25.25.8 Revenue Protection External Lead Procedures

Manual Transmittal

September 17, 2019

Purpose

(1) This transmits revised IRM 25.25.8, Revenue Protection External Lead Procedures.

Material Changes

(1) Editorial changes made throughout the IRM section

(2) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1 Changed "business" to "individual" , corrected Policy Owner name, added link to manager IRM.

(3) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1.1 Corrected Policy Owner name.

(4) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1.2 Corrected Policy Owner name, added link to manger IRM, added link to Embedded Quality IRM.

(5) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1.3 Corrected Policy Owner name, corrected link Policy Statement 4-21, added link to Servicewide Delegations of Authority.

(6) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1.4 Corrected Policy Owner name, corrected IRM link reference.

(7) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1.5 Corrected Policy Owner name.

(8) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.1.6 Corrected email address, added reminder and link to Taxpayer Bill of Rights.

(9) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.2.1 Corrected email address, corrected IRM link.

(10) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.2.2 Corrected IRM link title.

(11) IPU 19U0410 issued 03-26-2019 IRM 25.25.8.2.3 update lead number

(12) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.2.3 Corrected IRM link.

(13) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.3 Corrected LMS spreadsheet link.

(14) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.4 Corrected "naming convention" link, corrected LMS spreadsheet link.

(15) IPU 19U0410 issued 03-26-2019 IRM 25.25.8.4(8) table box 5 and 6 update block to document code

(16) IPU 19U0729 issued 06-06-2019 IRM 25.25.8.4(8) box 11 add no response

(17) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.6.1 Added category XIVO.

(18) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.7 Added timeframe for referral to IVO.

(19) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.9.1 Added offset criteria and link to offset IRM.

(20) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.10 Corrected address format, corrected IRM Exhibit link.

(21) IPU 19U0978 issued 08-22-2019 IRM 25.25.8.11 Corrected IRM link.

(22) IPU 19U0410 issued 03-26-2019 Exhibit 25.25.8-1 add new dispositions CT, EC, LF and WL

(23) IPU 19U0729 issued 06-06-2019 Exhibit 25.25.8-1 add new disposition DE

Effect on Other Documents

IRM 25.25.8 effective 09-14-2018 is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs): IPU 19U0410 issued 03-26-2019, IPU 19U0729 issued 06-06-2019.

Audience

Campus employees Return Integrity Verification Operations

Effective Date

(10-01-2019)

Related Resources

The following IRMs should be used in conjunction with IRM 25.25.8:

  • IRM 25.25.1, Integrity and Verification Operation (IVO) Business Master File (BMF) Procedures

  • IRM 25.25.2, Revenue Protection Screening Procedures for Individual Master File Returns

  • IRM 25.25.3, Revenue Protection Verification Procedures for Individual Master File Returns

  • IRM 25.25.4, Integrity & Verification Identity Theft Return Procedures

  • IRM 25.25.5, Revenue Protection Special Handling Procedures

  • IRM 25.25.6, Taxpayer Protection Program

  • IRM 25.25.7, Automated Questionable Credit Program

  • IRM 25.25.9, Revenue Protection Prisoner Lead Procedures

  • IRM 25.25.10, Frivolous Return Program

  • IRM 25.25.11, Wage and Withholding (WOW) Only Procedures

  • IRM 25.25.12, Fraud Evaluation and Referral Procedures for Integrity and Verification

  • IRM 25.25.13, Account Resolution for Integrity and Verification Operation (IVO)

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 Integrity and Verification Operation (IVO) employees when screening individual master file (IMF) returns in the Electronic Fraud Detection System (EFDS) for possible identity theft and false income and withholding. The returns are scored through the Dependent Database (DDb) or through the Return Review Program (RRP) system. These scoring processes identify suspicious returns exceeding the scoring tolerances for screening by IVO employees. Program goals for the program are in the Operation Guidelines as well as IRM 1.4.10, Integrity & Verification Operation Managers Guide.

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

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

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

  5. The External Leads Program (EL) is a program developed to review leads received from internal and external sources. Some lead sources include:

    • Criminal Investigation

    • Refund Inquiry

    • Financial Institutions

    • Federal and State agencies

    • National Banks

    • State Banks

    • Savings and Loan Associations

    • Mutual Savings Banks

    • Credit Unions

    • Brokerage Firms

    • Government Agencies

    • Correctional Facilities

    • Various Other Sources

  6. External Leads works with IRS Submission Processing to receive leads on questionable activities related to federal tax refunds, screen and validate the associated lead and account information, and subsequently request the recovery of refunds to reconcile accounts.

  7. Leads involve questionable federal tax refunds or offsets such as treasury checks, direct deposits, automated clearing house (ACH) deposits, refund anticipation loans (RAL), refund anticipation checks (RAC), third party checks, prepaid debit cards and Treasury Offset Program (TOP) offsets.

  8. Leads should be received into the general mailbox as follows:

    • For External Use - efleads@irs.gov

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

    Exception:

    Taxpayer Advocate Service (TAS) follows the Return Integrity and Compliance (RICS) Service Level Agreement (SLA) addendum procedures.

  9. If a determination is made to request the return of funds, within 10 business days of lead receipt an Indemnification/Hold Harmless Letter will be sent to the financial institutions that require the letter prior to the financial institution returning funds.

    Exception:

    Large leads may take longer than 10 business days for determinations.

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 such as; the Return Integrity Verification Operation (RIVO) Monthly Performance Comparison Report, to track the inventory, including receipts and closures. Additional report guidance is found in IRM 1.4.10, Integrity & Verification Operation Managers Guide.

  2. The Embedded Quality review program is in place to review all processes to ensure accuracy and effectiveness of the program. 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. The following references provide authority for the Return Integrity Verification Operations:

    • IRM 1.2.1.5.10, Policy Statement 4-21

    • 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

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 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.

External Lead Mailbox Process

  1. Employees assigned to the mailbox process will review e-mails received and identify lead types and/or inquiries by flag. Follow local procedures for flag determinations.

    Note:

    If the inquiry is from a new financial institution, send the Pub 5033, External Leads Program Fact Sheet and the Lead Submission Spreadsheet Template using the appropriate feedback script.

    Note:

    If inquiry requires headquarter elevation, flag e-mail red and follow local procedures for elevation.


    Lead Types

    • TOP Offsets

    • Refund Anticipation Loan (RAL)

    • Leads with funds available

    • Lead only (no funds available) - follow procedures in IRM 25.25.8.2.1, Lead Only.

    • ACH Reversals - follow procedures in IRM 25.25.8.2.2, Automated Clearing House (ACH) Reversals.

    • Altered Checks -- follow procedures in IRM 25.25.8.2.3, Altered Checks

    • Other Inquiries such as:
      Third Party Check Recovery (Centralized Check Process), Taxpayer inquiries, Reclamation Claims, etc.

  2. Lead information will be updated on the Financial Contact Information spreadsheet located on the Austin Shared drive. The lead number is created in the order that the lead is received, date of receipt, (MMDDYY xx )(xx = sequence number). For example 020216 02 = second lead received February 2, 2016.

    Note:

    Business Master File (BMF) leads will be marked with a B after the lead number. Flag e-mail per local procedures and assign to Ogden.

  3. Issue an acknowledgement e-mail to the financial institution with the assigned lead number.

    Reminder:

    If the approved Integrity and Verification Operation (IVO) Lead Submission Spreadsheet is not submitted by the financial institution, first check the spreadsheet for a previous response that the bank could not use the official spreadsheet. If no previous annotation, attach the Lead Submission Spreadsheet Template and feedback script with the acknowledgment. Annotate the spreadsheet with the financial institutions response. Add "agreed" , or if the financial institution is unable to use the spreadsheet, add comments "unable to use" , etc.

    Note:

    If the e-mail/attachments contain unsecured /unencrypted Personally Identifiable Information (PII), ensure the acknowledgment reply includes the encryption feedback script.

    Caution:

    If the submitter is not a financial institution (i.e., Special Agent (SA), etc.) use the appropriate script to the SA to determine if the financial institution is aware of the lead. If the financial institution is unaware and the Special Agent cannot be reached, follow local procedures to elevate to Data Management and Operational Support (DMOS) Tax Analyst for further guidance. Assign the lead number, create the lead folder and save in HQ EL folder. Do Not send an acknowledgment until HQ response is received or SA contact has been made to allow contact with the financial institution contact.

    Caution:

    DO NOT disclose internal research guidance in e-mail referrals, remove all internal information from correspondence received from the SA, HQ etc., before sending to the financial institution.

  4. Create the lead folder using the naming convention: lead number, financial institution name, and name of the Point of Contact (POC) submitting the lead, (first initial, last name) and save to the designated site folder.
    Save the following items in the lead folder:

    • Original e-mail saved as PDF

    • Acknowledgement e-mail saved as a PDF

    • Spreadsheets/attachments received with the e-mail (Lead Submission Spreadsheet)

    • All follow up/inquiry e-mails associated to the lead saved as a PDF

  5. Lead folders will be placed in the appropriate site’s folder.

    Note:

    Business Master File (BMF) leads found in the external leads mailbox should be flagged for Ogden review and placed in that site’s folder.

  6. Import all leads to the Lead Management System (LMS). Review LMS for successful import.

    Exception:

    DO NOT load "Lead Only - No Funds" .

    Reminder:

    Please ensure to load the institution’s RTN whenever present on the spreadsheet.

  7. Some leads may require priority handling, including pre-refund stop date research and verification. (Such as Lead only and ACH reversals).

Lead Only (No Funds Available)

  1. Contact the financial institution to ensure there are no funds available.

  2. Do not create a lead number or import to LMS.

  3. Send acknowledgement using "Lead Only" feedback script.

  4. Refer all leads where no funds are available to the Industry Lead Mailbox using ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , "lead only" as the subject line.

    Reminder:

    If the e-mail is submitted through the bank secured website, Do Not Forward. Create a new email and include attachments and secure password.

    Reminder:

    This mailbox is not encrypted. Send the efleads in a password protected zip file. A confirmation e-mail notifies the sender that the information was received. Refer to IRM 10.5.1.6.2, Encryption, for additional guidance when encrypting SBU data (including PII and tax information).

Automated Clearing House (ACH) Reversals

  1. Open the ACH control base as" C#,BKLDACHREV, A, MISC,1481X00005" .

  2. Initiate refund stopping actions, and follow insufficient time procedures in IRM 25.25.2.4, Stopping the Refund.

  3. Send the ACH Reversal feedback script by email and attach Pub 5033, "IRS External Lead Fact Sheet" to the financial institution.

Altered Checks

  1. Work lead per IRM 25.25.8.2, External Lead Mailbox Process.

  2. When an altered check is identified in the mailbox process, send the appropriate script to the financial institution to request an image of the front and back of the altered check and that the physical check be returned to Criminal Investigation (CI).

    Caution:

    If the original check is received handle the check with rubber gloves and place in a plastic bag before sending through the mail.


    Connie Webb, Investigation Management Analyst
    CI Refund Crimes, RC Operations & Policy West Pacific SDC
    1973 North Rulon White Blvd. Arka Monterey Park Building
    Ogden, UT 84404-5402

  3. Assign the PDF copy of the check(s) a new lead number, by adding an "A" to the original lead number and refer the lead to the altered check POC.

Other Inquiries

  1. Inquiries or other miscellaneous information may be found while reviewing the External Leads mailbox.

  2. Address inquiries or elevate to DMOS Tax Analyst for further guidance as appropriate.

  3. Send taxpayer inquiries received in the lead mailbox an acknowledgement using feedback script "Taxpayer inquiries" .

  4. When replying to the bank/financial institution for reclamation claims include the feedback script "Reclamation Claims" . Flag the email and forward it to the appropriate site assigned the lead.

  5. Recovery from 3rd party checks emails should be referred/forwarded to the Centralized Check Process (CCP) POC. No lead should be created on these referrals. Scan the third party check and save to the CCP folder. Notate on photocopy if original check or copy of check received.

Processing External Leads

  1. External Leads are assigned through the Lead Management System (LMS). Export the LMS spreadsheet and review all information provided in the lead folder.

  2. If the lead is incomplete, refer the lead to the local POC to contact the institution for additional information.

    Reminder:

    Any additional emails/attachments received should be saved to the associated lead folder as a PDF.

    Reminder:

    Please ensure to update the institution’s RTN if not present on the spreadsheet. Attempt to retrieve the number from EFDS or CC IMFOBT. If the routing number is not available input a zero in the field in LMS.

    Note:

    If an altered check is found within the lead, extract the information and create a new lead number that consists of the original lead number followed by an "A" , refer the new lead to the local POC to request the physical check and follow procedures in IRM 25.25.8.3.1.

    Note:

    If prior notification from the institution has been received or contains a statement that all available information has been provided, then additional contact with the institution is not required.

  3. Research the account for TC 971 AC 123 with MISC field "TPP Recovery" , if present no additional research is required, request the funds be returned from the financial institution.

  4. The External Lead IAT tool will be used to input a TC 971 AC 134, TC 971 AC 850 (current year returns only), and to open a control base on IDRS, "C#,BKLD,A,MISC
    148(XX)00001,*" .

    Note:

    Review the detail report from the EL IAT Tool ensuring actions were input to the correct tax period. Any actions that did not populate from the tool must be input manually.

    Reminder:

    Do Not open controls on the Internal Revenue Service Number (IRSN) when the SSN is available. See IRM 3.21.263.5.5, Internal Revenue Service Number (IRSN), for additional IRSN uses.

    Reminder:

    If you determine the funds were not from an IRS refund, do not request the funds. Close the control with "NOTIRSFNDS,C,MISC" and update LMS comments.

