25.25.7 Automated Questionable Credit Program

Manual Transmittal

September 15, 2020

Purpose

(1) This transmits revised IRM 25.25.7, Revenue Protection, Automated Questionable Credit Program.

Material Changes

(1) IRM 25.25.7.4, Taxpayer Responses - IPU 20U0744 issued 06-29-2020 - Updated tax examiners’ response procedures for resolving cases.

(2) IRM 25.25.7.4.1, Taxpayer Inquiries via e-Form 4442, Correspondence or Operation Assistance Requests (OARS) - IPU 20U0744 issued 06-29-2020 - Updated tax examiners’ response procedures for resolution on Correspondence, e-Form 4442 and OARS.

(3) IRM 25.25.7.4.3, Taxpayer Agreed Response Procedures - IPU 20U0744 issued 06-29-2020 - Updated the procedures on resolving Agreed responses.

(4) IRM 25.25.7.4.4, Taxpayer Disagreed Response Procedures - IPU 20U0744 issued 06-29-2020 - Updated the procedures on resolving Disagreed responses.

(5) IRM 25.25.7.4.6, Taxpayer Incomplete Response Procedures - IPU 20U0744 issued 06-29-2020 - Updated the procedures on resolving incomplete responses.

(6) IRM 25.25.7.6, No Response Received to Letter 4800C - IPU 20U0744 issued 06-29-2020 - Updated the procedures on resolving cases when no response is received to Letter 4800C.

(7) IRM 25.25.7.4, Taxpayer Responses -IPU 20U0759 issued 07-06-2020 - Updated tax examiners’ response procedures for resolving cases.

(8) IRM 25.25.7.4.1, Taxpayer Inquiries via e-Form 4442, Correspondence or Operation Assistance Requests (OARS) - IPU 20U0759 issued 07-06-2020 - Updated tax examiners’ response procedures for resolution on Correspondence, e-Form 4442 and OARS.

(9) IRM 25.25.7.4.3, Taxpayer Agreed Response Procedures - IPU 20U0759 issued 07-06-2020 - Updated the procedures on resolving Agreed responses.

(10) IRM 25.25.7.4.4, Taxpayer Disagreed Response Procedures - IPU 20U0759 issued 07-06-2020 - Updated the procedures on resolving Disagreed responses.

(11) IRM 25.25.7.4.6, Taxpayer Incomplete Response Procedures - IPU 20U0759 issued 07-06-2020 - Updated the procedures on resolving incomplete responses.

(12) IRM 25.25.7.6, No Response Received to Letter 4800C - IPU 20U0759 issued 07-06-2020 - Updated the procedures on resolving cases when no response is received to Letter 4800C.

(13) IRM 25.25.7.7, No Response Received to Letter 3219C (Notice of Deficiency) - IPU 20U0759 issued 07-06-2020 - Updated the procedures on resolving cases when no response is received to Letter 3219C.

(14) IRM 25.25.7.8.5, Premium Tax Credit (PTC) Referrals - IPU 20U0759 issued 07-06-2020 - Updated response procedures.

(15) IRM 25.25.7.9, Phone Calls Received via Toll-Free line 855-873-2100 - IPU 20U0759 issued 07-06-2020 - Updated response procedures.

(16) IRM 25.25.7.10, AQC Docketed Appeals Case Procedures - IPU 20U0759 issued 07-06-2020 - Updated response procedures.

(17) IRM 25.25.7.4, Taxpayer Responses - IPU 20U0854 issued 07-31-2020 - Updated taxpayer response procedures.

(18) IRM 25.25.7.4.1, Taxpayer Inquiries via e-Form 4442, Correspondence or Operation Assistance Requests (OARS) - IPU 20U0854 issued 07-31-2020 - Updated taxpayer response procedures.

(19) IRM 25.25.7.4.3, Taxpayer Agreed Response Procedures - IPU 20U0854 issued 07-31-2020 - Updated taxpayer response procedures.

(20) IRM 25.25.7.4.4, Taxpayer Disagreed Response Procedures - IPU 20U0854 issued 07-31-2020 - Updated taxpayer response procedures.

(21) IRM 25.25.7.4.6, Taxpayer Incomplete Response Procedures - IPU 20U0854 issued 07-31-2020 - Updated taxpayer response procedures.

(22) IRM 25.25.7.6, No Response Received to Letter 4800C - IPU 20U0854 issued 07-31-2020 - Updated no response procedures.

(23) IRM 25.25.7.7, No Response Received to Letter 3219C (Notice of Deficiency) - IPU 20U0854 issued 07-31-2020 - Updated no response procedures.

(24) IRM 25.25.7.8.5, Premium Tax Credit (PTC) Referrals - IPU 20U0854 issued 07-31-2020 - Updated PTC activity code and referral procedures.

(25) IRM 25.25.7.9, Phone Calls Received via Toll-Free line 855-873-2100 - IPU 20U0854 issued 07-31-2020 - Updated response procedures for phone calls received through toll-free line.

(26) IRM 25.25.7.10, AQC Docketed Appeals Case Procedures - IPU 20U0854 issued 07-31-2020 - Updated referral Appeals procedures.

(27) IRM 25.25.7.11, Automated Questionable Credit (AQC) Statute Imminent/Statute Expired Cases - IPU 20U0854 issued 07-31-2020 - Updated the procedures for resolving imminent and expired Statute cases.

(28) IRM 25.25.7.12, Processing Late Replies - IPU 20U0854 issued 07-31-2020 - Updated the procedures on resolving late replies.

(29) IRM 25.25.7.3, Automated Questionable Credit (AQC) Initial Case Processing - IPU 20U0898 issued 08-11-2020 - Updated case processing procedures.

(30) IRM 25.25.7.9, Phone Calls Received via Toll-Free line 855-873-2100 - IPU 20U0898 issued 08-11-2020 - Updated the procedures for received phone calls.

(31) IRM 25.25.7.3, Automated Questionable Credit (AQC) Initial Case Processing - Updated Form 1040X processing procedures.

(32) Editorial changes made throughout the IRM section.

Effect on Other Documents

IRM 25.25.7 effective 10-01-2019 is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs) – IPU 19U1196 issued 11-14-2019, IPU 20U0219 issued 02-05-2020, IPU 20U0759 issued 07-06-2020, IPU 20U0854 issued 07-31-2020.

Audience

Campus employees in Return Integrity Verification Operations (RIVO), Return Integrity Verification Program Management (RIVPM), Return Integrity and Compliance Services (RICS).

Effective Date

(10-01-2020)

Denise D. Davis
Director, Return Integrity Verification Program Management
Wage and Investment Division

Program Scope and Objectives

  1. Purpose and Program Goals: This IRM section provides guidance for Return Integrity Verification Operations (RIVO) employees when verifying individual master file returns for possible false income and withholding where a refundable credit is claimed. Individual master file returns are selected through the Dependent Database (DDb) or through the Return Review Program (RRP) system. These selection processes identify suspicious returns meeting certain criteria for false or inflated wages and/or withholding with a refundable credit claimed on the return.

  2. Audience: The audience intended in this IRM is RIVO employees.

  3. Policy Owner: The Return Integrity Verification Program Management (RIVPM) is the policy owner of this program.

  4. Program Owner: RIVPM is the program office responsible for oversight over this program.

  5. Primary Stakeholders; The primary stakeholders are Return Integrity Verification Operation (RIVO), and organizations such as Accounts Management, that collaborate with RIVO.

  6. Program Goals; Program goals for the program are in the Operation Guidelines as well as IRM 1.4.10, Return Integrity & Verification Operation Managers Guide.

  7. The Automated Questionable Credit (AQC) program is for certain types of work streams that do not meet the traditional Examination or Accounts Management work load. IDRS letters are issued to taxpayers proposing tax assessments. To be considered for treatment by AQC, cases must meet at least five of the following seven core AQC criteria:

    • A simple case (e.g., single issue case with low response rate and little or no documentation required)

    • Math-Error like conditions (i.e., Is the taxpayer eligible or not? Over the limit?)

    • High confidence in accuracy of data (e.g., low no change rate)

    • Refunds based on Verified False Income and Withholding (FI&W)

    • Refundable credits based on verified false income

    • A pre-refund opportunity to protect revenue

    • Issue generated from information on a return or in combination with 3rd party government data (data matching capabilities)

    Note:

    There may be certain exceptions when the opportunity is post-refund, an example is the Residential Energy Credit.

  8. All AQC cases will be issued a Letter 4800C, Questionable Credit 30 Day Contact Letter, informing the taxpayers of a proposed deficiency or disallowing a claim for refund or a credit for a subsequent period’s estimated tax.

  9. If the taxpayer does not respond to the Letter 4800C, then after the suspense period, the Service will send either a Letter 3219C, Statutory Notice of Deficiency, allowing the taxpayer 90 days to petition the Tax Court, or a Letter 105C, Claim Disallowed or a Letter 106C, Claim Partially Disallowed, and will make an immediate adjustment reflecting the claim disallowance.

  10. If the taxpayer does not respond to the Letter 3219C, after the suspense period, the Service will make an immediate adjustment reflecting the claim disallowance/assessment. No additional letter will be sent.

    Note:

    The Letter 3219C will include a paragraph disallowing a claim. This notice of claim disallowance triggers a two year period for the taxpayer to file suit in a district court or the Court of Federal Claims to contest those disallowed items. If the taxpayer files a petition to the Tax Court to contest the proposed deficiency and also wishes to contest all or part of the claim disallowance, the taxpayer may raise the disallowed issues in Tax Court to the extent provided by IRC § 6512.

Background

  1. Return Integrity Verification Program Management (RIVPM) strengthens the integrity of the tax system by:

    • Protecting the public interest by improving IRS’s ability to detect and prevent improper refunds

    • Serving the public interest by taking actions fairly and appropriately to identify, evaluate and prevent the issuance of improper refunds

    • Helping taxpayers understand the refundable tax credits for which they are eligible

Program Management and Review

  1. The program has reports to track the inventory, including receipts and closures. Additional report guidance is found in IRM 1.4.10, Return Integrity & Verification Operation Managers Guide.

  2. A quality control program, Embedded Quality, is in place to review all processes to ensure accuracy and effectiveness. Goals, measures, and operating guidelines are listed in the yearly Operation Guidelines and in IRM 21.10.1, Embedded Quality (EQ) Program for Accounts Management, Campus Compliance, Field Assistance, Tax Exempt/Government Entities, Return Integrity and Compliance Services (RICS), and Electronic Products and Services Support.

Authority

  1. Refer to the following:

    • IRM 1.2.2, Servicewide Policies and Authorities, Servicewide Delegations of Authority.

    • IRM 1.1.13, Organization and Staffing, Wage and Investment Division.

    • Various Internal Revenue Codes (IRC) including but not limited to:

    • IRC § 6402(a), Authority to make credits or refunds

    • IRC § 6401, Amounts treated as overpayments

    • IRC § 6404, Abatements of tax

    • IRC § 6213, Restrictions on assessments and math error authority

  2. Refer to IRC GATT § 32(c)(2)(B)(iv) for more information on General Agreement on Tariff and Trades (GATT) rule of disqualifying a prisoner’s income earned during incarceration for Earned Income Tax Credit (EITC).

Responsibilities

  1. Return Integrity Verification Program Management (RIVPM) has responsibility for information in this IRM. Information is published in the IRM on a yearly basis.

  2. The Director of RIVPM is responsible for the policy related to this IRM.

  3. The Chief of the RIVPM Policy & Analysis is responsible for ensuring this IRM is timely submitted to publishing each year.

  4. More information can be found in IRM 1.1.13.5, Return Integrity and Compliance Services.

Acronyms

  1. For a list of Acronyms used throughout Return Integrity Verification Operations (RIVO) see IRM 25.25.1.1.5, Acronyms.

Related Resources

  1. The related resources listed below may be utilized for account research and issue resolution. These related resources may be accessed through the IRS Intranet-Servicewide Electronic Research Program (SERP) site.

