or access of EUP to review MeF original tax return information; IRPTR to review income information, etc.

  2. If in telephone contact with the taxpayer, leave a CIS case note with the pertinent information to the case. For example, if taxpayer clarifies what was stated in the documentation or confirms the receipt of a refund, this should be included in the case notes.

  3. IDTVA- C employees will also (when applicable):

    • Review CEAS (Campus or Field Exam as appropriate) to determine the audit issues on open or closed Exam cases. This will assist with determining whether the audit should continue or assessments abated. Input a CIS case note providing a concise summary of the CEAS information.

    • Review the AUR system to determine the issues on open or closed AUR cases. This will assist with determining whether the AUR inquiry should continue or assessments abated. Input a CIS case note providing a concise summary of the AUR information.

  4. Refer to IRM 25.23.10.4.1, Requesting Translations of Correspondence from Certain Languages in English, for translation services guidance.

Identifying RPM Category
  1. When reviewing RPM complaints, it is important to review all documentation to determine the correct category, as the category determines the appropriate procedures and relief. In some instances, the taxpayer’s statements may indicate he/she falls into one category but research findings determine the complaint falls into another.

    Note:

    If a determination cannot be made based on the documentation received refer to IRM 25.24.2.4.3.2, Documentation Requirements, for additional information.

  2. Four (4) primary fact patterns have been identified in the RPM cases.

    1. Category 1: Unauthorized filing.

      The taxpayer was in contact with a preparer and ≡ ≡ ≡ ≡ ≡ ≡ ≡ did not sign or authorize the filing of a return, but a return was filed with his/her name/TIN.

      Example:

      The taxpayer visited or was in contact with a preparer and provided personal information including income documentation for a quote, rapid refund eligibility etc., and subsequently a return is filed without the taxpayer’s knowledge. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      •≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      •≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      •≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Based upon documentation submitted and research findings, a determination may be made that the taxpayer did have knowledge of the return filing. Judgment should be used taking into account all information (for example timing and dates). If this determination is made, follow the treatment stream for the appropriate category.

      Example:

      The taxpayer ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ did not authorize the filing of the original return and the preparer filed a return. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Note:

      For this category, it is possible that the taxpayer is not a victim of preparer misconduct but a victim of identity theft. In some cases, judgment must be used to distinguish between the two.

      Example:

      The taxpayer provided personal information, including income documentation to a 3rd party for other purposes, such as a loan, and subsequently a return is filed without the taxpayer’s knowledge. This scenario is considered identity theft not RPM.
      • Taxpayer provides proof that he/she received a loan (car or home loan) or loan rejection letter which could support a finding of identity theft and not RPM.

    2. Category 2: Authorized filing: Altered return information and no additional refund due to the taxpayer.

      The taxpayer was in contact with a preparer and authorized a return filing, but states tax data (exemptions, income, expenses, deductions, credits, etc.) on his/her return were altered before the return was filed or the return otherwise includes items which he/she did not authorize.

      The taxpayer may have received a refund for the amount he/she expected and it matches their return as intended to be filed, or taxpayer received a refund in excess of the amount to which he/she is entitled. In addition, the taxpayer may not have received a refund, but did not expect a refund and the return as intended to be filed is a balance due.

      Example:


      • The taxpayer visits or is in contact with a preparer and provides personal information including income documentation with the intent to have a return filed. Subsequently, the preparer alters the return to increase the expected refund (if any). The taxpayer received at least the amount of the refund expected and the preparer receives all or part of the increased refund amount.
      •≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Category 3: Authorized filing: Altered return information and taxpayer requesting additional refund.

      The taxpayer was in contact with the preparer and authorized a return filing, but states tax data (exemptions, income, expenses, deductions, credits, etc.) on his/her return were altered before it was filed or the return otherwise includes items which he/she did not authorize.

      The taxpayer states he/she only received a portion of the refund he/she expected or he/she received no refund. The taxpayer may have received a portion of the inflated refund but he/she has not received the refund he/she expected per the return submitted as intended to be filed.

      Example:


      • The taxpayer visits or is in contact with a preparer and provides personal information including income documentation with the intent to have a return filed. Subsequently, the preparer alters the return to increase the expected refund. Similar to Category 2, but the taxpayer received only a portion or none of the refund expected.
      •≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    4. Category 4: Misdirected refund only and taxpayer requesting additional refund.

      The taxpayer was in contact with a preparer and did authorize a return filing, but states although no tax data were altered, the direct deposit information or mailing address for the refund check was altered diverting all or a portion of the refund to the preparer.

      The taxpayer states that he/she only received a portion of the refund or he/she received no refund.

      Example:


      • Taxpayer visits or is in contact with a preparer and provides personal information including income documentation with the intent to have a return filed. Subsequently, the preparer alters the return to change the deposit information, but the return is otherwise as intended to be filed.
      • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Documentation Requirements
  1. The taxpayer is required to submit documentation to support their complaint of preparer misconduct.

  2. Documentation requirements may vary depending upon the category, requested relief, and whether the original return was signed by a preparer or is considered a ghost preparer. Refer to IRM 25.24.2.8, Treatment Stream for RPM Claims for the ≡ ≡ ≡ ≡ ≡ ≡ requirements for a specific category.

    Note:

    If the specific category could not be determined based on the information the taxpayer provided, then reference Category 2 for requirements when the taxpayer is not seeking an additional refund. However, if there is indication the taxpayer is seeking an additional refund or this determination cannot be made, then reference Category 3 requirements.

  3. For a full list of general acceptable documentation refer to IRM 25.24.1.2, RPM General Documentation Requirements.

    Note:

    For pre-existing cases, if the official law enforcement report or alternative statement described in IRM 25.24.2.4.1, Special Handling for Cases Tax Year 2013 (and prior) Received On or Before 12/31/2015, is missing, refer to IRM 25.24.2.5.2, Incomplete Complaints, for specific guidance.

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

     

  5. In cases where there is missing documentation or information on Form 14157-A, taxpayers will be issued a letter requesting the missing information and the case will be suspended. The claim will be disallowed if the required information is not provided within 30 days.

Verification of the Preparer
  1. In all categories, IRS records will be researched to verify the identity of the preparer and validate the complaint.

  2. Taxpayers will be advised their claim has been disallowed when the preparer or documentation regarding the preparer can not be verified.

  3. Account research must be performed to determine whether original return was signed by a preparer or not signed by a preparer (ghost preparer).

    1. If electronically filed, research CC TRDBV and/or access Employee User Portal (EUP) to review Modernized e-File (MeF) original tax return information.

    2. If a paper return was processed, the original return may have to be requested from Files to determine if there is a signing preparer or ghost preparer scenario. Refer to Exhibit in IRM 3.24.3-7, Section 05 - Form 1040, Page 2, for transcription information.

      Note:

      Research CC TRDBV for preparer information. If PTIN/TIN/EIN is present and IDRS research shows the name of the preparer matches the name of the preparer on the complaint, then no document request is needed. If PTIN/TIN/EIN present and the name does not match or there is no preparer information at all, then request document from Files. Suspend case per normal procedures while waiting for the document.

  4. If the case involves a non-signing preparer (ghost preparer), ensure the taxpayer provided sufficient documentation showing the preparer named on the Form 14157 is in the business of preparing tax returns or held themselves out as in the business of preparing tax returns AND the person named on the Form 14157 interacted with the taxpayer and submitted the return filed with the IRS unless this requirement was satisfied through internal research or CI confirmation. The evidence must show the preparer name, tax year in question or applicable corresponding dates that indicate an exchange between the taxpayer and the preparer regarding the filing of a tax return. For acceptable documentation refer to IRM 25.24.1.2, RPM General Documentation Requirements.

    Reminder:

    A signing preparer is considered to have held themselves out as in the business of preparing tax returns and to have interacted with the taxpayer therefore, no additional documentation is required.

    Note:

    In some cases, the evidence used to corroborate that the preparer was in the business or held themselves out as being in the business of preparing tax returns may also be used to show the taxpayer interacted with the preparer.

  5. Verify the identity of the preparer from the following IRS records.

    • CC INOLE to verify the TIN or EIN provided

    • CC RPVUE to verify PTIN

    • CC NAMEI or CC NAMEB to locate TIN or EIN

  6. Refer to chart below for scenarios on whether to consider the preparer verified or not verified.

      If ... And ... Then ...
    1. Signing preparer and preparer name matches the name on the associated TIN, EIN or PTIN ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

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

    Consider verified
    2. Signing preparer is a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site and the site identification number (SIDN) is valid for the VITA/TCE location

    Reminder:

    A referral to SPEC is required. Use SIDN information provided by SPEC, if applicable.

      Consider verified
    3. Signing preparer is a VITA/TCE site and the SIDN is not valid

    Reminder:

    A referral to SPEC is required. Use SIDN information provided by SPEC, if applicable.

    Through research a valid SIDN can be located Consider verified
    4. Signing preparer is a VITA/TCE site and the SIDN is not valid

    Reminder:

    A referral to SPEC is required. Use SIDN information provided by SPEC, if applicable.

    Through research a valid SIDN cannot be located and SPEC cannot verify the partner site or provide a valid SIDN Consider not verified
    • Disallow the claim for RPM (Certified letter 5956C).
    • Refer to IRM 25.24.2.10.1, Disallowance, for additional guidance.
    5. Signing preparer and PTIN provided is not valid or belongs to another person Through research a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ can be located for the preparer Consider verified
    6. Signing preparer and PTIN provided is not valid or belongs to another person Through research a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cannot be located for the preparer Consider not verified
    • Disallow the claim for RPM (Certified letter 5956C).
    • Refer to IRM 25.24.2.10.1, Disallowance, for additional guidance.
    7. Signing preparer and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ from the information provided by the taxpayer

    Note:

    Depending upon the facts and circumstances of the case, clarification may be requested from the taxpayer.

    Through research no connection/association can be established between the named preparer with the signing preparer information.

    Note:

    If a connection can be made then follow normal verification procedures.

    Consider ID Theft
    Refer to IRM 25.24.2.3, RPM Criteria Not Met, for additional information.

    Exception:

    If a compliance case and there is an indication that the taxpayer provided a response to AUR or Exam to address the compliance issue with no mention of RPM or IDT, then disallow RPM rather than treat as IDT.

    8. Signing preparer and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ provided by the taxpayer; ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Through research a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ can be located for the preparer Consider verified
    9. Signing preparer and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ provided by the taxpayer; ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Through research a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cannot be located for the preparer Consider not verified
    • Disallow the claim for RPM (Certified letter 5956C).
    • Refer to IRM 25.24.2.10.1, Disallowance, for additional guidance.
    10. Non-Signing preparer and no preparer information on tax return, “self prepared” and documentation is provided showing that the 3rd party held themselves out to be a return preparer and 3rd party interaction Through research a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ can be located for the preparer Consider verified
    11. Non-Signing preparer and no preparer information on tax return, “self prepared” and documentation is provided showing that the 3rd party held themselves out to be a return preparer and 3rd party interaction Through research a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cannot be located for the preparer Consider not verified
    • Disallow the claim for RPM (Certified letter 5956C).
    • Refer to IRM 25.24.2.10.1, Disallowance, for additional guidance.
    12. Non-Signing preparer and it can be clearly determined that the named ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    If not clearly indicated, then follow normal procedures and correspond with taxpayer.

      Consider not verified
    • Disallow the claim for RPM (Certified letter 5956C).
    • Refer to IRM 25.24.2.10.1, Disallowance, for additional guidance.
Refund Trace Requirements
  1. In addition to the required documentation to support the RPM complaint, a refund trace may be required on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases. The purpose of the refund trace is to validate the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name.

    Note:

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

  2. Refund trace information will be used for:

    1. Accepted complaints:
      • Category 1 and 2 complaints, (only if a refund trace was previously performed) - use the information to determine the amount of refund the taxpayer received, compute the preparer portion of the refund moved to the General Ledger (GL) 1547 account and for Category 1, the amount of the additional refund, if any.
      • Category 3 and 4 complaints - use the refund trace information to determine whether the refund was deposited into an account in the taxpayer’s name, compute the preparer portion of the refund to be moved to the GL1547 account and/or if an additional refund is issued to the taxpayer.

    2. Disallowed complaints:
      • For all categories the refund trace information is required to determine how the tax return submitted with the complaint will be treated.

  3. A refund trace is required as outlined below in ≡ ≡ ≡ ≡ ≡ ≡ scenarios:

    RPM Category: Refund Trace Required:
    Category 1 and Category 2 When a claim for RPM is disallowed and a return is submitted with the complaint.

    Note:

    In this instance the refund trace is required to determine the appropriate handling of the tax return submitted with the complaint.

    Category 3 and Category 4 On all cases regardless of whether the RPM claim is allowed or disallowed.

    Exception:

    A refund trace would not be required on any case, if it is clearly known who received the refund. The examples below are not all inclusive:
    • If the taxpayer states he/she received all or a portion of the refund and it matches the TC 846 issued.
    • If the taxpayer states he/she received a portion of the refund and the remainder of the refund is equal to stated preparer fees. The taxpayer received benefit of entire refund.
    • If the taxpayer was reimbursed the entire refund by the preparer company or the VITA/TCE site.
    • If the entire refund is frozen on the account.

  4. Be aware of split refunds. It is possible that the taxpayer received a portion of the refund or more than one refund was issued to an account that does not match the taxpayer’s name. If a trace is required, a trace would have to be performed on all refunds.

    Note:

    If the RPM allegation involves the preparer filing two separate returns instead of a joint return, refund traces must be completed on all refunds when applicable.

  5. Refund information should be researched through Command Code (CC) IMFOL, CC TXMOD, CC TRDBV and MeF Return Request Display (RRD) through EUP.

    • Indicator DD: 0 (paper check)

    • Indicator DD: 9 (direct deposit)

    • Refund Anticipation Loan (RAL) Indicator of "1"

    • Refund Anticipation Check (RAC) indicator of "2"

  6. Research the account to determine if a refund trace was previously performed.

    If IDRS shows: And: Then: To Determine:
    No open Refund Inquiry (RI) control TC 971 AC 011 • Research Treasury Check Information System (TCIS)/Payments Claims and Enhanced Reconciliation (Pacer) for Financial Management Service (FMS) 150.1 or paper check.
    • If no FMS 150.1 in TCIS, do not initiate another trace. Refer to IRM 21.4.2.4 (3), Refund Trace Actions, for additional guidance and time frames.
    • Contact local Refund Inquiry unit for additional research/assistance.
    • Suspend case, if necessary.
    Whether the refund was deposited into an account in the name of the taxpayer.
    Open RI control TC 971 AC 011 • Research IDRS controls for status of trace.
    • Contact local Refund Inquiry unit, if necessary, for assistance.
    • Suspend case, if necessary.
    Status of trace and if any disposition information available.
  7. Depending upon the RPM category, this information will be used in conjunction with other requirements to determine the correct account adjustment. Review available refund trace information for all cases, regardless of category for information on the amount of the refund, if any received by the taxpayer.

  8. Refund trace information will reflect a negotiated check or a completed FMS 150.1 that provides information as to the name on the account where the refund was deposited. Attach a copy of the check or the completed FMS 150.1 from TCIS to the CIS case.

    Reminder:

    If the refund trace FMS 150.1 shows that the refund was deposited into an account in the name of the taxpayer and the taxpayer specifically states that he/she does not own that account, then the taxpayer must provide documentation from the Financial Institution supporting that claim.

  9. If no previous refund trace was performed and a refund trace is required, then:

    1. Input CC CHKCL using the IAT Missing Refund (CHCKL) Tool. For CC CHKCL instructions, refer to Exhibit in IRM 21.4.2-1, Command Code (CC) CHKCL Input.

    2. Use Non-receipt code N = Non-receipt of refund (no P freeze set).

    3. Suspend case and monitor weekly for completion of trace.

    4. Refer to IRM 21.4.2-2, Disposition Code Chart Non-Receipt Claims CHCKL Claims Only, and IRM 21.4.2-5, Disposition and Status Codes – Additional Action Time Frames, for disposition and status code descriptions.

    Note:

    If the complaint is considered incomplete, at the same time that correspondence with the taxpayer begins, initiate the refund trace, regardless of category. For Category 1 and 2 cases, if additional information was requested from the taxpayer and it is received before the refund trace information becomes available, do not wait for the refund trace information, resume working case.

Law Enforcement Agency Report Requirements
  1. An official report from a law enforcement agency is generally required in RPM Category 3 and 4 cases, to be eligible for an additional refund to be issued. See below for exceptions.

    Example:

    (not all inclusive)
    • Police Department
    • State Attorney General
    • Criminal Investigation
    • Treasury Inspector General for Tax Administration (TIGTA)

    Exception:


    • If the original refund is frozen for the full amount in question, the law enforcement agency report is not required. However, on cases where a partial refund was released to the preparer, a law enforcement agency report is required.
    • If Category 4 case and a refund trace shows the taxpayer received the entire refund, the law enforcement agency report is not required since this would result in a disallowance of the claim. Refer to IRM 25.24.2.10, Disallowance of Claims, for additional guidance.
    • If the original posted return reflects a balance due and no refund was issued, the law enforcement agency report is not required.

