3.11.6 Data Processing (DP) Tax Adjustments

Manual Transmittal

November 08, 2018

Purpose

(1) This transmits revised IRM 3.11.6 Returns and Documents Analysis - Data Processing (DP) Tax Adjustments.

Material Changes

(1) Editorial (spacing, spelling, consistency, etc.) changes have been made throughout this IRM.

(2) 2018 figures/tolerances added throughout this IRM.

(3) Form line numbers have been revised throughout this IRM.

(4) Sections have been arranged in a logical working sequence throughout the IRM.

(5) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.2.10 Editorial changes.

(6) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.2.11 Added new subsection that provides Blocked Account instructions.

(7) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.3.1.1 Editorial changes to ITIN processing.

(8) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4 Editorial changes.

(9) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.1.1 Added instructions for processing disaster losses due to Hurricane Harvey, Irma or Maria.

(10) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.3.1 Editorial changes.

(11) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.7 Editorial changes.

(12) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.8 Updated paragraph references.

(13) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.14 Updated correspondence instructions.

(14) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.16 Editorial changes.

(15) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.4.23 Editorial changes.

(16) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.6.1 Updated No TC 150 procedures.

(17) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.6.5 Editorial changes.

(18) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.6.7 Editorial changes.

(19) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.6.8 Clarified CAF routing instructions.

(20) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.7.4 Updated correspondence procedures.

(21) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.7.6.1 Updated correspondence procedures.

(22) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.7.7 Editorial change.

(23) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.1.1 Updated correspondence procedures.

(24) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.1.3.1 Editorial change.

(25) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.1.4 Editorial change.

(26) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.2 Removed Itemized Deduction instructions.

(27) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.2.1 Added subsection with Itemized Deduction instructions.

(28) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.2.2 Added subsection with Form 2106 instructions.

(29) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.3 Editorial change.

(30) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.3.1 Editorial changes.

(31) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.6.3 Editorial changes.

(32) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.6.6 Editorial changes.

(33) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.6.7 Editorial changes.

(34) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.7 Editorial changes.

(35) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.7.2.2 Editorial changes.

(36) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.9.1 Editorial changes.

(37) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.10 Editorial changes.

(38) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.10.1 Editorial change.

(39) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.11.1 Editorial changes.

(40) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.11.2 Updated correspondence procedures.

(41) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.11.3 Updated correspondence procedures.

(42) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.11.4 Updated correspondence procedures.

(43) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.11.5 Updated correspondence procedures.

(44) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.13.3 Editorial changes.

(45) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.13.3.1 Updated correspondence procedures.

(46) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.13.5.1 Added note about 2013 and prior amended returns.

(47) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.9.14 Editorial changes.

(48) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10 Updated correspondence instructions.

(49) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.1 Updated correspondence instructions.

(50) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.2 Updated correspondence instructions.

(51) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.3 Updated correspondence instructions.

(52) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.4 Changed 4364C to 474C letter.

(53) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.5 Deleted use of 76C letter and added instructions for Multiple Correspondence Issues.

(54) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.6 Updated correspondence instructions.

(55) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.10.7 Updated correspondence instructions.

(56) IPU 18U0017 issued 01-03-2018 IRM 3.11.6.12 Added routing instructions for Disabled Combat Veterans.

(57) IPU 18U0017 issued 01-03-2018 Exhibit 3.11.6-7 Added Exhibit with TIN requirements for Exemptions and Credits.

(58) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.2.1 Added that CPs do not require Statute clearance.

(59) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.2.4 Added to ensure all related open bases are closed.

(60) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.4.2 Editorial change.

(61) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.4.3 Updated for statue year processing.

(62) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.4.3.1 Editorial change.

(63) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.7.4 C-letter fill-in explanation.

(64) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.7.6.8 Editorial change to CI routing.

(65) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.9.2.1 Added link to Form 2106 processing.

(66) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.9.11.4 Corrected C letter fill-in.

(67) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.9.13.1 Editorial change.

(68) IPU 18U0116 issued 01-16-2018 IRM 3.11.6.11 Updated 324C paragraphs.

(69) IPU 18U0116 issued 01-16-2018 Exhibit 3.11.6-6 Updated partial adjustment exhibit.

(70) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.3.1.1 Added reminder about allowing certain credits and PATH Act requirements.

(71) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.4.7 Added to route to Batching.

(72) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.4.16 Editorial change.

(73) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.6.7 Added that signatures are not required on math error responses.

(74) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.7.4.1 Added that signatures are not required on math error responses.

(75) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.7.6.2 Editorial change.

(76) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.8.1 Editorial change and added instructions for the RefCR field.

(77) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.9.11 Added instructions for Earned Income on specific hurricane related cases.

(78) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.9.11.4 Changed correspondence on Direct Deposit requests.

(79) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.9.13.5.4 Removed duplicated instructions.

(80) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.10.6 Editorial change.

(81) IPU 18U0214 issued 01-31-2018 IRM 3.11.6.12 Routing Guide clarification.

(82) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.2.11 Corrected mailbox.

(83) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.4.1.1 Updated disaster processing.

(84) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.4.4 Routing changes.

(85) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.4.7 Updated the list of TC 971 actions codes for IDTheft.

(86) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.4.8 Corrected a paragraph reference.

(87) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.6.7 Added link.

(88) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.7.4 Changed correspondence instructions.

(89) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.7.6.5 Added KATX to the list of category codes.

(90) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.7.7 Editorial change.

(91) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.1.4 Added that Form 8917 is available for tax year 2016 and prior.

(92) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.6.2 Added routing due to recertification requirements.

(93) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.6.7 Added routing due to recertification requirements.

(94) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.10 Removed duplicate instructions.