    • IRM 25.25, Revenue Protection

    • IRM 25.23, Identity Protection and Victim Assistance

    • IRM 21, Customer Account Services

    • IRM 2, Information Technology

    • IRM 3, Submission Processing

    • IRM 4, Examining Process

  2. IDRS restricted access accounts are accounts where a user must request special permissions to access the account through IDRS. Follow IRM 21.2.1.3.2, Authorized IDRS Access.

    Exception:

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

  3. The IRS adopted the Taxpayer Bill of Rights (TBOR) in June 2014. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. See IRC § 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see The IRS outlines the Taxpayer Bill of Rights.

Automated Questionable Credit (AQC) Inventory Types

  1. There are several types of inventory that will be covered by Automated Questionable Credit Program (AQC). AQC inventory will be identified with a transaction code (TC) 971 action code (AC) 140 or a TC 971 AC 122 with the MISC field containing the inventory case type, and/or TC 971 AC 128 with a MISC field "AQCPTC191" or "AQCPTC195" and a TC 810 with a memo amount:

    Inventory Type Description "Required Documentation"
    AQC 16
    • Full disallowance returns only. Returns with verified bad wages and withholding and refundable credits meeting certain dollar criteria.

    • Copies of pay statements or check stubs that contain the date gross income was received, and the amount of income and withholding, OR

    • A statement on company letterhead from the employer that paid the questionable income that contains the dates of employment, wages paid and withholding deducted.

      Caution:

      A copy of a Form W-2 is not a substitute for the above, unless in substantiation of an Individual Taxpayer Identification Number (ITIN).

    AQC17 partials
    • Returns with some (partial good) verified bad wages and/or withholding and refundable credits meeting certain dollar criteria.

    • Copies of pay statements or check stubs that indicate the date, gross income received, and withholding, OR

    • A notice on company letterhead from the employer that indicates the dates of employment, wages paid, and withholding deducted.

      Caution:

      A copy of a Form W-2 is not a substitute for the above, unless in substantiation of an ITIN.

    AQC25
    • Returns with verified bad wages and withholding and refundable credits originally meeting Exam criteria, rerouted to AQC based on no other compliance flags.

    • Copies of pay statements or check stubs that contain the date gross income was received, and the amount of income and withholding, OR

    • A statement on company letterhead from the employer that paid the questionable income that contains the dates of employment, wages paid and withholding deducted.

      Caution:

      A copy of a Form W-2 is not a substitute for the above, unless in substantiation of an ITIN.

    AQC6X (6X)
    • Form 1040-X that cannot be verified within tolerance and the account contains prior Return Integrity Verification Operations (RIVO) involvement: including returns with or without refundable credits.

    • Copies of pay statements or check stubs that indicate the date, gross income received, and withholding, OR

    • A notice on company letterhead from the employer that indicates the dates of employment, wages paid, and withholding deducted.

      Caution:

      A copy of a Form W-2 is not a substitute for the above, unless in substantiation of an ITIN.

    AQC2
    • False Income and Withholding (FI&W) with NO refundable credits.

    • Copies of pay statements or check stubs that contain the date the gross income was received, and the amount of income and withholding, OR

    • A statement on company letterhead from the employer that paid the questionable income that contains the dates of employment, wages paid and withholding deducted.

      Caution:

      A copy of a Form W-2 is not a substitute for the above, unless in substantiation of an ITIN.

    General Agreement on Tariff and Trades (GATT11)
    • Prisoner with good income but a refundable credit that is not allowable based on income earned while incarcerated see IRM 25.25.9.4, General Agreement on Tariffs and Trade (GATT) Returns.

    • Letter from the Prison (government entity) showing dates of incarceration (less than full year prisoner) participation in work release and halfway house programs, or community confinement are still considered incarcerated, see Pub 596, Earned Income Credit (EIC), for additional requirements.

    Note:

    For RIVO only: If the taxpayer states they have never been incarcerated use local procedures to verify or the taxpayer may respond with a letter from the police/institution that they have not been incarcerated.

    Note:

    For telephone assistors: If the taxpayer disagrees, they need to provide documentation showing their incarceration dates, such as a letter from the penal institution. If the taxpayer states they were never incarcerated, they need to sign the Letter 4800C or Letter 3219C or provide a written statement denying they were incarcerated and a copy of their driver’s license.

    American Opportunity Tax Credit (AOTC) (Pre-refund) (AOTC25–AOTC29) Additional Child Tax Credit (ACTC) or Earned Income Credit (EIC)
    • Inventory cases with refundable credits are typically cases that broke Dependent Database (DDb) Rule 7.

      Exception:

      A TC 971 AC 122 with MISC field 7V are accounts held by RIVO in December of 2017 and are not related to AQC.

    • 7B - AOTC27 - Claimed Social Security Benefits without withholding with AOTC only.

    • 7C - AOTC28 - 30+ years old with AOTC only.

    • 7D - AOTC29 - High risk preparer with AOTC.

    • 7E - AOTC25 - Claimed AOTC with no prior Form 1098T and under the age of 14.

    • 7F (7F)- Form 1040SS with ACTC.

    • 7T (7T) - Citizenship in question and claiming EIC

    • Copy of Form 1098-T, Tuition Statement, and proof of payment to higher education institution, or school transcript, etc. (If IRP documentation is not present). See IRM 4.19.15.3.1.1, Education Tax Credits - Evaluating Taxpayer Responses.

    • Copy of documentation showing the children claimed meet the tests outlined in Publication 501, (For 7F only) Dependents, Standard Deduction, and Filing Information, to be a qualifying child/qualifying relative.

    • See IRM 4.19.14.6.5, EITC - Personal Exemptions and Dependents, for examples of possible documentation that can be submitted to substantiate the claim.

    • For 7T only - The taxpayer needs to submit a copy of the social security cards for the primary and secondary taxpayers, as well as qualifying children listed on Schedule EIC that does not contain a legend "Not Valid for Employment." . If the legend, "Not Valid for Employment." , appears on the card, the taxpayer is not eligible for the credit. See Pub 519, page 31, U.S. Tax Guide for Aliens, for additional requirements or IRM 4.19.14.6 (4), Evaluating EITC Taxpayer Responses.

    Office of Child Support Enforcement (OCSE18)
    • Returns with a TOPS offset for Child support (TC 898)

    • Returns with some (partial good) verified bad wages and/or withholding and refundable credits.

    • Manually referred from External Leads

    • Copies of pay statements or check stubs that indicate the date, gross income received, and withholding, OR

    • A notice on company letterhead from the employer that indicates the dates of employment, wages paid, and withholding deducted.

      Caution:

      A copy of a Form W-2 is not a substitute for the above, unless in substantiation of an ITIN.

    Premium Tax Credit (PTC) PTC claimed on tax return.
    • Form 1095-A, Health Insurance Marketplace Statement,

      Note:

      Form 1095-A must be verified (if not verified, additional documentation must be requested that justifies the form amounts). Additional documentation requirements are listed below.

      documentation proving enrollment in the marketplace and premium payments, invoices, or statements from the insurance providers that include the names of those covered by the benefits and dates of coverage. (Required for all PTCXX inventory types listed below).

    Reminder:

    The documentation submitted must match the original return amounts or an amended return will be required to claim a different amount of credit.

    (PTC900) - Dependent Database (DDb)-PTC-Error-Code (CD) 900
    • PTC claimed, where the taxpayer is considered a full year prisoner.

    • PTC claimed on a joint return, where both taxpayers are considered full year prisoners.

    • Letter from the Prison showing dates of incarceration (less than full year) and

    • See PTC above for required documentation.

    (PTC901) DDb-PTC-Error-CD 901
    • The taxpayer is under the age of 18 and there is a record of Advance Premium Tax Credit (APTC) paid that was not reported on the tax return.

      Caution:

      PTC may not have been claimed on the return.

    • See PTC above for required documentation.

    (PTC904) DDb-PTC-Error-CD 904
    • No income was reported on the tax return and there is a record of APTC paid that was not reported on the tax return.

      Caution:

      PTC may not have been claimed on the return.

    • See PTC above for required documentation.

    (PTC902) DDb-PTC-Error-CD 902
    • The taxpayer is over the age of 65 and there is a record of APTC paid that was not reported on the tax return.

      Caution:

      PTC may not have been claimed on the return.

    • See PTC above for required documentation.

    (PTC903) DDb-PTC-Error-CD 903
    • A joint return, where both taxpayers are over the age of 65, and there is a record of APTC paid that was not reported on the tax return.

      Caution:

      PTC may not have been claimed on the return.

    • See PTC above for required documentation.

    Error Resolution Code (ERC) 191 (PTC91)
    • Verified income below the poverty level: the taxpayer is not eligible for the PTC.

    • See PTC above for required documentation.

    ERC 195 (PTC95)
    • PTC claimed with no record of a Marketplace purchase.

    • See PTC above for required documentation.

    Special Handling (AQC55) (This includes statute imminent and statute expired inventory)
    • Inventory cases that have been referred to AQC, that do not fit into normal AQC Inventory types listed above.

    • Various documents, based on case review of income/credits claimed.

Automated Questionable Credit (AQC) Initial Case Processing

  1. Automated Questionable Credit (AQC) cases are those that have been deemed to be non-compliant with the current tax regulations and have been forwarded to AQC for treatment. AQC Tax Examiners (TEs) will be responsible for researching the account, determining if appropriate documentation exists for the credit claimed and taking the appropriate actions based on their research. Use the following chart to initiate case actions:

    If Then
    1
    Pre-refund initial case actions
    • Research account for -O freeze. Ensure the special paragraph is used in the initial contact letter during the disaster relief period. Update control with “XXOFREEZE’, “XX” is the work type per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Research to determine if payments have posted to the account. If payments are present that were not claimed on the return or are not for the AQC deficiency, see Exhibit 25.25.5-1, Triage Procedures , and take appropriate actions to refer the case for processing.

    • Open a control using category code "QRPA" and use the Inventory Type as the activity code, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types. If there is already an AQC.net tool reject control (XXREJECT), update that control with the Inventory Type as the activity code.

    • Input transaction code (TC) 971 action code (AC) 140 include the Inventory Type in MISC field (if no TC 971 AC 122, TC 971 AC 128 or TC 971 AC 140 is already pending or posted), see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Input a TC 570 ( if there is not already a -R or -K freeze posted) to ensure the credit is held.

    • For current year Inventory Type AQC16 input a TC 971 AC 850.

    • Bring back any offsets other than the Shared Responsibility Payment as necessary, see IRM 21.4.6.5, Refund Offset Procedures.

    • Send Letter 4800C, Questionable Credit 30 Day Contact Letter, with appropriate paragraphs.

    • Update the QRPA control activity code to the suspense expiration date, "XXMMDDYYYY" (XX =Inventory Type, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types, and MMDDYYYY = the current date plus 46 calendar days or plus 61 days for outside the U.S.).

    • Update AQC database as required.

    2
    Post refund initial case actions.

    Note:

    Post-refund AQC cases are very rare, and this section is only to be used if the case was identified as a post-refund case and was assigned to your inventory by an AQC Analyst.

    • Research account for -O freeze. Ensure the special paragraph is used in the initial contact letter during the disaster relief period. Update control with “XXOFREEZE’, “XX” is the work type per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Open a control using category code "QRPA" and use the Inventory Type as the activity code, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Input TC 971 AC 140 include Inventory Type in MISC field (if no TC 971 AC 122, TC 971 AC 128 or TC 971 AC 140 is already pending or posted), see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Send Letter 4800C, Questionable Credit 30 Day Contact Letter, with the appropriate paragraphs.

    • Update the QRPA control activity code to the suspense expiration date, "XXMMDDYYYY" (XX = Inventory Type, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types, and MMDDYYYY = the current date plus 46 calendar days or plus 61 days if outside the U.S.).

    • Update AQC database as required.