  5. The EL IAT Tool will make a determination. If the tool was unable to make a determination, follow the research steps below to assist in a manual determination:

    1. Review the reason for referral provided by the financial institution.

    2. Follow IRM 25.25.2.2, Data Mining Screening, to assist in making a determination.

      Exception:

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

      Note:

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

    3. Identify any previous IDRS reversal adjustments on the account.

    4. Review the account for Exam activity (TC 42X, -L freeze etc.).

      Note:

      If Exam closed their audit and allowed a "no-change" determination (TC 300 .00 with no other credit reversals), return should be considered valid as filed and funds should not be requested back from the financial institution. If the funds were already returned, release the funds.

    5. Search entity modules for indications of identity theft such as a previously posted TC 971 with Action Code (AC) 5XX. See IRM 3.5.20.2.8.1, Identity Theft Indicator.

    6. Review IDRS for any payments (TC 610, TC 670, TC 430, TC 716, etc.).

    7. Review account for any balance due conditions (this may indicate other actions taken on the account).

    8. Review IDRS for extension to file (TC 460).

    9. Review EFDS notes for indication of previous IVO involvement.

    10. Review account for posted TC 971 action code 078, indicating forgery.

      Note:

      Search for open issue or previously verified good through contact employer.

    11. Review IDRS CC TXMOD for the tax period in question and ensure there are no open controls not in "B" status. If an open control is found, contact the open control before taking any actions.

  6. Once a determination is made follow the table below to determine the next action.

    If And Then
    1
    the return is two years prior or older to the current processing year

    Note:

    NO additional research is required

     
    • Update/Input IDRS control to "Cxx,REQFUNDS,A,MISC
      148XX00002"

    • Prepare indemnification letter to request funds from the financial institution.

      Note:

      When necessary, update and attach Lead Template with funds to be returned for all associated accounts.

    • Update EFDS notes with" BKL lead # (lead# =MMDDYY XX) REQFUNDS IDT" .

    • Import LMS spreadsheet with results to the "Update" folder.

    • Notify POC that the indemnification process is complete.

    2
    the return is current processing year or one year prior
    the return is found to be questionable AND no funds were received with the lead
    • Update/Input IDRS control to "Cxx,REQFUNDS,A,MISC
      148XX00002"

    • Prepare indemnification letter to request funds from the financial institution and save in the associated lead folder.

      Note:

      When necessary update Lead Template with funds to be returned/not returned for all associated accounts and save in the associated lead folder.

    • Update EFDS notes with" BKL lead # (lead# =MMDDYY XX) REQFUNDS" .

    • Import LMS spreadsheet with results to the "Update" folder.

    • Notify POC that the indemnification process is complete.

    3
    the return is found to be questionable
    funds were received with the lead See IRM 25.25.8.4, Processing External Lead Deposits.
    4
    the return is found to be valid
    no funds were received with the lead
    • Update/Input IDRS control to "Cxx,VALID150,C,MISC
      148XX00007" .

    • Update EFDS notes with" BKL lead # (lead# =MMDDYY XX) VALID150" .

    • Input TC 972 AC 134 to reverse IVO indicator.

      Reminder:

      If a TC 971 AC 134 is not already on the account, do not input a new TC 971 AC 134. Input a history on CC TXMOD as "ValidNo134".

      Note:

      When necessary, update and save Lead Template with funds to be returned/not returned for all associated accounts.

    • Import LMS spreadsheet with results to the "Update" folder.

    • Notify POC that the indemnification process is complete.

    5
    the return is found to be valid
    funds were received with the lead See IRM 25.25.8.4, Processing External Lead Deposits.
    6
    the return is deemed good or bad
    no funds are available to be returned (the spreadsheet from the bank indicates $0 available)
    • Update/close the control to "NOFNDSAVLB,C" .

    • Add a note to EFDS , Lead # and "no funds available" .

    • Update LMS.

    7
    The return is good or bad
    there is "TPP RECOVERY" in the MISC field
    • Update/Input IDRS control to "Cxx,REQFUNDS,A,MISC
      148XX00002"

    • Prepare indemnification letter to request funds from the financial institution and save in the associated lead folder.

      Note:

      When necessary update Lead Template with funds to be returned/not returned for all associated accounts and save in the associated lead folder.

    • Update EFDS notes with" BKL lead # (lead# =MMDDYY XX) REQFUNDS" .

    • Import LMS spreadsheet with results to the "Update" folder.

    • Notify POC that the indemnification process is complete.

Processing Altered Checks

  1. Altered checks are checks that have been altered by someone to change the payee and/or payment amount of the originally issued check.

  2. Once the physical check has been received send the actual voided physical check to Criminal Investigation (CI) POC.

    If And Then
    1
    Altered name and/or money amount
    the good return and the check has not been negotiated
    • Access TCIS to F stop the check

    • Monitor for TC 841 to post, suspend to 148XX00017

    • Request physical check from the financial institution

    • Reissue to good taxpayer after TC 841 posts

    2
    Altered name and/or money amount
    questionable refund and the check has not been negotiated
    • Access TCIS to F stop the check

    • Request physical check from the financial institution

    • Monitor for TC 841 to post ,suspend to 148XX00014

    • Disposition to ACE/ADJ once funds post to the account

    • Input an EFDS return note of "IVO EL IDT BKLD" .

    3
    Altered name and/or money amount
    the good return and the check has been negotiated
    • Open a closed IDRS control:
      "C#,ALTEREDCK,C,EVFY "
      1481X00003,*

    • Update AMS and EFDS notes , notate Received altered treasury check, altered dollar amount and original dollar amount, check number, indicate if original check received or copy .

    4
    Altered name and/or money amount
    questionable refund and the check has been negotiated
    1. Input TC 971 AC 134 (if not already present)

    2. Open a closed IDRS control:
      "C#,ALTEREDCK,C,EVFY "
      1481X00003,*

    3. Request physical check from the financial institution

    4. Update EFDS notes , notate Received altered treasury check, altered dollar amount and original dollar amount, check number, indicate if original check received or copy.

      Note:

      Disposition as "CAT 5 CL" if resolved by another function. Disposition as "CAT 7 CL" if resolved by IVO.

      Note:

      If Process Status 49, follow local procedures to update.

      Note:

      Prior year processed returns must be added to the Mass Push Spreadsheet to be updated.

    5. Update AMS History notes with same information as EFDS notes.

    6. If indications of Identity theft, input TC 971 AC 522 (if one does not already exist on CC ENMOD).

    7. Close all IVO controls.

Processing External Lead Deposits

  1. Once notification is received that funds have been returned, export the LMS spreadsheet and review all information provided in the lead folder. Use of the EL IAT Tool is mandatory when working deposits.

    Exception:

    Rejects from the tool must be worked manually.

    Caution:

    If a TERUP must be input, you must ensure to CMODE to the appropriate location.

    Reminder:

    Review LMS spreadsheet to ensure deposit information is accurate and update if necessary.

    Reminder:

    Ensure to update the institution’s RTN if not present on the spreadsheet. Attempt to retrieve the number from EFDS or CC IMFOBT. If the routing number is not available, input a zero in the field in LMS.

    Exception:

    Deposits with no x-ref lead number will need a lead number assigned, lead/deposit folder created, and an initial import to LMS.

    The lead number is created using the IVO received date (MMDDYY sc xx)(sc= your service center)(xx = sequence number). For example 020216 89 04 = IVO received February 2, 2016, worked in Fresno and the sequence number assigned 04.

    Create the lead/deposit folder, for deposits with no existing lead number, using the naming convention: deposit number, financial institution name (Financial Contact Information Spreadsheet), and lead number (as described above). Save to the designated site folder.

  2. If the deposit information is incomplete, refer the lead deposit to the local POC to contact the institution for additional information.

    Reminder:

    Any additional e-mails/attachments received should be saved to the associated lead folder as a PDF.

    Note:

    If prior notification from the institution has been received or contains a statement that all available information has been provided, then additional contact with the institution is not required.

  3. Run the EL IAT Tool with the deposit information.

    Reminder:

    If funds are received and they are deemed not to be from an IRS refund:
    - Release the funds to the taxpayer.
    - Ensure to input TC 770 .00 to prevent credit interest from being paid.
    - Input in the activity field "NOTIRSFUND"
    - Add AMS/EFDS note "Not an IRS refund"
    - If the Refund Expiration Dates (RSED) has passed, input S

  4. Research the account for TC 971 AC 123 with MISC field "TPP RECOVERY" , if present no additional research is required, post funds back to the account and suspend to 148XX00013 until TC 720 posts to the account.

    Reminder:

    Accounts containing a TC 971 AC 123 should not be released, but dispositioned to PS 30 once the recovered funds post. See IRM 25.25.8.6, Monitoring External Leads.

  5. Research the account for TC 971 AC 078, forgery indicator. If present do not reissue refund.

  6. Review IDRS CC TXMOD for the tax period in question and ensure there are no open controls not in "B" status. If an open control is found, contact the open control before taking any actions.

  7. The External Lead IAT tool will be used to input a TC 971 AC 134, TC 971 AC 850, and the history item," DONOTRFUND" , if not already present on all invalid accounts. The EL IAT tool will update the control base on IDRS to , "C#,BKLDCKRECD,A,MISC
    148(XX)0000X,*" (X= 4 invalid, 7 valid), input CC ELP45, and/or commingled memo.

    Note:

    Review the detail report from the EL IAT Tool ensuring actions were input to the correct tax period (If the actions were taken on the incorrect tax period close the control with "BKLDERROR" , and open a control on the appropriate tax period). Any actions that did not populate from the tool must be input manually.

    Reminder:

    TC 971 AC 850 if being input manually should only be input on the current tax year.

    Note:

    The External Lead TE will have 15 working days to complete the CC ELP45 input, barring any delays or large leads.

  8. If the tool was unable to determine if the funds will be applied or remain in the commingled general ledger account, follow the table below to determine the next actions:

    Reminder:

    Leads with multiple accounts may have multiple scenarios (for example you may have an invalid return, a valid return and an account with commingled funds on the same lead/deposit). The commingled memo will not be prepared until all accounts associated to the lead/deposit have been resolved.

    If And Then
    1
    the funds received are between $1.01 and $4.99
    the return is deemed good
    • Input CC ELP45.

      Caution:

      You MUST CMODE to the deposit locationto use this CC. This is based on the credit gateway information.

      Note:

      ELP45/ commingled amounts must be balanced to reflect total of deposit.

      Reminder:

      The amount of the transfer may not exceed the TC 846 amount.

    • Update/open control to "Cxx,BKLDCKRECD,A,MISC
      148XX00007" .

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) ELP45 input" .

    • Input TC 972 AC 134 to reverse IVO indicator.

      Reminder:

      If a TC 971 AC 134 is not already on the account, do not input a new TC 971 AC 134. Input a history on CC TXMOD as "ValidNo134" .

    • Change disposition in STARS to "DL" .

    • Update LMS spreadsheet with results.

    • Input a TC 290 .00 with a posting delay of 2 to release the refund to the TP.

    • Close all IVO controls.

    • Notify POC that process is complete.

    2
    the funds received are $1.00 or less
    the return is deemed good
    • Input CC ELP45.

      Caution:

      You MUST CMODE to the deposit locationto use this CC. This is based on the credit gateway information.

      Note:

      ELP45/commingled amounts must be balanced to reflect total of deposit.

      Reminder:

      The amount of the transfer may not exceed the TC 846 amount.

    • Update/open control to "Cxx,BKLDCKRECD,A,MISC
      148XX00007" .

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) ELP45 input" .

    • Input TC 972 AC 134 to reverse IVO indicator.

      Reminder:

      If a TC 971 AC 134 is not already on the account, do not input a new TC 971 AC 134. Input a history on CC TXMOD as "ValidNo134" .

    • Change disposition in STARS to "DL" .

    • Input a TC 290 .00 with a posting delay of 2 and a priority code of 5 to post accruals.

    • Close all IVO controls.

    • Update LMS spreadsheet with results.

    • Notify POC that process is complete.

    3
    the funds received are $4.99 or less
    the return is deemed bad
    • Update/close the control to "CXX,BKLCOMNGLD,C,MISC
      148XX00004" .

    • Input TC 971 AC 134 with MISC field "BKLD COMINGLED" .

      Note:

      If the tax year is in retention you must first bring it back to Master File using CC IMFOLB.

      Reminder:

      This will be updated en masse after the entire lead/deposit is completed.

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) BKLCOMNGLD. " . If two years prior or older add "suspected IDT" to the note.

    • If not already dispositioned in EFDS, disposition current processing year returns as appropriate.

    • Update LMS spreadsheet with results.

    • Create the Commingled Memo and save to the associated lead folder.

      Reminder:

      For large deposits being worked by more than one TE, only one memo will be created for the entire deposit.

    • Send e-mail to POC with notification that process is complete.

    4 the account is dormant, in retention (refunds paid in calendar years prior to the current and prior calendar year) or the return is two years prior or older to the current processing year

    Note:

    NO additional research is required

    Reminder:

    Even if the Taxpayer Identification Number (TIN) owner has been identified.

    Exception:

    If the account contains a TC 971 AC 123 with MISC field "TPP Recovery" , the money must be posted to the designated account and once posted sent to PS 30 ACE/Adjustments.

     
    • Update/close the control to "CXX,BKLCOMNGLD,C,MISC
      148XX00004" .

    • Input TC 971 AC 134 with MISC field "BKLD COMINGLED" .

      Note:

      If the tax year is in retention you must first bring it back to Master File using CC IMFOLB.

      Reminder:

      This will be updated en masse after the entire lead/deposit is completed.

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) BKLCOMNGLD. " . If two years prior or older add "suspected IDT" to the note.

    • If not already dispositioned in EFDS, disposition current processing year returns as appropriate.

    • Update LMS spreadsheet with results.

    • Create the Commingled Memo and save to the associated lead folder.