(95) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.11 Added routing due to recertification requirements.

(96) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.13.3 Added routing due to recertification requirements.

(97) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.9.10.1 Editorial changes.

(98) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.10.3 Removed duplicate instructions.

(99) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.10.5 Editorial changes.

(100) IPU 18U0291 issued 02-13-2018 IRM 3.11.6.10.9 Editorial changes to 916C instructions.

(101) IPU 18U0291 issued 02-13-2018 Exhibit 3.11.6-6 Editorial change.

(102) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.3.1 Made editorial changes.

(103) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.4 Corrected paragraph reference.

(104) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.4.5.3 Corrected paragraph reference.

(105) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.6.8 Added note.

(106) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.9.1.4 Updated valid years.

(107) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.9.6.4 Updated expiration date.

(108) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.9.10.1 Corrected paragraph reference.

(109) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.9.13.5.1 Clarified instructions.

(110) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.10.4 Added links.

(111) IPU 18U0340 issued 02-21-2018 IRM 3.11.6.11 Update to 369C fill-in.

(112) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.2.4 Edited controlling cases to previous wording.

(113) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.4.7 Mail routing update.

(114) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.4.1.1. Added instructions for The Tax Cut and Jobs Act of 2017.

(115) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.4.14 Editorial changes.

(116) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.4.16 Editorial change.

(117) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.9.6.7 Added fill-in for 916C.

(118) IPU 18U0387 issued 03-02-2018 IRM 3.11.6.12 Added routing criteria.

(119) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.4.1 Change to 916C processing.

(120) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.4.1.1 Update to disaster processing.

(121) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.4.5.3 Clarified instructions.

(122) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.1.3 Processing update.

(123) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.1.3.1 Processing update.

(124) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.1.4 Change to 916C letter.

(125) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.6.6 Change to 916C letter.

(126) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.6.7 Change to 916C letter.

(127) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.9 Change to 916C letter.

(128) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.11 Update to disaster processing.

(129) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.13.3 Update to disaster processing.

(130) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.9.13.5.3.1 Change to 916C letter.

(131) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.10.2 Change to 916C letter.

(132) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.10.3 Defined how to determine a previous disallowance.

(133) IPU 18U0472 issued 03-16-2018 IRM 3.11.6.10.9 Editorial changes to 916C processing.

(134) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.2.1 Updated paragraph reference.

(135) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.4.3.1 916C paragraph change.

(136) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.4.5.2 Added link for EGC.

(137) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.4.16 Updated NFR criteria per SERP Feedback 201801426.

(138) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.4.24.1 Updated link.

(139) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.7.4.1 Updated IRM references.

(140) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.8 Editorial change.

(141) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.9.2 Updated reason code.

(142) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.9.6.6 Updated line number.

(143) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.9.9.1 Updated allowable Excess Social Security instructions.

(144) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.9.11 Added note to use category KATX.

(145) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.9.13.3 Added note to use category KATX.

(146) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.10.9 Editorial change to 916C instructions.

(147) IPU 18U0634 issued 04-13-2018 IRM 3.11.6.12 Updated routing guide.

(148) IPU 18U0634 issued 04-13-2018 Exhibit 3.11.6-6 Updated link per SERP Feedback 201801454.

(149) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.4.3.1 Reorganized If/Then instructions.

(150) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.4.3 Added TC 971 AC 504 as an ID Theft indicator.

(151) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.4.5 Added an exception to partial adjustment requirements.

(152) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.4.7 Added TC 971 AC 504 as ID Theft routes.

(153) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.6.1 Added exception to routing.

(154) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.7.4 Removed fill-in and added instructions per SERP Feedback 201801915.

(155) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.9.6.7(4) Editorial change per SERP Feedback 201801914.

(156) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.9.13.5.2 Added link to duplicate instructions.

(157) IPU 18U0777 issued 05-08-2018 IRM 3.11.6.12 Added Form 8915A and Form 8915B to the routing guide.

(158) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.2.4 Updated cases that do not need controlling and added ICT/IVO case routing.

(159) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.4.3.1(4) Updated link per SERP Feedback 201802106.

(160) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.4.4(1) Updated instructions per SERP Feedback 201802312.

(161) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.4.8 Updated AUR routing/processing procedures.

(162) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.7.3(7) Editorial change.

(163) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.7.4.1 Editorial changes.

(164) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.9.3.1.1 Editorial changes.

(165) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.9.6.6 Editorial changes per SERP Feedback 201802223.

(166) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.10.3(1) Editorial change.

(167) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.10.4(3) Editorial change.

(168) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.11 Updated references and editorial changes.

(169) IPU 18U0922 issued 06-08-2018 IRM 3.11.6.12(3) Corrected Form 8915B title and added ICT/IVO routing instructions.

(170) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.2.4 Editorial change concerning associated cases.

(171) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.3.1 Editorial changes to routing conditions.

(172) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.3.1.1 Editorial changes.

(173) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.3.3 Editorial change.

(174) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.4.4 Editorial change.

(175) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.4.16 Editorial change.

(176) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.4.23 Editorial change.

(177) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.6.1 Editorial changes.

(178) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.4.7 Added ID Theft indicators.

(179) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.7.5 Removed note.

(180) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.8.1 Editorial changes to section.

(181) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.9.3.2 Editorial changes.

(182) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.9.12 Editorial changes.

(183) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.9.13.3.1 Editorial change.

(184) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.9.13.5.3.1 Editorial changes.

(185) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.9.13.5.5 Added reminder.

(186) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.9.14 Added to suspend until after the dead cycles.

(187) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.10.5 Editorial changes.

(188) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.10.9 Editorial changes to No Consider instructions.