    Note:

    The taxpayer is required to report the preparer misconduct incident to a law enforcement agency and provide an official report from the agency. If the preparer is being investigated by Criminal Investigation (CI) Division, this fact alone if contained in the taxpayer’s complaint, does not satisfy this requirement UNLESS the taxpayer reported the specific incident to CI or was interviewed by CI during the investigation of the named preparer. The taxpayer would need to provide a report from CI to support this or if confirmation is received from CI (e.g., RPM CI Referral form shows that the taxpayer reported the incident to CI or was interviewed by CI during the investigation of the named preparer) it can be accepted in lieu of the law enforcement agency report.

  2. The law enforcement agency report must be signed by a police officer or equivalent, depending on the report received (or otherwise demonstrably show it was accepted by the law enforcement agency) and must contain:

    • The tax year(s) involved

    • Preparer’s first and last name

    • A statement describing preparer misconduct and theft of refund

    The following list (not all inclusive) provides examples that otherwise demonstrably show the report was accepted by the agency:

    • Claim number included on the report

    • E-mail acknowledgement from the agency

    • Electronic receipt

    • Date stamped by the agency

    Exception:

    If the law enforcement agency report does not include all of the specific required information shown above, however it names the preparer or the company of the preparer in the description of the incident and a clear connection can be made between what is on the report and the taxpayer’s RPM complaint indicating that it is in fact a description of the same incident then the report can be accepted.

    Example:

    The RPM complaint names an individual preparer at ABC Tax Company and the police report describes taxpayer going to ABC Tax Company but does not include the named preparer. Since we can identify a connection, we would accept the report. However, if the taxpayer names a preparer with no company name on the complaint (anywhere in documentation or on TRDBV) and the report describes taxpayer going to ABC Tax Company, we cannot identify a clear connection and would not consider the law enforcement agency report acceptable.

  3. If an unredacted police report is unable to be secured, the taxpayer will have to provide a report from a different law enforcement agency containing the required information. Redacted police reports are not acceptable unless the required information can be viewed.

  4. Verification of the information provided on the law enforcement agency report provided by the taxpayer must be reviewed for consistency. Review the report to ensure all required elements are present or is considered acceptable and the information is consistent with the information provided on the complaint/affidavit.

    • In a signing preparer situation, the individual named on the report must match the preparer named in the complaint and on the original return.

    • In a non-signing preparer/ghost preparer situation, the preparer name must match the preparer named in the complaint.

  5. If the preparer name does not match, then the taxpayer is not entitled to an additional refund; however, the taxpayer may still be eligible for an adjustment to his/her account and removal of the preparer portion of the refund depending upon the refund verification results.

    Reminder:

    For pre-existing cases, refer to IRM 25.24.2.4.1, Special Handling for Cases Tax Year 2013 (and prior) Received On or Before 12/31/2015, for additional guidance. The majority of the pre-existing cases will not contain a law enforcement agency report because this is an additional requirement for cases in which the taxpayer is seeking a refund. Refund cases were not addressed in the prior RPM interim guidance. If the report or alternative statement is not contained in the case file, refer to IRM 25.24.2.5.2, Incomplete Complaints, for procedures.

RPM Complaints Involving Unauthorized Form 1040X

  1. RPM complaints alleging the unauthorized filing of a Form 1040X must be reviewed to ensure the complaint involves a 1040X and not another scenario. Complete research should be performed to ensure the taxpayer statements are supported by the account conditions.

  2. If information is consistent with the taxpayer allegations then follow chart below for resolution.

      If the ... And ... Then ...
    1. Taxpayer contacted a preparer regarding the filing of an amended return; however, ultimately did not authorize the filing The preparer subsequently filed an amended return without the taxpayer’s knowledge or consent. Follow normal RPM procedures for resolution.
    2. Taxpayer contacted a preparer and authorized the filing of an amended return The preparer subsequently altered the 1040X and/or misdirected the refund, without the taxpayer’s knowledge or consent. Follow normal RPM procedures for resolution.
    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Example:

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

    A Form 1040X was received and processed to the taxpayer’s account, resulting in a balance due. Consider ID theft and not return preparer misconduct.
    1. Advise the taxpayer he/she is a victim of identity theft and not a victim of preparer misconduct. We are forwarding their complaint to the appropriate function for resolution.

    2. X out "Form 14157-A" and write in "Form 14039 Identity Theft" .

    3. Leave a CIS case note: Taxpayer is victim of identity theft not victim of preparer misconduct.

    4. Update the CIS data to the appropriate Doc type, category code IDT1 or IDI1 with all other applicable codes.

    5. Ensure that a TC 971 AC 522 with a correct MISC code has been input or history item is entered, if necessary. See IRM 25.23.2.15, Initial Allegation or Suspicion of Tax-Related Identity Theft - IMF Identity Theft Indicators and subsequent applicable subsections, for information on the specific requirements.

    6. Reassign the CIS case to the designated IDTVA contact for ID theft resolution.

    7. Include the case on the RPO notification spreadsheet per guidelines in IRM 25.24.2.2.4, Return Preparer Office Notification Requirements.

    Note:

    If adjustment involves a tax increase or credit decrease and the ASED is expired, elevate case information to HQ for review.

    Reminder:

    Open AUR or Exam cases should be referred back to the originating function in accordance with IRM 25.24.2.9.1.1, Open AUR Issues or IRM 25.24.2.9.2.1, Open Exam Issues. If the case is an AUR or Exam reconsideration or an Exam case closed as disposal code (DC) 12 or 37 with ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , no other actions are required.

RPM Complaints Involving Restitution

  1. When restitution is ordered by a Court, it must be determined whether the order reflects restitution payments be paid to the IRS (Criminal restitution) or to the taxpayer (civil restitution) directly. The following subsections provide guidance.

Criminal Restitution involving Department of Justice (DOJ)
  1. Criminal restitution cases involving DOJ can generally be worked without regard to the restitution. A restitution based assessment (RBA) is made on an established MFT 31 account under the preparer’s TIN.

    Note:

    IDTVA will not make any adjustments to the MFT 31 account.

  2. Restitution involvement can be identified by any of the following:

    • DOJ documentation provided by taxpayer included with RPM complaint.

    • TC 971 AC 18X on module - Please note, these codes are not always present on the taxpayer’s account.

    • TC 766 with reference number 337

  3. The RPM case will be evaluated and resolved following normal RPM procedures.

    Note:

    When adjusting RPM accounts, IDTVA will not adjust any RBA codes (TC 971 AC 18X) or transaction codes (TC 766 with reference number 337).

  4. The information from the DOJ documentation may be used to establish that the preparer presented themselves as being in the business of preparing returns and interaction with the taxpayer. In some instances, it can also be used in lieu of a law enforcement agency report.

      If ... Then ...
    1. Documentation includes a client listing and it names the taxpayer as a victim. 3rd party documentation and law enforcement report requirements satisfied.
    2. Victim notification letter stating they have been identified as a victim. 3rd party documentation and law enforcement report requirements satisfied.
    3. Victim notification letter stating they may have been a victim. 3rd party documentation satisfied.
    Send CI referral to determine if the taxpayer was interviewed or if taxpayer reported incident to CI.
    • If so, law enforcement report requirement satisfied.

    • If not, law enforcement report is required from taxpayer.

  5. If a TC 971 AC 185, AC 188, or AC 189 is on taxpayer account, a CI referral is required. These codes indicate taxpayer was indicted for wrongdoing. Before taking steps toward account resolution, CI review is necessary to determine if the case had anything to do with the taxpayer’s individual account for the RPM tax year. Upon receipt of the CI response, elevate to HQ for review.

Civil Restitution
  1. Civil cases involve the taxpayer bringing the preparer to court.

  2. If court papers or documentation shows that the preparer was ordered to pay restitution directly to the taxpayer, elevate the case information to ITVA HQ. Do not complete any adjustments to the account.

RPM Complaints Involving RICS/IVO Account Conditions

  1. RPM complaints involving accounts that contain IVO indicators may be worked by IDTVA in certain circumstances. Complete research must be performed.

  2. If the RICS/IVO reroute conditions were not met, IDTVA will follow the procedures below for the resolution of the RPM complaint. Refer to IRM 25.24.2.2.5, Reroute/Reassignment Criteria, for routing conditions.

  3. Follow No Consideration procedures (5956C) in IRM 25.24.2.3, RPM Criteria Not Met, only when:

    1. Return was unpostable (TC 971 AC 121/124 or UPC 126) and there is clear indication the TPP letter was issued to the address of the taxpayer and

      Note:

      Review the address on the posted return with the address on the taxpayer’s complaint or taxpayer’s account history (AMS history shows taxpayer went to a TAC to respond to the TPP issues, IRPTR addresses, or prior returns with no issues). If an association can be made with the taxpayer then consider it an indication that the letter was issued to the taxpayer.

    2. Return is currently posted with the refund issued and

    3. Refund was not a RAC or RAL.

    Example:

    There is an indication that the taxpayer received the TPP letter and was required to authenticate themselves and verify the tax return. TPP assistors verify the information on the return received including exact refund amount and method of issuance. The return is posted if all items verify. Therefore, if the return is posted and the refund issued, the RPM claim does not meet the guidelines for RPM relief per IRM 25.24.2.3, RPM Criteria Not Met, chart Row 6. The RPM claim will be "no considered" since our records show that the taxpayer was aware of the items on the original return. Advise the taxpayer that our records indicate that he/she verified their identity and confirmed the filing of the original return and validated the information. Since he/she was aware of the original filing their claim does not meet the guidelines for RPM relief. Provide refund information also.

  4. Follow normal RPM procedures when:

    1. Reversed IVO indicators are present on the account, return is posted and refund was issued as RAC or RAL and the taxpayer states they did not receive the refund.

    2. Return was unpostable and there is indication the TPP letter was not issued to the address of the taxpayer. For example, the address on the return matches that of the preparer.

    3. Unreversed IVO Indicator (e.g., TC 971 AC 052) on account; however, the return is posted and refund has been issued.

    4. The module has a P- freeze and a TC 841 DLN Blocking Series 77711, 77712 or 77713 which indicates a direct deposit was rejected by the bank. Only IVO can release the overpayment. If allowing the RPM claim, perform any required adjustments and send e-4442 to RICS/IVO. Use Referral type IRM and select category RICS IVO – CP53X (TC841 DLN 77711/77712/77713) from drop down. Include remarks stating that the RPM issue has been resolved and request the release of credit, if applicable.

Taxpayer Contacts

  1. This section addresses procedures for taxpayer contacts and how to handle taxpayer responses.

  2. All normal outgoing correspondence guidelines should be followed per IRM 21.3.3.4.17.1, Preparing Outgoing Manually Generated Correspondence. The following list is not all inclusive:

    • A closing letter is required if an interim letter was issued.

    • If penalties (for example FTP or FTF) were manually assessed, provide the amounts and computation from and to dates in the letter.

    • All issues must be addressed. For example, if the taxpayer provides state tax return information and there is indication that the taxpayer is requesting information regarding the state tax return, then this must be addressed in the correspondence to the taxpayer (such as advise the taxpayer to send state information to their state taxation agency) along with any other explanation provided concerning their federal account.

    • Indicate any action(s) taken, including if a refund will be issued.

    • If a math error is set, provide an explanation of changes made.

    • If applicable, provide an explanation why complaint does not meet the Service’s guidelines under RPM.

    • Confirm RPO was notified.

  3. Taxpayers may respond in writing or by calling the assigned employee using the IDTVA toll free number (855-343-0057). Refer to IRM 25.24.2.5.2, Incomplete Complaints, and IRM 25.24.2.5.3, Taxpayer Responses, for appropriate actions.

  4. When in telephone contact with a taxpayer, a CIS case note must be left to document the interaction. The case note must contain the following information:

    • Date of call

    • With whom the employee spoke

    • Summary of the discussion, or

    • Documentation of call back attempt, including summary of message left for the taxpayer and date/time.

      Reminder:

      Do not leave confidential tax information on a voice mail message.

RPM Specific Letters 5955C and 5956C

  1. RPM specific letters have been implemented for use when working RPM complaints/claims.

  2. Letter 5955C, Return Preparer Misconduct – Case Incomplete for Processing Request, will be used when requesting information from the taxpayer.

  3. Letter 5956C, Return Preparer Misconduct (RPM) –Resolution Closing Letter, will be used as the closing letter based on the applicable treatment stream. The letter is broken down into sections based on allowable claims, no consideration, partial disallowance and full disallowance.

    Note:

    Letter 5956C also contains selective paragraphs addressing erroneous refunds. This one letter will be used when closing the RPM claim using the applicable paragraphs pertaining to the treatment stream. Refer to IRM 25.24.2.11.3, Category D Erroneous Refund, for additional information.

Incomplete Complaints

  1. For all categories where the determination has been made that the complaint is not complete, correspondence will be issued requesting the missing documentation. The case will be suspended for 40 days awaiting the taxpayer response (70 days for overseas taxpayers). If no response is received or insufficient information is provided, the claim will be disallowed or partially disallowed.

    Exception:

    If a Category 4 complaint is incomplete and received after the RSED has expired, disallow the claim. Refer to IRM 25.24.2.6.2, Refund Statute Expiration Date (RSED), for additional information.

  2. Advise the taxpayer to provide the requested information within 30 days.

  3. For all categories, if case is considered incomplete, initiate a refund trace if no trace has been previously performed. Refer to IRM 25.24.2.4.3.4, Refund Trace Requirements, for additional information.

    • For Category 1 and Category 2 cases specifically, if the additional information was requested from the taxpayer and the taxpayer responds before the refund trace information becomes available, do not wait for the refund trace information, resume working the case per IRM 25.24.2.8, Treatment Streams for RPM Claims.

  4. If the Assessment Statute Expiration Date (ASED) is imminent (90 days) and the taxpayer’s actual return is included with the complaint but there are other missing elements, the employee will have to take into consideration certain factors and time-frames in order to ensure the ASED is protected. Timely follow-up is required on these suspense cases.

    Note:

    How we treat the taxpayer’s actual return submitted with the complaint depends upon whether we allow or disallow a claim. However, in an incomplete complaint scenario, that determination cannot be made immediately. Even if the ASED is considered imminent, certain factors may affect the correct ASED determination.

    1. ASED imminent Scenario 1: If determination can be made that no refund or only a portion of the refund was deposited into an account in the taxpayer’s name then there are no statute implications. Follow normal procedures for resolution.

    2. ASED imminent Scenario 2: If determination can be made that the entire refund was deposited into an account in the taxpayer’s name or a determination cannot be made at the time of suspense regarding receipt or non-receipt of refund, then a prompt assessment may be necessary to protect the ASED.
      • If required to request a prompt assessment for a tax increase or credit decrease, the employee should not input any other aspects of the adjustment (tax decrease, credit increase, AGI etc.) until the actual treatment stream is determined after the suspense period.
      • Ensure you indicate on Form 3210 to Hold the Billing Notice.

      Note:

      Employee judgment may be used whether to input this initial prompt assessment. If there is sufficient time for the suspense time frame (40/70 days) and then sufficient time for prompt assessment if applicable (e.g., determination after suspense is a disallowance), then the case can be suspended without the initial prompt. However, timely follow-up actions MUST be taken to protect the ASED.

      Reminder:

      If initial prompt assessment is input and determination after suspense time frame is a disallowance, the PROMPT assessment MAY have to be reversed. Refer to IRM 25.24.2.10.1, Disallowance, for additional information.

  5. Correspond using Letter 5955C, Return Preparer Misconduct – Case Incomplete for Processing Request.

    1. Request all information needed for a complete complaint, including preparer information, if applicable.

    2. Include contact information providing the IDTVA toll free number 855-343-0057 with the name and six-digit extension of the employee assigned to the case.

  6. For the pre-existing cases, if the taxpayer is seeking a refund, the taxpayer is required to provide a law enforcement agency report or attempt to secure a police report. If unable to secure a report, the taxpayer will be advised to contact TAS.

    1. Correspond for the missing law enforcement agency report:
      • He/she must attempt to either provide a law enforcement agency report or alternative statement within 30 days.

      Reminder:

      Request any other information that is missing, for example 3rd party documentation for ghost preparer situations.


      • If he/she does not already have a law enforcement agency report and cannot obtain a police report, advise the taxpayer to contact TAS at 1-877-777-4778 for assistance.
      • Include IRS Publication 4134, Low Income Taxpayer Clinic (LITC) List. This publication will provide information on LITCs.

    2. Example of language for the request for the law enforcement agency report:
      We have received your complaint of Return Preparer Misconduct; however, due to subsequent policy decisions, in order to process your complaint a law enforcement agency report is now required. The report must include the tax year(s) involved; your tax return preparer’s first and last name and statement describing the preparer misconduct and theft of refund.
      If you do not have a law enforcement agency report, you should attempt to get a police report. If you are unable to obtain a police report, you must contact your local taxpayer advocate (insert TAS toll free number) for assistance. If no contact is made, we will be unable to process your complaint.

    3. TAS will:
      • Contact the controlling IDTVA employee, advising that the taxpayer has contacted them for assistance and negotiate a reasonable time frame for continued suspense.
      • TAS will attempt to secure a police report and if they cannot, TAS will assist the taxpayer in preparing a statement signed under penalties of perjury documenting his/her attempt.
      • TAS must also provide a written statement documenting their attempt.