      Reminder:

      For large deposits being worked by more than one TE, only one memo will be created for the entire deposit.

    • Send email to POC with notification that process is complete.

    5
    the return is deemed bad
    no TC 841 with document code 48 in the DLN or TC 700 with document code 58 in the DLN
    • Input CC ELP45

      Caution:

      You MUST CMODE to the deposit locationto use this CC. This is based on the credit gateway information.

      Note:

      ELP45/commingled amounts must be balanced to reflect total of deposit.

      Reminder:

      The amount of the transfer may not exceed the TC 846 amount.

    • Update/open control to "Cxx,BKLDCKRECD,A,MISC
      148XX00004" .

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) ELP45 input" .

    • Update LMS spreadsheet with results.

    • Notify POC that process is complete.

    6
    the return is deemed bad
    TC 841 with document code 48 in the DLN or TC 700 with document code 58 in the DLN present on the account or
    refunds are unidentified, excess funds or commingled accounts
    • Update/close the control to "Cxx,BKLCOMNGLD,C,MISC
      148XX00004" .

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) BKL COMNGLD" .

    • Input TC 971 AC 134 with MISC field "BKLD COMINGLED " .

      Reminder:

      This will be updated en masse after the entire lead/deposit is completed.

    • Update LMS spreadsheet with results.

    • Create the Commingled Memo and save to the associated lead folder.

    • Send e-mail to POC with notification that process is complete.

    7
    the return is valid
     
    • Input CC ELP45.

      Caution:

      You MUST CMODE to the deposit locationto use this CC. This is based on the credit gateway information.

      Note:

      ELP45/commingled amounts must be balanced to reflect total of deposit.

      Reminder:

      The amount of the transfer may not exceed the TC 846 amount.

    • Update/open control to "Cxx,BKLDCKRECD,A,MISC
      148XX00007" .

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) ELP45 input" .

    • Input TC 972 AC 134 to reverse IVO indicator.

      Reminder:

      If a TC 971 AC 134 is not already on the account, do not input a new TC 971 AC 134. Input a history on CC TXMOD as "ValidNo134" .

    • Change disposition in STARS to "DL" .

    • Update LMS spreadsheet with results.

    • Notify POC that process is complete.

    8
    cannot locate a return for the TIN provided by the financial institution

    Note:

    Research to attempt to find a valid TIN. If valid TIN is found follow scenario in this if/then table.

    Exception:

    If multiple accounts on a deposit are not from an IRS refund notify your lead before proceeding

    the money received cannot be allocated
    • Place the TIN provided by the financial institution in the LMS TIN field.

    • Open your control on the TIN provided by the financial institution for the most recent tax period. Open to "Cxx,BKLCOMNGLD,C,MISC
      148XX00004," .

    • Input TC 971 AC 134 with MISC field "BKLD COMINGLED" .

      Reminder:

      This will be updated en masse after the entire lead/deposit is completed.

    • Update LMS spreadsheet with results.

    • Create the Commingled Memo and save to the associated lead folder.

    • Notify POC that the process is complete.

    9
    the TIN is valid, but cannot locate the tax period

    Note:

    Research to attempt to find a the correct tax period. If the correct tax period is found follow scenario in this if/then table.

    Exception:

    If multiple accounts on a deposit are not from an IRS refund notify your lead before proceeding

    the money received cannot be allocated
    • Open your control on the most recent tax year. Open to "Cxx,BKLCOMNGLD,C,MISC
      148XX00004," .

    • Input TC 971 AC 134 with MISC field "BKLD COMINGLED" .

      Reminder:

      This will be updated en masse after the entire lead/deposit is completed.

    • Update LMS spreadsheet with results.

    • Create the Commingled Memo and save to the associated lead folder.

    • Send e-mail to POC with notification that process is complete.

    10
    the return is deemed good/bad
    the response from the financial institution is no funds are available to be returned
    • Update/close the control to "NOFNDSAVLB,C" .

    • Add a note to EFDS BKL Deposit # , Lead # and "no funds available" .

    • Update LMS.

    11
    the return is deemed bad
    after 60 days with no response from the bank
    • Update/close the control to "NOFNDSRTND,C" .

    • Add a note to EFDS BKL Deposit # , Lead # and "no funds returned" .

    • Update LMS.

    12
    the return is deemed good/bad
    the TIN is an Internal Revenue Service Number (IRSN), see IRM 3.21.263.5.5, Internal Revenue Service Number (IRSN), for additional IRSN information and the module contains a TC 848 or TC 849
    • Update/close the control to "Cxx,BKLCOMNGLD,C,MISC
      148XX00004" .

      Reminder:

      DO NOT post anything to the IRSN, open the control and take all actions on the SSN’

    • Update EFDS notes with" BKL deposit # lead # (lead# =MMDDYY XX) BKL COMNGLD" .

    • Input TC 971 AC 134 with MISC field "BKLD COMINGLED " .

      Reminder:

      This will be updated en masse after the entire lead/deposit is completed.

    • Update LMS spreadsheet with results.

    • Create the Commingled Memo and save to the associated lead folder.

    • Send email to POC with notification that process is complete.

Reversal/Return of Recovered Funds

  1. Research the lead/deposit to determine if the deposit was applied to individual accounts or commingled in the general ledger account. Follow the table below:

    If And Then
    1
    Recovered funds submitted in error or return of funds requested by financial institution
    funds were commingled and applied to the 4971 General ledger account or funds were applied to the 6801 (Excess) account

    Note:

    Funds are applied to the 6801 (Excess) account two years after the original payment date

    • Ensure documentation from the financial institution requesting the return of the recovered funds is printed and saved to the lead folder.

    • Documentation from the financial institution must include:

      • financial institution’s EIN

      • physical address

      • financial institution’s POC

      • lead #

      • amount requested

      • all associated TINs with full names of the taxpayers

      • reason for the return request

      Reminder:

      Contact the financial institution if required information is missing.

    • Prepare Form 3753, Manual Refund Posting Voucher,. Ensure the form is notated with the appropriate ledger account.

    • Create/revise the commingled memo and print and save to the lead folder.

    • Open a control to 148XX00011 with appropriate activity "PND720" , "PND722" , "PND 820" etc.

    2
    Recovered funds submitted in error or return of funds requested by financial institution
    funds were applied to an individual account
    • Prepare, print and save in lead/deposit folder the Form 3809, Miscellaneous Adjustment Voucher, to debit the taxpayer’s individual and credit the 4971, General Ledger account.

    • Create/revise the commingled memo and print and save to the lead folder.

    • Open IDRS control
      "C#,PND722,M,MISC"
      "1481500011,*" .

      After TC 722 posts to the account:

    • Close IDRS control with, "Cxx,722POSTED,C,MISC" .

    • Prepare Manual Refund Form 3753 and all required attachments, using the Employer Identification Number (EIN) of the financial institution requesting the funds out of the appropriate general ledger account. See IRM 3.17.79.3.1, General Ledger Account - Types of Refunds.

    • Print and save the signed Form 3753 in the lead/deposit folder.

    • Route forms to Manual Refunds per local procedures.

    • Revise the commingled memo to reduce the commingled amount by the amount being refunded. Save to the lead folder.

    3
    An inquiry/referral received after deposit resolution
    research determines the return is valid and funds were commingled and applied to the 4971 General ledger account or funds were applied to the 6801 (Excess) account

    Note:

    Funds are applied to the 6801 (Excess) account two years after the original payment date

    and there are enough available funds to cover the TC 846 amount
    • Prepare, print and save in lead/deposit folder the Form 3245, Posting Voucher - Refund Cancellation or Repayment, to credit the taxpayer’s individual account and debit the appropriate General Ledger account.

    • Revise the commingled memo to reduce the commingled amount by the amount being placed on the taxpayer’s account and save to the lead folder.

    • Open IDRS control
      "C#,PND720,M,MISC"
      "148XX00007,*" .

    • Update EFDS notes with the amount of funds being applied to the taxpayer’s account.

    • If the return is in STARS, update the disposition to "DL" for STARS removal.

    4
    An inquiry/referral received after deposit resolution
    research determines the return is valid and funds were commingled and applied to the 4971 General ledger account or funds were applied to the 6801 (Excess) account

    Note:

    Funds are applied to the 6801 (Excess) account two years after the original payment date

    and there are NOT enough available funds to cover the TC 846 amount
    • Prepare, print and save in lead/deposit folder the Form 3245, "Posting Voucher - Refund Cancellation or Repayment" , up to the available amount to credit the taxpayer’s individual account and debit the appropriate General Ledger account.

    • Revise the commingled memo to reduce the commingled amount by the amount being placed on the taxpayer’s account and save to the lead folder.

    • Open IDRS control
      "C#,PND720,M,MISC"
      "148XX00007,*" .

    • Update EFDS notes with the amount of funds being applied to the taxpayer’s account.

    • If the return is in STARS, update the disposition to "DL" for STARS removal.

    5
    An inquiry/referral received after deposit resolution
    research determines the return is valid and funds were applied to the taxpayer’s account
    • Release the refund.

    • Update EFDS notes as applicable

    • Remove from STARS, by updating the disposition to "DL" . A reason must be entered in the return's STARS or EFDS Notes when requesting a return be deleted from STARS.

    • Close all IVO controls.

External Lead Procedures for Automated Clearing House (ACH) Deposits

  1. Financial Institution Automated Clearing House (ACH)

    1. Screen the return and if valid, then "REFILE" the return and release the refund.

    2. If questionable/suspicious, input a CC NOREFP (before return posts or same day) and send the return to verify or verify using CC IRPTR, if available for verification.

    3. Open IDRS control base to "C#,BKLDACHREV,A,MISC 148XX00005,* " ,if not already present on the module.

    4. Close the "PRFZ" control base.

    5. Input a TC 971 AC 134 on CC TXMOD to indicate IVO activity.

    6. If the return is not valid, add a history item to CC TXMOD, "DONOTRFUND" .

    7. When the ACH lead is assigned, close the control as "841POSTED" , if the reversal is present, or update the control to "148xx00004/7 " as applicable, if waiting on the TC 841 to post.

    8. Monitor for credit posting, and if not already in STARS, manually add to STARS.

    9. If the return has already been dispositioned and is in the referral process, do not change the disposition unless the return is in a reject status and needs to be corrected (CE OR CA). See Exhibit 25.25.8-1, Return Disposition Status Codes.

    10. Update the 148XX00005 control to either 148XX00004 or 148XX00007, as applicable.

    11. If prior year (PY) in STARS, input on the manual referral spreadsheet and close the IDRS control base.

    12. Update Lead Management System as required.

Monitoring External Leads

  1. Point of Contact (POC) will monitor the lead to ensure that a deposit is received from a financial institution within 45 days of the original indemnification letter or other method of requesting funds to be returned to IRS. If 45 days have passed and no funds have been received, a follow up Indemnification Letter will be issued to the institution. If no funds have been received after 15 days from the follow-up Indemnification Letter, the lead will be closed as no funds returned.

    Note:

    Follow up notifications must be saved in the lead folder. Update Lead Management System (LMS), as required.

    Reminder:

    If sending a follow-up letter ensure the original indemnification letter date is not changed in LMS.

  2. The local POC will monitor the weekly external lead age listing. Follow the table below for appropriate actions.

    Reminder:

    Age listing must be resolved in oldest received date order.

    If And Then
    1
    control number is 148XX00001
    is 10 calendar days or older
    • Review the account for actions not taken.

    • Update/close the control base as appropriate.

    2
    control number is 148XX00002
    is 60 calendar days or older
    • Review account to determine if TC 720 is present.

      If not present:

    • Close the control base in status "C" with activity "NOFNDSRTND" .

      If present:

    • Determine if return is good, bad or Identity Theft (IDT).

      If good:

    • Release refund.

    • Update disposition to "DL" to remove from STARS. A reason must be entered in the return's STARS or EFDS Notes when requesting a return be deleted from STARS.

      If bad and return is current processing year:

    • Push to STARS.

    • Update category and disposition per IRM 25.25.8-2, STARS Category Definitions and IRM 25.25.8-1, STARS Disposition Definitions.

      If bad and prior processing year:

    • Complete Mass Push Template.

      Reminder:

      If already in STARS , update to the appropriate category and disposition.

      If IDT and the return is current processing year:

    • Push to STARS.

      Reminder:

      If completed en masse, update to "CAT 1" . If completed individually, update to "CAT 7 MR" if multiple TC 846 or the posting of the TC 720 occurs after the account was adjusted, refer to IRM 25.25.5-1 , Triage Procedures, if account requires adjustment.

      If IDT and the return is prior processing year:

    • Complete Mass Push Template using "CAT 1" .

    • Close the control base.

    3
    control number is 148XX00003
    is 60 calendar days or older
    • Follow IRM 25.25.8.11, Centralized Check Process (CCP).

    4
    control number is 148XX00004
    there is a credit balance and TC 720 is present

    Current processing year:

    • Push to STARS.

    • Update category and disposition per IRM 25.25.8-2, STARS Category Definitions and IRM 25.25.8-1, STARS Disposition Definitions.

      Note:

      Manually refer to the appropriate workstream using the Manual Referral Spreadsheet if the return does not meet the auto-referral categories.

      If prior processing year:

    • Complete Mass Push Template and Manual Referral Template.

      Reminder:

      If already in STARS, update to the appropriate category and disposition.

      If IDT and the return is current processing year:

    • Push to STARS.

      Reminder:

      If completed en masse, update to "CAT 1" . If completed individually, refer to IRM 25.25.5-1, Triage Procedures

      If IDT and the return is prior processing year:

    • Complete Mass Push Template using "CAT 1" .

    • Close the control as "Cxx,720POSTED,C,MISC" .