    3
    Special Handling

    Note:

    Special Handling cases may not meet all AQC criteria, but will still be worked through the AQC process

    • Research account for -O freeze. Ensure the special paragraph is used in the initial contact letter during the disaster relief period. Do not issue a Letter 105C, Claim Disallowed, Letter 106C, Claim Partially Disallowed,Letter 3219C, Statutory Notice of Deficiency (IMF/BMF), during the disaster relief period. Update control with “XXOFREEZE”, “XX” is the work type per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Open a control base using category code “QRPA” and “SPECHAND” in the activity code.

    • Input TC 971 AC 140 and include the Inventory Type of “AQC55” in MISC field, (if no TC 971 AC 122 or TC 971 AC 140 is already pending or posted with MISC field “AQC55”).

    • For current year returns input a TC 971 AC 850.

    • Send Letter 4800C, Questionable Credit 30 Day Contact Letter, with the appropriate paragraphs, if there are 180 days or more remaining on the Assessment Statute Expiration Date (ASED). Otherwise, see IRM 25.25.7.11, Automated Questionable Credit (AQC) Statute Imminent/Statute Expired Cases, for which letter to send and actions to take.

    • Update the QRPA control activity code to the suspense expiration date, "55MMDDYYYY" (MMDDYYYY = the current date plus 46 calendar days, or plus 61, if outside the U.S.).

    • Update the AQC database as required.

    4
    AQC17 AND command code (CC) IRPTR wages and withholding match originally reported amounts within tolerance (only after CC IRPTR is available for good) per IRM 25.25.3 , Revenue Protection Verification Procedures for Individual Master File Returns.
    • Do not send an initial contact letter.

    • Input a TC 290 for .00 with Reason Code (RC) “085” and Priority Code (PC) “8” to release the refund.

    • Update the Electronic Fraud Detection System (EFDS) notes as appropriate.

    • "Refile" the return in EFDS, if a current year return.

      Note:

      If the return is in the Scheme Tracking and Referral System (STARS), update the disposition to "DL" to have the return deleted from STARS. A reason must be entered in the return's STARS or EFDS Notes when requesting a return be deleted from STARS. See IRM 25.25.13-1, STARS Delete Reasons.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), with reason the refund was released.

    • Ensure all RIVO control bases are closed.

    • Update the AQC database as required, using "surveyed" as the closing disposition. Do not input a protected dollar amount.

    5
    AQC17 AND the changes to income and or credits would result in a refund equal to or greater than was originally claimed
    • Do not send an Initial Contact Letter.

    • Input a TC 290 for .00 with no source document. Use RC"099" , Source Code (SC) "0" and HC "3" , to release the original refund and to hold the adjustment notice.

    • Update EFDS notes with reason the refund was released.

    • "Refile" the return in EFDS, if a current year return.

      Note:

      If the return is in the Scheme Tracking and Referral System (STARS), update the disposition to "QL" .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), with reason the refund was released.

    • Ensure all RIVO control bases are closed.

    • Update the AQC database as required, using "surveyed" as the closing disposition. Do not input a protected dollar amount.

    6
    AQC 6X and the account has not been adjusted to the amended return or the amended return contains only Schedule C and/or HSH income.

    Note:

    The amended return is considered “adjusted” if the AM/SP originator only inputs a TC 290 for .00.

    • Reject back to the originator by:

      • Closing the QRPA control.

      • Opening a new control back to the AM/SP originator of the QRPA control: “C#,1040XRJCT,A,XRET”
        XXXXXXXXXX,*
        (XXXXXXXXXX= The IDRS number of the ACTION-EMP from the QRPA control)

      • Leaving appropriate AMS notes explaining the reason for the rejection.

    7
    AQC6X and the account has no previous RIVO involvement.
    • Do not send an initial contact letter.

    • Input a TC 290 for .00 with no source document, RC “099”, SC “0” and HC “3” to release the refund.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), with reason the refund was released.

    • Ensure all RIVO control bases are closed.

    • Update AQC database as required, using “surveyed” as the closing disposition. Do not input a protected dollar amount.

    8
    AQC6X and the account has previous RIVO involvement and the corrected income and/or withholding claimed on the amended return, verifies within tolerance per IRM 25.25.3.4, Income Verification using Command Code (CC) IRPTR.

    Note:

    Math verify the adjusted Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) are accurate based on the adjustments to income. If the EITC and/or ACTC are not correct, reject the case back to the AM/SP originator following Box 6 above.

    • Do not send an initial contact letter.

    • Input a TC 290 for .00 with no source document, RC “085” and PC “8” to release the refund.

    • Update the Electronic Fraud Detection System (EFDS) notes as appropriate.

    • “Refile” the return in EFDS, if a current year return.

    • If the return is in the Scheme Tracking and Referral System (STARS), update to CATG 5 disposition “CL”.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), with reason the refund was released.

    • Ensure all RIVO control bases are closed.

    • Update the AQC database as required, using “surveyed” as the closing disposition. Do not input a protected dollar amount.

    9
    AQC6X and the account has previous RIVO involvement and the corrected income and/or withholding claimed on the amended return, does not verify within tolerance per IRM 25.25.3.4, Income Verification using Command Code (CC) IRPTR.
    Determine if the case is a pre-refund or was assigned as a post-refund case and follow Box 1 or 2 above as appropriate.

Taxpayer Responses

  1. The following procedures will be used to resolve taxpayer responses received by Tax Examiners (TE) working the AQC program. Taxpayer responses are classified into five categories: Agreed, Disagreed, Identity Theft, Referred from WOW and Other.

  2. All incoming taxpayer responses will either be controlled on IDRS to AQC clerical number “1484177777” and assigned to an AQC TE within five (5) business days of receipt or directly controlled to a specific AQC TE within the same timeframe.

  3. For responses received by mail, use activity code “CORRECDXXX” (XXX=batch number the response is assigned to) and the received date of the response. Use the category code listed in the chart below to classify the type of response received:

    AQC Determinations Category Codes
    Agreed AQCA
    Disagreed AQCD
    Identity Theft AQCI
    Referred from WOW AQC1
    Other AQCO

  4. For responses received via e-Fax use activity code “MEMXXXMMDD” (XXX=batch number the response is assigned to and the MMDD= month and day the response was received) Use the category code listed in the table above to classify the type of response received.

    Note:

    If an open IDRS control base is present on the module to a specific employee (disregard generic control bases), contact the controlling employee prior to resolution to coordinate efforts and prevent erroneous or duplicate adjustments or actions. Refer to IDRS - Unit and USR Database, to locate the employee. A link is located on the SERP Home Page under the Who/Where tab.

  5. Use the chart below to resolve taxpayer responses in AQC:

    IF THEN
    1
    If TC 922 is present and the last Process Code is 30,34,54,55,57-60,75, 77-79,81,95,96 (with an open control to AUR employee), 97-99.
    • Update the return disposition in EFDS or STARS to “CAT 5 CL” and add appropriate notes.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to specify the AQC case has been rejected and referred to AUR.

    • Ensure all RIVO control bases are closed.

    • Update AQC database case status to “Rejected”, Reject Reason to “TC 922- Referred to AUR” and the Reject Date with the date of rejection. Do not input a protected dollar amount.

    2
    There is a “L” freeze condition on the account.
    • Review CC AMDISA to determine the status of the Examination (Exam) case. If the current status code is 08 or less, process as normal. If the status code is 09 or greater, route the response to Exam, per the AIMS Status Code and the QRP Source and Project Code. See IRM 4.19.14.9.2, QRP Source Code and Project Codes, and My SB/SE Employee Group Code for additional guidance and routing information.

    • Update the return disposition in EFDS or STARS to “CAT 5 CL” and add appropriate notes.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to specify the AQC case has been rejected and referred to Exam.

    • Ensure all RIVO control bases are closed.

    • Update AQC database case status to “Rejected”, Reject Reason to “L freeze greater than status 08”, and the Reject Date with the date of rejection. Do not input a protected dollar amount.

    3

    There is an -A freeze, a TC 971 action code (AC) 120, a control base with category code “XRET” or “TPRQ” assigned to another area.
    • Research the case. The inquiry may be the response to the AQC letter.

    • If the correspondence/amended return is related to the AQC issue; ensure appropriate notes are added to AMS. (e.g., “amended return ok to adjust”, “PTC amounts differ from reported amounts”, etc.)

    • Update the return disposition in EFDS or STARS to “CAT 5 CL” and add appropriate notes.

    • Ensure all RIVO control bases are closed.

    • Update AQC database case status to “Rejected”, Reject Reason to “A- Reject code AFRZ” and the Reject Date with the date of rejection. Do not input a protected dollar amount.


    4
    If a Form 1040-X, Amended U.S. Individual Tax Return, is received; there is NO -A freeze, and does NOT only address the proposed changes.
    • Verify the income and federal withholding reported on the amended return per IRM 25.25.3.2, Verification of Income.

    • Input/Update AMS notes with “verified good” or “verified bad” information per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Refer the Form 1040-X, to Accounts Management (AM) or Submission Processing (SP).

    • Hold AQC case open until AM or SP confirms receipt of the Form 1040-X, or until 3 business days have passed, whichever is earlier.

    • Update the return disposition in EFDS or STARS to “CAT 5 CL” and add appropriate notes.

    • Ensure all RIVO control bases are closed.

    • Update AQC database case status to “Rejected”, Reject Reason to “Form 1040-X received-forwarded to AM”, and the Reject Date with the date of rejection. Do not input a protected dollar amount.

    5
    If a Form 1040-X, Amended U.S. Individual Tax Return is received; there is NO -A freeze and it ONLY addresses the proposed changes.
    • Follow IRM 25.25.7.4.3, Taxpayer Agreed Response Procedures.


    6
    Response is to Letter 105C, Claim Disallowed or Letter 106C, Claim Partially Disallowed.
    • Follow IRM 21.5.3.4.6.2, Appeals and Responses to Letter 105C and Letter 106C.


    7
    If response indicates taxpayer is deceased and a refund needs to be released and the return was filed by someone other than the surviving spouse. Otherwise, process following normal procedures.
    • Follow IRM 25.25.13.10, Manual Refund Criteria for Return Integrity Verification Operations.

Taxpayer Inquiries via e-Form 4442, e-Fax, Correspondence or Operation Assistance Requests (OARS)

  1. There are three reasons an e-Form 4442, Inquiry Referral, will be received in the Automated Questionable Credit (AQC) queue:

    1. the allotted 60-day time frame has expired and taxpayer has not received a response.

    2. the taxpayer called and there are AQC indicators on the account and no initial contact letter has been issued within the allotted 60-day timeframe from the date of the transaction code (TC) 971 action code (AC) 122, 140 or 128 with MISC Field “AQCPTC191” or “AQCPTC195”.

    3. the taxpayer called and research showed documentation available on command code (CC) IRPTR to substantiate the claim for refund.

  2. There are two reasons why an e-Fax or correspondence would be received from a taxpayer via the AQC e-Fax or correspondence mailboxes:

    1. the taxpayer called the AQC toll-free line before a letter has been issued and is submitting documentation to substantiate their claim for refund.

    2. the taxpayer received a letter from AQC and is providing documentation or making an inquiry. Follow the tables in IRM 25.25.7.4, Taxpayer Responses, to resolve the inquiry, if an AQC letter was issued.

  3. The following reasons an Operation Assistance Request (OAR) is received from Taxpayer Advocate (TAS) may include:

    1. the taxpayer called the AQC toll-free line and an initial contact letter has not been issued.

    2. the taxpayer received a letter from AQC and is providing a response.

    3. the taxpayer is requesting an appeal on a previous adjustment or decision made by AQC.

    4. the taxpayer is experiencing a hardship.