    4. If TAS contacts IDTVA, employee will:
      • Leave case note indicating TAS contact with agreed follow-up date.
      • Request assistance from TAS to ensure any other required documentation is secured.

  7. Capture letter on CIS per IRM 21.5.1.5.1, CIS General Guidelines.

  8. Leave a case note on CIS indicating the c letter that was sent and the list of the information requested.

    Reminder:

    If in telephone contact with the taxpayer, leave a case note containing the pertinent information to the case.

  9. Update CIS data to turn off Auto Interim Letter since correspondence has been sent to taxpayer requesting information.

    Note:

    It is the employee’s responsibility to restart the auto interim letter if the taxpayer responds (timely or late) to a request for information and the RPM case cannot be closed within 30 days.

  10. Suspend case on CIS for 40 days (70 days for overseas taxpayers).

  11. Monitor for response. Refer to IRM 25.24.2.5.3, Taxpayer Responses, if a reply is received or the suspense period expires.

Taxpayer Responses

  1. Follow the table below when taxpayer responses are received.

    Note:

    For pre-existing cases, the chart below can be utilized for the next steps; however, the employee should also take into consideration if they are contacted by TAS. For example, if the taxpayer responds to the letter and does not provide all of the information; however, TAS advises that they are continuing to work with the taxpayer, the employee should allow additional time for the required information. If there was no contact by TAS, then the employee could proceed to disallowance.

      If the ... Then ...
    1. Taxpayer responds to request for missing information AND does provide all required documentation Resume working RPM case.
    Refer to IRM 25.24.2.4.3.1, Identifying RPM Category, or applicable section.
    2. Taxpayer responds to request for missing information AND does not provide all of the required documentation Disallow the claim for RPM (Certified Letter 5956C)
    Refer to IRM 25.24.2.10.1, Disallowance, for additional information.
    3. Taxpayer responds to request for missing information AND law enforcement agency report or (for pre-existing cases) alternative statement in lieu of report is the only missing element Proceed to the applicable Category 3 or Category 4 treatment stream chart in IRM 25.24.2.8, Treatment Streams for RPM Claims.
    4. Taxpayer does not respond Disallow the claim for RPM (Certified letter 5956C)
    Refer to IRM 25.24.2.10.1, Disallowance, for additional information.
    5. Taxpayer responds to Letter 105C/106C/5956C or correspondence is received after the 105C/106C/5956C is issued AND the disallowance or partial disallowance was not due to expired RSED Do not route to Appeals
    • Take into account any additional information the taxpayer provides and determine if claim can be allowed following normal procedures. Assign and work as new complaint. Refer to IRM 25.24.2.6.1, Assessment Statute Expiration Date (ASED) Consideration, for additional information regarding new claims and ASED.
    • If no additional information or insufficient information is received, issue 5956C letter advising taxpayer to follow the instructions in the disallowance letter.

    Note:

    If the taxpayer responds more than 2 years after the issuance of the 105C/5956C letter and the extended ASED and RSED have expired then send 5956C letter advising taxpayer no actions can be taken due to the statute of limitations.

    Include RPM RC 131 with the TC 290.
    6. Taxpayer responds to Letter 105C/106C/5956C AND the disallowance or partial disallowance was due to expired RSED only Follow IRM 21.5.3.4.6.2, Appeals and Responses to Letter 105C and 106C.
    7. Taxpayer responds by calling the IDTVA toll free number or a secure e-mail is received regarding the RPM case Assist the taxpayer by responding to their questions and concerns as it relates to the open RPM case. Clarify, if necessary, what documentation is still needed.
    • Provide fax number, whenever possible.

    • Leave CIS case note per IRM 25.24.2.5, Taxpayer Contacts, (4).


    Refer to IRM 25.23.4.26, Telephone Contact Procedures for IDTVA Paper Employees Only, for procedures and time frames.
  2. Responses received on suspended cases should retain the original IRS received date.

  3. Responses received on previously closed cases should use the IRS received date of the new information and treated as a new complaint.

    Note:

    When a new complaint is received, but a processible return as intended to be filed was included in a previously submitted complaint, the ASED is set by the IRS received date of that original complaint. The ASED is not set by the IRS received date of the subsequent RPM complaint, even if allowing the claim based on the new information. The IRS received date of the previously submitted return as intended to be filed is also used to determine whether the RSED is still open (3 year look-back period under IRC section 6511(b)(2)(A)) and the amount of refund the taxpayer is eligible.

    For example: An incomplete complaint is received for tax year 2013 on 03/15/2016 that contains a valid return as intended to be filed. No response is received to the request for missing information and the claim is disallowed on 04/20/2016. If the taxpayer responds on 05/01/2017, after the RSED has expired with the required information, the RPM claim can be allowed. The received date of 03/15/2016 of the previously submitted return as intended to be filed will be used to determine the updated ASED and will be used to determine whether the taxpayer is eligible for a refund. Since the return was received prior to the RSED 04/15/2017, the refund can be issued to the taxpayer.

Statute Considerations

  1. Care must be taken when evaluating statute year complaints. If the assessment statute expiration date (ASED) and/or refund statute expiration date (RSED) is imminent or expired, the complaint must still be evaluated. Actions should be taken to protect these dates, when appropriate.

  2. Incomplete complaints on statute year accounts: If additional information is necessary for consideration of the complaint, refer to IRM 25.24.2.5.2, Incomplete Complaints, for guidance.

  3. When a claim (Categories 1-3) is allowed, the original return will be treated as a nullity. The taxpayer’s signed return as intended to be filed, received with the complaint, will be considered the return of record. For Category 4 cases the original return is considered valid and the taxpayer’s return of record.

  4. When following erroneous refund procedures, complete the required actions within the applicable statute of limitations. When following Category D erroneous refund procedures, the Erroneous Refund Statute Expiration Date (ERSED) must be considered. Refer to IRM 21.4.5.15.1.1, Statute of Limitations Category D Erroneous Refunds IRC 6532 (b) ERSED.

    Note:

    For IDTVA-C - Refer to IRM 25.24.2.9, IDTVA- C RPM Complaint Considerations, for specific guidance.

  5. Review the following IRM sections to determine what procedures to follow based upon the applicable statute of limitations. This list is not all inclusive:

    • IRM 25.6.1, Statute of Limitations Processes and Procedures

    • IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitation Issues

    • IRM 25.6.1.6, General Information and Procedures

    • IRM 25.6.1.7, Credits and Payments

    • IRM 25.6.1.7.3, Excess Collection File (XSF) and Unidentified Remittance File (URF)

    • IRM 25.6.1.8, Original Delinquent Returns

    • IRM 21.4.5.15.1.1, Statute of Limitations Category D Erroneous Refunds IRC 6532 (b) ERSED

Assessment Statute Expiration Date (ASED) Consideration

  1. For allowable or partially allowable Category 1-3 claims, the original return is considered a nullity and the return as intended to be filed presented by the taxpayer with the RPM complaint is the taxpayer’s return of record. If the RPM complaint is received after the ASED based on the originally filed return has expired, the complaint must still be considered. If the claim is allowable or partially allowable the ASED must be updated to reflect the receipt of the taxpayer’s return as intended to be filed. If the ASED based on the taxpayer’s return as intended to be filed has expired, refer to IRM 25.24.2.6.1.1, Extended ASED Expired on Allowable RPM Claims, for additional guidance.

    Note:

    If the IRS does not allow a taxpayer's claim based on an RPM complaint submitted with a processible return as intended to be filed but later allows the claim based on a newly submitted RPM complaint, the ASED is set by the IRS received date of the first complaint containing the processible return. It is not set by the IRS received date of the second RPM complaint, even if the IRS may allow the claim based on the new information.

    1. Use the following instructions when using TC 560 to correct the ASED:
      •TC 560 on CC REQ77 must be input on IDRS to correct the ASED to show the posting of the correct return.
      • Input TC 560 on CC REQ77 in Blocking Series 700 to extend the ASED. Use Blocking Series 990–999 to back date/back down the ASED.

    2. Use the received date of the taxpayer’s signed return as intended to be filed to reflect the date of the return of record.

  2. For disallowed claims, if adjustment action is required (for example: the actual return is treated as an amended return) and the ASED is imminent, input prompt assessment following normal procedures. Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues, for additional information. If the complaint is received after the ASED has expired, no tax assessment or credit decrease can be input. Refer to IRM 25.24.2.10.1, Disallowance, for additional information.

Extended ASED Expired on Allowable RPM Claims
  1. The RPM case inventory contains cases where the extended ASED has expired and the RPM claim is allowable. For these cases, the taxpayer filed a claim within the statutory period of assessment and is entitled to relief. Even if the taxpayer is not due a refund, an adjustment must be made in response to the allowed RPM claim. In these situations, if an adjustment was input without the tax increase (TC 290 tax amount), but correctly reflected all other credits on the taxpayer’s actual return, the adjustment would result in a credit balance that would exceed the amount of the taxpayer’s expected refund by the barred tax amount. In a balance due situation, the adjustment would not result in a correct debit balance. Therefore, a unique approach must be taken when adjusting the account in order to accommodate the barred tax increase and have the account reflect the appropriate credit or debit balance as shown on the taxpayer’s actual return. The following procedures should only be used for those cases meeting these criteria.

  2. The employee has to determine the amount of refund to which the taxpayer is entitled, taking into consideration tax offsets, TOP offsets, payments etc., and the preparer portion of the refund. The employee must be aware of the expected account status (refund or balance due amount) after actions are taken to ensure the account balance is accurate.

  3. If the taxpayer’s actual return reports a tax amount and the TC 150 shows a tax amount, DO NOT back out the original posted return information. The TC 150 tax amount must remain on the account to protect that portion of the otherwise barred tax. The original return information will NOT be backed out due to the statute implications and will be taken into account when figuring the adjustment needed (netted).

    Note:

    If the TC 150 shows no tax amount or the taxpayer’s actual return does not report any tax, then the original return can be nullified, even if the ASED has expired since credit decreases are allowable after the ASED.

  4. In order to correctly balance the account, the employee must first determine the amount of tax that is barred. Compare the posted return TC 150 amount and the amount of tax reported on the taxpayer’s actual return. If the TC 150 tax amount is less than the tax reported, the difference is the barred amount.

    Note:

    If the TC 150 tax amount (or total tax on the module including any subsequent adjustments) exceeds the amount of tax reported on the taxpayer’s actual return then this would not be considered a barred assessment. A tax decrease can be input to the taxpayer’s tax amount and no tax would be lost. Netting against the original posted information is required and back-out procedures would be bypassed per IRM 25.24.2.12.2, Standard Account Adjustments, since this case would have statute implications pertaining to the ASED.

  5. Once it has been determined that there is a barred tax amount, the employee must then determine how to account for the barred tax amount when adjusting the account.

    1. Scenario 1: If there is a sufficient amount of credit (withholding and/or any refundable credits) claimed on the taxpayer’s actual return to offset the barred amount, then the credit claimed will be reduced by the barred tax amount resulting in a recalculated allowable credit amount. The adjustment to this credit is the net between what is posted on the module and this recalculated credit amount.

      Example:

      The taxpayer’s actual return shows a tax of $1,500.00 and withholding credit of $2,500.00 resulting in a refund of $1,000.00. Taxpayer did not receive any of the original refund. Account shows original return processed with a TC 150 $1,000.00, TC 806 $3,000.00, and TC 846 $2,000.00.
      • The barred tax amount is the difference between what is posted TC 150 $1,000.00 and the tax on the return of $1,500.00 = $500.00.
      • The taxpayer claims a withholding credit of $2,500.00 which exceeds the barred amount of $500.00. Therefore, the allowable withholding amount will be recalculated to $2,000.00 ($2,500.00 as claimed on the taxpayer’s return less the $500.00 barred tax amount). The adjustment to the withholding is the difference between the posted TC 806 for $3,000.00 and the recalculated withholding credit of $2,000.00.
      • The adjustment input to reflect the taxpayer’s actual return would include TC 290.00, TC 807 $1,000.00- (IRN 888, 886 etc. HC 3).
      • The adjustment will create a debit balance of $1,000.00. The posting of the TC 841 from the GL 1547 for $2,000.00 will result in the appropriate account credit balance of $1,000.00.

    2. Scenario 2: If there is no credit claimed on the actual return, the amount credited from the GL 1547 will be reduced by the barred amount resulting in a recalculated preparer portion of the refund amount. The adjustment will be made to remove any credits posted on the module to zero and a TC 700 input with the recalculated amount.

      Example:

      The taxpayer’s actual return shows a tax of $1,000.00 with no credits resulting in a balance due of $1,000.00. Taxpayer did not receive any of the original refund. Account shows original return processed with a TC 150 $200.00, TC 806 $1,500.00, TC 768 $3,000.00, TC 846 $4,300.00.
      • The barred tax amount is the difference between what is posted TC 150 $200.00 and the tax on the return of $1,000.00 = $800.00.
      • Since $800.00 tax is considered barred and there are no allowable credits claimed on the taxpayer’s actual return, the amount credited from the GL1547 must take this into consideration, otherwise the account will not reflect the balance due reflected on the taxpayer’s actual return. Therefore, the preparer portion of the refund would be reduced to $3,500.00 ($4,300.00 preparer portion of the refund less the $800.00 barred tax amount).
      • The adjustment input to reflect the taxpayer’s actual return would include TC 290.00, TC 807 $1,500.00-, TC 765 $3,000.00-, (IRN 888, 886 etc. HC 3).
      • The adjustment will create a debit balance of $4,500.00. The posting of the TC 700 from the GL 1547 for $3,500.00 will result in the appropriate account debit balance of $1,000.00.

    3. Scenario 3: If the credit claimed on the actual return only covers a portion of the barred amount, a combination of scenario 1 and scenario 2 procedures will be used. The credit claimed will be reduced by an equal amount of the barred tax amount resulting in a recalculated allowable credit amount to zero. The remaining barred amount will be taken into consideration when adjusting the GL 1547 credit. The adjustment to this credit will bring the allowable credit to zero and a TC 700 input with the recalculated amount.

      Example:

      The taxpayer’s actual return shows a tax of $2,500.00 with education credit of $1,000.00 resulting in a balance due of $1,500.00. Taxpayer did not receive any of the original refund. Account shows original return processed with a TC 150 .00, TC 806 $1,000.00, TC 766 $2,000.00 CRN 260, TC 846 $3,000.00.
      • The barred tax amount is the difference between what is posted TC 150.00 and the tax on the return of $2,500.00 = $2,500.00.
      • Since $2,500.00 tax is considered barred and the only credit claimed on the taxpayer’s actual return is $1,000.00 education credit, the allowable credit would be reduced to zero. The GL1547 amount would be reduced by the remaining $1,500.00 of the barred amount of $2,500.00. Therefore, the preparer portion of the refund would be reduced to $1,500.00 ($3,000.00 preparer portion of the refund less the remaining $1,500.00 barred tax amount).
      • Since the TC 150 is zero, the original posted return information can be nullified with a TC 290.00, TC 807 $1,000.00-, CRN 260 $2,000.00-, (IRN 888, 886 etc.).
      • The adjustment input to reflect the taxpayer’s actual return would include TC 290.00, (IRN 888, 886 etc. HC 3).
      • The adjustments will create a debit balance of $3,000.00. The posting of the TC 700 from the GL1547 for $1,500.00 will result in the appropriate debit balance of $1,500.00.

  6. Send a closing letter since the adjustment notice will be held in most cases due to the netting of the account.

  7. Prepare Form 9355, Barred Statute Report, or equivalent containing summary of account to notify the Statutes function.

  8. Select the specific verbiage from one of the three scenarios below and enter it as a CIS Case Note, to describe the adjustment input on the account.

    1. Scenario 1: The taxpayer filed a timely claim. Because the tax is barred, the amount of the credit adjusted reflects the total amount of the refund to which the taxpayer is entitled rather than the credit amount that was actually reported on the return as intended to be filed.

    2. Scenario 2: The taxpayer filed a timely claim. Because the tax is barred, the amount applied from the GL1547 account reflects the applicable amount to ensure the account is in the proper balance shown on the taxpayer’s return as intended to be filed.

    3. Scenario 3: The taxpayer filed a timely claim. Because the tax is barred, the amount of the credit adjusted reflects the total amount of the refund to which the taxpayer is entitled rather than the credit amount that was actually reported on the return as intended to be filed and the amount applied from the GL1547 account reflects the applicable amount to ensure the account is in the proper balance shown on the taxpayer’s return as intended to be filed.

Refund Statute Expiration Date (RSED)

  1. Normal RSED procedures or aspects of RSED procedures will be followed whenever possible.

    Reminder:

    The return as intended to be filed is considered the claim for refund. The received date of the return as intended to be filed should be used to determine whether the claim was filed timely, on or prior to the RSED, and is open for refund issuance.

  2. Category 1 and 3 cases are not solely considered a claim for refund. Since these complaints also involve an allegation that the original return was not authorized (Cat 1) or tax data was altered (Cat 3), the adjustment aspect still needs to be considered.

    1. The return as intended to be filed included with the RPM complaint is considered the claim for refund. The IRS received date of the valid signed return should be used to determine whether the claim was filed timely and to determine the amount of any refund the taxpayer may be eligible to receive.