    5
    control number is 148XX00004
    a TC 720 is not present and is 10 calendar days or older from the date the CC ELP45 was input
    • Research the account to determine why TC 720 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    6
    control number is 148XX00005
    there is a credit balance and TC 841 is present and is 10 days or older
    • Determine if return is good, bad or IDT

      If good:

    • Release refund.

    • Update disposition to "DL" to remove from STARS. A reason must be entered in the return's STARS or EFDS Notes when requesting a return be deleted from STARS.

      If bad and return is current processing year:

    • Push to STARS.

    • Update category and disposition per IRM 25.25.8-2, STARS Category Definitions and IRM 25.25.8-1, STARS Disposition Definitions

      If bad and prior processing year:

    • Complete Mass Push Template and Manual Referral Template.

      Reminder:

      If already in STARS, update to the appropriate category and disposition.

      If IDT and the return is current processing year:

    • Push to STARS.

      Reminder:

      If completed en masse , update to "CAT 1. " If completed individually, refer to IRM 25.25.5-1Triage Procedures

      If IDT and the return is prior processing year:

    • Complete Mass Push Template using "CAT 1" .

    • Close the control base as "841POSTED" .

    7
    control number is 148XX00005
    there is no credit balance and is 60 calendar days or older
    • Close the control base as "Cxx,RFNDNOTHLD,C,MISC" .

    8
    control number is 148XX00007
    there is a credit balance and TC 720 is present
    • Re-file the return and release the refund.

    • Update disposition to "DL" to remove from STARS. A reason must be entered in the return's STARS or EFDS Notes when requesting a return be deleted from STARS.

      Exception:

      Do Not Release if refund is held by another functions freeze code. When this occurs reverse IVO marker by inputting TC 972 AC 134.

    • Close the control base.

    9
    control number is 148XX00007
    there is a credit balance and TC 720 is not present and is 10 calendar days or older from the date the CC ELP45 was input
    • Research the account to determine why TC 720 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    10
    control number is 148XX00009
    is 10 calendar days or older
    • Determine if return is in STARS.

      If in STARS:

    • Update disposition to "CC" or "CL"

    • Close the monitoring control.

      If not in STARS:

    • Research to determine why the return is not in STARS.

    • Update/close the control base.

    11
    control number is 148XX00011
    the TC 722 is present Follow IRM 25.25.8.4.1, box 2 after 722 posts, Reversal/Return of Recovered Funds
    12
    control number is 148XX00011
    the TC 722/TC 820 is not present and is 60 calendar days or older from the date the accounting form was prepared
    • Research the account to determine why TC 722 or TC 820 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    13
    control number is 148XX00012
    there is a credit balance and the TC 766 is present

    Current processing year:

    • Push to STARS.

      Reminder:

      Manually update the Fraud Box in STARS to ensure the return will be referable.

      If already in STARS:

    • Update category and disposition per IRM 25.25.8-2, STARS Category Definitions and IRM 25.25.8-1, STARS Disposition Definitions.

      Note:

      Manually refer to the appropriate work stream using the Manual Referral Spreadsheet if the return does not meet the auto-referral categories.

      If prior processing year:

    • Manually refer the case.

    • Complete Mass Push Template.

      Once in STARS:

    • Update category and disposition per IRM 25.25.8-2, STARS Category Definitions and IRM 25.25.8-1, STARS Disposition Definitions.

      Reminder:

      If already in STARS, update to the appropriate category and disposition.

    • Close the control.

    14
    control number is 148XX00012
    the TC 766 is not posted and is 15 calendar days or older
    • Research the account to determine why the TC 766 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    15
    control number is 148XX00013

    Note:

    This is an account that contains a TC 971 AC 123 MISC "TPP Recovery"

    the TC 720 is posted
    • Disposition the return to Ace Adjustments (PS 30).

    • Input an EFDS return note of "IVO EL IDT BKLD" .

    • Close all IVO controls.

    16
    control number is 148XX00013

    Note:

    This is an account that contains a TC 971 AC 123 MISC "TPP Recovery"

    the TC 720 is not posted and it is 10 calendar days or older from the date the CC ELP45 was input
    • Research the account to determine why TC 720 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    17
    control number is 148XX00014
    the TC 841 is posted
    • Disposition the return to Ace/ Adjustments (PS 30).

    • Input an EFDS return note of "IVO EL IDT BKLD" .

    • Close all IVO controls.

    18
    control number is 148XX00014
    the TC 841 is not posted and it is 60 calendar days or older from the date the F stop was requested
    • Research the account to determine why TC 841 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    19
    control number is 148XX00017
    the TC 841 is posted
    • Reissue check to the good taxpayer.

    • If account is in STARS, remove from STARS, by updating disposition to "DL" . A reason must be entered in the return's STARS or EFDS Notes when requesting a return be deleted from STARS.

    • Close all IVO controls.

    20
    control number is 148XX00017
    the TC 841 is not posted and it is 60 calendar days or older from the date the F stop was requested
    • Research the account to determine why TC 841 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

    21
    control number is 148XX00018
    there is a credit balance and the TC 766 is present
    • Refer to Automated Questionable Credit (AQC) Program on the AQC OCSE manual referral spreadsheet. Ensure to provide the change in wages, tax and refundable credits to be made to the account (AMS PDF). These changes should equal the amount of the offset requested back from the Office of Child Support (attach PDF of the AMS amended return screen).

    • Push to STARS

    • Update to disposition "E2" , Manual referral to AQC.

    • Close control "REFERTOAQC" .

    22
    control number is 148XX00018
    the TC 766 is not posted and is 15 calendar days or older
    • Research the account to determine why the TC 766 has not posted.

    • Take appropriate actions to resolve.

    • Update/close the control as applicable.

Criteria for Updating STARS Categories and Dispositions

  1. Use the table below to update STARS categories and dispositions.

    If Then
    -A freeze is present and/or AM IDRS control base on the account such as: DUPF, IDT1, IDT3, XRET, XIVO, MXEN, IDS1, IDS3, IDT8, IDT9, IDS9, SCRM and SSA2
    • Update STARS to "CAT 5 CL" .

    Return meets IDT criteria:
    • previous IDT marker (TC 971 AC 5XX)

    • date of death present (DOD)

    • date of birth (DOB) 1940 and prior or 2001 and after

    • If completed en masse, update to "CAT 1" .

    • If completed individually, refer to IRM 25.25.5-1, Triage Procedures.

Responding to Taxpayer Inquiries

  1. For non-IVO employees receiving taxpayer inquiries follow the procedures outlined below.

  2. The caller states the bank returned their refund to the IRS, see Exhibit 25.25.8-4, External Lead Involvement Indicators, and follow the chart below:

    Note:

    Please contact the Point of Contact on any External Lead control before taking any actions on the account. See External Lead Point of Contact.

    If And Then
    1
    The account contains an open control to IVO.
    The control base activity field is one of the following:
    • "BKLD"

    • "REQFUNDS"


    AND the control base assignment number is one of the following:
    • 148XX00001

    • 148XX00002

    • Update the Accounts Management System (AMS) notes with the following: name and contact information of the caller, name of the financial institution, and date of contact.

    • Advise the caller that the return and refund are under review and it may take up to 90 days from the date of the control base to complete the review and either issue the refund or send a letter regarding the review.

    • If 90 days have passed and no action has been taken on the account prepare a Form e4442, Inquiry Referral, and forward to IVO using category - RICS IVO - External Lead. Advise the taxpayer to allow 60 days for a response.

    2
    The account contains an open control to IVO.
    The control base activity field is one of the following:
    • "BKLDCKRECD"

    • "BKLDACHREV"


    AND the control base assignment number is one of the following:
    • 148XX00004

    • 148XX00005


    ANDno funds are posted to the module (no TC 720 or TC 841).
    • Update AMS Notes with the following: name and contact information of the caller, name of the financial institution, and date of contact.

    • Advise the caller that the return and refund are under review and it may take up to 10 weeks from the date of the call to complete the review and either issue the refund or send a letter regarding the review.

    • If 10 weeks have passed and no action has been taken on the account prepare a Form e4442, Inquiry Referral, and forward to IVO using category - "RICS IVO - External Lead" . Advise the taxpayer to allow 60 days for a response.

    Exception:

    IDTVA Employees may make adjustments as needed after contacting the External Leads POC to verify if the financial institution has returned the funds.

    Exception:

    . If the control base is closed with "BKLCOMNGLD" then no contact is required.

    3
    The account contains an open control to IVO.
    The control base activity field is one of the following:
    • "BKLDCKRECD"

    • "BKLDACHREV"

    AND the control base assignment number is one of the following:
    • 148XX00004

    • 148XX00005

    AND the funds are posted to the module (TC 720 or TC 841).
    • Update AMS Notes with the following: name and contact information of the caller, name of the financial institution, and date of contact.

    • Advise the caller that the return and refund are under review and it may take up to 10 weeks from the date of the call to complete the review and either issue the refund or send a letter regarding the review.

    • If 10 weeks have passed and no action has been taken on the account prepare a Form e4442, Inquiry Referral, and forward to IVO using category - RICS IVO - External Lead. Advise the taxpayer to allow 60 days for a response.

    Exception:

    ID Theft Employees may make adjustments as needed.

    4
    The account contains an open control to IVO.
    The control base activity field contains the following:
    • "VALID150"


    AND the control base assignment number is the following:
    • 148XX00007

    • Update AMS Notes with the following: name and contact information of the caller, name of the financial institution, and date of contact.

    • If the TC 720/ TC 841 is not posted, advise the caller that the return and refund have completed the review process and to allow 10 weeks for the refund to be issued.

    • If the TC 720/ TC 841 is posted, advise the caller that the return and refund have completed the review process and to allow 6 weeks from the TC 720 /TC 841 cycle date for the refund to be issued.

    • If more than 10 weeks have passed from the date of the initial call and the refund has not been issued, prepare a Form e4442, Inquiry Referral, and forward to IVO using category - "RICS IVO - External Lead" . Advise the taxpayer to allow 60 days for a response.

    5
    The account contains a closed IVO control base.
    The control base activity field was "BKLCOMNGLD" and the control base assignment number was 148XX00004 or 148XX00007.
    • Update AMS Notes with the following: name and contact information of the caller, name of the financial institution, and date of contact.

    • Advise the caller that the return and refund are under review and it may take up to 6 weeks from the date of the call to receive a letter regarding the review.

    • Prepare a Form e4442, Inquiry Referral, and forward to IVO using category - "RICS IVO - External Lead" . Advise the taxpayer to allow 60 days for a response.

    6
    The taxpayer states the financial institution has advised them that IRS requested the funds back.
    The control base activity field is "NOFNDSAVLB" or "NOFNDSRTND" and the control base assignment number is 148XX00004.
    • IRS never received any funds from the financial institution. Advise the caller to contact their financial institution regarding the refund.


    If the taxpayer states they have already spoken to the bank and the bank referred the taxpayer back to IRS then:
    • Submit an Form e-4442 to "RICS IVO EX LDS" . Advise the taxpayer to allow 60 days for a response.

    7
    The account contains a closed IVO control base.
    The control base activity field was "841LOST" or "ACHLOST" and the control base assignment number was 148XX00005, and there are no credits held on the account.
    • The financial institution returned the funds as a direct deposit reversal, however the refund was released via a paper check.

    • Follow normal refund inquiry procedures per IRM 21.4.2, Refund Trace and Limited Payability.

    8
    The account contains an IDRS history item such as "BKLD DO NOT RELEASE" or "BKLD DO NOT REFUND"
    A credit (TC 720 or TC 841) is held on the account with an IVO freeze such as a TC 971 AC 134 or a TC 971 AC 199. Refer to the last closed IVO control base and follow the instructions in this "If and Then " chart.
    9
    The taxpayer states the financial institution has advised them that IRS requested the funds back.
    No open or closed IVO control or indications of IVO activity.
    • Update AMS Notes with the following: name and contact information of the caller, name of the financial institution, and date of contact.

    • Advise the caller to allow 90 days from the date of the call to either receive the refund or a letter regarding the review.

    • If more than 7 days have passed since the bank notified the taxpayer that the refund had been returned to the IRS, prepare a Form e-4442, Inquiry Referral, and forward to IVO using category - "RICS IVO - External Lead" . Advise the taxpayer to allow 60 days for a response.

  3. If over 90 days since the external lead control was opened and the taxpayer has not received their refund or notification, submit a Form e-4442, Inquiry Referral, to IVO using the appropriate referral category, RICS IVO - External Lead.

  4. The caller is a tax preparer inquiring about a taxpayer’s current year tax refund not being deposited into the preparer’s account. Take the following actions:

    If And Then
    The caller claims to be a tax return preparer who directed current year tax refunds into their account Bank has told caller that the deposited refunds were returned to the IRS due to multiple refunds or name mismatch
    1. Submit the following information via email to the *RPO Referrals mailbox. Subject line of: "Attempt to Direct Deposit Client Refund to Return Preparer Bank Account" .

    2. Include a brief explanation of why the preparer called:

      Example:

      Return preparer called because the bank sent the refund back to IRS instead of depositing the refund into the preparers bank account.

      • Preparer name

      • Preparer SSN number

      • Preparer PTIN

      • Preparer Firm EIN number (if available)

      • Preparer phone number

      • Bank routing number and account number

    3. Inform the caller that direct deposit tax refunds must be deposited to bank accounts in the name of the taxpayer. This may explain why the bank returned the funds to the IRS. No exception to these rules exists for tax return preparer.

      Note:

      The instructions for both Form 1040, U.S. Individual Income Tax Return, and Form 8888, Allocation of Refund (Including Savings Bond Purchases), instruct taxpayers not to request a deposit of their refund to an account that is not in their name, such as their tax preparer’s account.

    4. Do not provide any specific information about a taxpayer’s account unless the caller has a power of attorney to receive it.