    Note:

    If an e-Form 4442, an e-Fax, correspondence or an OAR is received is inquiring about the status of a refund, and NO AQC correspondence (e.g., Letter 4800C, Questionable Credit 30 Day Contact Letter, Letter 3219C, Statutory Notice of Deficiency) has been sent, and there are NO AQC indicators (e.g., transaction code (TC) 971 action code (AC) 122, TC 971 AC 140, TC 971 AC 128 with MISC Field “AQCPTC191” or “AQCPTC195”,or DDb Rule 7 inventory types), reject the case as not meeting AQC criteria.

    If the taxpayer called and research shows: Then
    1
    AQC indicators on the account and no initial contact letter has been sent and the request is an OAR and there is no documentation available to substantiate the claim for refund.
    • Initiate manual start procedures per IRM 25.25.7.3, Automated Questionable Credit (AQC) Initial Case Processing, and close the OAR.

    Note:

    TAS may open an additional request once the taxpayer has received the notice and is allowed the allotted time to agree or disagree with proposed changes.

    2
    AQC indicators on the account and no initial contact letter has been issued AND documentation is not available on CC IRPTR or the “required documentation” per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types, to substantiate the claim for refund is not provided by the taxpayer.

    Exception:

    DDb Rule 7 inventory types (AOTC holds) should not be referred until after cycle 19 each year. Follow Alert 16A0041: -R Freeze hold on American Opportunity Tax Credit (AOTC).

    1. If no AQC.net Tool rejection criteria are met per Exhibit 25.25.7-1, Inventory Reject Criteria, then place the required information (taxpayer identification number (TIN), tax period, name control, work type, etc.) on the "Refer to Tool" spreadsheet for initial case actions.

    2. If AQC.net Tool rejection criteria are met per Exhibit 25.25.7-1, Inventory Reject Criteria, or the account contains an AQC.net tool reject control (XXREJECT), then initiate manual start procedures per IRM 25.25.7.3, Automated Questionable Credit (AQC) Initial Case Processing.

    3. Update EFDS notes as appropriate.

    4. Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include the specific documentation received and the reason(s) it did not substantiate the credit or refund claimed (e.g. Received copy of Form W-2, can not be used per IRM 25.25.7.2)..

    5. Ensure all RIVO control bases are closed, if case is being placed on the “refer to Tool” spreadsheet.

    6. Close the e-4442 with note: “Return not substantiated, referred to have letter 4800C issued”, or AQCX correspondence control with "UNSUBDOC" .

    7. Review IRM 21.5.1.4.10 Classified Waste, to determine if the documentation meets classified waste criteria. If the documentation does not meet classified waste criteria and needs to be associated with the return for audit trail purposes, complete Form 9856, Attachment Alert, to send the documentation to Files.

      Exception:

      For E-fax responses, mark the fax with a red “X”, your Employee Identification Number and move it to your “Classified Waste” folder. Do not complete Form 9856.

    8. Update the AQC database as required.

    3
    AQC indicators on the account and no initial contact letter has been issued AND documentation is available on CC IRPTR and/or the taxpayer has provided the “required documentation” per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types, to substantiate the claim for refund.

    Note:

    See IRM 25.25.3, Revenue Protection Verification Procedures for Individual Masterfile Returns.

    1. Input TC 290 for .00 with no source document (NSD) for claims validated only using CC IRPTR or source document (SD) for claims validated using any documentation provided by the taxpayer to release the refund. Use RC "085" and PC "8" to provide the taxpayer with confirmation of the refund release.

    2. Update EFDS notes as appropriate. Refile the return in EFDS for current year returns.

    3. Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include the specific documentation received (e.g. Received copy of paystubs).

    4. If the return is in the Scheme Tracking and Referral System (STARS), update the disposition to DL to have the return deleted from STARS. A reason must be entered in the return’s STARS or EFDS Notes when requesting a return to be deleted from STARS, see Exhibit 25.25.13-1 , STARS Delete Reasons.

    5. Ensure all RIVO control bases are closed.

    6. Update the AQC database as required.

      Note:

      Cases that are released before any letter is sent to the taxpayer are closed as "surveyed" in the AQC database.

Automated Questionable Credit (AQC) Scheme Tracking and Referral System (STARS) Closing Actions

  1. All Automated Questionable Credit (AQC) treatment streams (excluding those below) will be identified as disposition "AQ - Accepted into AQC" . Once a final determination of fraud is made, the Scheme Tracking and Referral System (STARS) will be updated to Disposition "QL" as a final closing disposition. If a return is determined to be non-fraud, the return will be removed from STARS following current STARS delete procedures and updated in STARS to disposition "DL" . Enter a reason in the return's STARS or Electronic Fraud Detection System (EFDS) Notes when requesting a return to be deleted from STARS.

    Note:

    Return Integrity and Compliance Services (RICS) Analysts will update STARS with the final dispositions weekly.

  2. DDb Non-Compliant filter Rule 7 (with both American Opportunity Tax Credit (AOTC) and Additional Child Tax Credit (ACTC) credits) are non-income related issues. These cases will be identified as Category (CAT) 8 Disposition (Disp) R7 (DDb Rule 7 In Process of fraud determination) in EFDS. Once a final determination of fraud is made, STARS will be updated to CAT 8 Disp “QL” as a final closing disposition. If a return is determined to be non-fraud, the return will be removed from STARS by updating the disposition to "DL" . Enter a reason in the return's STARS or EFDS Notes when requesting a return be deleted from STARS.

    Note:

    RICS Analysts will update STARS with final dispositions weekly.

  3. The AQC treatment stream for Premium Tax Credit (PTC) will be identified as CAT 8 Disp "PT - Questionable Premium Tax Credit (In Process of fraud determination)" . Once a final determination of fraud is made, STARS will be updated to CAT 8 Disp "QL" as a final closing disposition. If a return is determined to be non-fraud, the return will be removed from STARS by updating the disposition to "DL" . Enter a reason in the return's STARS or EFDS Notes when requesting a return to be deleted from STARS.

    Note:

    RICS Analysts will update STARS with final dispositions weekly.

  4. The AQC treatment stream for General Agreement on Tariff and Trades (GATT) will be identified as CAT 8 Disp "TT - full year prisoner with refundable credits" . Once a final determination of fraud is made, STARS will be updated to CAT 8 Disp "QL" as a final closing disposition. If a return is determined to be non-fraud, the return will be removed from STARS by updating the disposition to "DL" . Enter a reason in the return's STARS or EFDS Notes when requesting a return to be deleted from STARS.

    Note:

    RICS Analysts will update STARS with final dispositions weekly.

Taxpayer Agreed Response Procedures

  1. For taxpayer responses agreeing to the proposed changes follow the table below:

    Exception:

    For AQC16 if Command Code (CC) IRPTR verifies the return, release the refund the taxpayer is entitled to, regardless if the taxpayer responded to the letter agreeing to a full return disallowance. See IRM 25.25.3.4, Income Verification using CC IRPTR.

    IF THEN
    1
    The taxpayer agreed to the proposal and signed the letter or the letter was signed by an Authorized Third Party, see IRM 3.42.9.3.8, Third Party Authorization.

    Exception:

    If the taxpayer has checked the "Agreed" box but provided documentation that substantiates the original claim, treat the response as "Disagreed" , and follow the procedures, see IRM 25.25.7.4.4, Taxpayer Disagreed Response Procedures.

    • Input the adjustment as a Source Document (SD) attaching the signed agreement as SD. Use Hold Code “0” and source code “0”.

    • Input Transaction Code (TC) 811 for zero (.00) with a posting delay code of “2”, if there is an -E freeze on the module to release the freeze and issue any remaining refund.

    • Update the Electronic Fraud Detection System (EFDS) notes as appropriate.

    • Update the return in the Scheme Tracking and Referral System (STARS) to "QL".

    • Input/Update Account Management Services (AMS) notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Ensure all Return Integrity Verification Operations (RIVO) control bases are closed.

    • Update the Automated Questionable Credit (AQC) database as required. Include the dollar amount protected.

    2
    The taxpayer sent in full payment for a post-refund case that has posted to the account, but did not return the letter this will be treated as an agreement.
    • Input a Non-Source Document (NSD) adjustment to adjust the account based on the inventory type. Use Hold Code “0: and Source Code “0”.

    • Input Transaction Code (TC) 811 for zero (.00) with a posting delay code of “2”, if there is an -E freeze on the module to release the freeze and issue any remaining refund.

    • Update EFDS notes as appropriate.

    • Update the return in STARS to "QL".

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Ensure all RIVO control bases are closed.

    • Update the AQC database as required. Include the dollar amount protected.

    3
    The taxpayer agreed to the proposal, and signed the letter and/or submitted a signed written request or Form 9465, Installment Agreement Request, requesting a payment plan.
    • Input a Source Document (SD) adjustment attaching the signed agreement (or a copy of the Installment Agreement Request) as a SD. Use Hold Code “0” and Source Code “0”.

    • Input Transaction Code (TC) 811 for zero (.00) with a posting delay code of “2”, if there is an -E freeze on the module to release the freeze and issue any remaining refund.

    • Update EFDS notes as appropriate.

    • Update the return in STARS to "QL".

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Ensure all RIVO control bases are closed.

    • Forward the installment agreement request to the Collections Function per the Mail Routing Guide for processing.

    • Update the AQC database as required. Include the dollar amount protected.

Taxpayer Disagreed Response Procedures

  1. Disagreed taxpayer responses fall into two categories – Substantiated or Unsubstantiated.

  2. For inventory types that involve false wages and/or withholding, verify any income document(s) sent in by the taxpayer (e.g. paystubs, letter from employer/payer, etc.) by following IRM 25.25.3, Revenue Protection Verification Procedures for Individual Master File Returns. If you are unable to confirm the validity, the document(s) cannot be used to substantiate the income on the tax return.

  3. If unable to verify the income document(s), determine if the document(s) submitted by the taxpayer are from a valid employer. Use IRM 25.25.3.5, Bogus Employer Determination, Exhibit 25.25.3-1, Internet Research Sources, and Exhibit 25.25.3-3, Research Check Sheet, to research the employer. If you are unable to confirm the validity of the employer, the document(s) cannot to be used to substantiate the return.

    Note:

    For Disagreed taxpayer responses, follow the table below:

    IF THEN
    1
    Substantiated - (No Change to the original return ) – The taxpayer replies to the letter, submits the requested documentation and it verifies as good.

    Exception:

    If research shows the taxpayer is a full year prisoner per CC FTBOLP, and the original inventory type was AQC16 or AQC17, then follow the instructions in box 2 of this table.

    Reminder:

    If documentation for Inventory Type GATT11 verifies that they were not incarcerated or a full year prisoner, follow the local procedures to update the FTBOL spreadsheet located on the shared drive.

    • Input a Transaction Code (TC) 290 for zero (.00) using the documents provided as the Source Document (SD) to release the refund. Use Reason Code (RC) “085” and Priority Code (PC) “8”, to provide the taxpayer with confirmation of the refund release.

    • Input TC 811 for zero (.00) with a posting delay code of 2, if there is an -E freeze on the module to release the freeze and issue any remaining refund.

     

    Reminder:

    If there is an I- freeze on the account, attributed to missing documentation, ensure that the correct return processable date is input on the adjustment. If the original figures were correct and no documents were missing use the original received date of the return.

    1. Update the Electronic Fraud Detection System (EFDS) notes as appropriate.

    2. For current year returns "Refile" the return in EFDS.

    3. Input/Update Account Management Services (AMS) notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include the specific documentation received (e.g. Received copy of paystubs).

    4. If the return is in the Scheme Tracking and Referral System (STARS), update the disposition to “DL” to have the return deleted from STARS. Update STARS or EFDS notes, when a return is being deleted from STARS, see Exhibit 25.25.13-1, STARS Delete Reasons.

    5. Ensure all Return Integrity Verification Operations (RIVO) control bases are closed.

    6. Update the Automated Questionable Credit (AQC) database as required. Do not input a protected dollar amount.

    2
    Substantiated AQC16 or AQC17 wages and withholding and the taxpayer has been incarcerated the entire year.
    • If the response is to a Letter 4800C, follow IRM 25.25.7.6, No Response Received to Letter 4800C, and send Letter 3219C or Letter 105C, or Letter 106C, as a "GATT" inventory type.