(189) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.11(2) Changes to Form 8832 and Form 2120 correspondence procedures.

(190) IPU 18U1086 issued 07-20-2018 IRM 3.11.6.12 Added Form 965 routing instructions.

(191) IPU 18U1106 issued 07-27-2018 IRM 3.11.6.2.7 Reorganized CC NOREF instructions.

(192) IPU 18U1106 issued 07-27-2018 IRM 3.11.6.3.1 Editorial changes to Scrambled SSN/Mixed Entity section.

(193) IPU 18U1106 issued 07-27-2018 IRM 3.11.6.4.7 Editorial changes and updates to Identity Theft.

(194) IPU 18U1106 issued 07-27-2018 IRM 3.11.6.6.8 Editorial changes to CAF instructions.

(195) IPU 18U1106 issued 07-27-2018 IRM 3.11.6.7.4.1 Editorial changes to Math Error Responses.

(196) IPU 18U1106 issued 07-27-2018 IRM 3.11.6.9.13.5.3.1 Editorial changes.

(197) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.1.5(1) - Added section Credit for Other Dependents (ODC) to Acronym Table.

(198) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.4.3.1(2) - Updated procedures, removed exception and updated line items for CRX Letter 105C.

(199) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.7.4.1 (3) - Updated notes.

(200) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.9.13.5.4(4) - Updated information relevant to years.

(201) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.9.13.5.5(3) - Modified chart.

(202) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.10 - Editorial changes.

(203) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.10.3 - Changes to paragraphs relating to Letter 105C.

(204) IPU 18U1291 issued 10-04-2018 IRM 3.11.6.12 - Added CP85A, 85B, 85C, 87A, 87B, 87C, or 87C and made editorial changes.

(205) IRM 3.11.6.1.5(1) Added MAGI and ODC to Acronym Table.

(206) IRM 3.11.6.2.11 Changed restriction from section to e mail address only.

(207) IRM 3.11.6.4.1 Added paragraph for 2018-2025 personal casualty and theft losses claimed.

(208) IRM 3.11.6.4.1.1 Added instructions for 2018-2025 to qualifying individuals.

(209) IRM 3.11.6.4.3 Editorial changes.

(210) IRM 3.11.6.4.3.1 Removed K-1 reference.

(211) IRM 3.11.6.4.4 Editorial change.

(212) IRM 3.11.6.4.7 Editorial change.

(213) IRM 3.11.6.4.8 Editorial change.

(214) IRM 3.11.6.4.19 Restructured section.

(215) IRM 3.11.6.6.9 Deleted section.

(216) IRM 3.11.6.7.4.1 Added correspondence conditions.

(217) IRM 3.11.6.7.6.2(3) Added Reason Code for Other Dependent Credit.

(218) IRM 3.11.6.9.1.6 Added Form 3903, Moving Expenses section.

(219) IRM 3.11.6.9.2(1) Updated Standard Deductions table.

(220) IRM 3.11.6.9.3.1.1 Deleted section and moved instructions to the Routing Guide.

(221) IRM 3.11.6.9.6.2(4)(f) Added Credit for Other Dependents information to 2nd note.

(222) IRM 3.11.6.9.6.3 Add new section for Credit for Other Dependents.

(223) IRM 3.11.6.9.6.7 Updated MAGI and MAGI phase out amounts for Lifetime Learning Credit.

(224) IRM 3.11.6.9.6.7(11) Added instruction to correspond for missing institution EIN.

(225) IRM 3.11.6.9.6.7.1 Added new subsection.

(226) IRM 3.11.6.9.6.7.2 Added new subsection.

(227) IRM 3.11.6.9.6.8 Moved section to subsection 3.11.6.9.6.7.2.

(228) IRM 3.11.6.9.6.11.1 Updated section.

(229) IRM 3.11.6.9.7.2 Updated Form 4361 routing.

(230) IRM 3.11.6.9.13.5.1 Added locations of the Coverage Checkbox.

(231) IRM 3.11.6.12 Added new forms.

Effect on Other Documents

IRM 3.11.6, Data Processing (DP) Tax Adjustments, dated October 12, 2016 (effective January 1, 2018), is superseded. This IRM incorporates the following IRM Procedural Updates (IPUs), issued between January 1, 2018 through October 4, 2018: 18U0017, 18U0116, 18U0214, 18U0291, 18U0340, 18U0387, 18U0472, 18U0634, 18U0777, 18U0922, 18U1086, 18U1106, and 18U1291.

Audience

Wage and Investment Submission Processing Tax Examiners

Effective Date

(01-01-2019)


Linda Brown
Director, Submission Processing
Wage and Investment

Program Scope and Objectives

  1. Purpose: This IRM covers Form 1040X, CP 08, 09 and CP 27 processing procedures for Integrated Data Retrieval System (IDRS) and Integrated Submission and Remittance Processing (ISRP) input by Submission Processing (SP).

  2. Audience: Supervisory Tax Examining Technician, Lead Tax Examining Technician, and Tax Examining Technician

  3. Policy Owner: Director, Submission Processing

  4. Program Owner: Post Processing Section, Specialty Programs Branch

  5. Primary Stakeholders: Accounts Management (AM), Small Business/Self-Employed (SBSE), Large Business and International (LB&I), Chief Financial Officer (CFO), Taxpayer Advocate Service (TAS), Chief Counsel, Information Technology programmers, Compliance, Submission Processing (SP)

Background

  1. Employees in the Submission Processing (SP) 1040X organization:

    • Control Form 1040X cases on IDRS and input of the TC 971 AC 120

    • Perform a preliminary review of Form 1040X

    • Screen, sort, route, and prioritize the forms for processing

    • Process Form 1040X using IDRS for input of adjustments

    • Input specific Individual Master File (IMF) Adjustments

    • Correspond for missing required forms and signatures

    • Aid in determining fraud and frivolous positions

    • Input adjustments from CP Notices

Authority

  1. Authority for these procedures is found in the following sections of the Internal Revenue Code (IRC) and their corresponding Treasury regulations.