Bureau of Fiscal Services (BFS) Credit Gateway

  1. The External Leads Program, supported and managed by the IRS Integrity & Verification Operation (IVO), works in conjunction with IRS Submission Processing (SP) to receive, screen and validate leads, and then request the recovery of refunds to reconcile accounts. Refunds associated with leads can be submitted electronically, rather than a paper check, via Bureau of the Fiscal Service (BFS) Credit Gateway.

  2. Sources will provide a spreadsheet containing critical personally identifiable information (PII) that will help the IRS identify the source of the funds received as well as ensure accurate processing of the funds. Once the External Leads team completes the necessary research on the leads, the source should be notified of the total amount of federal tax refunds to be returned to the IRS.

  3. IVO will provide the source with a Credit Gateway Account Locator Number (ALC) for the submission of funds. See table in (7) below.

  4. IVO will then receive via the efleads@irs.gov mailbox, a batch file of funds with the locked down accounts, along with an e-mail including the Lead Number(s).

  5. Any sources using the BFS Credit Gateway should be provided fund transfer instructions below for the site working the inventory. The accounting POC for the site should be included in the instructions.

  6. Update Lead Management System as required.

  7. To initiate the fund transfer, use the following account information:

    Cincinnati, OH Fresno, CA
    ALC: 20091700 ALC: 20098900
    Standard Entry Class (SEC) code: CCD Standard Entry Class (SEC) code: CCD
    Transaction Type: 22 Transaction Type: 22
    Receiving ABA routing number: 051036706 Receiving ABA routing number: 051036706
    DFI account number: 820091700001 DFI account number: 820098900001
    Receiving Company Information: Institution Name and Lead# (limit 22 characters) (Lead# = mmddyy seq# of lead, i.e., SunTrust #101414 39) Receiving Company Information: Institution Name and Lead# (limit 22 characters) (Lead# = mmddyy seq# of lead, i.e., SunTrust #101414 39)
    Tax Class: 20X0903 Tax Class: 20X0903

External Offset Leads (State and Federal Agencies)

  1. The External Offset Leads include the following:

    • The Office of Child Support (OCSE)

    • State Revenue Departments

  2. The Office of Child Support Enforcement (OCSE) receives and manages various states child support referrals. The states run their own filters to determine if an overpayment is suspicious or the agency may receive information from a taxpayer stating they did not work during the current year or they did not file a current year tax return. The state is aware that the overpayment is from a tax return. OCSE loads these leads through the Health and Human Services (HHS) website portal.

    Note:

    An email is sent by the portal when a new file is added. The POCs then retrieve the file and filter to the operation to be worked.

  3. The IRS works directly with the OCSE and returns the determinations to OCSE to be forwarded to the state. The IRS usually receives the following information:

    • Trace number

    • State referring case

    • Debtors first and last name

    • Debtors SSN

    • Offset amount/date

    • Notes column (some states use the field to disclose information)

  4. Input the TC 971 AC 134 with MISC "BKLD OFFSET" on all receipts to identify IVO External Lead involvement.

    Note:

    The TC 971 AC 134 may be input en masse.

    Reminder:

    Ensure the name control is accurate, mismatches will require re-submission after correction OR a manual input.

  5. Research is completed through the use of batch tools to determine the tax period in question.

  6. If the batch process is unable to verify the return against CC IRPTR due to the presence of Schedule C or other "unverifiable" data, the case will be referred to the External Lead team to work. Research will include any identity theft markers, including TC 971 AC 125, EFDS notes stating "Compromised IRP Data - Do Not Release Based on IRP" , IRP statement "THIS IS A STATE REVERSE FILE MATCH INITIATIVE (SRFM) IRP DOC (consider verified false)" or "WARNING FRAUDULENT PAYER TIN" . The External Lead tax examiner (TE) will identify the corresponding TIN and tax period and will return a determination (using the If And Then chart in #7) of:

    1. "NO" (No Funds Requested)

    2. "YES" (All Funds Requested) -
      For all "YES" accounts TEs must indicate either taxpayer "Fraud" or "IDT"

    3. "PARTIAL" (Some Funds Requested -TE will need to provide verified wage and withholding figures)

      Note:

      Prior to IRP being considered fully loaded, if unable to make a No/Yes/Partial determination, the wage and withholding returns are submitted thru the IVO verification process. An interim response of "M" will be recorded in LMS and EFDS, The return DLN is to be captured in the "Remarks " field.

      Reminder:

      NEVER suspend BFS or PIR responses.

    4. "PIR" (Prior Actions By IRS Has Already Reversed the Offset).

      For all "PIR" accounts TEs must indicate either taxpayer "Fraud" , "IDT" , or blank.

    5. "BFS" TC 899(s) have posted to the account totaling the entire amount of the referred TC 898.

    Note:

    Research for your determination should be performed on the tax year where the credit originated, not where it refunded from. If the offset is the result of payments (TC 670, TC 430, etc.) then the response is "No" . If the offset is the result of an overpayment (refundable credits and/or WH) released due to an abatement or reversal of tax/penalty/interest, then follow the If/And/Then chart in #7 below.

    Reminder:

    Individual IRP document matching must be performed on OCSE case review. Withholding cannot be claimed by taxpayers without the related income also being claimed.

  7. Follow the If and Then chart below to reach your determination:

    Note:

    Update Lead Management System as required.

    Note:

    Use Hold Code 4 on all return adjustments and TOP offset reversals. Reason Code 087 must be used on all TOP offset reversals.

    *Do not consider a Schedule C/F/HSH filing history as consistent when multiple returns claiming the Schedule C/F/HSH are filed within the same processing year; if filer has verified as TIN owner, accept the Sch C and review only Wages/WH in the table below.

    Reminder:

    TOP Offsets cannot be reversed via TC 290/766 if more than 5 Years 11 Months from offset date – must request Manual Reversal through TOP Liaison.

    If And Then
    1
    Agency Code 02 (NON-TANF)
    more than 5 months from the offset date
    Response is "No - late lead"

    Note:

    add a comment for too late to work and notify HQ analyst of receipt.

    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

    2
    The return wages and withholding are determined to be valid per tolerances established in IRM 25.25.8.3 paragraph 5b
     
    Response is "No"
    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

    3
    Return is determined to be IDT
     
    Response is "Yes – IDT"
    • Research for Valid TP return (Do not request the offset if a valid return is located and the good refund is equal to or more than the offset amount).

      Note:

      If the good return is found and has not been processed, follow procedures to process the good return.

    • Treat IDT filing and account per IRM 25.25.4, IVO ID Theft Return Procedures

    • Push to STARs, if not already there. Update to "CAT 7 CL"

    4
    Schedule C and/or F and/or HSH with or without Wages and/or withholding
    No consistent Schedule C/F/HSH history or prior year scheme identified as identity theft

    Exception:

    Do not disposition the return to Scheme if there is documentation on CC IRPTR supporting the income claimed on the Schedule C, such as a Form 1099-MISC, Miscellaneous Income. "Re-file" the return in the Electronic Fraud Detection System (EFDS).


    Response is "Yes - IDT "
    • Research for Valid TP return. (Do not request the offset if a valid return is located and the good refund is equal to or more than the offset amount).

      Note:

      If the good return is found and has not been processed, follow procedures to process the good return.

    • Treat IDT filing and account per IRM 25.25.4, IVO ID Theft Return Procedures

    • Push to STARs, if not already there. Update to "CAT 7 CL"

    5
    Schedule C and/or F and/or HSH without Wages/WH
    Schedule C/F/HSH is consistent without previous disallowance OR if there is IRP support from a valid payer* OR filer is verified as TIN owner
    Response is "No"
    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

    6
    Schedule C and/or F and/or HSH with Wages/WH
    Schedule C/F/HSH is consistent without previous disallowance OR if there is IRP support from a valid payer* OR filer is verified as TIN owner Continue reviewing wages/withholding on return and disposition per below.
    7
    Returns only claiming Education/Hope Credit(s) and no income OR the only income is SSA, and the return has other IDT characteristics
    IRPTR (current or prior year) does not support the credit
    Response is "Yes – IDT"
    • Research for Valid TP return

    • Treat IDT filing and account per IRM 25.25.4, IVO ID Theft Return Procedures.

    8
    Returns only claiming Education/Hope Credit(s) and no income OR the only income is SSA, and the return has other IDT characteristics
    IRPTR (current or prior year) supports the credit
    Response is "No"
    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

    9
    Return contains "unallowable" or "frivolous" items meeting frivolous return criteria. See IRM 25.25.2.20, Frivolous Returns.
     
    Response is "Yes – Fraud"
    Reverse TOP Offset in full and refer to:
    $10K and over - Friv through Unit POC
    10
    There are underreported wages and/or withholding
    the result is an INCREASED refund amount or the SAME refund amount
    Response is "No"
    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Reminder:

      Do Not adjust for increased wages and/or withholding.

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

    11
    There are false wages and/or withholding
    all of the wages/withholding are determined to be false and all of the offset will be reversed
    Response is "Yes-Fraud"
    • Reverse the entire TOP Offset(s) amount per IRM 21.4.6.5.12, TOP Offset Reversals With Adjustments

    • Open the control to "M" status with category "ELOF" and place in suspense to "148XX00012"

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS) select "Refund Offset" issue.

    12
    There are false wages and/or withholding
    a portion of the wages/withholding are determined to be false and only a portion of the offset will be reversed and there are changes to refundable credits
    Response is "partial"
    • Calculate the correct refund amount based on verified wages and withholding claimed on the return (use 1040X worksheet on AMS)

      Caution:

      Do not increase refundable credits. Refundable credits must be equal to or less than originally claimed.

    • Reverse TOP Offset(s) in the amount equal to the difference in refund, per IRM 21.4.6.5.12, TOP Offset Reversals With Adjustments

    • Open the control to "M" status with category "ELOF" and place in suspense to "148XX00018" .

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS) select "Refund Offset" issue.

    13
    There are false wages and/or withholding
    a portion of the wages/withholding are determined to be false and only a portion of the offset will be reversed and there are no changes to refundable credits
    Response is "partial"
    • Calculate the correct refund amount based on verified wages and withholding claimed on the return (use 1040X worksheet on AMS).

    • Reverse TOP Offset(s) in the amount equal to the difference in refund, per IRM 21.4.6.5.12, TOP Offset Reversals With Adjustments.

    • Input adjustments to tax, wages, withholding, and non refundable credits.

      Exception:

      DO NOT increase refundable credits or increase withholding.

    • Issue 106C, Claim Partially Disallowed. Use WOW letter Job Aide for paragraphs. See WOW Letters

    • Input/Update AMS notes per IRM 21.2.2.4.5, Account Management Services (AMS) select "Refund Offset" issue.

    • Push to STARS. If current processing year use the appropriate category with disposition "AL", if prior processing year use Mass push procedures.

    14
    Referred TOP offset is fully reversed by TC(s) 899(s)
     
    Response is "BFS"
    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

    15
    Referred TOP offset is fully reversed by TC 290/ TC 766 and/or TOP Manual Reversal TC 700
     
    Response is "PIR" Indicate IDT, Fraud, or leave blank (Injured Spouse cases only) as appropriate.
    • Input the TC 972 AC 134 MISC field "BKLD OFFSET "

      Note:

      This may be done en masse.

      Note:

      This will close the IVO External Lead involvement on the module.

    • Close all IVO control bases.

  8. The designated POC will upload the response file to the OCSE/HHS portal within 30 days of the initial receipt of the submission.

    Reminder:

    No tax return information that was not originally provided by the source agency may be disclosed (i.e., tax year of the offset or Fraud/IDT). The TIN must be redacted on the file returned to HHS/OCSE.

Responding to Offset Phone Inquiries

  1. Phone calls may be received from taxpayers who have been informed that the offset of their refund to a Federal/State debt has not been applied, because it has been returned to the IRS.

  2. Follow the If and Then chart below:

    If Then
    1
    The module contains an un-reversed TC 971 AC 134 MISC field "BKLD OFFSET"
    • Advise the taxpayer to wait 60 days from the date of the TC 971 input.

    • If over 60 days with no additional action showing on IDRS, prepare Form e-4442, Inquiry Referral, to IVO, using the appropriate referral category for RICS/IVO External Lead.

    • Document the call in AMS and include the taxpayers name and contact information.

    2
    The module contains an open/closed control with activity "FraudCase" and category "DMFC"
    • Advise the taxpayer to allow 45 days from the receive date of the open control to receive a notice/letter requesting additional documentation to substantiate income/withholding claimed on the return.

    • If over 45 days with no indication of IRS correspondence to the taxpayer, prepare Form e-4442, Inquiry Referral, to IVO, using the appropriate referral category for RICS/IVO External Lead.

    • Document the call in AMS and include the taxpayers name and contact information.

    3
    The module contains a TC 972 AC 134 MISC field "BKLD OFFSET"
    • Advise the taxpayer the refund will be applied to any outstanding debt.

    • Document the call in AMS.

    4
    The module contains a TC 972 AC 134 MISC field "BKLD OFFSET" , with category "ELOF" and the funds are posted back to the account (TC 766 with OTN or TC 899 showing offset reversal to IRS, see IRM 21.4.6.4.2.10, TC 899 Reversal or Agency Refund of TOP Offset).
    • If over 15 days with no indication of IVO action, prepare Form e-4442, Inquiry Referral, to IVO, using the appropriate referral category for RICS/IVO External Lead.

    • Document the call in AMS and include the taxpayers name and contact information.