    • If the response is to a Letter 3219C, follow the normal process in IRM 25.25.7.7, No Response Received to Letter 3219C (Notice of Deficiency).

      Note:

      A new Letter 3219C is not necessary. Allow the wages and withholding, but remove the refundable credits as outlined in IRM 25.25.9.4, General Agreement on Tariffs and Trade (GATT) Returns.

    • Input TC 972 AC 140/122 MISC "AQC16" or "AQC17" to reverse the prior inventory type.

    • Input a new TC 971 AC 140 MISC "GATT" .

    • Send a request to your local AQC database Administrator to update the work type to "GATT11" , per local procedures.

    • Add an AQC database note "Wages and withholding substantiated - TP full-time prisoner - change to GATT" .

    3
    Substantiated for Premium tax credit only - The taxpayer replies to the letter and submits requested documentation that will change both the proposed amount and the originally claimed amount due to the Alternative Calculation for Marriage (ACM) or contains an allocation condition.
    Follow direction in IRM 25.25.7.8.5, Premium Tax Credit (PTC) Referrals.
    4
    Substantiated for Individual Taxpayer Identification Number (ITIN) - The taxpayer replies to the letter and submits the requested documentation or a Form W-2, containing a “work assumed” Social Security Number (SSN).
    Research CC IRPTR data or the Social Security Administration Online Retrieval System (SSA_ORS) database.

    Note:

    If a “work assumed” SSN is found, update EFDS return notes with the “work assumed” SSN.


    If the income is substantiated, follow box 1 above.
    If the income is not substantiated, follow box 6 below.
    5
    Substantiated or Unsubstantiated - The taxpayer replies with or without documentation to amend the original return to something other than the proposal amount.
    1. Send the taxpayer a Letter 89C, Amended Return Required to Correct Account. .

    2. Close the "AQCX" control on IDRS with activity code "30XRETREQ" , if only a Letter 4800C was issued OR"90XRETREQ" , if a Letter 3219C was issued. Leave the QRPA control open.

    3. Review IRM 21.5.1.4.10, Classified Waste, to determine if the documentation meets classified waste criteria. If the documentation does not meet classified waste criteria and needs to be associated with the return for audit trail purposes, complete Form 9856, Attachment Alert, to send the documentation to Files.

      Exception:

      For E-fax responses, mark the fax with a red “X”, your Employee Identification Number and move it to your “Classified Waste” folder. Do not complete Form 9856.

    4. If there is an AQC.net tool reject control (XXREJECT), reassign the AQC.net tool reject control with the following information:
      C#,XXMMDDYYYY,A,QRPA ("XXMMDDYYYY" = activity before control was closed)
      *,MMDDYYYY ("MMDDYYYY" is the original received date of the case)

    5. If no "QRPA" control is on the account and no AQC.net Tool rejection criteria is met per Exhibit 25.25.7-1, Inventory Reject Criteria, place on the "Refer to Tool" spreadsheet.

    6. Update EFDS notes as appropriate. .

    7. Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include the specific documentation received and the reason(s) it did or did not substantiate the credit or refund claimed (e.g. Received copy of Form W-2, cannot be used per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    8. Update the AQC database as required. Do not update the disposition.

    6
    Unsubstantiated – The taxpayer replies to the letter and either submits information that is not related to the request, that is insufficient, or simply asks for further clarification.
    1. If the taxpayer requests additional clarification send Letter 131C, Information Insufficient or Incomplete for Processing Inquiry, with an explanation of the proposed error. Do not send Letter 131C, if the suspense date has expired.

    2. Close the IDRS "AQCX" control using one of the following activity codes: "30UNSUBDOC" , if only a Letter 4800C has been issued OR"90UNSUBDOC" , if a Letter 3219C has been issued. Leave the "QRPA" control open.

    3. Review IRM 21.5.1.4.10 , Classified Waste, to determine if the documentation meets classified waste criteria. If the documentation does not meet classified waste criteria and needs to be associated with the return for audit trail purposes, complete Form 9856, Attachment Alert, to send the documentation to Files.

      Exception:

      For E-fax responses, mark the fax with a red “X”, your Employee Identification Number and move it to your “Classified Waste” folder. Do not complete Form 9856.

    4. If there is an AQC.net tool reject control (XXREJECT), reassign the AQC.net tool reject control with the following information:
      C#,XXMMDDYYYY,A, QRPA ("XXMMDDYYYY" = activity before control was closed)
      *,MMDDYYYY ("MMDDYYYY" is the original received date of the case)

    5. If no "QRPA" control is on the account and no AQC.net Tool rejection criteria is met per Exhibit 25.25.7-1, Inventory Reject Criteria, place on the "Refer to Tool" spreadsheet.

    6. Update EFDS notes as appropriate.

    7. Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include the specific documentation received and the reason(s) it did not substantiate the credit or refund claimed (e.g. Received copy of Form W-2, cannot be used per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    8. Update the AQC database as required. Do not update the disposition, unless closing as default.

Taxpayer Claiming Identity Theft Response Procedures

  1. For identity theft taxpayer responses follow the instructions below:

    Exception:

    For Statute Imminent Returns (less than 90 days on Assessment Statute Expiration Date (ASED)) and All Rule 7 cases (AOTC25 – AOTC 29, 7F and 7T), follow the procedures in IRM 25.25.4.5, Identity Theft (IDT) Category 7 — Single Return/Deceased/X-REF (No Lost Refund) Process.

    1. Designated Tax Examiners (TEs) will triage Identity Theft (IDT) replies per Exhibit 25.25.5-1, Triage Procedures.

    2. Input a transaction (TC) 971 action code (AC) 522 on command code (CC) ENMOD when the reply indicates IDT, see Exhibit 25.23.2-10, IMF Only TC 971 /AC 522 Tax-Related Identity Theft, Case Status (Initial Claim/Suspicion).

      Note:

      Do not input a TC 971 AC 522 if one for that tax year already exists.

    3. If there is a -A freeze condition on the account and no history of a Return Integrity Verification Operations (RIVO) IDRS control in categories NCAT, ECAT or NRAM, send the correspondence to the Inventory Control Team (ICT) following local procedures.

    IF THEN
    1
    The return meets criteria for Category (CAT) 7 Disposition (Disp) S1 or SB (account will be resolved using the Return Integrity and Compliance Services (RICS) IDT Tool).
    • Update the Scheme Tracking and Referral System (STARS) to CAT 7 Disp S1 or SB.

    • Place the reply in the holding bin (documentation will be attached to original return).

    • Close both the Correspondence and "QRPA" IDRS controls with "IDTCORR" as the activity code.

    • Update the Electronic Fraud Detection System (EFDS) notes as applicable. For Premium Tax Credit (PTC) cases input "PTC addressed" .

    • Input/Update Account Management Services (AMS) notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Close all RIVO controls.

    • Update the Automated Questionable Credit (AQC) database as required.

    2
    The return meets criteria for CAT 7 Disp S2.
    • Place the reply in the bin labeled “S2” for the IDT TE to resolve the account.

      Note:

      Do not update the STARS CAT or Disp, the IDT TE will update STARS accordingly after the account is resolved.

    • Update EFDS notes as applicable. For PTC cases input "PTC addressed" .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Update the activity code of "AQCX" control to "IDTS2" and re-assign to IDRS number "1484022222" .

    • Close the "QRPA" control using activity code "IDTCORR" .

    • Update the AQC database as required.

    3
    The return meets criteria for CAT 7 Disp GB.
    • Place the reply in the bin labeled “GB” for IDT TE to work.

      Note:

      Do not update the STARS CAT or Disp, the IDT TE will update STARS accordingly after the account is resolved.

    • Update EFDS notes as applicable. For PTC cases input "PTC addressed" .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Update the activity code of "AQCX" control to "IDTGB" and re-assign to IDRS number "1484022222" .

    • Close the "QRPA" control using activity code "IDTCORR" .

    • Update the AQC database as required.

    4
    Return meets criteria for CAT 7 Disp BG.

    Note:

    If the taxpayer's good return is not attached to the correspondence, review IDRS for a posted TC 976.

    • Place the reply in the bin labeled "BG" for IDT TE to work.

      Note:

      Do not update the STARS CAT or Disp, the IDT TE will update STARS accordingly after the account is resolved.

    • Update EFDS notes as applicable. For PTC cases input "PTC addressed" .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Update the activity code of "AQCX" control to "IDTBG" and re-assign to IDRS number "1484022222" .

    • Close the "QRPA" control using activity code "IDTCORR" .

    • Update the AQC database as required.

Taxpayer Incomplete Response Procedures

  1. For “Incomplete” taxpayer responses follow the table below:

    IF AND THEN
    1
    The taxpayer sends the Letter 4800C or Letter 3219C with no signature, or signed the letter but did not provide a statement or check a box.
    You can reach the taxpayer by telephone, see IRM 21.1.3.2.3, Required Taxpayer Authentication.
    • Request a signed letter with an agreement or disagreement. If the taxpayer intends to send a response of disagreement advise the taxpayer to include supporting documents, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Inform the taxpayer to either fax or mail the information, but not both.

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855-855- 0616.

    • Update the Electronic Fraud Detection System (EFDS) notes as appropriate.

    • Input/Update the Account Management Services (AMS) notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include the specific instructions provided to the taxpayer.

    • Close the "AQCX" correspondence control with “Incomplete”.

    • Leave the “QRPA” control open.

    • If there is an AQC.net tool reject control (XXREJECT), reassign the reject control with the following information:
      C#,XXMMDDYYYY,A, QRPA
      *,MMDDYYYY (XXMMDDYYYY is the activity code before the reject and “MMDDYYYY” is the received date of the original QRPA control).

    • If no "QRPA" control is open, and no AQC.net Tool rejection criteria is met per Exhibit 25.25.7-1, Inventory Reject Criteria, place the required information on the “Refer to Tool” spreadsheet.

    • Update the Automated Questionable Credit (AQC) database as required. Do Not update the disposition.

    2
    The taxpayer sends the Letter 4800C or Letter 3219C with no signature, or signed the letter but did not provide a statement or check a box.
    You cannot reach taxpayer by telephone.
    • Send Letter 131C, Information Insufficient or Incomplete for Processing Inquiry, to explain the needed documentation, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types. Exception: Do not send Letter 131C if the suspense period has expired, allow the next case action to take place.

    • Update EFDS notes as appropriate.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to include why the response was incomplete for processing (e.g. Received letter 4800C, no box was checked).

    • Close "AQCX" correspondence control with “Incomplete”.

    • Review IRM 21.5.1.4.10, Classified Waste, to determine if the documentation meets classified waste criteria. If the documentation does not meet classified waste criteria and needs to be associated with the return for audit trail purposes, complete Form 9856, Attachment Alert, to send the documentation to Files.

      Exception:

      For E-fax responses, mark the fax with a red “X”, your Employee Identification Number and move it to your “Classified Waste” folder. Do not complete Form 9856.

    • Leave the “QRPA” control open.

    • If there is an AQC.net tool reject control (XXREJECT), reassign the AQC.net tool reject control with the following information:
      C#,XXMMDDYYYY,A, QRPA
      *,MMDDYYYY (XXMMDDYYYY is the activity code before the reject and “MMDDYYYY” is the received date of the original QRPA control).

    • If no QRPA control is open, and no AQC.net Tool rejection criteria is met per Exhibit 25.25.7-1, Inventory Reject Criteria, then place the required information on the “Refer to Tool” spreadsheet.

    • Update AQC database as required. Do Not update the disposition.

Unclaimed Mail / Undelivered Mail

  1. Taxpayers have a right to receive information concerning any Federal taxes assessed against them. The Service is required to exercise due diligence to find and use the taxpayers last known address. It is important that all undeliverable mail is worked as a priority to ensure that the statutory notice of deficiency is mailed to the taxpayer's current address.