    • IRC 6201(a)

    • IRC 6213 (b)

    • IRC 6402(a)

    • IRC 6511

  2. All Policy Statements for Submission Processing are contained in IRM 1.2.12.

Responsibilities

  1. The Director of Submission Processing is responsible for monitoring operational performance for the Submission Processing campus.

  2. The Operations Manager is responsible for monitoring operational performance.

  3. The team manager and lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The team employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

Program Controls and Review

  1. Program Goals: Adjust tax accounts using documents provided by the taxpayer.

  2. Program Reports: ERS Draft language - System control reports are on the Control-D, WebAccess (CTDWA)

  3. Program Effectiveness:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial reviews

  4. Annual Review: Review the processes included in this manual annually to ensure accuracy and promote consistent tax administration. This may be included under Responsibilities for a manager.

  5. Federal Managers Financial Integrity Act (FMFIA)

Acronyms

  1. Acronyms commonly used include the following;

    Acronym Definition
    AM Accounts Management
    AMS Accounts Management Services
    ATIN Adoption Taxpayer Identification Number
    CC Command Code
    CIS Correspondence Imaging System
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    IAT Integrated Automation Technologies
    ITIN Individual Taxpayer Identification Number
    MAGI Modified Adjusted Gross Income(always greater than the AGI)
    MFT Master File Transaction
    NC Name Control
    O/S Original Signature
    ODC Credit for Other Dependents
    POA Power of Attorney
    QND Qualifying Non-Dependent
    RTS Real Time System
    SSN Social Security Number
    TIN Taxpayer Identification Number
  2. The following link will take you to a list of commonly used acronyms and their definition; http://rnet.web.irs.gov/Resources/Acronymdb.asp

Related Resources

  1. Websites, job aids and electronic tools used to process adjustments include:

    • Servicewide Electronic Research Program (SERP)

    • Submission Processing Design Center (SPDC)

    • Integrated Data Retrieval System (IDRS)

    • Integrated Automation Technologies (IAT)

    • Accounts Management Services (AMS)

General Form 1040X Information

  1. An individual taxpayer may file an Amended US Individual Income Tax Return to correct Form 1040 or Form 1040-NR. By filing an amended return, taxpayers may add, delete, update, or change tax information reported on their original tax return. Taxpayers may also amend amounts adjusted by the IRS.

  2. The Form 1040 for tax year 2018 has been restructured. The redesigned Form 1040 removed certain line items that are now found on Schedules 1 through 6. Additionally, the redesign made Form 1040A and Form 1040EZ obsolete.

  3. For tax years 2017 and prior, a taxpayer may correct Form 1040, 1040A, 1040EZ or 1040-NR.

  4. When present on Form 1040X, Column A is used to report amounts originally claimed by the taxpayer, amounts adjusted by the IRS (math error on original return), or amounts adjusted from a previously filed Form 1040X for the same tax period.

  5. When present on Form 1040X, Column B is used to report the amount of change (increase or decrease) for each line the taxpayer is changing. Taxpayers are instructed to show decreases in parenthesis, explain each change in the Explanation of Changes, of the Form 1040X or attached statement, and attach any schedule and/or form related to the change.

  6. The Correct Amount column of the Form 1040X, Column C, is used to show amended figures or to figure the amounts reported in Columns A and B when these columns are present:

    1. Adding increases in Column B to Column A.

    2. Subtracting decreases in Column B from Column A.

    3. No change, entering the amount from Column A.

  7. The operational instructions in this IRM will determine if the adjustment request can be made in Submission Processing or if it must be routed to another area or function. Returns which can be adjusted in Submission Processing (commonly referred to as "workable" ) are either input on-line using IDRS or sent to ISRP for input.

  8. The general sequence you will follow is:

    1. Determine if route out criteria is met.

    2. Determine if the claim is complete.

    3. Determine if the claim is allowable

    4. Determine if the claim is processable.

  9. If a taxpayer files an amended Form 1040 series, Individual Income Tax Return, in lieu of a Form 1040X, you must determine if it is an original, duplicate, or amended return. If an original return, route to Receipt and Control for processing under the correct Program Code. Refer to IRM 3.11.6.6.5 for duplicate or IRM 3.11.6.6.4"amended" procedures.

  10. Form 1040X and CP notices are to be processed within 12 calendar days from the IRS received date (day one) to the date the document is delivered to the Corresponding Imaging System (CIS) Unit (ending day) or input of a TC 29X. See IRM 3.30.123, Processing Timeliness: Cycles, Criteria, and Critical Dates. During the peak period the 12 day time frame will be expanded to 20 days. Peak period is defined as March 1st through June 30th. All work that has not met the aged criteria will be controlled and batched with work that has the same IRS received date. Work that is aged when received will be identified as I/O; I/O, Statute and W-7 will be worked within 12 calendar days of the date it is entered in BBTS. Days in inventory will be counted using the IRS received date to determine the oldest date to be processed excluding I/O, Statute, W-7, No TC 150, Correspondence and the previously day receipts.

  11. Occasionally multiple Form 1040, Form 1040-A, Form 1040-EZ and/or Form 1040-X are attached. For example:

    • Two or more returns from the same taxpayer are mailed in the same envelope.

    • Two or more family members' returns are mailed by the tax preparer in the same envelope.

    • Two or more unrelated returns are mailed by the tax preparer in the same envelope.