Debit Card Procedures

  1. All potential fraudulent debit cards received at any IRS facility in a sealed envelope will be mailed to Fresno Service Center. Follow PII Guidelines IRM 21.3.3.4.25, Breaches of Personally Identifiable Information (PII) Caused by Manual Stuffing Errors and UPS Overnight to:
    Internal Revenue Service
    ATTN: RICS External Leads Manager
    Mail STOP 23101
    5045 East Butler Avenue
    Fresno, CA 93727

    1. IVO will review the cards and determine the return address of the issuing bank.

    2. The TE will prepare the debit card letter per Exhibit 25.25.8-3, Letter for Intercepted Prepaid Debit Card(s) and track the number of cards sent to the issuing bank.

  2. Reloadit Cards are cards that the taxpayer is adding funds to, to pay their balance due. Send the taxpayer letters and Reloadit cards to the Fresno SP Payment Processing Unit. The SP payment processing unit does not accept credit/debit cards as a valid form of paying a balance due. The Payment Processing Unit will return the debit cards to the taxpayer with an explanation on how they can pay their balance due.

Centralized Check Process (CCP)

  1. Fresno External Lead unit receives treasury check copies, third-party checks and miscellaneous payments in the form of money orders, savings bonds, personal checks etc., from all service centers when there is potential Identity Theft (IDT) involved. Refer to IRM 3.10.72.5.5, Extraction of Envelope Contents for Returns and Documents With Remittance and IRM 21.4.3.5.4, Returned Refund Check Procedures.

  2. Third party checks received at IRS facilities that are not issued to pay tax are worked in the Centralized Check Process (CCP).

    Example:

    Financial Institution issues a check to an individual instead of Department of Treasury or IRS.

    Note:

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

    Exception:

    Taxpayer Advocate Service (TAS) follows the Return Integrity and Compliance (RICS) Service Level Agreement (SLA) addendum procedures.

    Note:

    Checks received with Entity (name line) issues, address changes, or checks that are expired are not worked in CCP and should be returned to the originator for appropriate handling.

    Reminder:

    If documentation containing a live signature is received with the check, file the document(s) per IRM 25.25.5.2.1, General Replies to Letters/Notices and Undeliverable Mail.

  3. When CCP case is received, open a control to "C#,CCP,A,EVFY
    148XX00003, *" .

    Note:

    If there is already an open lead, open a closed control for tracking purposes.

Returned Treasury Checks

  1. If a Federal Refund Treasury Check was returned to the IRS, verify:

    • It is a Treasury check and

    • Taxpayer indicates the refund issued is not theirs and confirms IDT

      Note:

      Social Security, FEMA, and Restitution Treasury Checks should not be sent to be worked by the Centralized Check Process (CCP). These checks, if received, should be returned to the originator for appropriate handling.

    Follow the table below.

    Reminder:

    All original treasury checks received due to IDT or fraud will be cancelled using F-stop by the POC with access to Treasury Check Information System (TCIS).

    If And Then
    1
    TC 841 has not posted
    the check has not been negotiated and identity theft documentation is attached

    The TE will:

    1. On IDRS input CC NOREFP for all original treasury checks received, to ensure funds are held. Use the IAT Tool "Stop Refund" and close the control base.

    2. Input TC 971 AC 134 (if not already present) and TC 971 AC 850 (only on current tax year)

    3. Input a history item "DONOTRFUND" ,

    4. Refer the account to the POC to stop the check in TCIS

    5. Monitor for the posting of the TC 841

    6. Update the control to reflect "PND841"

    7. Update EFDS notes to "CCP, Lead # MMDDYYYY XX XX, notate Received Treasury check (by e-fax or original), dollar amount, check number, and what TP states "didn't file" etc., notate if Form 14039 is attached."

    8. Update AMS History notes with same information as EFDS notes.

    9. Input TC 971 AC 522 (if one does not already exist on CC ENMOD).

      The POC will:

    10. The POC will access TCIS and use stop code F to stop the check

      Note:

      Use the address provided on the documentation from the taxpayer. If an address is not provided use the address that populates in TCIS.

    11. Open an IDRS control:
      "C#,TCISCANCEL,A,EVFY "
      1481X00003,*

    12. Input the cancelled check numbers on the "Cancelled Treasury Checks " monitoring spreadsheet

    13. Send the cancelled check to BFS, include the statement" the check was cancelled in TCIS using F-stop and is being returned to be destroyed. "

      Note:

      Ensure "VOID" is stamped on all checks

      Once the TC 841 posts:

    14. Close the monitoring control with "841posted"

    15. Import/Update LMS

    16. Disposition the return.

      Note:

      . Disposition as "CAT 5 CL" if resolved by another function. Disposition as "CAT 7 CL" if identity theft resolved by IVO.

      Note:

      Prior year processed returns must be added to the Mass Push Spreadsheet to be updated. Update the control to "Cxx,PNDSTARS,M,EVFY 148XX00009,".

    If the check was sent in error:

    • Close the IDRS control base with: "Cxx,REJECTTORI,C,EVFY" .

    • Reject the case back to Refund Inquiry.

    2
    TC 841 posted
     
    1. Input TC 971 AC 134 (if not already present) and TC 971 AC 850 (only on current tax year).

    2. Input a history item "DONOTRFUND" .

    3. Open a closed IDRS control:
      "C#,841POSTED,C,EVFY"
      1481X00003,* .

      Note:

      It is possible for the treasury check to post as a TC 740. If the credit amount for the check is on the account and the check number matches the TC 740, close the base "740POSTED"

    4. Update EFDS notes to "CCP, Lead # MMDDYYYY XX XX, notate Received treasury check , (by e-fax or original), dollar amount sent to BFS, indicate what TP states "didn't file" etc., notate if Form 14039 is attached."

      Note:

      . Disposition as "CAT 5 CL" if resolved by another function. Disposition as "CAT 7 CL " if resolved by IVO.

      Note:

      If IDT and the money is posted, push it to scheme and refer through STARS as "CAT 7 CC" .

      Note:

      When pushing to Scheme, for source use the service center on the Form 3210 that is attached, if no Form 3210 attached, use the source "OTHE" .

      Note:

      Prior year processed returns must be added (if not already in STARS) to the Mass Push Spreadsheet to be updated.

    5. Update AMS History notes with same information as EFDS notes.

    6. If indications of Identity theft ,input TC 971 AC 522 if one does not already exist on CC ENMOD .

    7. Import/Update LMS.

    If the check was sent in error:

    • Close the IDRS control base with: "Cxx,REJECTTORI,C.EVFY" .

    • Reject the case back to Refund Inquiry.

Third Party Checks or Miscellaneous Repayments

  1. If a third party check or miscellaneous repayment is received at an IRS facility, verify:

    Example:

    Financial Institution issues a check to an individual instead of Department of Treasury or IRS, a money order, etc.

    • It is not a Treasury check

    • Taxpayer indicates that the refund issued is not theirs

    • Refund should not have been deposited to their account

    Note:

    Third Party and Miscellaneous Funds returned will be worked as an EL deposit.

  2. For third party checks received, the IVO POC will e-mail a copy of the check to the issuing financial institution using the appropriate script to request that the funds be returned with a check payable to IRS or Department of the Treasury.

  3. Follow the If/And/Then chart for completing Centralized Check Processing (CCP) for third party checks and/or miscellaneous repayments:

    If And Then
    1
    Check(s) is made payable to a 3rd Party
     
    1. Input TC 971 AC 134 (if not already present) and TC 971 AC 850 (only on current tax year).

    2. Input a history item "DONOTRFUND" .

    3. Open/update an IDRS control:
      C#,3RDPRTYCK,A,EVFY
      148XX00003.

    4. If indications of Identity theft, input TC 971 AC 522 (if one does not already exist on CC ENMOD) .

    5. Update control to "Cxx,PND$AMT,A,EVFY"
      "148xx00003" . Monitor until deposit is received (45 days).

      Current processing year return or already in STARS:

    6. Update as "CAT 7 CC." . Update as" CAT 5 CL" if resolved by another function, , or "CAT 7 CL" , if identity theft resolved by IVO.

      Prior processing year return:

    7. Complete mass push template and update control to "Cxx,PNDSTARS,M,EVFY 148XX00009," .

    8. Input the notes in EFDS and AMS: "CCP, Lead # MMDDYYYY XX XX, received (original or efax of check) 3rd party check (Bank’s name) check #XXX $XXX.XX, returned to bank, requesting funds, TP states…. (ie. statement from the taxpayer IDT, erroneous refund, F14039, etc.)."

    9. Monitor the "EVFY" control base.

    Note:

    Funds received for 3rd Party checks will be made an ELP and worked as a deposit.

    2
    Check(s) is made payable to a 3rd Party
    If no response received after 45 days Send a follow up e-mail to re-request the funds. Allow an additional 15 days.
    3
    Check(s) is made payable to a 3rd Party
    If no response received after an additional 15 days from the follow-up e-mail
    • Update EFDS notes as applicable.

    • Update AMS History notes with same information as EFDS notes.

    • Close control base with: "NOFNDSRECD,C" .

    4
    Miscellaneous Repayment
    Check or money order is made payable to:
    • US Treasury

    • United States Treasury

    • Internal Revenue Service

    • Department of the Treasury

    1. There is IVO activity (Letter 4464C, Notice CP 05, Letter 4115C)

    2. A Form 14039 identity theft Affidavit is attached, OR

    3. Correspondence indicates identity theft

    1. Input TC 971 AC 134 (if not already present) and TC 971 AC 850 (only on current year).

    2. Input a history item "DONOTRFUND"

    3. Open an IDRS control:
      "C#,PNDMISCCK,A,EVFY"
      148XX00003,*. Monitor until deposit is received (45 days).

      Current processing year return or already in STARS:

    4. Update as "CAT 7 CC." . Update as "CAT 5 CL" if closed by another function. . If identity theft close as "CAT 7 CL" .

      Prior processing year return:

    5. Complete mass push template and update control to "Cxx,PNDSTARS,M,EVFY 148XX00009," .

    6. Input the notes in EFDS and AMS: "CCP, Lead # MMDDYYYY XX XX, received (personal check, money order, cashier’s check) Check #XX $XXX.XX , sent to payment processing. TP states…. (i.e. statement from the taxpayer IDT, erroneous refund, F14039, etc.)."

    7. If indications of identity theft, input TC 971 AC 522 (if one does not already exist on CC ENMOD).

    8. Monitor for the funds to post to the account .

    5
    Miscellaneous repayment
    there is no IVO issue and the correspondence or research performed indicates the funds should be posted to another taxpayer account
    • Prepare Form 3244, Payment Posting Voucher. Refer case to the lead/POC

    • Monitor for the funds to post to the account (i.e., TC 610, TC 660, TC 670, etc.) look for the matching dollar amount credited within 45 days.

      If funds have not posted within 45 days, follow-up with the Form 3210 Acknowledgement contact.

Reject Reason Code 17/18/19/23 Transcripts

  1. Beginning January 2013, an Opt-In Program developed by the IRS, Department of Treasury Bureau of Fiscal Services (BFS) and the National Automated Clearing House Association (NACHA) will allow financial institutions to reject questionable refunds for review.

    Note:

    All Rejects come in on the Reject Reason Code 17 Transcripts.

    Reminder:

    The presence of the CP53 indicates that a flip to a paper check has been implemented.

  2. Reject Reason Code 17 (R17 )), is used by some financial institutions to reject current year direct deposit refunds when the name/taxpayer identification number (TIN) listed on the Treasury Automated Clearing House (ACH) file for the tax refund does not match the account holder information in the bank’s records. R17 rejects are posted with a TC 841 DLN ending in "77711" and a control base with an assigned number of "1487111117" to IDRS. A CP 053A, is sent to the taxpayer. Reject Reason Code 17 will identify name mismatch refunds. A Reject Reason Code 17 REFC (refund cancellation) will be used by institutions when one or more of the following situations occur in banking filters:

    • The last name on the account (account holder) does not match the name on the return.

    • Multiple named Federal tax refunds deposited into single accounts or multiple accounts.

    • Multiple tax refunds for multiple taxpayers going into a single account without any established relationship.

    • Full name mismatches and partial name mismatches where a relationship to the account holder cannot be established.

    • TIN on account does not match return information.

    • There is no exact match of the entity information and efforts to reconcile joint filers have been exhausted.

    • The IRS has requested funds back as part of a recovery attempt. These funds may come back as either a paper check or a deposit. These accounts will contain a TC 971 AC 123 with MISC field "TPP Recovery" .

    Reminder:

    The initial notice advises the taxpayer to wait 10 weeks prior to calling regarding their refund, and includes third party notification information.

  3. Reject Reason Code 18 (R18) is used by some financial institutions to reject current year direct deposit refunds when the bank has determined the tax refund is Identity Theft. R18 rejects are posted with a TC 841 DLN ending in "77712" and a control base with an assigned number of "1487111118" . A Letter 5253C, "Rejected Direct Deposit" , is sent to the taxpayer.

    Reminder:

    The initial notice advises the taxpayer to wait 10 weeks prior to calling regarding their refund, and includes third party notification information.

  4. Reject Reason Code 19 (R19) is used by some financial institutions to reject current year direct deposit refunds when the bank has determined the account holder/tax refund is fraudulent. R19 are posted with a TC 841 DLN ending in "77713" and a control base with an assigned number of 1487111119. A Letter 5254C, "Rejected Direct Deposit" , is sent to the taxpayer.

    Reminder:

    The initial notice advises the taxpayer to wait 10 weeks prior to calling regarding their refund, and includes third party notification information.

  5. Subsequently a refund cancellation R17 transcript listing will generate to Return Integrity Compliance Services (RICS) External Leads for workload distribution and refund verification. Once the review is complete, the refund will be referred for appropriate treatment or released.

    Exception:

    Accounts containing a TC 971 AC 123 should not be released, but dispositioned to PS 30 once the recovered funds post, unless research shows th account has already been adjusted to the good taxpayer’s figures.