    Note:

    A taxpayer could challenge an assessment in the appeals process or in the courts if the Service did not attempt to locate taxpayers last known address.

  2. Mail should have one of the following notations on the envelope:

    • New address found - The United States Postal Service (USPS) yellow address sticker with a new address on the original envelope.

    • No new address found

    • The reply indicates the taxpayer does not live at the address on the letter

    • Unclaimed

  3. Triage undeliverable mail into the following categories:

    • Letter 4800C, Questionable Credit 30 Day Contact Letter

    • Letter 3219C, Statutory Notice of Deficiency

    • Letter 105C, Claim Disallowed, and Letter 106C, Claim Partially Disallowed

  4. Sort Letter 3219C into the following categories:

    • With new address on the yellow label or envelope

    • No new address, not at this address or unclaimed

  5. Complete the following for each undeliverable letter:

    If Then
    A Letter 4800C, Letter 105C, or Letter 106C is returned Undeliverable/Unclaimed.
    • Destroy letter as classified waste. Follow IRM 21.5.1.4.10, Classified Waste .

    • Take no action on IDRS/Account Management Services (AMS).

  6. A Letter 3219C is returned as undeliverable, take the following actions:

    If And Then
    No new address indicated on the envelope or yellow label Envelope is marked "Unclaimed" , "Not at this address" or "No new address" .
    • Destroy letter as classified waste. Follow IRM 21.5.1.4.10, Classified Waste .

    • Take no action on IDRS/AMS.

    New address is indicated on yellow sticker from the post office or hand written on the envelope.

    Note:

    Do Not update the address on command code (CC) ENMOD.

    • Send a Letter 2475C, Address Change Request from an Undeliverable, with the appropriate paragraphs. Attach the original Letter 3219C as an enclosure to the letter. Include a Form 8822, Change of Address, to the taxpayer.

      Note:

      Do not send a Form 8822 to a prisoner.

    • Input IDRS history item: "H,UNDSTAT2TP."

    • Update IDRS control activity suspense date to 90 days from the issuance of the Letter 2475C.

    • After 105 days have elapsed from the date of the letter, follow IRM 25.25.7.7, No Response to the 3219C Letter (Notice of Deficiency).

No Response Received to Letter 4800C

  1. After the 46 day suspense period has expired (61 days for outside the U.S.) and no substantiated response was received from the taxpayer, take the following actions on the case:

    Note:

    Research account for a -O freeze. Do not send Disallowance or Notice of Deficiency Letters during the disaster relief period. Do not Disallow or Default an account during the disaster relief period, unless agreed to by the taxpayer.

    IF AND THEN
    The case is Pre-refund. The proposal will result in a Negative Deficiency, see IRM 4.19.14.9.5, QRP Negative Deficiency Procedures.
    • Input a Non Source Document (NSD) adjustment to adjust the account based on the Inventory Type. Use a Hold Code (HC) "3" to hold the adjustment letter.

    • For partial disallowances, use Blocking Series (BS) “00”, for electronically filed returns or “18” for paper filed returns.

    • For full disallowances, use BS “99”, for electronically filed returns or “98” for paper filed returns.

    • Send a Letter 105C, Claim Disallowed, or Letter 106C, Claim Partially Disallowed, with the appropriate paragraphs.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Accounts Management Services (AMS), to indicate the case was defaulted, because no substantiated response was received.

    • Close all Return Integrity Verification Operations (RIVO) control bases.

    • Update the Automated Questionable Credit (AQC) database as required. Include the dollar amount protected.

    • Update the Scheme Tracking and Referral System (STARS) to disposition "QL" .

    The case is Pre-refund. The proposal will not result in a Negative Deficiency.
    • Send Letter 3219C, Statutory Notice of Deficiency, with the appropriate paragraphs.

    • Update the QRPA control activity code to the suspense expiration date "XXMMDDYYYY" (XX = inventory type, see IRM 25.25.7.2Automated Questionable Credit (AQC) Inventory Types,, and MMDDYYYY = the current date plus 106 calendar days or plus 151 days for outside U.S.).

    • Update AQC database as required.

    The case is Post-refund.
    • Send the Letter 3219C with the appropriate paragraphs.

    • Update the QRPA control activity code to the suspense expiration date "XXMMDDYYYY" (XX = inventory type, see IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types, and MMDDYYYY = the current date plus 106 calendar days or plus 151 days for outside the U.S.).

    • Update AQC database as required.

No Response Received to Letter 3219C (Notice of Deficiency)

  1. After the 106 day suspense period (151 days for outside the U.S.) has expired and no substantiated response was received from the taxpayer, take the following actions on the account:

    Note:

    Research account for a -O freeze. Do Not send Disallowance or Notice of Deficiency Letters during the disaster relief period. Do Not Disallow or Default accounts during the disaster relief period, unless agreed to by the taxpayer.

    IF THEN
    The case is Pre-refund.
    • Input an adjustment as a Non-Source Document (NSD) to adjust the account based on the inventory type. Use Source Code (SC) "0" and Hold Code (HC) "0" .

      Note:

      Input Transaction Code (TC) 811 for .00 with a Posting Delay Code ‘2’, if there is an -E freeze on the module to release the freeze and issue any remaining refund.

    • Input/Update Account Management Services (AMS) notes per IRM 21.2.2.4.5, Account Management Services (AMS), to indicate the case was defaulted, because no substantiated response was received.

    • Close all Return Integrity Verification Operations (RIVO) control bases.

    • Update the Automated Questionable Credit (AQC) database as required. Include the dollar amount protected.

    • Update the return in the Scheme Tracking and Referral System (STARS) to "QL".

    The case is Post-refund.
    • Input an adjustment as a Non-Source Document (NSD) to adjust the account based on the inventory type. Use SC "0" and HC "0" .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), to indicate the case was defaulted, because no substantiated response was received.

    • Close all RIVO control bases.

    • Update AQC database as required. Include the dollar amount protected.

    • Update the return in STARS to "QL".

Premium Tax Credit (PTC)

  1. The section addresses the premium tax credit, which was effective beginning in tax year 2014. See IRM 21.6.3.4.2.12, Premium Tax Credit, for general information, including qualifications, terms, Form 8962, Premium Tax Credit (PTC), sections and use of the Account Management System (AMS) PTC Calculator.

Premium Tax Credit (PTC) Error Codes (ERC) (Associated with Automated Questionable Credit (AQC))

  1. Premium Tax Credit (PTC) error codes will be prioritized depending on the severity of the error.

    Note:

    Error Reason Code (ERC) 191 and 195 will be worked by Automated Questionable Credit (AQC). ERC 197, ERC 198 and ERC 199 will be worked by Examination as of August 1, 2015. These cases will contain a MISC field literal of "AQCPTC19X" .

    • ERC 191 - Taxpayer's Household Income (HHI) as a percent of Federal Poverty Level (FPL) is less than 100 percent and all tax family members are U.S. citizens, but taxpayer is claiming PTC (Exchange data indicates coverage with no record of Advance Premium Tax Credit (APTC) received)

    • ERC 195 - Taxpayer claims PTC (Form 8962, Premium Tax Credit (PTC), attached), but no one claimed as an exemption on the Form 1040, U.S. Individual Income Tax Return, or Form 1040A, U.S. Individual Income Tax Return, was enrolled in a Qualified Health Plan (QHP) through the Exchange

    • ERC 197 - When Exchange data is available for all months, the taxpayer's annual premium amount does not equal the annual premium reported by the Exchange

    • ERC 198 - When Exchange data is available for all months, the taxpayer's annual premium of Second Lowest Cost Silver Plan (SLCSP) does not equal the annual SLCSP reported by the Exchange

    • ERC 199 - When Exchange data is available for all months, the annual APTC reported by the taxpayer does not equal the annual APTC reported by the Exchange

  2. Electronic Fraud Detection System (EFDS) Referrals with PTC

    Note:

    The PTC referrals listed below will only be worked during Contingency.

    • PTC claimed under age 18 with no dependents (DDb-PTC-Error-CD 901)

    • PTC claimed with no income (DDb-PTC-Error-CD 904)

    • PTC claimed by a full year prisoner (single taxpayer) (DDb-PTC-Error-CD 900)

    • PTC claimed, both taxpayers are full year prisoner (primary and secondary joint filing) (DDb-PTC-Error-CD 900)

    • PTC claimed by taxpayer over 65 with no dependents (single taxpayer) (DDb-PTC-Error-CD 902)

    • PTC claimed by taxpayers, both over 65 with no dependents (joint filing) (DDb-PTC-Error-CD 903)

Frozen Refund with Premium Tax Credit

  1. Transaction Code (TC) 971/ Action Code (AC) 128 will generate the TC 810 freezing the “Exposure Amount” and setting the —E freeze.

  2. If the credit module balance exceeds the frozen amount, the excess amount will be released via TC 811 with the released amount in the memo money amount.

Issuance of Letters

  1. Normal Automated Questionable Credit (AQC) Processing should be followed:

    • Letter 4800C, Questionable Credit 30 Day Contact Letter (after notices received during processing). Follow IRM 25.25.7.3, Automated Questionable Credit (AQC) Initial Case Processing.

    • Taxpayer correspondence received anytime during the process, follow IRM 25.25.7.4, Taxpayer Responses.

    • Letter 3219C, Statutory Notice of Deficiency. Follow IRM 25.25.7.6, No Response received to Letter 4800C.

    • No Response received after Statutory Notice, Follow IRM 25.25.7.7, No Response Received to Letter 3219C (Notice of Deficiency).

Adjusting Accounts with Premium Tax Credit (PTC)

  1. Premium Tax Credit (PTC) allowed on the original return posts as a computer-generated Transaction Code (TC) 766, credit reference number (CRN) 262. Advance Premium Tax Credit (APTC) is included in the TC 150.

  2. Posted PTC data, such as the premium tax credit (the computed amount (line 24 Form 8962, Premium Tax Credit) which is not the same as Net PTC (CRN 262)), APTC, and excess advance payment above limitation, can be viewed in the posted return section of command code (CC) TXMODA and CC IMFOLR.

  3. When adjusting PTC related data, use the following reference numbers, as appropriate:

    • 262 – adjust the Net PTC

    • 865 – adjust the total APTC

    • 866 – adjust the total PTC

    • 867 – adjust the Advance PTC Repayment

      Reminder:

      Whenever you have a CRN 867 you will have a corresponding tax increase (TC 290) for the same amount.

    • 868 – adjust the Excess Advance Payment Above Limitation

  4. When adjusting PTC related data, use the following reason codes, as appropriate:

    • 151 – Net PTC

    • 152 – Advance PTC Repayment

  5. CC TXMODA PTC fields:

    • Total APTC.

    • Total PTC.

    • APTC Repayment is reported as a tax before the non-refundable credits. This is the amount of the excess APTC after limitation has been applied that must be repaid by the taxpayer.

    • PTC Limitation Amount (Excess Advance Payment above the Limitation). This is the amount of the excess APTC that does not need to be repaid by the taxpayer.

    • Net PTC Credit.

    • PTC Exposure Amount.

  6. When adjusting an account with PTC and a -E Freeze, a TC 811 must be input for .00 with a posting delay of 2 to release any remaining refund and/or the freeze condition on the account.

Premium Tax Credit (PTC) Referrals

  1. Premium Tax Credit (PTC) responses received by Automated Questionable Credit Program (AQC) that use the Alternative Calculation for Marriage (ACM) or contain an allocation condition will be referred to the AQC Analyst for review.

  2. When an AQC Analyst referral is needed:

    • Update the" AQCX control" activity code to "PTC2RVIEW" .

    • DO NOT close “QRPA” control.

    • Scan a copy of the documentation provided and send via secure e-mail to the AQC Analyst.