      Note:

      Detach the returns leaving an action trail on each document, then sort, work or route the returns as appropriate.

      Exception:

      For transactions that require routing to another function, if two or more returns are for the same taxpayer keep all tax years together.

  12. Do not input or update CC REQ54, CC DUPED, CC DDBCK or CC ENREQ on an account that will be routed or when returning the claim to the taxpayer unless otherwise instructed by a specific section.

  13. The following link will take you to a list of acronyms and their definitions: Acronym Database

  14. The operational guidance in this IRM takes precedence over any conflicting IRMs. Contact your manager if you have any questions about operational guidance and for clarification between operational issues and statutory requirements.

  15. General SERP Alerts issued for IRM 3.11.6 are additions to the IRM instruction and are to be followed as part of the IRM 3.11.6.

  16. References to the Integrated Automation Technologies (IAT) xClaim tool functionality are not intended to be exhaustive or complete. Refer to xClaim training and local procedures for more complete information about the functionality and use of these tools. Use IAT tools, when available, to process amended returns.

    Note:

    IRM instructions will take precedence over any instructions, directions or default inputs the IAT tools provide. If specific IRM instructions are not present, accept the IAT Tool results.

  17. All references to line numbers are for the current revision of the form or schedule unless otherwise specified.

  18. The specific section instructions take precedence over any general instruction.

CP Notices

  1. CP 08, 09 and 27 notices are mailed to taxpayers with 2D bar codes and will have the SSN masked (e.g., XXX-XX-1234). Hand held scanners will be available for reading the barcode. If the hand-held scanner is unable to read the bar code, Command Code (CC) TPIIP must be used to determine the SSN. For additional information on CC TPIIP refer to IDRS Command Code Job Aid located on the Servicewide Electronic Research Program (SERP) under IRM Supplements.

    Note:

    Take care not to write, mark or stamp over the bar code as this could make it unreadable.

  2. Generally, a completed CP notice is considered an informal claim. However, if the taxpayer returns the CP notice indicating he/she is not eligible for the specific credit (no other issues involved), a reply is not necessary. Destroy as classified waste per local procedures. Form 1040X procedures are to be applied to CP 08, 09, and 27 notices, as they are considered a Form 1040X. PATH Act research applies to tax year 2015 and prior.

    Exception:

    If some of the children qualify for the credit but others do not, then process the CP notice for the qualifying child(ren).

  3. If the taxpayer attached the CP 08, 09, or 27 notice to Form 1040X and there are additional issues, convert the credit to the attached Form 1040X and process per local procedures. X the CP notice and staple behind the Form 1040X.

    Note:

    If the taxpayer has additional issues in addition to the CP notice and does not provide Form 1040X, process the CP notice and correspond for a 1040X for the other issues.

  4. If the taxpayer attached the CP 08, 09, or 27 notice to Form 1040X and there are no additional issues, process the CP notice. X the Form 1040X and staple behind the CP notice.

    Note:

    CP08, CP09 or CP27 notice with a received date after the RSED should be worked following procedures in the If/Then chart IRM 3.11.6.4.3.1(6).

  5. Taxpayers must return the completed and signed (both Primary and Secondary if FS2, Married Filing Jointly) CP notice, if qualified. If the CP notice is incomplete, return to the taxpayer using the check boxes on the Form 8009-A pertaining to the CP notices.

    Note:

    If the taxpayer response to Form 8009-A is still incomplete, send the 916C letter refer to IRM 3.11.6.10.9.

  6. CP notices do not need to be sent to Statute for clearance before processing

  7. If a signed Form 1040X or Amended Return is attached to the CP Notice, accept the signature and notate O/S 1040X on the notice.

  8. Do not include an amended claims date on CP notice adjustments.

  9. Do not input a TC 971 AC 270 when corresponding on CP notices.

  10. Use the AGI and EI from the Per Computer Column of CC RTVUE for CP Notice calculations.

    Exception:

    If there is a previously posted adjustment see paragraph 12 below.

  11. If the taxpayer alters the address on a CP notice and an address change can be made per IRM 3.11.6.7.1, then use CC INCHG to update the taxpayer address.

  12. If there is a previously posted adjustment on IDRS, review the adjustment to determine if the CP notice issue has already been adjusted. If the CP notice has already been adjusted, treat the CP notice as classified waste per local management. Otherwise, continue to process the CP notice.

General Instructions

  1. Use an erasable red pen for any editing markings.

  2. Edit your Tax Examiner (TE) number in the top left margin of Form 1040X or CP 08, 09 and 27, or follow any local procedures that ensure the integrity of the batch for routing to Files (e.g., number returns, enter IDRS employee number, and date).

  3. Follow local procedures for routing to other functions.

  4. Return the following original document:

    • Passport

    • Social Security Card

    • Drivers License

    • Marriage certificate

    • Other original documents - see Lead TE

      Note:

      Form 8009-A use the fill-in: "We are returning your original document(s) to you."

      Exception:

      If the return is being routed to another area, do not detach the above-mentioned document(s).

  5. Researching previous tax years may assist in processing a return, but it is not required unless specified. Tax examiners must have a valid business reason to access related accounts.

IRM Deviations

  1. Service Center Directors, Headquarter Branch Chiefs, and Headquarter Analysts do not have the authority to approve deviations from IRM procedures. Any request for an exception or deviation to an IRM procedure must be elevated through appropriate channels for executive approval. This will ensure other functional areas are not adversely affected by the change, and it does not result in disparate treatment of taxpayers.