  6. Reject Reason Code 23 (R23) generates the notice 53B. Process the returns the same as R17 above. Taxpayer states money isn’t mine - send through TPP (PS30) process. Receive notification the same day to pull the checks. If already went through TPP, the return can go back through TPP (PS30).

Reject Reason Code R17 Procedures

  1. Pull Control D files for NACHA and save as a text file in the appropriate reject folder.

    • Import NACHA files into LMS using the NACHA Import Template. The lead number should be the date on the text file followed by the sequence received that day and the NACHA reject code, i.e. 031918 01 R23.

    • When imported update the record in LMS by notating as NACHA, input the total dollar amount on the Control D file in the "Total Amount Available for Recovery" box and assign to Cincinnati.

  2. When the transcript is received, input EFDS return note "BKL-RXX" (XX= Reject Reason code 17/18/19/23) on all returns using CASE, follow the procedures below:

    1. Check IDRS for posting of TC 841.

    2. Ensure TC 841 matches TC 846 amount (look for possible offset to outside agencies).

    3. Check CC TXMODA for DLN 7771X (X= 1, 2 or 3) and control base activity and category code "REFC" . TC 971 AC 805 has REFCANCLXX (XX= Reject Reason code 17/18/19/23) in the MISC field.

  3. An initial review of the RXX (XX= 17, 18, 19 or 23) inventory will be completed to determine if the return is valid, questionable or probable identity theft and must be moved to the appropriate EFDS process status within 10 business days. If manually screening the returns follow the procedures below to determine the appropriate EFDS process status and account resolution actions.

    Note:

    Valid returns will be released en masse weekly.

  4. Supply the SSNs in concatenated format to someone with Discoverer to obtain the R17/R19 DLNs. Add each reject DLN into Case and input the appropriate BKL - R17/R19 note. Every Friday the NACHA DLNs for the week need to be sent to the FRE POC.

  5. Follow IRM 25.25.2.2, Data Mining Screening, to assist in making a determination.

    Exception:

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

    1. Review EFDS to aid in determining a pattern.

    2. Identify any previous IDRS reversal adjustments on the account.

    3. Review the account for Exam activity (TC 42X, -L freeze etc.)

      Note:

      If Exam closed their audit and allowed a 'no-change' determination (TC 300 .00 with no other credit reversals), return should be considered valid as filed and funds should not be requested back from the financial institution. If the funds were already returned, release the funds.

    4. Search entity modules for indications of identity theft such as a previously posted TC 971 with Action Code (AC) 5XX. See IRM 3.5.20.2.8.1, Identity Theft Indicator.

    5. Review IDRS for any payments (TC 610, TC 670, TC 430, TC 716, etc.)

    6. Review account for any balance due conditions (this may indicate other actions taken on the account)

    7. Review IDRS for extension to file (TC 460)

    8. Review EFDS notes for indication of previous IVO involvement.

      Note:

      Search for open issue or previously verified good through contact employer.

      Reminder:

      Research to establish whether the return is IDT or Non-IDT. IVO DOES NOT AUDIT returns.

  6. Follow the table below after determination:

    If And Then
    1
    The return is good
    filed by the TIN owner
    1. Re-file the return in EFDS.

    2. Update EFDS notes.

    3. Input TC 971 AC 850 (only on current year returns).

    4. Release the refund inputting a TC 290 .00 with a Priority Code (PC) 1 and a Posting Delay Code (PDC) of 1.

    5. Close all IVO controls.

    2
    The return is deemed IDT
    the full TC 846 was returned
    • Disposition the return to Ace Adjustments (PS 30).

      Exception:

      If the return has previously been through the TPP process, the return cannot be put back through the TPP process unless the module contains TC 971 AC 123 MISC field "TPP RP" .

    • Input an EFDS return note of "IVO EL IDT BKLD" .

    • Close all IVO controls.

    3
    The return is deemed IDT
    the full TC 846 is not returned

    Exception:

    If the account contains a TC 971 AC 123 with MISC field "TPP Recovery" , then treat as in box 2 above and disposition to PS30

    • Push to Scheme and update the category and disposition to the appropriate identity theft Triage Category per IRM 25.25.5-1, Triage Procedures . If completed en masse, update to "CAT 1" .

    • Input an EFDS return note of "IVO EL IDT BKLD" .

    • Close all IVO controls.

    4
    The return is questionable
    is an electronic filed return
    • Update disposition in EFDS as appropriate.

    • Close any IVO open IDRS control bases.

    5
    The return is questionable
    is a paper filed return
    • Follow table below.

    • Update disposition in EFDS as appropriate.

    • Close any IVO open IDRS control bases.

  7. Follow the table below for paper returns:

    If Then
    1
    A paper return
    • Request the return from files.

    • Input CC ESTABD.

    • Update activity to "ESTAB1" .

    2
    If more than 14 days have passed
    • Initiate a second request using CC ESTABV to expedite the request.

    • Update the activity to "ESTAB2" .

    3
    The return is received on the second request
    • Input the IDOC information in EFDS and disposition the return as appropriate.

      Note:

      If pushed to verification , add to manual verification spreadsheet.

    4
    The return is not received on the second request
    • Push the return to Scheme.

    • Include a return note in EFDS stating "paper return – not received" .

  8. If there is a duplicate Filing Condition on CC TXMODA indicated by a –A Freeze:

    1. Suspend the case, update control base to B status and update the activity to "SUSPNCE2AM" .

    2. When Accounts Management (AM) work is complete, AM will update the control activity to "DUPWKD" .

    3. IVO will then monitor for the activity update and input a TC 290 .00 with PC 1 and close the control base.

Reject Reason Code Pilot R23 Procedures

  1. For calendar year 2018 IVO will be conducting a pilot for reject reason code R23.

  2. Pull Control D files for NACHA and save as a text file in the appropriate reject folder.

    • Import NACHA files into LMS using the NACHA Import Template The lead number should be the date on the text file followed by the sequence received that day and the NACHA reject code, i.e. 031918 01 R23.

    • When imported update the record in LMS by notating as NACHA, input the total dollar amount on the Control D file in the "Total Amount Available for Recovery" box and assigning to Cincinnati.

  3. If any R23s were received send them to ACE/Adjustments and input the "BKL - R23" note along with the "IVO EL IDT BKLD" note. (If they were previously re-filed by TPP check to see if that was because of the lost refund and not because of authentication, they can go back through for lost refund).

  4. Results will be split into two tabs, TE & Valid, the DLNs will be run through Discoverer to determine which accounts have split refunds. The accounts on the TE tab that do not contain split refunds will be loaded in Case and anything that has not been previously dispositioned will be sent to ACE/ADJ with the appropriate note "IVO EL IDT BKLD" . Returns dispositioned to SCHEME/Verification will be left alone, returns that are in any other process besides Re-file can be sent to ACE/ADJ. Returns that are in re-file will have to be reviewed to determine:

    If And Then
    the re-file was from a TE working NACHA   Release the refund
    the re-file was from a TE not working NACHA lost refund Check validity and disposition appropriately
    the re-file was from a TE not working NACHA the return is valid
    • Load into CASE and review any previous dispositions

      Caution:

      Be cautious these could be IDT returns.

    • Run the returns through a CC IMFOLT & CC TXMODA GII to find out which accounts still have a credit balance and which accounts still have an open control base.

    • All control bases will be closed utilizing Access/Macros & GII.

    • All refunds will be released with a TC 971 AC 850.

    • Re-file (need to show re-filed by a NACHA TE).

  5. The age listing will need to be pulled every Monday and broken down by reject code. R17 & R19 control bases can be closed utilizing GII and Access. The R18 files will need to be matched up with any Control D files received the previous week. You will also have R18 - TPP Recovery returns on the aged listing so you will need to identify which open controls are for those. TPP Recovery, R18s will need an EFDS note input "BKL - R18 TPP Recovery" and dispositioned to Ace/Adjustments. These can then be closed through GII as "CLS2PS30 ."

    • For all Rejects - Any accounts containing freezes that would require additional attention or contact to another IRS process should be separated and worked manually.

    • When releasing refunds for valid returns if there is an open control from another area the return will be errored out during the GII run. The "allprint" file will need to be reviewed for these errors and manually look at those accounts to determine what actions are being taken that may impact (these are generally open 4442s/OARS, contact may need to be made with the controlling IDRS #) the release of the refund.

  6. Discoverer queries will need to be run weekly on each reject to be certain all returns have been dispositioned and released. Any returns that have been sent to SCHEME will need to be checked for referral status and updated if NA/NR or rejected.

  7. LMS will need to be updated for each Lead # imported with the required fields. Most of the required information can be obtained from the Discoverer run.

    Reminder:

    NACHA is input into LMS as suspended cases and the disposition must be updated and the cases moved to complete at a later date.

R23 Check Pulls

  1. Make sure the R23 Check pulls have been retrieved from the BFS SharePoint site and saved Check Pulls. The SSNs will need to be run through GII to obtain the name controls so control bases may be opened on the accounts for monitoring. Input an EFDS note "BKL - R23 check pull" . An option instead of running the GII is to input manually which would be easily done if not many are received. Make sure all accounts have a TC971 AC134 and an open control base "BKLR23TPP" to "1481300023" on IDRS.

  2. Monday, when the age listing is pulled, the R23s need to be researched to locate which accounts have funds on the module. If funds have posted those returns need to be added to case and sent to Ace/Adjustments with the "IVO EL IDT BKLD" note. Control bases can be closed.

  3. Returns remaining on the age listing with no credit balances reflected after two weeks will need to be researched to see if there is an issue.

Undeliverable Refunds

  1. Review account and determine if the account meets IDT characteristics.

    If And Then
    1
    Meets IDT characteristics for a current processing year
    complete overpayment returned Push through manual TPP process to PS 30 with the specific bank lead EFDS note.
    2
    Meets IDT characteristics for a prior processing year
    complete overpayment returned push to STARS and update as CATG "7" Disp "MR" .
    3
    Meets IDT characteristics for a current processing year
    partial refund returned ((i.e.split payment and only one TC 846 was returned as undeliverable) push to STARS and update as CATG "7" Disp" MR" .
    4
    Meets IDT characteristics for a prior processing year
    partial refund returned push to STARS and update as CATG "7" Disp "MR" .
    5
    Does not meet IDT characteristics
      Take no action.
    6
    Cannot determine if meets IDT characteristics
      update EFDS note, but take no actions.
  2. FRE will monitor for 60 days, If the S freeze is unresolved, push to STARS and update to "CATG 7" and appropriate disposition.

Criminal Investigation (CI) List Procedures

  1. Criminal Investigation (CI) will route data breach lists to Project Analytics and Modeling (PAM) for clustering via email. In addition, CI will route high risk (e.g. PII, hacked preparer) and imminent lists such as Traffic Stops, Search Warrants, and Informant Leads, with no returns filed via email to Integrity & Verification Operation (IVO). The accounts will have Identity Theft (IDT) markers input (TC 971 AC 506, WI PRP LIST1) and a Letter 4904C to be issued to the taxpayer.

    Note:

    The letter will only be issued if a valid address is identified.

  2. If the taxpayer sends a response to the Letter 4904C, IVO will follow procedures in 25.25.5.4, General Correspondence Letters/Notices.

  3. CI will send a list of treasury check numbers via email to IVO for IRS refunds that were identified through Traffic Stops, Search Warrants, and Informant Leads related to IDT. IVO will take the following actions:

    • Research treasury check numbers to identify the applicable tax year

    • Run cases through the Return Integrity and Compliance Services (RICS) IDT Tool for account resolution

    • Update Scheme Tracking and Referral System (STARS) to "CAT 7 CI"

    Note:

    Any cases rejected by the tool will be worked per IRM 25.25.4, Integrity and Verification Identity Theft Return Procedures.

STARS Disposition Definitions

The table below describes the STARS disposition status codes .

Note:

It is critical to check the Category Code and Disposition of each DLN before updating STARS. The correct combination is needed for the systemic processes to work. Please see IRM for additional information.

Reminder:

STARS Disposition NR means the DLN is not referable to AM or Exam through EFDS and actions must be taken via the Manual Referral Spreadsheet to refer the DLN for further processing.