  3. The AQC Analyst will:

    • Review the documentation provided.

    • Provide the correct disposition for the account via secure e-mail.

    • Update the “AQCX” control activity code to "RVIEWDONE" .

  4. After the disposition is provided by the AQC Analyst, follow IRM 25.25.7.4 , Taxpayer Responses to resolve the response based on the disposition.

Phone Calls Received via Toll-Free line 855–873–2100

  1. Most questions should be answered during the phone call on the Automated Questionable Credit (AQC) toll-free line. There should be a minimal number of referrals made to AQC. For Toll-Free Customer Service Representatives (CSRs) not designated to answer the AQC toll-free line provide the caller with the toll free number 855-873-2100 and the hours of operation of Monday through Friday 7:00 am to 9:00 pm CST. CSRs designated to respond to AQC telephone inquiries should follow IRM 21.1.3.2.3, Required Taxpayer Authentication and if directed, IRM 21.1.3.2.4, Additional Taxpayer Authentication, to authenticate the caller. When transferring a caller to the Spanish speaking line use transfer IUP #1248.

    Exception:

    Accounts that contain an AQC indicator, and research indicates the original refund was held but subsequently released, with or without the issuance of a Letter 4800C, Questionable Credit 30 Day Contact Letter, and/or Letter 3219C, Statutory Notice of Deficiency, require no additional action from the taxpayer. DO NOT refer these accounts to AQC. Advise the taxpayer the account issue has been resolved and that no further action is necessary. However, if you identify an Erroneous Refund, follow procedures in IRM 21.4.5.5, Erroneous Refund Categories and Procedures.

  2. If the caller is responding to a balance due owed based on an assessment by AQC and agrees with the assessment, do not transfer the caller to the AQC line. Follow normal balance due procedures, see IRM 5.19.1.6, Methods of Payment.

    Note:

    No account adjustments will be made by Accounts Management CSRs if there are any AQC indicators present. All account adjustments will be processed by the AQC teams only.

  3. Follow the table below to respond to the taxpayer regarding responses to the Letter 4800C or Letter 3219C, or if the taxpayer did not receive a letter:

    Note:

    If a Form 4442, Inquiry Referral, was previously issued and the timeframe has passed, follow the procedures in IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, and advise the taxpayer you are referring their case to Taxpayer Advocate Service (TAS).

    IF AND THEN
    1
    The taxpayer has not been issued Letter 4800C or Letter 3219C.
    The module contains a transaction code (TC) 971 action code (AC) 128 with MISC Field "AQCPTC191" , "AQCPTC195" or "AQCPTC9XX" .

    Note:

    if the module contains a TC 971 AC 128 with any other "AQCPTCXXX" , these cases should have a -L freeze and are worked by Exam.

    • Research Coverage Data Repository (CDR) or command code (CC) IRPOLA to verify Premium Tax Credit (PTC) amounts claimed on Form 8962, Premium Tax Credit (PTC), match Marketplace data.

      If CDR information does not match the original return and is 60 days or less since TC 971 AC 128 has posted:

    • Explain the documentation required to substantiate the credit claimed on the original return, per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Explain to the taxpayer that they should receive either a letter requesting this documentation or their refund in 60 days from the date of the TC 971 AC 128.

    • If the taxpayer has the documentation necessary to substantiate the original credit claimed: Advise the taxpayer to either mail or fax their documentation, but not both, to:

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855-855-0616.

    • Advise the taxpayer to include their taxpayer identification number (TIN) and tax period on each page of their response.

    • Advise the taxpayer to allow 60 days from the received date of their documentation, to receive either their refund or a letter.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

    • If the taxpayer cannot provide the documentation and more than 60 days have elapsed since the TC 971 AC 128 has posted and no actions have been taken by AQC:

    • Initiate an e-Form 4442, Inquiry Referral, to AQC using referral queue "RICS RIVO AQC" .

    • Advise the taxpayer to allow 60 days for a response.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

      If CDR information does match the original return Form 8962 and more than 60 days has elapsed since TC 971 AC 128 has posted:

    • Initiate an e-Form 4442 to AQC to expedite the release of the refund, using referral queue "RICS RIVO AQC" . Advise the taxpayer to allow 60 days for a response.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    2
    The taxpayer has not been issued Letter 4800C or Letter 3219C.
    The module contains a TC 971 AC 122 or AC 140 or has an open control assigned to "1487877777" with an activity code of "AQC6X" or “AQC6XATAO”.
    • Research the account to determine if the appropriate documentation for the inventory type indicated in the MISC field of the TC 971 AC 122 or AC 140 is available on IRS systems and substantiates the refund claimed. See IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • If IRS systems substantiate the refund claimed and more than 60 days has elapsed since the TC 971 AC 122 or AC 140 has posted:

    • Initiate an e-Form 4442 to AQC to expedite the release of the refund, using referral queue “RICS RIVO AQC”.

    • Advise the taxpayer to allow 60 days for a response.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

    • If IRS systems donot substantiate the refund claimed and is 60 days or less since the TC 971 AC 122 or AC 140 has posted:

    • Explain the documentation required to substantiate the refund claimed on the original return based on the inventory type, per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.

    • Explain to the taxpayer they should receive either a letter requesting this documentation or their refund in 60 days from the date of the TC 971 AC 122 or AC 140.

      If the taxpayer has the documentation necessary to verify the original amounts claimed:

    • Request the taxpayer to either mail or fax their response, but not both, to:

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855–855–0616.

    • Advise the taxpayer to include their taxpayer identification number (TIN) and tax period on each page of their response.

    • Advise the taxpayer to allow 60 days from the received date of their documentation, to receive either their refund or a letter.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

    • If the taxpayer cannot provide the documentation and more than 60 days have elapsed since the TC 971 AC 122 or AC 140 has posted and no actions have been taken by AQC:

    • Initiate an e-Form 4442 to AQC using referral queue “RICS RIVO AQC”.

    • Advise the taxpayer to allow 60 days for a response. Input/Update AMS notes per IRM 21.2.2.4.5 , Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    3
    The taxpayer received Letter 4800C or Letter 3219C and agrees to the proposal.
    • Advise the taxpayer to sign the Letter 4800C or Letter 3219C or submit a signed written statement and to clearly indicate their agreement.

    • Advise the taxpayer to either mail or fax their response, but not both, along with a copy of their AQC letter to:

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855–855–0616.

    • If the result will be a refund, advise the taxpayer to allow 60 days from the received date of the documentation for a refund to be issued.

    • If the result will be a balance, follow IRM 5.19.1.6, Methods of Payment if trained on balance due issues. Otherwise, transfer the call per the Telephone Transfer Guide (TTG).

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    4
    The taxpayer received Letter 4800C or Letter 3219C and disagrees with the proposal.
    • The taxpayer has the documentation required to substantiate the refund claimed on the original return, per IRM 25.25.7.2 , Automated Questionable Credit (AQC) Inventory Types

      Exception:

      If documentation exists on the system to substantiate the refund claimed. (i.e. income verifies per CC IRPTR) Follow procedures in box 5 below.

      Note:

      If the scholarship/grant amount(s) on the Form 1098-T exceed the amount of qualified expenses and/or the amount billed. Additional documentation of expenses should be submitted with the response.

    • Advise the taxpayer to sign the Letter 4800C or Letter 3219C or submit a signed written statement clearly indicating their disagreement.

    • Advise the taxpayer either mail or fax their documentation, but not both, along with a copy of their AQC letter to:

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855–855–0616.

    • Advise the taxpayer to include their TIN and tax period on each page of their response.

    • If the result will be a refund, advise the taxpayer to allow 60 days from the received date of the documentation for a refund to be issued.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

      Note:

      If the taxpayer requests additional time, explain the process will continue until documentation is received.

    5
    The taxpayer received Letter 4800C or Letter 3219C anddisagrees to the proposal.
    Research shows the appropriate documentation is on IRS systems to substantiate the original refund claimed (i.e. IRP/Marketplace documents available or verified per CC IRPTR).

    Note:

    If the scholarship/grant amount(s) on the Form 1098-T exceed the amount of qualified expenses and/or the amount billed. Additional documentation of expenses should be submitted with the response.

    • Send e-Form 4442 to AQC to expedite the release of the refund using referral queue "RICS RIVO AQC" .

    • Advise the taxpayer to allow 60 days for a response.

    • Notate in the referral narrative CC IRPTR or Marketplace, etc. documents were available to substantiate the claim.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    6
    The taxpayer received Letter 4800C or Letter 3219C and disagrees to the proposal.
    • The taxpayer does not have the required documentation to substantiate the refund claimed on the original return, per IRM 25.25.7.2 , Automated Questionable Credit (AOC) Inventory Types.

    • Advise the taxpayer to sign the Letter 4800C or Letter 3219C as Disagreed or submit a signed written statement clearly indicating their disagreement.

    • Advise the taxpayer to either mail or fax their response, but not both, along with their explanation and a copy of their AQC letter.

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855-855-0616.

    • If the result will be a refund, advise the taxpayer to allow 60 days from the received date of the documentation for a refund to be issued.

    • If the result will be a balance, follow IRM 5.19.1.6, Methods of Payment if trained on balance due issues. Otherwise, transfer the call per the Telephone Transfer Guide (TTG).

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    7
    The taxpayer claims identity theft stating, for instance, “I didn’t file this return” or a similar statement.
    • Follow procedures in IRM 25.23.12.3, Identity Theft Telephone General Guidance, to advise the taxpayer how to submit an identity theft claim.

    • Advise the taxpayer to either mail or fax their claim, but not both, along with a copy of their AQC letter.

    • Mail to: Internal Revenue Service Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855-855-0616.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    8
    The taxpayer inquires about the status of their refund, and no Letter 4800C or Letter 3219C (as indicated on CC ENMOD) has been sent.

    Exception:

    DDb Rule 7 inventory types (AOTC holds) should not be referred until after cycle 19 if no letter has been sent. Follow Alert 16A0041: -R freeze hold on American Opportunity Tax Credit (AOTC).

    Research shows AQC indicators TC 971 AC 140 or AC 122 or AC 128 posted to the account more than 60 days ago.

    Exception:

    A TC 971 AC 122 with MISC field 7V are accounts held by RIVO and are not related to AQC.

    Exception:

    A TC 971 AC 122 with MISC field 7P, these are fiscal year PATH ACT accounts. See IRM 21.5.6.4.5.1, C- Freeze - Refund Holds.

    • Initiate an e-Form 4442 to AQC using referral queue "RICS RIVO AQC" .

    • Advise the taxpayer to allow 60 days to receive either their refund or a letter.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use "Exam Assessment" when choosing an issue.

    Exception:

    For DDb Rule 7 cases (AOTC holds) prior to cycle 19, when the taxpayer has documentation to substantiate the credit follow the “has documentation” section of Box 2 above to provide mailing or faxing instructions.

  4. Follow the table below to respond to the taxpayer regarding responses to the Letter 105C, Claim Disallowed, or Letter 106C, Claim Partially Disallowed, sent by AQC:

    IF AND THEN
    1
    The taxpayer agrees to the disallowance.
    • No further action is needed by the taxpayer.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

    2
    The taxpayer disagrees with the disallowance.
    • The taxpayer has the documentation required to substantiate the refund claimed on the original return, per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types .

    • Advise the taxpayer to either mail or fax their documentation, but not both, along with a copy of their AQC letter.

    • Mail to: Internal Revenue Service, Stop 763, 4800 Buford Highway, Chamblee, GA 30341.

    • Fax to: 855-855-0616.

    • Advise the taxpayer to include their TIN and tax period on each page of their response.

    • Advise the taxpayer to allow 60 days from the received date of the documentation to receive either their refund or a letter.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS),, use "Exam Assessment" when choosing an issue.

    3
    The taxpayer disagrees to the disallowance..
    • Research shows the appropriate documentation is on IRS system (e.g. CC IRPTR documents available after the posting of the TC 971 AC 140 or AC 122).