    2. If the complaint is complete and the taxpayer did not file their complaint timely, on or prior to the RSED, the claimed overpayment may not be refunded to the taxpayer, but instead must be moved to Excess Collections. Refer to IRM 25.6.1.7.3, Excess Collection File (XSF) and Unidentified Remittance File (URF). Partial disallowance procedures would then be followed. Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional guidance.

    3. If the taxpayer provides no response so that the complaint remains incomplete, then normal disallowance procedures apply.

      Note:

      If a response to the disallowance letter is received providing the requested information, the IRS received date of the previously submitted return as intended to be filed is used to determine whether the RSED is still open, if applicable. Refer to IRM 25.24.2.5.3, Taxpayer Responses, for additional information.

  3. Category 4 cases involve a claim for refund only and are required to be filed on or prior to the RSED for consideration. If a category 4 complaint is received after the RSED has expired, follow disallowance procedures.

Balance Due Cases - Penalty Considerations

  1. Depending upon the facts and circumstances of the complaint and account actions, there may be instances where a balance due will be a result. Possible scenarios are:

    1. The taxpayer received or it is determined the taxpayer received a refund in excess of the amount to which he/she is entitled resulting in a balance due situation. For these types of cases, depending upon the category and circumstances, the taxpayers will be asked to repay the excess amount using erroneous refund procedures. Refer to IRM 25.24.2.8, Treatment Streams for RPM Claims, and IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.

    2. The taxpayer submits a return as intended to be filed reflecting a balance due. (This scenario should only occur with Category 1 and Category 2 cases.) Circumstances of the account and return received dates will have to be considered to determine if any penalty and interest implications apply.

  2. Penalties and interest may apply when the taxpayer’s actual return reflects a tax liability and the tax return is late and/or if any of the tax due on the correct return was paid after the original return due date of the return (without regard to extensions).

    Exception:

    For pre-existing cases, no failure to file (FTF) penalty or failure to pay (FTP) penalty will be applied for the period from the original due date of the return to the 23C date of the adjustment to the account. Refer to next sections for additional information.

  3. January 2016 programming changes will allow the failure to pay (FTP) penalty to systemically compute. A determination will need to be made whether any failure to file (FTF) penalty, estimated tax (ES) penalty, or any other applicable penalty needs to be manually computed and assessed.

    Note:

    Interest will be allowed to systemically generate.

  4. The following Internal Revenue Manuals (IRMs) should be referenced. This list is not all inclusive:

    • IRM 20.1.2, Failure to File/Failure to Pay Penalties

    • IRM 20.1.3.1.3, Return Posted to Wrong TIN or Period

Failure to Pay (FTP) Penalty Consideration

  1. The FTP penalty should be considered when:

    1. The taxpayer’s actual return provided with the RPM complaint reflects a tax liability owed and,

    2. Tax has not been paid by the due date of the original return.

      Note:

      If the taxpayer received a refund in excess of what he/she should have received and the actual tax return shows a tax liability owed, then the FTP penalty applies only to the tax shown on the actual return.

  2. When Category 1 and Category 2 claims are allowed, the original return is considered a nullity and the taxpayer’s return submitted with the complaint is considered the return of record. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. The January 2016 programming changes allow the computer to recognize the need to charge the FTP penalty from the RDD on a subsequent adjustment with the use of new Item Reference Number (IRN) 871 and priority code (PC) 2. The IRN 871 and PC 2 allows systemic calculation/re-calculation of the FTP penalty, if applicable. Two adjustments (complete back-out of the nullified return and subsequent adjustment to reflect the taxpayer’s return as intended to be filed) are required if the correction to the taxpayer’s return as intended to be filed will result in a balance due, or if any of the tax due on the correct return was paid after the original return due date without regard to extensions.

    Note:

    Manual computation is required if account adjustment requires netting.

  4. Compute the IRN 871 amount (tax shown) on the return as intended to be filed, which is the amount of tax the taxpayer figured they owe, minus any taxpayer computed refundable and prepaid credits. The IRN 871 amount is included on the adjustment to reflect the taxpayer’s actual return and will tell the computer the tax the taxpayer expected to owe on his/her return and the amount of tax that will be assessed the FTP penalty from the due date of the return. The computer will systemically recognize any payments, credit elects, withholding and cancellations of any refunds (TC 841/TC700) when computing the FTP penalty. Follow the guidance in IRM 20.1.2.1.6.2, Incorrect Tax Shown Recorded, for computing the IRN 871 and IRM 20.1.2.1.6.3, Wrong Return Posted First, for additional information.

    Note:

    If after math verifying the return as intended to be filed, it is determined that a math error must be set, the IRN 871 is still the amount the taxpayer figured as his/her total tax minus certain credits claimed on his/her return.

  5. The PC 2 allows the computer to recognize the need to compute the FTP penalty back to the RDD for the lesser of the IRN 871 amount or the “tax assessed” on the return and tells the computer to ignore any prior tax or credit in the module, and to treat the TC 29X/30X as if it were the TC 150 original return transaction when computing the FTP penalty. This is the reason the original return considered a nullity needs to be completely backed out.

    Example:

    Allowed Category 2 and the taxpayer’s actual return shows a balance owed of $1,000. However, after the return as intended to be filed was math verified the true balance owed is $1,500. The IRN 871 computation is the taxpayer’s figure of $1,000. The adjustment input to reflect the taxpayer’s actual return would include a TC 290 for $1,500 (tax assessed) and the IRN 871 for $1,000 (tax shown) with PC 2. The computer will compute the FTP penalty from the RDD on the $1,000 (the lesser of the tax assessed or the IRN amount). Since the taxpayer was unaware of the $500 tax increase, he/she has the 21 days from the 23C date to pay the $500 without the FTP penalty being charged.

  6. For pre-existing cases, no FTP penalty will be applied for the period from the original due date of the return to the 23C date of the adjustment. Restrict the generation of the penalty or reverse any assessed penalty, if applicable. The TC 270.00 is included on the adjustment to reflect the taxpayer’s actual return. Include reason code (RC) 65 and penalty reason code (PRC) 30.

Failure to File (FTF) Penalty Consideration

  1. The FTF penalty should be considered when:

    1. The taxpayer's actual return reflects a tax liability and,

      Note:

      If the taxpayer received a refund in excess of what he/she should have received and the actual tax return does not show a tax liability owed, then FTF penalty does not apply. The FTF penalty is based on unpaid tax only.

    2. The taxpayer's actual return provided with the RPM complaint is received after the due date of the return.

      Reminder:

      If applicable, to determine the timeliness of the taxpayer’s paper return filed after a e-file attempt was rejected, refer to (6) in IRM 3.30.123.12.2, Electronic Postmark and Tax Return Due Date.

  2. The FTF penalty will have to be computed manually and included with the adjustment to the account. The computer cannot systemically generate the penalty if the altered return (TC 150) was timely.

    Exception:

    For pre-existing cases, no FTF penalty will be charged. The TC 160.00 is included on the adjustment to reflect the taxpayer’s actual return. Include reason code (RC) 65 and penalty reason code (PRC) 30.

  3. The chart below illustrates when FTF penalty may be applied:

      If the ... And ... Then ...
    1. Taxpayer did not authorize filing of a return Through IDRS/AMS/CIS research, along with the facts of the case, there is an indication the taxpayer made efforts to file a tax return within reasonable time frames or we received the actual return within reasonable time frames
    (such as research shows the taxpayer attempted to e-file and/or made contact with the IRS advising of issues on account)
    FTF penalty does not need to be computed since it can be considered that the taxpayer demonstrated the failure to file is due to reasonable cause and not due to willful neglect.

    Note:

    A TC 160.00 is required if the altered return TC 150 was not timely to prevent a systemic generation of the penalty.

    Note:

    Leave a CIS case note stating reasonable cause established.

    2. Taxpayer did not authorize filing of a return Through IDRS/AMS/CIS research, along with the facts of the case, there is NO indication the taxpayer made efforts to file a tax return and/or the time frame was not reasonable FTF penalty should be considered and included on the adjustment unless the taxpayer has established reasonable cause.

    Note:

    If there is a posted TC 16X on the module, remember to take that amount into account when inputting your adjustment.

    Note:

    If applicable, leave a CIS case note stating reasonable cause established.

    3. Taxpayer did authorize the filing of a return Through IDRS/AMS/CIS research, along with the facts of the case, there is an indication the taxpayer authorized the filing of a false return and the return was further altered without the taxpayer’s knowledge (such as the taxpayer had knowledge of and accepted a refund to which he/she knew he/she was not entitled) FTF penalty should be considered and included on the adjustment unless the taxpayer has established reasonable cause.

    Note:

    If there is a posted TC 16X on the module, remember to take that amount into account when inputting your adjustment.

    Note:

    If applicable, leave a CIS case note stating reasonable cause established.

    4. Taxpayer did authorize the filing of a return Through IDRS/AMS/CIS research, along with the facts of the case, there is an indication the taxpayer received expected amount of refund and/or was unaware of any issues with his/her original return. (Such as the taxpayer became aware of issues with original return upon subsequent contact made by IRS.) FTF penalty does not need to be computed since it can be considered the taxpayer demonstrated the failure to file is due to reasonable cause and not due to willful neglect.

    Note:

    A TC 160.00 is required if the original altered TC 150 was not timely to prevent a systemic generation of the penalty.

    Note:

    Leave a CIS case note stating reasonable cause established.

Treatment Streams for RPM Claims

  1. These sections will provide guidance for the resolution of an RPM complaint after the preliminary review has been performed. They outline the required steps for each category, the treatment stream for each category, account adjustment considerations and issuance of correspondence.

  2. Refer to IRM 25.24.2.4.3.1, Identifying RPM Category, if additional information is needed for categorization.

  3. IDTVA-C examiners will utilize the information for the applicable category to determine the treatment stream and will also refer to IRM 25.24.2.9, IDTVA-C RPM Complaint Consideration, to determine how to address the compliance activity.

Category 1 - Unauthorized Filing

  1. Determine if the complaint is complete.

      Posted Return Reflects: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Signing preparer • Tax return as intended to be filed, signed by the taxpayer
    • Form 14157, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    2. Ghost preparer/ Non-Signing preparer • Tax return as intended to be filed, signed by the taxpayer
    • Form 14157, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    • Documentation showing 3rd party presented him/herself as preparer
    • Documentation showing interaction between the taxpayer and the preparer
    1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:

      • Tax return is not included because the taxpayer states he/she is not required to file and research supports that claim (e.g., CC IRPTR or IAT Compliance Suite tool results support no filing requirement).
      • Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
      • Form 14157 is not included; however, the preparer’s ≡ ≡ ≡ ≡ ≡ ≡ or first and last name and address are included on other documentation.

      Note:

      If the address is not provided, however, the preparer can be verified without this information, then it is not required.


      • 3rd party documentation is not included; however, internal research or CI referral response satisfies the 3rd party documentation requirement.

    2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

      Example:

      The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

      Reminder:

      For this category, it is possible the taxpayer is not a victim of preparer misconduct but a victim of identity theft. In some cases, judgment must be used to distinguish between the two. Refer to IRM 25.24.2.4.3.1, Identifying RPM Category, for additional information.

  2. If a complaint is considered incomplete refer to IRM 25.24.2.5.2, Incomplete Complaints, for additional information. Case will be suspended for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer IRM 25.24.2.5.3, Taxpayer Responses.

  3. Verify the preparer information. Refer to IRM 25.24.2.4.3.3, Verification of the Preparer, for additional information.

  4. For Category 1, ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required when the claim is disallowed. This is necessary to determine the appropriate handling of the actual return provided with the complaint.

    Reminder:

    If the complaint is incomplete, a refund trace should be initiated at the same time correspondence is sent to the taxpayer requesting additional information. If response is received prior to the completion of the refund trace, resume working case.

  5. However, if a refund trace was previously performed and the trace information is currently available on a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund, the information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

    1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ determine if a refund trace was previously performed. Refer to IRM 25.24.2.4.3.4, Refund Trace Requirements, for additional information.

    3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the available refund trace information.

      Example:

      The taxpayer states no refund was received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      The taxpayer states no refund or portion of the refund was received; however, available refund trace shows the entire refund was deposited into an account in the taxpayer’s name. The refund amount from the refund trace information would be utilized to determine any additional refund amount. (The taxpayer states he/she received $500.00 and trace shows the taxpayer received $1,000.00. When computing the applicable refund amount allowable, employee would use the $1,000.00.)

    4. If trace information is not available or available trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, then the complaint is accepted.

  7. The IRS will determine the type of relief to which the taxpayer is entitled, and for an allowed claim, will consider the original return a nullity and the actual return presented by the taxpayer (unaltered by the preparer) as the taxpayer’s return of record.

  8. For Category 1 cases, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer, this amount would be considered part of the preparer portion of the refund. If the taxpayer did not authorize the filing of the tax return, the taxpayer would not be held responsible.

  9. Follow the CAT 1 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

    Note:

    IDTVA-C examiners will utilize the chart below to determine the treatment stream and will also refer to IRM 25.24.2.9, IDTVA-C RPM Complaint Consideration, to determine how to address the compliance activity.

    Reminder:

    Ensure any statute issues are taken into account and that the taxpayer is eligible for an additional refund under IRC 6511 (3 year look-back period). Refer to IRM 25.24.2.6.2, Refund Statute Expiration Date (RSED), for additional information.

    CAT 1 Scenario 1: Research and/or available refund trace information shows that the taxpayer did not receive a refund.

      Return as intended to be filed reflects: Then:
    1. A refund due Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    4. Applicable additional refund.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.
    2. A balance due Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    Note:

    Normal collection notices will be issued for balance due amount shown on the taxpayer’s return as intended to be filed.


    Refer to IRM 25.24.2.7, Balance Due Cases - Penalty Considerations, and IRM 25.24.2.11, Required Account Considerations, for additional information.
    3. Neither a refund or balance due - taxpayer has no filing requirement Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Removal of the preparer portion of the refund, if applicable.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.

     

    CAT 1 Scenario 2: Research and/or available refund trace information shows a portion of the refund was received by the taxpayer.

      Return as intended to be filed reflects: Then:
    1. A refund amount that is equal to or exceeds the amount that the taxpayer has received.

    Example:

    The taxpayer received a refund equal to or less than what he/she was entitled to on the actual return.

    Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    4. Remaining balance of refund due per actual return, if applicable.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.

    Exception:

    Follow partial disallowance procedures if issuing a refund less than what the taxpayer expects. Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional information.

    2. Refund amount that is less than the amount that the taxpayer has received.

    Example:

    The taxpayer received a refund more than what he/she was entitled to on the actual return.

    Allow Claim - Taxpayer will be asked to repay the erroneous portion of the refund using Category D erroneous refund procedures and is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.


    Refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.
    3. Balance due Allow Claim - Taxpayer will be asked to repay the erroneous portion of the refund using Category D erroneous refund procedures and is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    Note:

    Normal collection notices will be issued for balance due amount on the taxpayer’s return as intended to be filed.


    Refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.
    4. Neither a refund or balance due - taxpayer has no filing requirement Allow Claim - Taxpayer will be asked to repay the erroneous portion of the refund using Category D erroneous refund procedures and is eligible for:
    1. Account adjustment to remove the unauthorized return.

    2. Removal of the preparer portion of the refund, if applicable.


    Refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.

     

Category 2 - Authorized Filing, Altered return information and No additional refund is due to the taxpayer.

  1. Determine if the complaint is complete.

      Posted Return Reflects: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Signing preparer • Tax return as intended to be filed signed by the taxpayer
    • Form 14157, First and Last name of preparer and address
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    2. Ghost preparer/ Non-Signing preparer • Tax return as intended to be filed signed by the taxpayer
    • Form 14157, First and Last name of preparer and address
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    • Documentation showing 3rd party presented him/herself as preparer
    • Documentation showing interaction between the taxpayer and the preparer
    1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:

      • Tax return is not included because the taxpayer states he/she is not required to file and research (CC IRPTR) supports that claim.
      • Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
      • Form 14157 is not included; however, the preparer’s first and last name and address are included on other documentation.

      Note:

      If the address is not provided, however, the preparer can be verified without this information, then it is not required.


      • 3rd party documentation is not included however, internal research or CI referral response satisfies the 3rd party documentation requirement.

    2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

      Example:

      The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

      Note:

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

  2. If the complaint is considered incomplete, refer to IRM 25.24.2.5.2, Incomplete Complaints, for additional information. Case will be suspended for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.5.3, Taxpayer Responses.

  3. Verify the preparer information. Refer to IRM 25.24.2.4.3.3, Verification of the Preparer, for additional information.

  4. For Category 2, ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required when the claim is disallowed. This is necessary to determine the appropriate handling of the actual return provided with the complaint.

    Reminder:

    If the complaint is incomplete, a refund trace should be initiated at the same time correspondence is sent to the taxpayer requesting additional information. If response is received prior to the completion of the refund trace, resume working case.

  5. However, if a refund trace was previously performed and the trace information is currently available on a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund, the information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an erroneous refund received by the taxpayer.

    1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. If ≡ ≡ ≡ ≡ ≡ ≡ , determine if a refund trace was previously performed. Refer to IRM 25.24.2.4.3.4, Refund Trace Requirements, for additional information.