  2. See specific guidelines in IRM 1.11.2, Internal Management Documents System, Internal Revenue Manual (IRM) Process. Request for an IRM deviation must be submitted in writing and signed by the Field Director, following instructions from IRM 1.11.2.2.4(3). Any disclosure issues will be coordinated by the Program Owner. No deviations can begin until reviewed by the Program Owner and approved at the Executive Level. All requests must be submitted to the Submission Processing Headquarters IRM Coordinator.

Controlling Cases on IDRS

  1. Submission Processing will control all amended returns received in the 1040X teams on IDRS within five business days of receipt, the date a case is entered into BBTS will be counted as day one. The purpose of this initiative is to enhance the tracking and recording of inventory within Submission Processing.

    Exception:

    CP Notices, Form W-7 returns, loose forms and MFT 35 adjustments do not have to be controlled on IDRS.

  2. The group/team’s numbers used by the SP clerical staff to control 1040X cases on IDRS are listed below:

    Campus IDRS Number IDRS Number IDRS Number
    Austin 06224 06233 06238
    Fresno 10215 10216 10217
    Kansas City 09215 09216 09217

    Note:

    As these are group numbers the claims have not been assigned to a specific tax examiner in Submission Processing. These are 1040X claims controlled to the 1040X area in SP. If you do receive phone calls from other areas concerning controlled cases the caller should be referred to the headquarter 1040X analyst.

  3. If an amended return has "ICT/IVO" notated on the top of the form, the case should be controlled then pulled by the assigning clerk for expedite routing to CIS/AM per local procedure.

    Note:

    Use ICT/IVO as the working trail and close the base "MISC" .

  4. If the case is controlled to another campus’ 1040X unit, process your case following normal procedures.

  5. Cases opened to other than a 1040X employee or the generic queue, see IRM 3.11.6.4.23.

  6. If the case is controlled to the wrong taxpayer, MFT or tax year then close the incorrect base to MISC and work the case as uncontrolled. If the case has multiple control bases with the same received date, make sure all bases are closed upon case completion. Correct other case control input errors using IAT ACTON before completing your case action. This includes incorrect IRS Received Dates and incorrect service center IDRS numbers.

  7. Process amended returns as follows:

    If the case is And the case will be Then
    Controlled to your campus’ generic queue
    1. Worked

    2. Routed or returned to the taxpayer

    3. Suspended

    1. xClaim will re-assign the case, with matching received date, to your IDRS number then close the control base and issue a TC 971 AC 120 if missing.

    2. Change the control category to "MISC" and close the control base.

      Note:

      It is not necessary to open and close a control base on a case that is being routed.

    3. Suspend the case by:

      • Reassigning the case to your IDRS number

      • Inputting the appropriate suspense activity then suspend the case.

        Note:

        Follow local procedures for suspending and maintaining suspense files.

    Uncontrolled
    1. Worked

    2. Routed or returned to the taxpayer

    3. Suspended

    1. xClaim will generate a closed control base, based on your adjustment, and issue a TC 971 AC 120 using the return received date.

    2. Create a closed control base to your IDRS number and use:

      • "SPX-1040X" as the Activity

      • "MISC" as the control category

      • Received date of the amended return.

      • Input a TC 971 AC 120

    3. Open a suspense case to yourself and use:

      • XRET as the control category

      • Appropriate Activity for the suspense

      • Received date of the amended return

      • Input a TC 971 AC 120.

      Note:

      Follow local procedures for suspending and maintaining suspense files.

    Note:

    Ensure all open controls associated with the case(s) that you are processing are closed. Associated cases are those open to your local 1040X department and can be identified by Batch ID number and/or received date.

  8. When xClaim is not available you must manually control/close the case.

  9. If the received date of the amended return is more than one year old place a V after the received date; MMDDYYYYV.

  10. If the case is moving from an ITIN to an SSN, then the control base should be on the SSN. If the SSN has not been established, control to the ITIN.

Working Trail

  1. Leave a working/action trail in the left margin of Form 1040X when:

    1. You detach a form, schedule, or notice per IRM instruction (i.e., Form 2848 POA, or a Form 8821 (TIA to CAF)).

    2. You prepare a form.

      Example:

      Form 4442, payment plan request, Presidential Election Campaign Fund (PECF) dummy return.

    3. Routing Form 1040X as instructed per local procedures (CB/CF, CIS, etc.).

    4. Any action trail required by local procedures.

    5. Edit out any previous working trails per local procedures.

  2. Edit the following on the Form 1040X:

    1. Detached item description - (i.e., Detached Form 2848).

    2. Routing destination.

    3. Date or action trail if required by local procedures.

  3. Edit the following on the detached form, schedule, or notice, if the information is not present on the document:

    1. Taxpayer's name.

    2. Taxpayer's address.

    3. Taxpayer Identification Number (TIN), (e.g., SSN, IRSN, ITIN).

    4. Received Date.

    5. Tax Year.

    6. Form 1040X.

    7. TE stamp

    8. Any action trail required by local procedures.

      Exception:

      Do not edit Personally Identifiable Information (PII) on forms being detached, which belong to different taxpayers.

Reversing an Erroneous Adjustment

  1. These manual instructions are intended for work leaders. xClaim has the capability of performing this same operation. The reversal button on the xClaim tool is not available until the tax adjustment is input and posted to the tax account. Once the adjustment posts the reversal button becomes active.

  2. In the course of an internal quality review occasions will arise where erroneous adjustments are identified. If the tax adjustment cannot be deleted a reversal of the adjustment must be made by the quality reviewer, lead or designated tax examiner. If the erroneous adjustment will generate an incorrect TC 846 the Lead or Manager should initiate a Refund Intercept when possible using IDRS Command Code (CC) NOREF to stop the refund. See IRM 3.11.6.2.7 for time frames and time constraints.