STARS Disposition Status Disposition Description Disposition Usage Details
A1 QRP Category 1 Pending BRO AM Referral Special Project  
A2 QRP Category 2 Pending BRO AM Referral Special Project  
A9 Category 99 manual referrals to AQC (HQ only) Special Project  
AA Resolved (accepted by AM) Systemic  
AC AM Reject Corrected (Austin use only) Special Project  
AE Accepted by Exam Systemic  
AF Bad/Bad IDT Account with minus A freeze on module Available for update IDRS has an open control to 1487777777 and all returns are deemed IDT
AL Closed (Account Settled on AA) Available for update WOW, External Leads & statute process when making an adjustment for disallowance or there is an erroneous abatement and return is being added to DFS spreadsheet
AM Referred to BRO Accounts Management Special Project  
AP Adjustment FDCs (Monitoring) Special Project  
AQ ACCEPTED by AQC Systemic  
BA Bundle for AM Available for update  
BB ID THEFT BAD/BAD Available for update  
BE Bundle for Exam Available for update  
BG ID THEFT BG Available for update IDT /Good and Open Control to IVO, (Ex. NCAT, ECAT) (IDT return is TC 150) - no - A freeze present on module
BQ Batch AQC Available for update  
BT Below Tolerance Special Project  
CA Corrected for AM (Reject) Available for update Used to update a disposition that has been holding in the same status for longer than 60 days, or a return with no disposition (field is blank). The use of these codes is determined by the refundable credits on the account. Returns claiming no credits or refundable credits under $500.00. External Leads rejects and IDT overages also use this in their work flow.
CC Returned Refund Check received in Centralized Check Program (CCP) Available for update Confirmed IDT TC 841 posted with no money posted and IVO resolved by IVO
CD CADE Return Lost Refund Final Special Project  
CE Corrected for Exam (Reject) Available for update Used to update a disposition that has been holding in the same status for longer than 60 days, or a return with no disposition (field is blank). The use of these codes is determined by the refundable credits on the account. Returns claiming refundable credits of more than $500.00. External Leads rejects and IDT overages also use this in their work flow.
CI CI ID Theft Inventory Received Special Project  
CL Closed (Account Settled) Available for update Account is closed, the case has been fully resolved by IVO (CAT 7) or another business unit (CAT 5). Should not be changed without manager/lead determination and approval.
CO Return Sent to Collections Special Project  
CQ Corrected for AQC (Reject) Available for update  
CT Confirmed ID Theft per TP response Available for update  
CX ID Reject (Return is not Identity Theft) Special Project  
DB CI ID Theft Received Ignore IRP Special Project  
DD Multi DD Ref flip to Paper return Undel treat as IDT Special Project  
DE Deferred Exam Inventory Special Project PY2018 QRP Clean-up
DL Delete from STARS Available for update  
DR R17 DD Rej Flip to Paper Ref rel rtn Undel trt IDT Special Project  
E1 Manual Referral to WOW Available for update True TP Wage/wh and no refundable credits; see Manual Referral Disposition Tab
E2 Manual Referral to AQC Available for update True TP Wage/WH and refundable credits; see Manual Referral Disposition Tab
E3 Manual Referral to WI Exam Available for update True TP HSH with refundable credits; see Manual Referral Disposition Tab
E4 Manual Referral to SBSE Exam Available for update True TP Sch C with refundable credits; see Manual Referral Disposition Tab
E9 Category 99 manual referrals to Exam (HQ only) Special Project  
EC Exam QRP case closed Available for update  
EL Closed (Account Settled on AE) Available for update  
ET Exam Tolerance Special Project  
EX Return Sent to Exam Special Project  
FF FRIV Filer Special Project  
GB ID THEFT GB Available for update Good/IDT and either Credit Balance, Zero Balance, or Balance Due
GT Gas Tax/Fuel Excise to Exam Special Project  
HA Hold AM Special Project  
HE Hold Exam Special Project  
ID ID Theft AMTAP Available for update Used by FRE

Note:

Account will be resolved using the (RICS) IDT Tool

IP In Process Available for update  
JA AM Referral Rejected by MFDC Special Project  
JE Exam Referral Rejected by CFDC Special Project  
LF Prior -L freeze return to be included in open Exam audit Special Project  
LO Lost Refund Offset Special Project  
LR Lost Refund Final Special Project  
ME Math Error No Refund Remains Final Special Project  
MR IDT Return Requiring Manual Review for Resolution Available for update Multiple TC 846s, Offsets, etc.
ND CI Reviewed / Not Deleted Available for update  
NG No Go As EFDS Selected Referral Special Project  
NR Non Referable Return Systemic NR means that the return is non-referable. This disposition indicates that EFDS was unable to refer to any area. Correction or manual referral may be necessary when a return is in this disposition. Review for possible correction before using manual referral process.
NS No Selection Special Project  
NT No TC 150 Posted to Master File Special Project  
O1 IDT return with good TP address Available for update Address is not to be changed when resolved
OA Offset Adjustment Needed Special Project  
OM Operation Mass Mailing Available for update  
PA Pending Referral to AM Systemic In the process of being referred; and should not be changed if they are <60 days
PE Pending Referral to Exam Systemic In the process of being referred; and should not be changed if they are <60 days
PJ Identity Theft Project Special Project  
PL Prisoner Listing Special Project  
PN Pending Actions Special Project In the process of being referred; and should not be changed if they are <60 days
PQ Pending REFERRAL to AQC Systemic In the process of being referred; and should not be changed if they are <60 days
PT "Premium Tax Credit " Available for update Questionable Premium Tax Credit (in process of fraud determination)
PU ID THEFT DDb Filter Fraud Available for update Unpostable 126 RC 0 DLN is deemed IDT during the TPP process. This is a final disposition and should not be changed unless return posted and is being moved into IDT treatment stream.
QL Closed (Account Settled on AQ) Available for update Same as CL for IDT or PU for TPP
QX Rejected while in Waiting for AQC Referral Systemic  
R7 Non-Compliant Rule 7 Filter Cases Available for update DDb Non-Compliant filter Rule 7 (with both AOTC and ACTC credits) these are non-income related issues. (In process of fraud determination)
RA Referral to AM Special Project  
RE Referral to Exam Special Project  
RR Ready for Release Special Project  
RV Review for identity theft Special Project  
S1 ID THEFT SINGLE BAD NLR Available for update

Note:

Account will be resolved using the (RICS) IDT Tool

S2 ID THEFT SINGLE BAD LR Available for update Spreadsheet work done by TEs one TC 846 for the entire refund or part of the refund - may have a Tax Offset (TC 826/896) (Not a TOP Offset) - no good address for the taxpayer
SB Single Bad Available for update

Note:

Account will be resolved using the (RICS) IDT Tool.

Selected when the TP was deceased prior to the tax year
ST Statute Return Special Project  
TA Taxpayer Advocate Case Special Project  
TR ID Theft Triage Required AMTAP Special Project  
TT GATT (full year prisoner claiming unallowable refundable credit) Available for update AQC treatment stream for GATT (in process of fraud determination)
W9 Category 99 manual referrals to WOW (HQ only) Special Project  
WA Waiting for AM referral (Automation) Systemic  
WL Refund released due to workload Special Project HQ update only
WQ Waiting for AQC Referral Systemic  
XA Rejected by AM Systemic  
XE Rejected by Exam Systemic  
XQ REJECTED by AQC Systemic  
XW Rejected while in waiting for AM referral (Auto) Systemic  
ZA AM Reject after aging (Austin Use Only) Special Project  
ZC AM REJECT after aging corrected (Austin Only) Special Project  
ZF Z- Freeze Available for update  
ZZ CI Use Only Special Project  

STARS Category Definitions

STARS Category Category Description
Category 1 Nullity
Category 2 No refundable credits
Category 3 Refundable credits (EITC)
Category 4 Additional Child Tax Credit (ACTC)
Category 5 Account worked by another function
Category 6 Phishing/Bulk filing
Category 7 Identity Theft
Category 8 Questionable Refundable Credits including ACA 15 Premium Tax Credit (PTC)
Category 9 Return Preparer (RPP)

Letter for Intercepted Prepaid Debit Card(s)

Letter for Intercepted Prepaid Debit Card(s)
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
ATLANTA, GA 30308
Financial Institution
PO Box 12345
Anywhere USA
 
By :email/mail/fax
 
Re: Intercepted Prepaid Debit Cards
The U.S. Postal Inspection Service notified us that it suspected that prepaid debit cards you issued were used to receive fraudulent Federal tax refunds. The U.S. Postal Inspection Service intercepted these cards from the mail and provided them to our agency. We are returning these cards to you as the identified issuing institution.
We wish to investigate whether any Federal tax refunds were deposited to the prepaid debit cards returned to you to ensure that we recover all refunds that are improper Federal payments. This letter is our request for your assistance with the investigation.
The Federal Right to Financial Privacy Act, as amended in 2008, authorizes you to assist us by providing financial records, upon request, when we are investigating or recovering an improper Federal payment. In accordance with 12 U.S.C. § 3413(k)(2)(B), we request that you provide us with the direct deposit (routing and deposit account) numbers, Federal tax refund amounts, date of deposit or ACH transfer, and Social Security Number reported by the Treasury Financial Management Service on the ACH file for each Federal tax refund deposit that posted to the cards returned to you so that we may match this information against our records. Our request for direct deposit numbers is focused on the numbers your customer would enter on a Federal tax return to direct a refund to the card.
We ask that you provide this response in spreadsheet format within 20 days from the date of this letter by secure email to efleads@irs.gov with a subject line following this format: Intercepted Prepaid Debit Cards, [Your Name], [Date]. Please direct any questions about this request to the same email address.
We may later request that you return to us any refunds you identify to the extent that funds remain in the accounts you identify. We may also request your best efforts to protect the funds in any accounts by stopping the re-issuance of these cards and refusing any further withdrawals or payments requested by the cardholder.
We appreciate your assistance in this matter.
Sincerely,
 
Denise D. Davis
Director, Return Integrity Operation

External Lead Involvement Indicators

The following chart contains the Integrated Data Retrieval System (IDRS) control bases and history items indicating External Lead involvement.

1
IDRS Activity or Control number
Description
2
"BKLD" (148XX00001)
An External Lead was received.
3
"REQFUNDS" (148XX00002)
IRS requested the funds (refund) from the financial institution.
4
"PND841BFS" (148XX00003)
Federal Refund Treasury Check received. Wait for TC 841 to post back funds.
5
"BKLDCKRECD" (148XX00004 or 148XX00007)
IRS received the funds (refund), the amount returned typically is less than the TC 846 due to bank fees.
6
"BKLCOMNGLD" (148XX00004 or 148XX00007)
IRS received the funds (refund) but are unable to determine the dollar amount to apply to this account or the account was previously adjusted and the refund covered up with a TC 841. These funds are placed in a general ledger account.
7
"NOFNDSAVLB" or "NOFNDSRTND" (148XX00004 or 14XX00007)
No funds (refund) are available to be returned to the IRS or no funds returned (no response from the bank)
8
"BKLDACHREV" (148XX00005)
Automated Clearing House (ACH) Reversal associated to an External Lead.
9
"VALID150" (148XX00007)
When TC 720 posts, refund will be released.
10
"DONOTRELSE" or "DONOTRFUND" (148XXXXXXX)
TC 720 or TC 841 posted and refund should not be released without approval from IVO.
11
"PNDSTARS" (148XX00009)
Suspend until return has been pushed to STARS and can be referred
12
"FRAUDCASE" , with Category code "ELOF" (148XX00012)
Suspend until offset reversal posts back to the account (TC 899)
13
"BKLD OFFSET"
There is a potential for an offset reversal based on account review
14
"3RDPRTYCK"
Third party check received that has not posted.
15
"PNDMISCCK"
Payment received to repay a refund received in error.
16
"720PENDING"
Waiting for the posting of the TC 720. Funds to post back to the account
17
"PND722"
Waiting for the TC 722 to post
18
"722POSTED"
The TC 722 posted
19
"PND841" assigned to 148xx00014
Waiting for the posting of the TC 841. Funds to post back to the account.
20
"PND841" assigned to 148xx00017
Waiting for the posting of the TC 841. Funds to post back to the account.
21
"ALTEREDCK" assigned to 148xx00003
The refund check has been altered. i.e., money amount changed, name changed etc.,
22
"841POSTED"
Funds have posted back to the account.
23
"TCISCANCEL"
A treasury check has been canceled through TCIS and is waiting for the TC 841 to post to the account.
24
"PNDMISCCK"
A miscellaneous payment was received from the taxpayer to repay the refund. Waiting for the posting of the payment.
25
"BKLDERROR"
A control was opened in error.
26
"RFNDNOTHLD"
The refund was not held .
27
"REJECTTORI"
Reject the case back to refund inquiry.
28
"740POSTED"
The TC 740 posted to the account.
29
"720POSTED"
The TC 720 has posted to the account.
30
"NOTIRSFNDS"
The funds were not issued by IRS and they are not being requested back from the financial institution.

Recovery from Third Party Check Letter

Recovery from Third Party Check Letter
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
ATLANTA, GA 30308
Date
Financial Institution
Address
City, ST Zip code
By: mail
Re: Recovery from Third Party Checks
We received third party checks that we believe were issued by you in connection with the filing of federal tax returns claiming a fraudulent tax refund. We are returning these checks to you as the identified issuing institution.
We wish to investigate whether any federal tax refunds were deposited to the accounts of the checks we have returned to you to ensure that we investigate and recover refunds that are improper federal payments. This letter is our request for your assistance with the investigation.
The Federal Right to Financial Privacy Act, as amended in 2008, authorizes you to assist us by providing financial records, upon request, when we are investigating or recovering an improper federal payment. In accordance with 12 U.S.C. § 3413(k)(2)(B), we request that you provide us with the following information about federal tax refunds that posted to the accounts related to the checks we are returning to you:
  • Direct deposit (routing and deposit account) numbers,

  • Federal tax refund amount,

  • Date of deposit or ACH transfer,

  • Name reported on the ACH file, and

  • Social Security Number reported on the ACH file.

Our request for direct deposit numbers is focused on the numbers your customer would enter on a federal tax return to direct a refund to your bank. We welcome additional information, such as the account or customer reference number, that will assist us in communicating with you about these refunds.
We ask that you create an electronic spreadsheet listing only suspect refunds that posted to accounts that currently have a positive balance. If there is no chance of returning any part of a refund, please exclude the refund from your spreadsheet. We ask that you provide the spreadsheet within 30 days from the date of this letter by secure email to efleads@irs.gov with a subject line following this format:
Recovery from Third Party checks, [Your Financial Institution Name], [Date]
Please mention this letter in the email body and include information about a point of contact at your institution. Please describe any potential patterns or trends of improper payment revealed by federal refunds you received, even if related to accounts with a zero balance or other accounts at your institution. If you include details about these other accounts, please make clear that you are not offering to return funds from those accounts, for example by listing the current balance on each account. You do not need to provide any detail if you are already working with another IRS office to report potential refund fraud.
We may later request that you return to us any refunds you identify to the extent that funds remain in the account. We may also request your best efforts to protect the funds in any accounts by stopping the re-issuance of these checks and refusing any further withdrawals or payments requested by the account holder.
Please direct any questions about this request to efleads@irs.gov.
We appreciate your assistance in this matter.
Sincerely,
 
Denise D. Davis
Director, Return Integrity Operation