    3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the available refund trace information.

      Example:

      The taxpayer states he/she received the correct or expected portion of the refund amount; however, available refund trace differs showing the entire refund was deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ use the refund trace information to determine the amount of the erroneous refund to the taxpayer.

    4. If the trace information is not available or available trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion that the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, then the complaint is accepted.

  7. The IRS will determine the type of relief to which the taxpayer is entitled, and for an allowed claim, will consider the original return a nullity and the actual return presented by the taxpayer (unaltered by the preparer) as the taxpayer’s return of record.

  8. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

  9. Follow the CAT 2 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

    Note:

    IDTVA-C examiners will utilize the chart below to determine the treatment stream and will also refer to IRM 25.24.2.9, IDTVA-C RPM Complaint Consideration, to determine how to address the compliance activity.

    CAT 2 Scenario 1: Research and/or available refund trace information shows that the taxpayer did not receive a refund.

      Return as intended to be filed reflects: Then:
    1. A balance due Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    Note:

    Normal collection notices will be issued for balance due amount on the taxpayer’s return of record.


    Refer to IRM 25.24.2.7, Balance Due Cases - Penalty Considerations, and IRM 25.24.2.11, Required Account Considerations, for additional information.

     

    CAT 2 Scenario 2: Research and/or available refund trace information shows a portion of the refund was received by the taxpayer.

      Return as intended to be filed reflects: Then:
    1. A refund amount that is equal to the amount the taxpayer has received Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.
    2. A refund amount that is less than the amount the taxpayer has received.

    Example:

    The taxpayer received a refund more than what he/she was entitled to on the actual return.

    Allow Claim - The taxpayer will be asked to repay the erroneous portion of the refund using Category D erroneous refund procedures and is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    Note:

    If the taxpayer’s return as intended to be filed shows a balance due, normal collection notices will be issued.


    Refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.
    3. A balance due Allow Claim - The taxpayer will be asked to repay the erroneous portion of the refund using Category D erroneous refund procedures and is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    Note:

    Normal collection notices will be issued for balance due amount on the taxpayer’s return as intended to be filed.


    Refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.

     

Category 3 - Authorized filing, Altered return information and the taxpayer is requesting an additional refund

  1. Determine if the complaint is complete.

      Posted Return Reflects: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Signing preparer • Tax return as intended to be filed signed by the taxpayer
    • Form 14157, First and Last name of preparer and address
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    • Official law enforcement agency report (e.g. police department, State Attorney General, CI, TIGTA), signed or otherwise demonstrably shown to be accepted by that agency and must contain:
    • Tax year(s) involved

    • Preparer’s first and last name

    • Statement describing preparer misconduct and theft of refund

    2. Ghost preparer/ Non-Signing preparer • Tax return as intended to be filed signed by the taxpayer
    • Form 14157, First and Last name of preparer and address
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    • Documentation showing 3rd party presented him/herself as preparer
    • Documentation showing interaction between the taxpayer and the preparer
    •Official law enforcement agency report (e.g. police department, State Attorney General, CI, TIGTA), signed or otherwise demonstrably shown to be accepted by that agency and must contain:
    • Tax year(s) involved

    • Preparer’s first and last name

    • Statement describing preparer misconduct and theft of refund

    Note:

    In cases that meet Category 3 where the original refund is frozen for the full amount in question, the law enforcement agency report is not required. However, on cases where a partial refund was released to the preparer, a law enforcement agency report is required.

    1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:


      • Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
      • Form 14157 is not included; however, the preparer’s first and last name and address are included on other documentation.

      Note:

      If the address is not provided, however, the preparer can be verified without this information, then it is not required.


      • For pre-existing cases, official law enforcement agency report is not included; however, the taxpayer provides an alternative statement documenting the taxpayer’s attempt to secure a police report signed under penalties of perjury along with a statement from TAS documenting their assistance/attempts in obtaining a police report. The taxpayer statement should contain the return preparer’s first and last name and description of the preparer misconduct and theft of refund.
      • 3rd party documentation is not included; however, internal research or CI referral response satisfies the 3rd party documentation requirement.

    2. Consider the documentation incomplete: If the ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

      Example:

      The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

      Note:

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

  2. If the complaint is considered incomplete refer to IRM 25.24.2.5.2, Incomplete Complaints, for additional information. Case will be suspended for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.5.3, Taxpayer Responses.

  3. Verify the preparer information. Refer to IRM 25.24.2.4.3.3, Verification of the Preparer, for additional information.

  4. For Category 3, ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required and used to verify whether a refund was issued in the taxpayer’s name. The trace information will be utilized to verify the receipt or non-receipt of a refund and to determine the refund amount, if any, that may be issued.

    Note:

    If the taxpayer was reimbursed by the preparer’s company acknowledging RPM or the SPEC referral indicates RPM (intentional act) and the taxpayer was reimbursed by the VITA/TCE partner, follow the applicable guidance in the chart below.

    1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. If ≡ ≡ ≡ ≡ ≡ ≡ , determine if a refund trace was previously performed. If no trace information is available, initiate a refund trace. Refer to IRM 25.24.2.4.3.4, Refund Trace Requirements for additional information.

    3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the refund trace information.

      Example:

      The taxpayer states no refund was received and refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

      Example:

      The taxpayer states no refund or portion of the refund was received; however, refund trace shows the entire refund was deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ use the refund trace information to determine refund amount, if applicable.

    4. If trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion that the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified then the complaint is accepted.

  6. The IRS will determine the type of relief to which the taxpayer is entitled, and for an allowed claim, will consider the original return a nullity and the actual return presented by the taxpayer (unaltered by the preparer) as the taxpayer’s return of record.

  7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

  8. Follow the CAT 3 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

    Note:

    IDTVA-C examiners will utilize the charts below to determine the treatment stream and will also refer to IRM 25.24.2.9, IDTVA-C RPM Complaint Consideration, to determine how to address the compliance activity.

    Reminder:

    Ensure any statute issues are taken into account and that the taxpayer is eligible for an additional refund under IRC 6511 (3 year look-back period). Refer to IRM 25.24.2.6.2, Refund Statute Expiration Date (RSED), for additional information.

    CAT 3 Scenario 1: Research and/or refund trace shows that the taxpayer did not receive a refund.

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied
    • Preparer named is consistent with complaint and tax return, if applicable.

    Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    4. Applicable additional refund.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.
    2. Not satisfied
    • Preparer named is not consistent with complaint and tax return, if applicable or

    • No law enforcement agency report or

    • No alternative statement in lieu of report is submitted with the complaint (if pre-existing case)

    Partial Disallowance (Certified letter 5956C) - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    4. NO additional refund since law enforcement agency report requirements not satisfied.


    Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional information.

     

    CAT 3 Scenario 2: Research and/or refund trace shows a portion of the refund was received by the taxpayer or the refund was reimbursed to the taxpayer by the company or VITA/TCE site, acknowledging RPM AND the refund amount received by the taxpayer is EQUAL to the refund on the actual return:

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied/Not Satisfied Partial Disallowance (Certified letter 5956C) - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. NO additional refund is due since our records show taxpayer previously received the applicable amount.


    Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional information.

    Note:

    If law enforcement agency report information does not match, also include explanation regarding the inconsistent information in the 5956C letter.

     

    CAT 3 Scenario 3: Research and/or refund trace shows a portion of the refund was received by the taxpayer or the refund was reimbursed to the taxpayer by the company or VITA/TCE site, acknowledging RPM AND the refund amount received by the taxpayer is LESS than what the taxpayer is entitled to on the actual return:

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied
    • Preparer named is consistent with complaint and tax return, if applicable.

    Allow Claim - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund, if applicable.

    4. Applicable additional refund.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.

    Exception:

    Partial Disallowance (Certified letter 5956C):
    • If the difference between the refund received by the taxpayer and the refund on the actual return matches the fee paid to the preparer then no refund will be issued or
    • If the refund trace confirms the portion received is greater than what the taxpayer states then issue only the remaining balance of refund.

    Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional information.
    2. Not satisfied
    • Preparer named is not consistent with complaint and tax return, if applicable.

    • No law enforcement agency report or (if pre-existing case) No alternative statement in lieu of report is submitted with the complaint

    Partial Disallowance (Certified letter 5956C) - Taxpayer is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Account adjustment to reflect return as intended to be filed.

    3. Removal of the preparer portion of the refund.

    4. NO additional refund since law enforcement agency report requirements not met.


    Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional information.

     

    CAT 3 Scenario 4: Research and/or refund trace shows a portion of the refund was received by the taxpayer or the refund was reimbursed to the taxpayer by the company or VITA/TCE site, acknowledging RPM AND the refund amount received by the taxpayer EXCEEDS what the taxpayer is entitled to on the actual return:

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied/Not Satisfied Partial Disallowance (Certified letter 5956C) - The taxpayer will be asked to repay the erroneous portion of the refund using Category D erroneous refund procedures and is eligible for:
    1. Account adjustment to remove the nullified return.

    2. Removal of the preparer portion of the refund.


    Refer to IRM 25.24.2.10.2, Partial Disallowance, and IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional information.

     

Category 4 - Misdirected Refund Only and the taxpayer is requesting an additional refund

  1. Determine if the complaint is complete.

      Posted Return Reflects: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Signing preparer • Tax return as intended to be filed signed by the taxpayer
    • Form 14157, First and Last name of preparer and address
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    • Official law enforcement agency report (e.g. police department, State Attorney General, CI, TIGTA), signed or otherwise demonstrably shown to be accepted by that agency and must contain:
    • Tax year(s) involved

    • Preparer’s first and last name

    • Statement describing preparer misconduct and theft of refund

    2. Ghost preparer/ Non-Signing preparer • Tax return as intended to be filed signed by the taxpayer
    • Form 14157, First and Last name of preparer and address
    • Form 14157-A, signed under penalties of perjury (at least one taxpayer, if married filing joint)
    • Documentation showing 3rd party presented him/herself as preparer
    • Documentation showing interaction between the taxpayer and the preparer
    • Official law enforcement agency report (e.g. police department, State Attorney General, CI, TIGTA), signed or otherwise demonstrably shown to be accepted by that agency and must contain:
    • Tax year(s) involved

    • Preparer’s first and last name

    • Statement describing preparer misconduct and theft of refund

    Note:

    In cases that meet Category 4 where the original refund is frozen for the full amount in question, the law enforcement agency report is not required. However, on cases where a partial refund was released to the preparer, a law enforcement agency report is required.

    1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:


      • Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
      • Form 14157 is not included; however, the preparer’s first and last name and address are included on other documentation.

      Note:

      If the address is not provided, however, the preparer can be verified without this information, then it is not required.


      • 3rd party documentation is not included; however, internal research or CI referral response satisfies the 3rd party documentation requirement.
      • For pre-existing cases, official law enforcement agency report is not included; however, the taxpayer provides an alternative statement documenting the taxpayer’s attempt to secure a police report signed under penalties of perjury along with a statement from TAS documenting their assistance/attempts in obtaining a police report. The taxpayer statement should contain the return preparer’s first and last name and description of the preparer misconduct and theft of refund.

    2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

      Example:

      The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

      Note:

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

  2. If the complaint is considered incomplete, refer to IRM 25.24.2.5.2, Incomplete Complaints, for additional information. Case will be suspended for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.5.3, Taxpayer Responses.

  3. Verify the preparer information. Refer to IRM 25.24.2.4.3.3, Verification of the Preparer, for additional information.

  4. For Category 4, ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required and used to verify whether a refund was issued in the taxpayer’s name. The trace information will be utilized to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

    Note:

    If the taxpayer was reimbursed by the preparer’s company acknowledging RPM or the SPEC referral indicates RPM (intentional act) and the taxpayer was reimbursed by the VITA/TCE partner, follow the applicable guidance in the chart below.

    1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , determine if a refund trace was previously performed. If no trace information is available, initiate a refund trace. Refer to IRM 25.24.2.4.3.4, Refund Trace Requirements, for additional information.

    3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the refund trace information.

      Example:

      The taxpayer states no refund was received and refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      The taxpayer states no refund or portion of the refund was received; however, refund trace shows the entire refund was deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ use the refund trace information.

    4. If trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Example:

      The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, then the complaint is accepted.

  6. The IRS will determine the type of relief the taxpayer is entitled. For Category 4 cases the original return is considered valid and not considered a nullity.

  7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

  8. Follow the CAT 4 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

    Note:

    IDTVA-C examiners will utilize the chart below to determine the treatment stream and will also refer to IRM 25.24.2.9, IDTVA-C RPM Complaint Consideration, to determine how to address the compliance activity.

    Reminder:

    Ensure any statute issues are taken into account and that the taxpayer is eligible for an additional refund under IRC 6511 (3 year look-back period). Refer to IRM 25.24.2.6.2, Refund Statute Expiration Date (RSED), for additional information.

    CAT 4 Scenario 1: Research and/or refund trace confirms that the taxpayer did not receive a refund.

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied
    • Preparer named is consistent with complaint and tax return, if applicable.

    Allow Claim - Taxpayer is eligible for:
    1. Removal of the preparer portion of the refund, if applicable.

    2. Applicable additional refund.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.
    2. Not satisfied
    • Preparer named is not consistent with complaint and tax return, if applicable or

    • No law enforcement agency report or

    • No alternative statement in lieu of report is submitted with the complaint (if pre-existing case)

    Disallow the claim for RPM (Certified letter 5956C)
    • NO additional refund since law enforcement agency report requirements not satisfied.


    Refer to IRM 25.24.2.10.1, Disallowance, for additional information.

     

    CAT 4 Scenario 2: Research and/or refund trace shows ENTIRE refund was received by the taxpayer:

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied/Not Satisfied Disallow the claim for RPM (Certified letter 5956C)
    • NO additional refund is due since our records show taxpayer previously received entire amount.


    Refer to IRM 25.24.2.10.1, Disallowance, for additional information.

     

    CAT 4 Scenario 3: Refund was reimbursed to the taxpayer by the company or VITA/TCE site, acknowledging RPM:

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied/Not Satisfied Partial Disallowance (Certified letter 5956C)
    • RPM portion of claim is allowed; however, NO additional refund is due since our records show taxpayer was reimbursed the amount of the original refund.


    Refer to IRM 25.24.2.10.2, Partial Disallowance, for additional information.

     

    CAT 4 Scenario 4: Research and/or refund trace shows only a portion of the refund was received by the taxpayer:

      The law enforcement agency report requirement (or alternative statement requirement, if applicable) is: Then:
    1. Satisfied
    • Preparer named is consistent with complaint and tax return, if applicable.

    Allow Claim - Taxpayer is eligible for:
    1. Removal of the preparer portion of the refund, if applicable.

    2. Applicable additional refund.


    Refer to IRM 25.24.2.11, Required Account Considerations, for additional information.

    Exception:

    Partial Disallowance (Certified letter 5956C)
    • If a refund trace confirms that the portion received is greater than what taxpayer states, then issue only the remaining balance of refund.

    Exception:

    Disallow the claim for RPM (Certified letter 5956C)
    • If the amount of the refund the taxpayer did not receive matches the fee paid to the preparer, then there is no preparer portion of the refund and no refund will be issued.

    2. Not satisfied
    • Preparer named is not consistent with complaint and tax return, if applicable or

    • No law enforcement agency report or

    • No alternative statement in lieu of report is submitted with the complaint (if pre-existing case)

    Disallow the claim for RPM (Certified letter 5956C)
    • NO additional refund since law enforcement agency report requirements not satisfied.


    Refer to IRM 25.24.2.10.1, Disallowance, for additional information.

     

IDTVA-C RPM Complaint Considerations

  1. RPM receipts will be referred from Identity Protection Specialized Unit (IPSU), AM or any other function and assigned directly to the IDTVA-C team on CIS rather than through the AUR or Exam function. It is important that all newly assigned cases are reviewed on the applicable compliance systems to ensure the case has been suspended or closed.

    Note:

    Exam Cases Only: Do not confuse cases under the Return Preparer Program (RPP) with RPM victim assistance. Any cases under the RPP (e.g. Program Action Cases, see IRM 4.1.10, Return Preparer Program Coordinator or IRM 4.19.15.25, Return Preparer Referrals) do not automatically qualify for victim relief. The taxpayer must state he/she is a victim of preparer misconduct and provide the necessary documentation to be considered for the relief.

  2. Open AUR cases must be researched on the AUR system to ensure the case has been suspended in the process code SI until the RPM allegation has been reviewed and a determination made. Open AUR cases can be identified by reviewing TXMOD. If there is a TC 922 without an assessment, the AUR case is open. Another way to identify an open AUR case is by an open TXMOD control with category code URP- or URPS. This can be identified when working the Case Control Activity (CCA) 4244, IDRS Multiple Case Control Report listing on a weekly basis. Upon research, if the process code is not SI on the AUR system, contact the appropriate AUR coordinator via e-mail or fax to request the case be suspended and placed in process code SI. A listing of the AUR IDT Coordinators can be found on SERP under the Who/Where tab, AUR IDT Coordinators. Contact must be made to ensure that AUR does not continue with their process which may include an unwarranted assessment.