    Exception:

    Do not input a corrective adjustment for changes to reason codes, received date, or amended claims date.

    Exception:

    It is not necessary to input CC NOREF if a TC 846 is not generated or the TC 846 is for the correct amount, in these cases only input the corrective adjustment.

    Note:

    Correspond using a 324C letter if there is a missing signature, form/schedule/ or other issue. Suspend the return waiting for the reply. Input CC NOREF at the same time as issuing the correspondence, if necessary.

  3. When an account needs to be reversed, take the following actions to back out the erroneous adjustment.

    1. As a result of the incorrect adjustment reverse the affected portion of the tax, adjusted gross income, taxable income, self-employment tax, any credits, exemptions and federal withholding. Below is a listing of the appropriate transaction and reference codes.

    • Adjusted Gross Income will be reversed with an Item Reference Number (IRN) 888.

    • Taxable Income will be reversed with a IRN 886.

    • Tax will be reversed with a Transaction Code (TC) 29X. (Opposite of erroneous TC 29X)

    • Exemptions will be reversed with a IRN 887.

    • Withholding will be reversed with a IRN 806 or 807. Depending on the error to withholding.

    • Primary self-employment income will be reversed with IRN 878.

    • Secondary self-employment income will be reversed with IRN 879.

    • Self-employment tax will be reversed with IRN 889 in conjunction with the TC 29X.

    • Self-employment tax will be reversed with IRN 889 in conjunction with the TC 29X.

    • Include any necessary priority codes on the corrective adjustment. See IRM 3.11.6.7.6.4

    Note:

    Whenever reversing an adjustment on an account some of the transaction codes and the reference codes cited above will have a minus behind the money amounts. The Reference Code for Exemptions will have a minus behind the exemption number. TC 291 reverses tax and TC 807 reverses withholding: for other reversal codes especially credits see Document 6209 as they also have specific reversal codes.

    Example:


    •IRN 887 .02- (Deleting 2 exemptions)
    •IRN 888 28,467.00- (Reducing AGI)
    •IRN 886 7,654.00- (Reducing taxable income)

    Caution:

    Always verify the erroneous adjustment did not create an unpostable condition before reversing an adjustment. If an unpostable condition was created monitor the account until the adjustment unposts, then input the correct adjustment. Hold the return until the Form 4251 return Charge-out is received and match the return with the Form 4251.

    Note:

    Use Hold Code 4 to prevent incorrect refunds or notices from being issued. In certain cases, the Hold Code 4 will not stop the refund and/or the notice, but should be input on all reversals regardless.

Refund Intercept CC NOREF

  1. Use the IAT Stop Refund tool to prevent an erroneous refund from generating if the time frame for CC TERUP and CC RVIEW have expired. The IAT Stop Refund tool uses CC NOREF to stop a refund.

    Caution:

    If a TC 846, in the amount of the erroneous refund, has posted to the module after the erroneous TC 29X adjustment, the refund record has already been sent to Financial Management Services (FMS), and the refund cannot be stopped.

  2. CC TERUP and CC RVIEW must be used if available:

    • CC TERUP can be used to TERUP the adjustment on the day of input, but it must:
      -be input by the TE that input the adjustment.
      -be input before 5:00 PM CST on the day the adjustment was input.

      Note:

      If the erroneous adjustment was input after 5:00 PM CST, CC TERUP may be used until 5:00 PM CST the next day.

    • CC Review can only be used after the time frame for CC TERUP has expired.
      -CC Review is only available for 2 days after the input of an adjustment.

  3. CC NOREFP will resequence for 14 days for daily IMF accounts and, depending on the day of input, up to 20 days for weekly IMF accounts. Each day, CC NOREFP will look for a matching refund and, when a match is found, will stop the refund.

    Note:

    If no match is found within these time frames, the CC NOREFP will be dropped from IMF processing.

  4. Use the following tables to determine if the IAT Stop Refund tool can be used to prevent an erroneous refund from generating. If the erroneous adjustment was on:

    Transaction Input before 5:00 PM CST Use IAT Stop Refund tool before 9:00 PM CST on the following: Transaction Posts to MF on the following:
    Friday (Day 1) Thursday, week 1 (4 days after input) Friday, week 1 (5 days after input)
    Monday (Day 2) Thursday, week 1 (3 days after input) Friday, week 1 (4 days after input)
    Tuesday (Day 3) Thursday, week 2 (7 days after input) Friday, week 2 (8 days after input)
    Wednesday (Day 4) Thursday, week 2 (6 days after input) Friday, week 2 (7 days after input)
    Thursday (Day 5) Thursday, week 2 (5 days after input) Friday, week 2 (6 days after input)

    Example:

    If an adjustment is input on Friday, the IAT Stop Refund tool may be used after 5:00 PM CST on Tuesday and until 9:00 PM CST on Thursday. After 9:00 PM CST on Thursday the refund can no longer be stopped.

  5. To input the stop refund request, see the IAT Stop Refund tool https://organization.ds.irsnet.gov/sites/WiMttIat/IATJobAids/_layouts/15/WopiFrame.aspx?sourcedoc=/sites/WiMttIat/IATJobAids/Documents/StopRefund_1163.docx:

    • Select the "Stop Refund" radio button

    • Cycle: Select the same posting cycle as the pending erroneous adjustment (PN TC 29X)

    • Status: M

    • Category: RFDL

    • Originating Service Center Code: AUSC or FSC or KCSC

    • Reason Code: 81- Refund Stop request

  6. The controlling employee must monitor for the posting of a TC 841. TC 841 verifies the refund was stopped, if the TC 841:

    • posts to the module then close the RFDL control base and work the case per IRM instructions. Do not route based on -P freeze instructions.