    • Submit an e-Form 4442 to AQC using referral queue “RICS RIVO AQC” to inform documentation is available on IRS systems that supports the taxpayer’s original claim for refund.

    • Advise the taxpayer to allow 60 days for a response.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

    4
    The taxpayer disagrees to the disallowance.
    The taxpayer does not have the required documentation to substantiate the credit claimed on the original return, per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types.
    • Advise the taxpayer to follow the Appeals instructions in the Letter 105C or Letter 106C as directed.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS), use “Exam Assessment” when choosing an issue.

      Note:

      See IRM 21.5.3.4.6.2, Appeals and Responses to Letter 105C and Letter 106C, for additional information.

  5. When a correspondence response is received from the taxpayer, AQC will control the response using one of the following category codes:

    • AQCD - AQC letter response disagreed

    • AQCA - AQC letter response agreed

    • AQCO - AQC letter response other

    • AQCI - AQC letter response identity theft

    • AQC1- Referred from WOW

    • TWRO - initiated electronic 4442

    If it has been more than 60 days from the correspondence received date, submit an e-Form 4442 to AQC using referral queue “RICS RIVO AQC” to request a response. Advise the taxpayer to allow 60 days for a response.

  6. If the taxpayer previously responded to the letter, but there is no indication on the account that AQC has received it and it is more than 30 days since the taxpayer mailed or faxed the response, advise the taxpayer to resubmit the information by either mail or fax, but not both.

AQC Docketed Appeals Case Procedures

  1. When Return Integrity and Compliance Services (RICS) is notified that a case has been docketed for Appeals, the following documentation must be collected and sent to the Office of Appeals within 10 days of the request.

    • Modernized e-File (MeF), TRPRT or original filed paper document (Note: if original return must be requested send copy of CC ESTAB request. DO NOT wait for receipt of paper document)

    • A redacted copy of the Certified Mail -Listing (CML). The CML will be maintained within the Operation for three years

    • Copy of certified Letter 3219C, Statutory Notice of Deficiency, or Letter 105C, Claim Disallowed, from the Control D file

    • Any responses received from the taxpayer, if still available.

    • Update or open a new QRPA control with activity code to "FWD2APPLS" and the status code M (Monitor) to reflect the documentation has been sent to Appeals.

    • Monitor the account until the Appeals freeze posts before closing the monitoring control.

  2. Fax/scan (send electronic files whenever possible) the documentation above to Philadelphia for Docketed cases:

    • E-mailbox ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Include a Form 3210, Document Transmittal, or with cover information that reflects Automated Questionable Credit Program Docketed Appeals case with case number.

    • Send Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to notify the taxpayer their request has been forwarded to Appeals.

Automated Questionable Credit (AQC) Statute Imminent / Statute Expired Cases

  1. Returns selected by Automated Questionable Credit (AQC) and/or previous Questionable Return Program (QRP) Examination returns that did not meet the 13 month assessment statute expiration date (ASED) expiration time frame will require special treatment. Follow the If/Then chart below:

    Reminder:

    Review the account for reject criteria, see Exhibit 25.25.7-1, Inventory Reject Criteria, and reject the case if criteria is met. If reject criteria is not met, take the following actions on the case:

    Note:

    Research account for -O freeze. Do Not send Disallowance or Notice of Deficiency Letters during the disaster relief period. Do Not Disallow or Default accounts during the disaster relief period, unless agreed to by the taxpayer. See FEMA, for disaster locations.

    If Then
    Statute is Imminent (at least 1 day is remaining on the Statute)

    Exception:

    (If the ASED has 180 days or more follow procedures in

    IRM 25.25.7.3, Automated Questionable Credit (AQC) Initial Case Processing).
    • Send Letter 3219C, Statutory Notice of Deficiency, with the appropriate paragraphs.

    • Update the IDRS QRPA control assignment number to the Tax Examiner (TE) sending the letter and update the activity code to the suspense expiration date "55MMDDYYYY" , and MMDDYYYY = the current date plus 106 calendar days or plus 151 days for outside U.S.).

    • Update AQC database as required.

    Statute is Expired
    • Send Letter 105C, Claim Disallowed, or Letter 106C, Claim Partially Disallowed, with the appropriate paragraphs.

    • For Partial Disallowances: Adjust the account to allow the portion of the refund the taxpayer is entitled to based on the available account information (e.g. IRPTR, CDR data, etc.). Use Hold (HC) “3”, Blocking Series (BS) “00”, for electronically filed returns or “18” for paper filed returns.

    • For full disallowances: Input Transaction Code (TC) 290 for .00. Use the appropriate Reason Codes for the items being disallowed, HC “4”, BS “99”, for electronically filed returns or “98” for paper filed returns.

    • Move the overpayment for the disallowed amounts to Excess Collections using Form 8758, Excess Collections File Addition for each credit being moved. See IRM 3.12.38.5.19.4.1, Preparing Form 8758.

    • Input a closed control history, with activity "87582EXCES", and category "MISC", to track the Form 8758 submission to Excess Collection.

    • For full and partial disallowances: Input/Update Account Management Services (AMS) per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Close all Return Integrity Verification Operations (RIVO) control bases.

    • Update AQC database as required.

    • If still open in Scheme Tracking and Referral System (STARS), close disposition "QL"

    Note:

    If the taxpayer later provides sufficient documentation to support the claim, move the overpayment back to the account from Excess Collections using Form 8765 and allow the refund to be issued. Attach taxpayer correspondence to the Form 8765 and forward to accounting. Open a control in M status and monitor for the refund release. See IRM 3.17.220.2.12, Applying Amounts From the XSF - General.

Processing Late Replies

  1. Automated Questionable Credit (AQC) late replies are replies that are received after the case has been closed.

  2. Review the taxpayer’s correspondence, and follow the table below:

    If Then
    The taxpayer did not provide the required documentation, per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Types, to substantiate the refund claimed on the original return, is not submitting substantiation as previously requested.
    • Close the case as a "no consideration." Follow the procedures in IRM 21.5.3.4.6.3, No Consideration Procedures.

    • Close the “AQCX” control with “LPUNSUBDOC” in the activity code.

    • Review IRM 21.5.1.4.10, Classified Waste, to determine if the documentation meets classified waste criteria. If the documentation does not meet classified waste criteria and needs to be associated with the return for audit trail purposes, complete Form 9856, Attachment Alert, to send the documentation to Files.

      Exception:

      For E-fax responses, mark the fax with a red “X”, your Employee Identification Number and move it to your “Classified Waste” folder. Do not complete Form 9856.

    • Update the Electronic Fraud Detection System (EFDS) notes as appropriate.

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • Update AQC database as required.

    The taxpayer provided the required documentation, per IRM 25.25.7.2, Automated Questionable Credit (AQC) Inventory Typesand it substantiates the refund claimed on the original return.
    • Input an adjustment using the documents provided as a source document to reverse the previous adjustment.

    • Update EFDS notes as appropriate. .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS).

    • If the return is in the Scheme Tracking and Referral System (STARS), update the disposition to “DL” to have the return deleted from STARS. A reason must be entered in the return’s STARS or EFDS Notes when requesting a return be deleted from STARS, see Exhibit 25.25.13-1, STARS Delete Reasons.

    • Update AQC database as required.

Inventory Reject Criteria

The criterion for rejects in the table below is based on what the AQC.NET tool will reject. AQC TEs should resolve or route cases with freeze conditions as appropriate.

IDRS Research Reject the Following
Command Code (CC)TXMODA
  • Transaction Code (TC) 150 not posted (return not posted)

  • TC 29X posted or Pending (account adjusted)

  • TC 30X posted or Pending (exam closing)

  • Reject for TC 424, TC 425, TC 420 (open exam)

  • Reject if CC TXMODA shows any of the following freezes: A-, -A, B-, -B, D-, -D, E-, F-, -F (unless posted payment is for Automated Questionable Credit Program (AQC) case), G-, -G, I-, -I, K-, -K (only on Scrambled SSN accounts), -L, M-, -M, -N, -O, Q, -S, T-, -T, -U, U-, V-, -V, W-, -W, X-, -X, Y-, -Y, Z-, -Z

    Reminder:

    Although these cases are not worked by the AQC tools, they must be routed/resolved per IRM 21.5.6.4, Freeze Code Procedures , for appropriate resolution.

  • Any control open to other than the .net tool

CC ENMOD
  • TC 971 Action Code (AC) 136 (Exam case)

Previously Identified Identity Theft (IDT) Case Indicators
  • TC 971 /AC 501 Taxpayer identified IDT case

  • TC 971 /AC 506 IRS identified IDT case; tax administration impact

  • TC 971 /AC 524 Locked taxpayer account

  • TC 971 /AC 525 is applied to the Social Security Number (SSN) owner when an Individual Taxpayer Identification Number (ITIN) taxpayer is using the SSN for employment

    Reminder:

    Although these cases are not worked by the AQC tool, they must be routed/resolved per IRM 25.25.4, Integrity & Verification Identity Theft Return Procedures , for appropriate resolution.

Unpostable Conditions
  • Individual Master File (IMF) Unpostable Code, (unless due to AQC payment posting or assigned to AQC Tax Examiner(TE))

  • See IRM 21.5.5.3.2, Researching Unpostables on IDRS, for more information on Unpostables using CC UPTIN

Automated Questionable Credit (AQC) Return Disposition Status Codes

Return Disposition Code Description
AQ Accepted by Automated Questionable Credit (AQC)
BQ Batch for AQC
CL Closed (Account Settled)
CQ Statute Imminent
DL Removed from Scheme Tracking and Referral System (STARS)
MQ AQC Manual Review
PQ Pending referral to AQC
PT Questionable Premium Tax Credit (In Process of fraud determination)
QL Closed (Account Settled on AQC)
TT Full year prisoner with verified good income and/ or withholding and a questionable refundable credit
WQ Statute Expired
XQ Rejected by AQC

Definitions for Automated Questionable Credit (AQC) Database

Case Status Definitions
1
Unassigned
No letter have been sent by Automated Questionable Credit (AQC) and no action has been taken on the account
2
Suspended:
A letter has been sent out and waiting for response
3
Rejected
Someone outside of AQC (any IDRS number not starting with 14841, 14842 or 1484046025) has resolved the case or it has been referred to another area for resolution
4
Closed:
AQC has resolved the case
Closing Types Definitions
5
Agreed
Taxpayer agrees to the proposed changes
6
Defaulted
The taxpayer has not provided a valid response and the suspense timeframe has passed
7
ID Theft
Taxpayer claims that return was not filed by them
8
No Change
Refund is released by AQC without adjustments
Dispositions Definitions
9
Surveyed
Refund released before first letter has gone out
10
No Change
Refund released by AQC after Letter 4800C, Questionable Credit 30 Day Contact Letter, or Letter 3219C, Statutory Notice of Deficiency, has gone out
11
Agreed after 30 day letter
Taxpayer agrees to proposed changes after Letter 4800C has gone out but before Letter 3219C has gone out
12
ID Theft after 30 day letter
Taxpayer claims to be victim of identity theft after Letter 4800C has gone out but before Letter 3219C has gone out
13
Disallowed
Account defaulted and Letter 105C, Claim Disallowed, Letter 106C, Claim Partially Disallowed, is sent before Letter 3219C is sent
14
Agreed after 90 day letter
Taxpayer agrees to proposed changes after Letter 3219C has gone out (This applies even if the taxpayer is responding to the Letter 4800C)
15
Default after 90 day letter
Account is adjusted to proposed changes and suspense timeframe has passed and no valid response from taxpayer
16
Petitioned
Taxpayer files petition in United States Tax Court
17
ID Theft after 90 day letter
Taxpayer claims to be victim of identity theft after Letter 3219C has gone out (This applies even if the taxpayer is responding to the Letter 4800C)
18
Appealed
Taxpayer responds to Letter 105C or Letter 106C appealing the decision to disallow the claim