  3. If a referral is received with an open AIMS (-L freeze on master file), contact the Exam functional coordinator as appropriate per IRM 25.24.2.9.2.1, Open Exam Issues, upon receipt of the case. Contact must be made to ensure Exam does not continue with their process which may include an unwarranted assessment. Review the CCA 4243, IDRS Overage Report, to ensure new receipts with open L freezes are addressed.

  4. Attach a copy of the Form 3210 and/or the e-mail or fax to the CIS record(s) whenever contacting the AUR or Exam coordinators.

  5. When RPM allegations are received and a treatment stream has been determined per IRM 25.24.2.8, Treatment Streams for RPM Claims, the compliance involvement on the account must be taken into consideration when determining the next actions. The following subsections provide guidance for specific compliance issues.

    Note:

    All other RPM procedures will be followed, if applicable. For example, issue correspondence, TC 971 requirements, etc.

  6. When a Statutory Notice of Deficiency (SNOD) was issued, an assessment made and it is determined the taxpayer received a refund for more than entitled, the portion covered by the SNOD is subject to normal collection action rather than an erroneous refund. When this occurs, the portion determined to be covered by erroneous refund procedures and the portion subject to normal collection actions will need to be manually computed.

AUR RPM Complaint Actions

  1. Open AUR cases are considered a priority and must be worked within 120 days of receipt in IDTVA. If a case cannot be closed within 120 days, contact must be made with the appropriate AUR IDT Coordinators to request additional time. This is in addition to leaving a case note on the AUR system. If contact is not made within 120 days, AUR will close the case using process code 17.

  2. The AUR issues on the account must be reviewed and taken into consideration. The handling of the account may differ depending on whether the case is an open AUR or closed AUR case. Follow the applicable subsection for guidance.

Open AUR Issues
  1. For open AUR issues, follow the chart below to determine the correct case disposition.

      If ... And ... Then ...
    1. Open AUR with all under reported (UR) income included on return as intended to be filed Allowed RPM claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims, and:
    1. Enter AUR case notes.

    2. Return case to AUR and advise that the RPM was allowed and there are no outstanding issues.
      Note: If a portion of the UR income is included on the return as intended to be filed, notify AUR of the portion of the UR income that was included as part of the RPM complaint.

    3. Close CIS case.

    2. Open AUR with UR income not included on return as intended to be filed Allowed RPM claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims, and:
    1. Enter AUR case notes.

    2. Return case to AUR and advise that the RPM claim was allowed and there are outstanding issues.

    3. Close CIS case.

    3. Open AUR and the RPM issues are the same as the AUR issues.

    Example:

    The taxpayer alleges the preparer added in AOTC.

    Disallowed RPM claim - Regardless of dollar amount
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Enter AUR case notes.

    4. Return case to AUR and advise that the RPM claim was disallowed and continue with the UR income.

    5. Close CIS case.

    4. Open AUR and the RPM issues are not the same as the AUR issues. Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Enter AUR case notes.

    4. Return case to AUR and advise that the RPM claim was disallowed and continue with the UR income.

    5. Close CIS case.

    5. Open AUR and the RPM issues are not the same as the AUR issues. Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Enter AUR case notes.

    4. Return case to AUR and advise that the RPM claim was disallowed and to close AUR case as a referral to Exam.

    5. When referring to Cat A, include a statement that identifies the UR income that must be included as part of the exam assessment.

    6. Once a response is received from CAT A, close CIS case.

    Note:

    The ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ applies to the change in tax or credits on the return as intended to be filed and not the AUR changes.

  2. When all final account actions have been finalized, open AUR cases need to be referred back to AUR. Information regarding the determination must be communicated to the AUR function via Case Notes on the AUR system. In addition to the requirements in IRM 25.23.2.2.2, Required Case and History Notes, case notes will include:

    • Information regarding which Information Returns to delete, if any.

    • Follow up actions required (e.g., Recomputed Notice, Default, or Case Closure).

    Note:

    Provide AUR with general guidance on how to process the RPM issue. AUR’s instructions are subject to change; therefore, avoid using specific AUR directions, such as specific process codes to use.

  3. Standard Case notes were developed to assist with notifying AUR of the case disposition. The standard case notes are as follows:

    • 26 IDTVA – RPM – Case was determined to not meet RPM criteria. Case requires referral to Exam. PC needs to be input that closes the case to Campus Exam.

    • 29 IDTVA – RPM – Case was determined not to be RPM. Continue processing.

    • 30 IDTVA – RPM – Letter was issued to the taxpayer requesting additional information and date has expired with no response. Continue processing.

  4. AUR must be sent a list of taxpayer identification numbers (TINs) for AUR cases completed by IDTVA. This will indicate to AUR that a next action is needed. The cases need to be sent back to the AUR site where the case originated. The DLN of the TC 922 reflects the AUR site that worked the case. This list can be sent via e-mail or fax to the AUR IDT coordinator. A listing of the AUR IDT Coordinators can be found on the SERP under the Who/Where tab AUR IDT Coordinators. Leave a CIS case note indicating that the TIN was sent.

Closed AUR Issues
  1. For closed AUR cases, follow the chart to determine the correct case disposition.

      If ... And ... Then ...
    1. Closed AUR with UR assessment and the taxpayer includes the UR income on the return as intended to be filed Allowed RPM claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims, and:
    If all UR issues addressed, the account should already reflect the return as intended to be filed. Back out procedures to nullify will be bypassed.
    1. Input 290.00, BL 00 with RC 131.

    2. Move the preparer portion of the refund to the 1547 account, if applicable.

    2. Closed AUR with UR assessment and the taxpayer does not include all of the UR income on the return as intended to be filed Allowed RPM Claim See paragraph 2 below chart.
    3. Closed AUR with UR assessment regardless whether the UR income is included on the return as intended to be filed Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Do not route to Exam.

    4. Do not reverse the AUR assessment.

    4. Closed AUR with UR assessment and the AUR assessment is the same as the RPM issue.

    Example:

    AUR assessment was the Education credit. The RPM allegation is the preparer added the Education credit after the return was signed. Since the AUR issue is the same as the RPM issue, do not route to Exam. The issue was already assessed through deficiency procedures.

    Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Do not reverse the AUR assessment.
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Do not route to Exam.

    4. Close the case.

    5. Closed AUR with UR assessment and the AUR assessment is not the same as the RPM issue. Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Do not reverse the AUR assessment.
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Send to CATA using the primary reason RPM Refundable Credits or RPM Other. Refer to IRM 25.24.2.10.1, Disallowance, for additional information.

    4. Upon return from CAT A, close case.

    Note:

    The ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ applies to the change in tax or credits on the return as intended to be filed and not the AUR changes.

  2. In closed AUR cases with an assessment in which the AUR issues are not the same as the RPM issues, the AUR assessment may be valid and remain on the account if the SNOD was properly issued. A SNOD is properly issued when mailed to the taxpayer’s address of record.

    Note:

    If a determination is made that the SNOD was not properly issued, elevate case to HQ prior to making any account adjustments.

    1. Determine what was included in the AUR assessment. This can be determined by reviewing the CP2000. Determine whether the SNOD was issued to the taxpayer’s address of record. If the SNOD was issued to the taxpayer’s address of the record, the assessment is valid and should not be reversed.

    2. If the taxpayer did not address some of the AUR issues then that portion of the assessment is still considered valid. Recalculate the tax and/or credits, if applicable, depending on the RPM issues, the return as intended to be filed and the AUR assessment.

    3. Full back-out nullity procedures will be bypassed since the AUR assessment is considered valid. A netting adjustment will be input to the recalculated amounts, if necessary.

      Example:

      A taxpayer alleges RPM and no receipt of refund. The AUR issues were wages, withholding, Education Credit and the American Opportunity Tax Credit (AOTC). The RPM issue is the AOTC. The taxpayer provides all of the necessary information to show that the preparer altered the return by adding the AOTC and received the additional refund; however, the return as intended to be filed fails to include the underreported wages and additional withholding. The SNOD was issued to the taxpayer’s address of record and an assessment made. To correct the account the following adjustments are required:
      • Input 290.00, BL 00, RC 131.
      • Move the preparer portion of the refund to the 1547 account (AOTC amount).
      • Since the taxpayer did not include the underreported income, the AUR assessment would not need to be recalculated as the underreported assessment removed the education credit and the AOTC. Since the SNOD was issued to the taxpayer’s address of record, the AUR assessment is valid and would remain on the account.

AUR Accuracy Related Penalties
  1. AUR may have included an Accuracy related penalty when an assessment was made. The accuracy related penalty will have to be considered depending upon the RPM determination and the necessary account adjustments.

  2. When a determination is made that the taxpayer is a victim of RPM and the AUR assessment is being reversed in full, abate the accuracy related penalty along with the AUR assessment.

  3. When the AUR assessment is being partially abated, consider whether the accuracy related penalty should be abated in part or in full.

Exam RPM Complaint Actions

  1. The Exam issues on the account must be reviewed and taken into consideration when addressing the RPM issue. The handling of the account may differ depending on whether the case is an open Exam or closed Exam. Per current Exam policy AIMS will be closed disposal code (DC) 12 or 37 prior to routing RPM complaints to IDTVA-C; however, there may be exceptions and open AIMS cases will be received. Follow the applicable subsection for guidance.

  2. Upon receipt of new inventory, cases must be researched to determine whether AIMS is open (L freeze). If AIMs is open, Exam must be contacted to request AIMS be closed unless the case will be resolved within 5 days of assignment. A listing of functional coordinators can be found on SERP under Job Aids Compliance SBSE campus point of contact (POC) or for W&I campus Exam contact the AIMS coordinator found on SERP under Who/Where tab Exam Contact List, AIMS/ERCS Staff by User Location.

  3. Case open in Field Exam will be referred to Field Exam in accordance with IRM 25.24.1.4.1, Routing Information - Paper.

  4. If the RPM claim is disallowed and the case was closed by Exam as a DC 12 or 37, prior to the routing of the RPM allegation to IDTVA-C, the claim will be returned to Exam provided there are ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . These cases can be identified as follows:

    • WI Exam - closed DC 12 after December 31, 2015.

    • SBSE Exam - closed DC 37 after March 2016.

Open Exam Issues
  1. An Open Exam is considered any cases closed DC 12 or DC 37 or any open AIMS case. Follow the chart to determine the correct case disposition.

      If ... And ... Then ...
    1. Open Exam: RPM complaint resolved all audit issues

    Example:

    The audit issue was the AOTC. The RPM complaint states the preparer added the AOTC and the return as intended to be filed removes the credit, addressing the audit issue.

    Allowed RPM claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims, and then close CIS case.

    Note:

    Inform Exam that the RPM claim was allowed and their case can be closed only if case remains open on AIMS.

    2. Open Exam: RPM complaint does not resolve all audit issues

    Example:

    The audit issues were 3 exemptions, CTC and EITC. The RPM complaint alleges the preparer added 2 exemptions. The return as intended to be filed, however, claims one dependent that is the same as the audit issue. The complaint does not resolve all audit issues and the taxpayer is still required to prove eligibility for that exemption.

    Allowed RPM claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims, and:
    1. Return to referring Exam team, if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ as measured from the taxpayer’s actual return.

    2. Inform Exam that the RPM claim was allowed and clearly state the outstanding audit issues and provide the ASED.

    3. If less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , close case. Do not refer to Exam.

    3. Open Exam Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series.

    3. Return to referring Exam team, if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ as measured from the taxpayer’s actual return.

    4. Inform Exam to continue with the audit and identify the issues that the taxpayer is claiming were inflated, and any new return items to be considered.

    5. If less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , close case. Do not refer to Exam.

    Reminder:

    If the refund is frozen on the account and the case is being returned to Exam, use a HC 4 so the refund is not released. Exam will address the frozen refund.

  2. When returning cases to Exam, clearly identify the RPM issues and the reason the RPM allegation was disallowed.

    Note:

    Issue a certified 5956C letter as appropriate when a refund is frozen by Exam and the RPM claim is disallowed or partially disallowed. A 5956C is needed since the outcome of the audit is unknown at the time of closure. If Exam makes an assessment and a refund is not issued, the taxpayer would be required to substantiate the audit issues or file suit.

  3. Return cases to the Exam site where the audit originated, as follows:

    • WI Exam - prepare a Form 3210, Document Transmittal, include the SSN, tax year, and reason for the disallowance. Include instructions that the return as intended to be filed is located on CIS. Send to the applicable site’s AIMS Coordinator found on SERP under Who/Where tab Exam Contact List, AIMS/ERCS Staff by User Location.

    • SBSE Exam - send a secured e-mail to the Campus Exam IDT Coordinators; include the SSN, tax year, and the reason for the disallowance. Include instructions that the return as intended to be filed is located on CIS.

      Reminder:

      Attach a copy of the Form 3210 and any e-mail or fax to Exam to the CIS case.

Closed Exam Issues
  1. On closed Exam cases with an assessment and the Exam issues are not the same as the RPM issues, the Exam assessment may be valid and remain on the account if the SNOD was properly issued.

  2. Cases closed out of Appeals (PBC 6XX) will be worked in accordance with IRM 4.13.2.2, Function Responsible & Routing Instructions.

  3. Determine what was included in the Exam assessment. This can be determined by reviewing CEAS. In some cases, it may be necessary to request (CC ESTAB) the Exam closure package to review documents and returns submitted by the taxpayer.

  4. Determine whether the SNOD was issued to the taxpayer’s address of record. If the SNOD was issued to the taxpayer’s address of the record, the assessment is valid and should not be reversed.

    Note:

    If a determination is made that the SNOD was not properly issued, elevate case to ITVA HQ prior to making any account adjustments.

  5. For cases closed with an assessment, follow the chart to determine the correct case disposition. (This chart should not be used on cases closed off AIMS with a DC 12/37. Refer to Open Exam Issues chart).

      If ... And ... Then ...
    1. Closed Exam and RPM complaint includes the audit issues.

    Example:

    The audit issue was the AOTC. The RPM complaint states the preparer added the AOTC and the return as intended to be filed removes the credit, addressing the audit issue.

    Allowed RPM claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims.
    If all audit issues addressed, the account should already reflect the return as intended to be filed. Back-out procedures to nullify the original return will be bypassed.
    1. Input 290.00, BL 00 with RC 131.

    2. Move the preparer portion of the refund to the 1547 account, if applicable.

    Example:

    The audit issues are the disallowance of an exemption, EITC, CTC. The RPM claim alleges that the preparer added the exemption, EITC and CTC. Since the Exam assessment had already reversed these items, the only issue is to move the preparer portion to the 1547 account.

    2. Closed Exam and RPM complaint does not include all of the audit issues. Allowed RPM Claim Follow the steps in the applicable treatment stream chart based upon the category in IRM 25.24.2.8, Treatment Streams for RPM Claims, and:
    1. Recalculations of the tax and/or credits may be required depending on the RPM issues, return as intended to be filed and the Exam assessment.

    2. Determine what issues are covered in the Exam assessment and should be adjusted based on the RPM complaint per the return as intended to be filed.

    3. Back out procedures can be bypassed. Input a net adjustment to the recalculated figures.

    4. Determine the amount to be moved to the 1547 account.

    5. Include an explanation to the taxpayer that the issues disallowed by Exam would only be allowed once documentation was received to support the audit issue. As part of the explanation to the taxpayer include suggested verbiage as follows: In order to allow certain items on your return as intended to be filed, you must contact the examination department and request a reconsideration of the exam issues that you do not agree with. See Publication 3598, What You Should Know about the Audit Reconsideration Process, for additional information.

    Example:

    The audit disallowed 3 exemptions, EITC, and CTC for the three exemptions. The taxpayer is claiming the preparer added 2 exemptions. The taxpayer provides all of the necessary information to prove the RPM claim but does not provide documentation addressing the exam issues. In this scenario, do not back out the Exam assessment or the TC150, since it is an allowed claim and the Exam assessment removed the exemptions, EITC and CTC, otherwise the reversal will go unpostable. The return as intended to be filed includes one of the exemptions that was disallowed by Exam. Since Exam disallowed the exemption the taxpayer is claiming on the return as intended, we cannot allow the exemption or the EITC or the CTC associated with that dependent. The taxpayer has to prove he/she is entitled to the exemption and the associated credits. The account adjustment would reflect a TC 290.00 with RC 131.

    Example:

    The audit shows the TC 150 contained a Schedule A reporting miscellaneous deductions totaling $15,540. The audit disallowed the miscellaneous deductions of $15,540 in full. The taxpayer provided sufficient information to show that the preparer inflated the Schedule A miscellaneous deductions by $6,340.00. However, the return as intended to be filed still reflects Schedule A miscellaneous deductions of $9,200. Recalculate the exam assessment to remove the portion the preparer added, in this case $6,340 of the total $15,540 was inflated by the preparer. The $9,200 portion of the Exam assessment would remain. Net the account and input adjustment (BL 00) to the recalculated amounts.

    3. Closed Exam and RPM claim includes the audit issues.

    Example:

    Exam assessment was the Education credit. The RPM allegation is the preparer added the Education credit after the return was signed. The issue was already assessed through the Notice of Deficiency.

    Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series. Do not abate the Exam assessment.

    3. Close CIS case.

    4. Closed Exam and RPM claim does not include the audit issues. Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series. Do not abate the Exam assessment.

    3. Close CIS case

    5. Closed Exam and RPM claim does not include the audit issues. Disallowed RPM claim - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. Issue certified 5956C as applicable.

    2. Input TC 290.00 and RC 131 with the applicable blocking series. Do not abate the Exam assessment.

    3. Suspend to CATA using the appropriate primary reason below:

      • "RPM Refundable Credits" : Use if claim issues involve refundable credits.

      • "RPM - Other" : Use if claim issues do not involve refundable credits.

    4. Close CIS case

    Reminder:

    If a recertification indicator was set by the Exam disallowance of CTC/ACTC, AOTC, or EITC, the indicator will be reversed if addressed by the taxpayer’s return as intended to be filed. See IRM 25.24.2.11.4, Recertification Indicators.

Closed Field Exam Cases
  1. Closed Field Exam cases where the taxpayer is claiming RPM will be worked by IDTVA-C.

  2. Follow all normal RPM research paths to determine whether the taxpayer is a victim of RPM.

  3. Field Exam CEAS documents must be reviewed to determine whether the RPM allegation was addressed during the original audit. Once reviewed, determine whether the case should be retained or returned to the appropriate Field Exam.

  4. Cases that were no shows/no response in Field Exam will be retained and worked in IDTVA-C.

  5. Cases will be transferred back to Field Exam if:

    1. RPM cannot be determined from the work papers/case notes,

    2. The issue is outside the scope of the examiner, or

    3. The taxpayer responded to the RPM evaluation with documentation to prove the audit issues.

  6. In cases where the RPM issues were resolved, do not return the case to Field Exam. Follow normal procedures to resolve the taxpayer’s correspondence.

  7. In cases where there is taxpayer contact and the RPM was addressed but the account was not corrected properly, e.g., the refund issued due to the RPM issues were not moved to the GL 1547 account, do not return to Field Exam, resolve the account.

  8. Document CIS with the reason the case is/is not being transferred back to Field Exam (e.g., CEAS notes input by Field Exam indicate the revenue agent (RA) or tax compliance officer (TCO) had contact with the taxpayer or the taxpayer submitted documentation during the audit).

  9. Returning Cases to Field Exam - When it is determined a case will be referred to Field Exam due to an RPM allegation, the following information must be included as part of the case file:

    1. Form 3210, Document Transmittal, completed with the name and address of the appropriate PSP Contact. Include the taxpayer’s SSN, tax year(s), and the reason for the referral.

    2. Form 14157 & 14157A.

    3. The TC 30X administrative file. Two (2) attempts must be made to obtain the administrative file. If the administrative file cannot be obtained, include copies of the Form 2275, Records Request, Charge and Recharge, showing the results of the search.

  10. Establish a control on AIMS. Then transfer the case to the applicable Area PSP Office as outlined in IRM 4.13.3.5.1, Transfers to an Area Office.

Exam Accuracy Related and Fraud Penalties
  1. Exam may have included an Accuracy related penalty or a Fraud penalty when an assessment was made. These penalties will have to be considered depending upon the RPM determination and the necessary account adjustments.

  2. When a determination is made that the taxpayer is a victim of RPM and the claim is being allowed and the exam assessment is reversed in full, abate the accuracy related penalty.

  3. When the exam assessment is being partially reversed, consider whether the accuracy related penalty should be abated in part or in full.

  4. When a fraud penalty was assessed, refer the case information to ITVA HQ.

Appeals Cases

  1. See IRM 25.23.10.10, Requests for an Appeal, for handling cases with Appeals involvement.

Cases Assigned to DITA

  1. DITA performs all account adjustments for Field and Specialty Collection, Field Exam and Large Business & International (LB&I). Any RPM complaints worked in the Field that require account adjustments will be referred to DITA.

  2. Field and Specialty Collection, Field Exam, and LB&I will not control cases on IDRS or refer through CIS. RPM claims received from the Field will be scanned to CIS document type DITA RPM and category code IDII. The IRS received date will be the date the referral was received in DITA.

  3. If DITA finds information is insufficient or determines to reject a case, DITA should send an e-mail to the referring employee listed on the Form 4442, Inquiry Referral, or Form 3870, Request for Adjustment. DITA should include an explanation outlining the reason for the reject.

  4. DITA will perform refund traces on all Field RPM cases. Requests will be made using Form 4844, Request for Terminal Action.

  5. DITA will only issue claim disallowance letters (105C, 106C) on RPM cases for Field and Specialty Collection. For claim disallowance for Field and Specialty Collection, enter TC 290.00 and use NSD (No Source Document) when working through CIS. In order to complete the C letter, necessary information must be included on the Form 4442 /Form 3870 referral, otherwise reject the referral.

  6. Upon completing all account adjustments, close the case through CIS. DITA will notify Field and Specialty Collection, Field Exam, and LB&I examiners of the completed actions via e-mail or fax.

  7. When account adjustments are complete and the adjustments are being monitored for posting, open up a new control with the IDRS category code MISC.

Disallowance of Claims

  1. These sections will provide additional specific guidance when the treatment stream chart for accepted complaints in the applicable category instructs to disallow or partially disallow a claim.

Disallowance

  1. There will be circumstances when the taxpayer’s claim will be disallowed.

    1. In all categories, incomplete complaints will not be accepted and the claim will be disallowed if no response is received or a response is received without the requested information within the specified time frame.

      Exception:

      For Category 3 - If the only missing element is law enforcement agency report or (for pre-existing cases) alternative statement in lieu of report, then refer to IRM 25.24.2.10.2, Partial Disallowance, section.

    2. In all categories, the complaint will not be accepted and the claim will be disallowed when the preparer and/or documentation cannot be verified.

    3. Category 4 claims will be disallowed when:
      • the entire refund was issued to or deposited into an account in the name of the taxpayer or
      • the law enforcement agency requirement is not satisfied or
      • the claim was received after the RSED expired.

  2. For all categories, if the claim is disallowed, a refund trace is required on ≡ ≡ ≡ ≡ ≡ cases to determine the treatment of the taxpayer’s actual return if included in the documentation. Refer to IRM 25.24.2.4.3.4, Refund Trace Requirements, for additional information.

    Note:

    Where the IRS could issue a notice of deficiency, a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ applies.

  3. Follow the Disallowance scenarios and chart below to determine the next actions required.

    Disallowance Scenario 1: Research and/or refund trace shows that the ENTIRE refund was deposited into an account in the taxpayer’s name, the entire refund is frozen on the account or the original return reflected a balance due.

      Then:
    1. • Issue certified 5956C letter and
    • Treat the taxpayer’s actual return, if present, as an amended return following normal procedures, if applicable.

     

    Note:

    For IDTVA-C: When a refund was frozen by Exam, follow guidance in IRM 25.24.2.9.2.1, Open Exam Issues.

    Disallowance Scenario 2: Research and/or refund trace shows that no refund or only a portion of the refund was deposited into an account in the taxpayer’s name.

      And the net change to tax and credits is: Then:
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    or
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • Issue certified 5956C and
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    For cases where multiple years are involved, only refer the years that have no ASED issues. If any of the years have ASED issues, follow Row 1 guidance.

    • Issue certified 5956C and
    Do not input any adjustments.
    • Refer to Exam for deficiency procedures. Suspend to CATA using the appropriate primary reason below:
    • "RPM Refundable Credits" : Use if claim issues involve refundable credits.

    • "RPM - Other" : Use if claim issues do not involve refundable credits.

    Note:

    When multiple years are involved and both primary reasons above apply, elevate case information to HQ.


    • Notate in remarks field: RPM Disallowance over ≡ ≡ ≡ ≡ ≡ ≡ ≡ . certified 5956C letter sent.
    Exam will return case to employee with determination to select or non-select (e.g., not worthy of pursuit) the case. No further action is required, (5956C previously sent).
    Close CIS case.

    Note:

    If Exam returns the case as "accepted as filed" , suspend back to CATA advising that this is an RPM disallowance and that deficiency procedures are required.

     

  4. Issue certified 5956C letter when disallowing the RPM claim following the guidelines below.

    1. Letter must be certified.

    2. Letter must contain the specific reason for the claim disallowance as well as the claim amount, if applicable.

    3. Letter must contain explanation for other actions taken or not taken. For example, the taxpayer must also be advised when:
      ▸ Treating the taxpayer’s return as an amended return.
      ▸Statute issues apply and no actions can be taken.
      ▸Guidance states ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , advise taxpayer to file an amended return.

    4. For all categories, the taxpayer will be provided the right to file suit only.

      Exception:

      If the disallowance is being issued for expired RSED (CAT 4) then appeal rights and right to file suit will be provided.

    5. If using CIS, save the 5956C letter to PDF and attach it to the case with the Attach File button on the actual tax period involved, instead of capturing the "request completed" screen. See IRM 21.5.1.5.1, CIS General Guidelines, for additional information.

    6. Provide IRS Pub 4134, Low Income Taxpayer Clinic (LITC) List. This publication will provide information on LITCs.

  5. Actions for inputting the adjustment on fully disallowed claims:

    • Input TC 290.00 with RC 131.

    • Use blocking series 98 if the original paper return is not with the claim.

    • Use blocking series 99 if the original return is with the claim.

      Note:

      If the original return was filed electronically, use blocking series 99 and attach an IMFOLR print. Do not use blocking series 98.

      Reminder:

      When disallowing a claim in cases where the taxpayer received the entire refund (or the benefit of the entire refund, e.g., offset), an account adjustment is needed (the taxpayer’s return is treated as an amended return). Therefore, a separate TC 290.00 blocking series (BL) 98 or 99 for the disallowance must also be input. (The same applies if statute issues apply.) Include RPM reason code 131 with the adjustment.

Partial Disallowance

  1. Partial disallowance procedures may apply in certain Category 1, Category 3 and Category 4 cases and also may apply if there are RSED implications.

  2. Depending upon the facts and circumstances including the refund trace results, partial disallowance procedures would apply if we are issuing less of a refund than the taxpayer expects.

    1. The taxpayer may have received more than he/she stated in the RPM complaint and therefore this would impact the amount of any refund issued.

      Example:

      Category 3: The taxpayer states he/she received a portion of the refund in the amount of $500.00. Their actual return shows refund of $1,500.00. The complaint is reviewed and considered complete. The refund trace shows that the taxpayer received a refund but in the amount of $1,000.00. The treatment chart would advise that the taxpayer is eligible for account adjustment, removal of any preparer portion of the refund and the remaining balance of refund. The computation would affect the preparer portion moved to the general ledger account and in turn affect the additional refund amount due to the taxpayer. Since we are issuing less than the taxpayer expects ($500.00) this would be considered a partial disallow.

    2. The taxpayer may have received the benefit of the refund, for example TOP offset or tax offset and is unaware. Advise the taxpayer of any offsets that occurred in correspondence.

    3. The taxpayer was reimbursed by the preparer’s company acknowledging RPM or the SPEC referral indicates RPM (intentional act) and the taxpayer was reimbursed by the VITA/TCE partner. In this scenario, the taxpayer is not due the refund claimed since he/she was subsequently reimbursed; however, the claim that there was preparer misconduct will be acknowledged.

    4. The law enforcement agency report contained inconsistent information or taxpayer did not provide an acceptable report upon request; however, the complaint was otherwise complete and therefore the taxpayer is not eligible for a refund but is eligible for account adjustment.

    5. The RSED has expired; however, the taxpayer is eligible for account adjustment including removal of the preparer portion of the refund, and the overpayment must be moved to Excess Collections.

  3. Issue certified 5956C letter when partially disallowing the RPM claim following the guidelines below.

    1. Letter must be certified.

    2. Letter must contain the specific reason for the claim partial disallowance as well as the claim amount, if applicable.

    3. For all categories, the taxpayer will be provided the right to file suit only.

      Exception:

      If the partial disallowance is being issued for expired RSED then appeal rights and right to file suit will be provided.

    4. If using CIS, save the 5956C letter to PDF and attach it to the case with the Attach File button on the actual tax period involved, instead of capturing the "request completed" screen. See IRM 21.5.1.5.1, CIS General Guidelines, for additional information.

    5. Provide IRS Pub 4134, Low Income Taxpayer Clinic (LITC) List. This publication will provide information on LITCs.

  4. Actions for inputting adjustment on partially disallowed claims:

    • Input TC 29X as appropriate for the treatment stream with RC 131.

    • Use blocking series 00 to reflect the taxpayer’s actual return of record.

    • Input TC 971 AC 504 with the applicable MISC code when partially allowing a claim.

Required Account Considerations

  1. The next sections review the necessary considerations and actions to resolve the RPM complaint. At this point, the employee must know what specific relief to which the taxpayer is entitled and will take the applicable actions.

Offset Reversal Consideration

  1. Offset Reversals – Care must be taken when determining if offsets (posted in or out of the module) should be reversed. The offset may not have to be reversed in its entirety and will depend upon circumstances of the account and the relief to which the taxpayer is entitled.

    Note:

    If Category D erroneous refund procedures are applicable, refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for additional offset reversal consideration information.

  2. Reverse offsets that may have been applied from other tax years into the tax year module that the RPM complaint involves. Depending upon the account status, include TC 570’s on your credit transfer, if necessary. Be sure to release any credits on these associated modules.

    Note:

    If the taxpayer will have an actual balance due, then only reverse the portion of the offset that exceeds the balance owed including penalties and interest.

  3. Reverse offsets generated from the original refund applied to other IRS debts, when appropriate. Include TC 570 on your credit transfer screen as needed.

  4. Treasury Offset Program (TOP) offset reversals - Reverse only the portion that exceeds the taxpayer's actual overpayment amount. Include TC 570 on your credit transfer screen as needed.

  5. For TOP offsets involving child support, the IRS must limit the time to reverse a child support offset to 5 months from the refund payment date. Refer to IRM 21.4.6.4.2.4, Child Support TOP Offsets, for specific guidance.

  6. Examples:

    1. The taxpayer did not receive any refund and is entitled to full relief including additional refund. Account shows an adjustment was previously input to reflect a Form 1040X creating a balance due. An offset (TC 706) was applied from subsequent year to the balance due.

      In this scenario, the entire offset can be reversed back to the originating module. When inputting resolution of RPM claim, the subsequent posting of a TC 841 (removal of the preparer portion of the refund using general ledger account) will resolve the balance due and the remaining credit should reflect the taxpayer’s true refund.

    2. Account shows TC 846 $5,500.00 with a Bureau of the Fiscal Service (BFS) offset of 5,000.00. The taxpayer states no refund received and is entitled to relief. Research shows the remaining portion of $500.00 was not deposited into an account in the name of the taxpayer. The taxpayer’s return as intended to be filed shows a refund of $3,000.00.

      In this scenario, although the taxpayer may not have actually received a refund, he/she received benefit of $5,000.00 offset to a BFS debt. Since the offset exceeds the amount of the taxpayer’s actual overpayment, $2,000.00 of the offset would be reversed and the resolution of the preparer portion of the refund of $500.00 would be addressed utilizing general ledger procedures.

Utilizing General Ledger Account for Preparer Portion of the Refund

  1. When the taxpayer is eligible for the removal of the portion of the refund attributable to preparer misconduct, a general ledger account will be utilized to credit the account.

  2. RPM general ledger account 1547 was created for use with CC RPM48 and CC RPM58.

    Note:

    Information regarding the input of the CC RPM48 and CC RPM58 is in IRM 2.4.61, Command Code IDT48/IDT58/RPM48/RPM58. The employee is required to input the command code at the campus where the taxpayer’s refund originated using CC CMODE.

  3. Use CC RPM48 to reverse the entire refund (TC 84X) amount. TC 841 will post with document code 48 and Blocking Series 930-939 identifying it as an RPM transaction. This transaction will systemically freeze the account with a P freeze. Use when the taxpayer did not receive any portion of the original refund. TC 841 amount would reflect the entire TC 84X amount.

  4. Use CC RPM58 to reverse a portion of the refund. TC 700 is used to reverse a partial refund. TC 700 will post with document code 58 and Blocking Series 930-939 identifying it as an RPM transaction. Input a secondary TC 570 on your credit transfer to freeze the credit. Use when taxpayer received a portion of the original refund OR when the taxpayer is not eligible for an additional refund. The TC 700 amount would reflect the TC 84X amount minus the portion received by the taxpayer or if the taxpayer is not eligible for additional refund, the TC 84X amount minus the refund amount as shown on the tax return as intended to be filed (considered netting).

    Note:

    RPM48/RPM58 does not take into consideration refunds moved from another account using TC 848/849. If two accounts are involved (e.g., separate to joint) and posted TC 848/849 is present, these transactions need to be reversed back to the originating module. Then RPM48/58 would be utilized on each account, if applicable.

  5. If a split refund was issued and multiple TC 846’s are present then each TC 846 should be considered separately when determining which command code to use. If reversing an entire TC 846 amount then CC RPM48 should be used. CC RPM58 should only be used when a partial reversal of one specific TC 846 is necessary.

    Example:

    Total overpayment on tax return is $5,000.00. Split refund on account issued with TC 846 $3,000.00 and TC 846 $2,000.00. The taxpayer received the refund for $2,000.00. The preparer received the refund for $3,000.00. CC RPM48 would be used to reverse the TC 846 $3,000.00 reflecting the preparer portion of the refund.

  6. It is imperative to ensure the proper amount is computed. The employee must be aware of the relief the taxpayer is eligible for and the expected account status after actions are taken including an adjustment, if applicable.

  7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the preparer portion of the refund matches that fee amount, the GL account would not be utilized. The taxpayer received benefit of this portion.

    Exception:

    For Category 1 cases, if there is a fee involved, then this would be considered part of the preparer portion of the refund. If the taxpayer did not authorize the filing of the tax return, we would not hold the taxpayer responsible for the fee.

  8. The end result of the posting of the TC 841 or TC 700 and any adjustments (if applicable) input depends upon the scenario.

    Examples:

    1. If the taxpayer is entitled to an additional refund – account should be in credit balance for the amount of the additional refund.
      Account shows a TC 846 for $1,800.00. The taxpayer’s return as intended to be filed shows an overpayment of $1,000.00.
      1. The taxpayer received no portion of the original refund.
      Since the taxpayer did not receive any refund, the employee would post a TC 841 for $1,800.00. Account would be credited for $1,800.00. Once the adjustments are input, the account will show a credit balance of $1,000.00.
      2. The taxpayer received a portion of the original refund in the amount of $800.00.
      Since the taxpayer received $800.00 portion of the $1,800.00 refund, the employee would post a TC 700 for $1,000.00 (difference between the $1,800.00 minus $800.00). Once the adjustments are input, the account will show a credit balance of $200.00, which is the remaining amount due to the taxpayer.
      3. The taxpayer states he/she received no portion of the refund but paid $300.00 fee to preparer that was deducted from the original refund.
      Since the fee was deducted from the refund, the taxpayer received benefit of $300.00 and the preparer portion would total $1,500.00. The employee would post a TC 700 for $1,500.00. Once the adjustments are input, the account will show a credit balance of $700.00, which is the remaining amount due to the taxpayer.

      Reminder:

      If the taxpayer did not file their claim timely, on or prior to the RSED, the claimed overpayment is not eligible for refund to the taxpayer, but instead must be moved to Excess Collections.

    2. If the taxpayer is not entitled to an additional refund – The account balance depends on the reason the taxpayer is not entitled to the refund.
      Account shows a TC 846 for $1,800.00. Taxpayer’s return as intended to be filed shows an overpayment of $1,000.00.
      1. The taxpayer received a portion or no portion of the original refund and taxpayer not entitled to refund since law enforcement report requirement was not satisfied.
      In this scenario, it does not make a difference if the taxpayer actually received any portion of the refund, since the determination was made not to allow additional refund. The employee would post a TC 700 for $800.00 which is the difference between $1,800.00 and the $1,000.00 refund shown on the taxpayer’s return as intended to be filed. Once the adjustments are input the account will show a balance of $0.00.

      Note:

      If refund on the return as intended to be filed exceeds the original TC 846 amount there is nothing to net so no TC 700 is required. The taxpayer would be entitled to the difference between the 2 refunds without a law enforcement report. For example, the TC 846 amount is $1,800.00, however, the refund on the return as intended to be filed shows overpayment of $2,000.00. Once the adjustments are input, the credit balance should be $200.00 that is secondary to the original refund of $1,800.00 that is not being released due to the lack of the police report.


      2. The taxpayer received no portion of the original refund and taxpayer not entitled to refund since the RSED has expired.
      In this scenario, the account balance should reflect the full amount of refund as shown on the taxpayer’s return as intended to be filed. Since the taxpayer did not file their claim timely, on or prior to the RSED, the claimed overpayment is not eligible for refund to the taxpayer, but instead must be moved to Excess Collections. If the taxpayer received a portion of the refund, the employee will take that into account and reverse the determined preparer’s portion of the refund. The account balance should reflect the remaining credit amount that would be moved to Excess Collections.

    3. If the taxpayer is not due a refund and return as intended to be filed is a balance due – account should be in debit balance for amount owed.
      Account shows a TC 846 for $1,800.00. The taxpayer’s return as intended to be filed shows a balance due of $1,000.00.
      1. The taxpayer received no portion of the refund. The employee would post a TC 841 for $1,800.00. Account would be credited for $1,800.00. Once the adjustments are input, the account will show a debit balance of $1,000.00.

      Note:

      If the taxpayer received a refund from the original return he/she was not entitled to receive and the return as intended to be filed is a balance due return, refer to IRM 25.24.2.11.3, Category D Erroneous Refunds, for example and procedure.

Category D Erroneous Refunds

  1. Reference IRM 21.4.5.6.1, Account Actions for Category D Erroneous Refunds, (and any other Category D applicable references) for additional required actions.

    Exception:

    The 5956C letter contains selective paragraphs for erroneous refund scenarios and will be used in lieu of the 510C letter cited in IRM 21.4.5.6.1 guidance. If CAT D erroneous refund applies, the employee will include the applicable erroneous refund paragraphs along with the appropriate paragraphs regarding the RPM closing resolution. Indicate on Form 12356, Erroneous Refund Worksheet, Line 7 - "5956C date" and include in explanation Line 14, "Return Preparer Misconduct CAT D erroneous refund; 5956C sent instead of 510C requesting repayment."

  2. If the ERSED has expired, refer to IRM 21.4.5.15.1.1, Statute of Limitations Category D Erroneous Refunds IRC 6532 (b) ERSED, for guidance. Any offsets or payments that occurred prior to the ERSED expiring can be applied and taken into account when figuring the erroneous refund amount. Use the TC 846 cycle date plus two years and the cycle dates of the offset/payments to determine if they can be applied.

  3. Category D procedures will generally be followed when the claim is allowed and the taxpayer received a refund amount that exceeds the amount on the return as intended to be filed. These cases will usually be considered an IRS error.

    Note:

    For IDTVA-C - When returning a case to Exam, if the frozen refund was released in error prior to returning to Exam, do not follow erroneous refund procedures. Exam will address the refund.

  4. When guidance states to follow Category D erroneous refund procedures, the employee will incorporate the requirements specific to Category D into the adjustment of the account (using the procedures in IRM 25.24.2.12.2, Standard Account Adjustments) and any RPM account actions applicable. (For example, moving preparer portion of refund to the general ledger account etc.)

  5. After required actions are taken, the account should be in debit balance. Depending upon the scenario, this debit amount may consist of both an erroneous refund portion and a tax liability. It is important to distinguish between the two, since the taxpayer will be asked to repay the erroneous refund portion following Category D procedures and will be liable for the tax liability following normal collection activity.

    • The erroneous refund portion is the refund amount received by the taxpayer that exceeds the amount on the return as intended to be filed.

    • A tax liability would occur if the taxpayer’s return as intended to be filed reflects a balance due.

    Example:

    The taxpayer received $2,000.00 and his/her return as intended to be filed reflects a balance due of $1,000.00. After required actions are taken, the account will be in a $3,000.00 debit. The erroneous refund portion is $2,000.00 and should be entered on the TC 844. When accounting receives the erroneous refund package, they will post a false credit TC 700 for $2,000.00 and continue monitoring. The account will now be in balance due for the $1,000.00 which will be subject to normal collection activity.

  6. Issue 5956C letter advising the taxpayer of any determinations made or actions taken on the account.

Recertification Indicators

  1. Determine whether recertification indicators originated from the RPM tax year and whether they need to be reversed. Recertification indicators are found on CC ENMOD and IMFOLE. Refer to IRM 4.19.14.6, Recertification, for additional guidance.

  2. If the RPM claim is allowed and the recertification issues were fully addressed by the taxpayer’s return as intended to be filed (RIF), reverse the indicator(s).

    1. Earned Income Tax Credit (EITC) – input TC 971 AC 056.

    2. Child Tax Credit/Additional Child Tax Credit (CTC/ACTC) – input TC 971 AC 161.

    3. American Opportunity Tax Credit (AOTC) – input TC 971 AC 160

    Note:

    The indicator reversal is still required if the taxpayer qualifies for the credits based on different dependents/exemptions than those originally disallowed.

  3. If the taxpayer claims the same credits for the same dependents/exemptions or themselves on their return as intended to be filed (RIF), do not reverse the recertification indicators. Follow normal procedures for processing the returns per IRM 25.24.2.8, Treatment Streams for RPM Claims, and IRM 25.24.2.9, IDTVA-C RPMC Complaint Considerations.

Allowable Claims - Account Adjustments

  1. Depending upon the facts and circumstances of the complaint and the applicable treatment streams, account adjustments will be required for resolution.

  2. There may be instances where the taxpayer received, or it is determined that the taxpayer received a refund in excess of which he/she is entitled, resulting in an erroneous refund/balance due situation. The taxpayer will be asked to repay the amount using Category D erroneous refund procedures.

  3. Where the treatment stream chart does not specifically cite an action (for example erroneous refund) and shows the taxpayer eligible for account adjustment etc., standard RPM adjustment actions can be taken per the following section.

Preliminary Account Inputs and Reminders

  1. Update the entity, if necessary (name lines, address, filing status, etc.), based on the information on the taxpayer’s return of record.

    Note:

    The address cannot be updated based on the Form 14157-A alone.

  2. Input TC 971 AC 504 on ENMOD using CC REQ77 if allowing or partially allowing the RPM claim on all involved accounts.

    • TRANS-DT is auto populated with the current date

    • Enter SECONDARY – DT (enter the tax year affected by RPM incident in the format MMDDYYYY)

    • Enter applicable MISC code depending upon the identified category - RPM1, RPM2, RPM3 or RPM4

      Note:

      The input is limited to current calendar year and 7 prior years. Refer to IRM 25.23.2.17.1.2, TC 971 AC 504 - Miscellaneous Field Code SPCL1, SPCL2, RPM1, RPM2, RPM3, RPM4, and EAFAIL, for additional guidance.

  3. If there is an unresolved TC 971 AC 522 for the same year as the RPM year reverse the TC 971 AC 522 in accordance with IRM 25.23.2.15.4.1, Invalid Identity Theft Determinations – TC 972 AC 522 NORPLY . Use tax administration source code of NOIDT.

  4. Input TC 470 to prevent offsets and any notices from issuing, if applicable. At times during the adjustment process, actions may put the account into a "false" debit that would be resolved with subsequent actions. To safeguard against balance due notices from generating or offsets being applied, the TC 470 can be used.

    Note:

    If required to follow erroneous refund procedures, follow the applicable references cited in the Erroneous Refund section regarding specific input.

  5. If working current year accounts, input TC 971 AC 850 if entire credit is frozen on account or if conditions in IRM 21.4.1.5.7.1(4), Direct Deposit of Refunds, are present. The input of the TC 971 AC 850 ensures any subsequent refund will not be direct deposited and will be issued as a paper check.

    Reminder:

    If inputting TC 971 AC 850 and an adjustment simultaneously, you MUST post delay your adjustment.

  6. Update ASED, if applicable. Refer to IRM 25.24.2.6.1, Assessment Statute Expiration Date (ASED) Consideration, for additional information.

    Reminder:

    If the complaint involves a statute year, refer to IRM 25.24.2.6, Statute Considerations, prior to taking any final steps.

  7. Math verify the taxpayer's actual tax return using the procedures in IRM 21.5.3.4.5, Math and Master File Verification of Claims and Amended Returns. Paragraphs 4–6 should be followed. Set a math error, if applicable, per IRM 21.5.4.5.1, Setting the Initial Math Error Action.

  8. If working current year accounts, use CC DUPED to update the data to reflect the taxpayer’s correct information, if applicable. Refer to IRM 21.6.1.7.1, Command Code DUPED.

  9. If the taxpayer’s return as intended to be filed shows a balance owed due to a tax liability, refer to IRM 25.24.2.7, Balance Due Cases - Penalty Considerations, for additional information. If penalties apply, then computation may have to be performed and included with the adjustment.

  10. Determine if an estimated tax penalty needs to be assessed or recomputed based on the taxpayer’s actual return.

    Reminder:

    If no penalty needs to be assessed, 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.

Standard Account Adjustments

  1. The posting sequence of actions taken and adjustments input is important. When the original return is considered a nullity, that return will be zeroed out and then a second adjustment will be input reflecting the figures on the taxpayer’s return as intended to be filed. This second adjustment will issue a notice of adjustment (containing any refund amount or balance due amount, if applicable) and will release any freeze conditions, generating a refund, if applicable.

  2. If the account has previously been adjusted to reflect the taxpayer’s return as intended to be filed. (e.g., SP processed an amended return), or there are statute implications pertaining to the ASED (an adjustment may be present due to a previous prompt assessment), then the back out guidance can be bypassed. The employee will follow any other applicable steps, for example:

    • TC 841/TC 700

    • Adjustment to reflect the taxpayer’s return may not be necessary if account already reflects the taxpayer’s return as intended to be filed; however, an adjustment must be input to address penalties, if applicable, or an adjustment needs to be input to include the Return Processible Date (RPD) date. (Follow any other rules (BL, HC etc.) as shown in (4) below).

    • Post delay transactions, as necessary.

    Exception:

    If the taxpayer’s actual return shows a balance due and the balance due remains unpaid or it was paid after the original return due date, it is necessary to follow the back-out procedures that follow. This will allow a clear notice of adjustment to be generated with the subsequent adjustment to reflect the taxpayer’s actual return.

  3. In general, when RPM Category 1 – 3 cases are allowed, the original TC 150 will be considered a nullity. This account information will be removed in full following normal back-out procedures.

    • Input an adjustment to back out the TC 150 original return information in full to zero out the account. On REQ54/ADJ54 screen use:

    • Use Blocking Series (BL) 05.

    • Source Code (SC) 0.

    • Reason Code (RC) 099 and 131.

    • Use Hold Code (HC) 4 to hold notices and any credit scenario.

    • Include TC 170.00, if applicable.

  4. The subsequent adjustment will reflect the figures on the return submitted with the taxpayer’s complaint, considered now to be the return of record. If the taxpayer was not liable to file, adjust the account only to remove the posted information.

    Note:

    Category 4 cases are misdirected refund only cases and the original posted return is not considered a nullity. Employee will follow any other applicable steps (e.g., CC RPM48/58 etc.).

    On REQ54/ADJ54 screen use:

    • BL 00 (BL 77 if setting a math error) to reflect adjustment made with original return.

      Note:

      If statute issues apply, see IRM 25.24.2.6, Statute Considerations, for additional information.

    • SC 2 (SC 6 if setting a math error).

    • RC 131 and any other applicable RCs.

    • Use HC 0 to allow the notice to generate.

      Exception:

      Use HC 4 if required to issue a manual refund or if required to transfer the overpayment to Excess Collections.

    • Use PDC 1 to allow previous actions taken to post first, if applicable.

    • Include Return Processible Date (RPD), the received date of the taxpayer’s actual processible return on your ADJ54.

      Note:

      The RPD date is the date the taxpayer submits a signed tax return that can be processed. Unsigned returns are not processible. See IRM 20.2.4.5, Unprocessible Returns, for additional information.

    • IRN 871 and PC 2 are required inputs with this adjustment if the taxpayer’s actual return shows a balance and the balance due remains unpaid or it was paid after the original return due date. Refer to IRM 25.24.2.7, Balance Due Cases - Penalty Considerations.

    Reminder:

    If P- freeze is present with a TC 841 DLN blocking series 77711, 77712 or 77713, input any required account adjustments and prepare e-4442 to IVO to release the refund. Use RICS IVO – CP53X (TC841 DLN 77711/77712/77713) category. Use Referral type IRM and select category RICS IVO – CP53X (TC841 DLN 77711/77712/77713) from drop down. Include remarks stating that the RPM issue has been resolved and request the release of credit, if applicable.

  5. Determine if DIF score is needed per guidance in IRM 21.5.2.4.23.6, DIF SCORE or CLASSIFICATION “Send Return(s) to Examination for Review”. If criteria are met, send return to Examination for review.

    Note:

    Ensure that the auto interim letter is turned off. The RPM aspect of the case has been resolved and a closing letter is being sent to the taxpayer.

  6. If the taxpayer is due a refund, issue a manual refund ONLY if a refund cannot be systemically released. Refer to IRM 21.4.4.5, Preparation of Manual Refund Forms, for additional guidance on issuing a manual refund. Otherwise, release freeze for systemic generation.

    Reminder:

    If the taxpayer is eligible for credit interest, he/she is only entitled to it from the RPD date.

  7. Input TC 472 to reverse TC 470 previously input, if applicable.

    Reminder:

    This is important since in some instances after all account actions are performed, normal collection notices should be issued for balance due amount shown on the taxpayer’s return as intended to be filed.

  8. If the account is in status 22 and a balance due for tax liability is still present, ACS must be notified again using Form 14394 regardless if the balance due involves the RPM year.

  9. Notify the taxpayer of adjustment action taken using the 5956C letter. Refer to IRM 25.24.2.5, Taxpayer Contacts, for additional information.

    Reminder:

    Refer to IRM 25.24.2.5, Taxpayer Contacts, section for additional information that may have to be addressed in the closing letter. For example: If a math error was set, provide the taxpayer a detailed explanation of the math error, or balance due/penalty issues etc.

  10. Close CIS case.

  11. Ensure the Form 14157 and Form 14157-A information has been e-mailed to RPO, if applicable.