    • does not post within 6 cycles forward to CIS/AM.

Loose Correspondence and Documents

  1. When associating correspondence or loose documents, those that became detached in error, with a previously posted adjustment or the original filing, use Form 9856 following local procedures.

  2. Documents cannot be associated with an electronic DLN. Research CC IMFOLI or CC TRDBV to determine if the original return was filed electronically. See Document 6209 for service center codes. If there is an electronic DLN input a TC 290 .00.

Related IRMs

  1. The following IRM references regarding amended returns are being provided for informational purposes only.

    • IRM 3.10.72, Extracting, Sorting, and Numbering

    • IRM 3.11.3, Individual Income Tax Returns

    • IRM 3.24.3, Individual Income Tax Returns ISRP System

    • IRM 21, Customer Account Services

    • IRM 2.4.1, IDRS Terminal Input

    • IRM 3.13.5, IMF Account Numbers

    • IRM 3.12.37.23, Correspondence Manual

  2. Document 6209, IRS Processing Codes and Information, 1040 attachment guide, Tax Form and Instructions (accessible through the IRS Home Page), and Publication 17 are valuable resources for obtaining additional information and resolving questions.

IRS Employees and Covered Relationships

  1. IRS employees can be identified from the IRS-EMP-CD on CC TXMOD and on CC IMFOLT. There are special procedures that you must follow to protect the taxpayer employee, as well as to protect yourself.

  2. If you access an account of an IRS employee that you do not know, work the case and see (4) below.

  3. If you access an account of an IRS employee that you do know, or if you access an account of someone that falls under a covered relationship such as family members, friends, or neighbors, refer the case to your lead or manager and see (4) below.

  4. Completing Form 11377-E, Taxpayer Data Access, is voluntary but highly recommended. The purpose is to document the reason(s) that the tax return and/or information on IDRS was accessed when the case was not assigned directly to you.

IDRS Access

  1. While working or assigning cases, SP employees may encounter modules that are blocked on IDRS. These modules will be identified by an IDRS security violation message, Unauthorized to Access This Account. Forward the case to your manager. Managers will notify the local Planning & Analysis staff who will scan the case and send encrypted information to the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ mailbox requesting access to the account. Managers will retain the original case in a file awaiting access that can take up to five business days. Once notified that access has been granted, the case can be worked following applicable procedures.

Preliminary Review of Form 1040X/Amended Return

  1. Before an adjustment can be input or routed to another function, check the return for the following elements:

    • Taxpayer Identification Number

    • Tax Period

    • Received Date

    • Control base

    • PECF Requests

    • Discovered Remittance

    • TC 150 posted

Taxpayer Identification Number

  1. In order to process a return, the taxpayer must have a Social Security Number (SSN) or IRS Individual Taxpayer Identification Number (ITIN).

  2. For ITINs, see IRM 3.11.6.3.1.1.

  3. If the Primary TIN or secondary TIN, when married filing jointly is missing, incorrect, or illegible, research per IRM 3.11.6.7.1. If found, edit to the appropriate field on the amended return.

  4. If you have exhausted all resources and are still unable to determine the P-TIN and/or S-TIN, correspond per IRM 3.11.6.10 using Form 8009-A, box 11 (do not input TC 971 AC 270 if unable to determine primary TIN).

  5. Refer as CIS/AM, if:

    1. The primary or secondary taxpayer is changing from an ITIN/IRSN to an SSN.

    2. The primary or secondary taxpayer’s account is set up on the invalid segment of Master File (which requires an asterisk after the TIN (000-00-0000*). A pound sign after the TIN (000-00-0000#) is an indication of a newly assigned TIN. Do not treat as an invalid TIN.

      Exception:

      If the filing status is FS 3, the spouse's TIN may show an asterisk after the TIN. This should not be considered an invalid TIN and can be worked as normal.

    3. A Filing Status change to Married Filing Jointly (MFJ) and both taxpayers have already filed.

    4. The case involves merged (re-sequenced) account and an update to CC DDBCK or CC DUPED is required.

      Note:

      A merged (resequenced) account will have a transaction code 011, 013, 040 or 041 on CC ENMOD.

    5. Mixed entity cases where more than one taxpayer has attempted to file under the same TIN and:
      •it is not possible to verify the correct TIN through research, or
      •Research verifies that both individuals have used the TIN in other tax years, or
      •CC INOLES shows that both taxpayers have been listed under this TIN.

    6. Scrambled SSN cases where CC INOLES has an entry beside the Scrambled SSN literal except blank, 00, 08, 21, or 22.

  6. If the taxpayer is filing MFJ and there is no TC 150 posted for the primary's TIN, research the secondary's TIN for a TC 150. TC 594 may be present. See IRM 3.11.6.6.1.

ITIN Status
  1. If any of the items in paragraph 4 below are increasing and they are based on an ITIN, CC INOLES must be researched to determine the ITIN(s) current status (as of today’s date). There are three statuses:

    • A - Active

    • I - Inactive

    • U - Unvalidated

  2. If any ITIN is unvalidated, route to CIS/AM.

  3. PATH Act requirements may apply, see IRM 3.11.6.9.6.1.

  4. Do not allow an increase to any of the following if they are based on an inactive ITIN:

    1. Research applies to the individual(s) claimed, the primary and secondary (if applicable).
      •Child Tax Credit
      •Additional Child Tax Credit
      •Education Credit (LLC and AOTC)

    2. Research only applies to the individual(s) claimed:
      •Exemption(s)
      •Child and Dependent Care Credit.

  5. For any inactive or unvalidated ITIN(s), the exemption or credit increase is not allowed. If the credit/exemption is increasing, use this table to determine processing based on the ITIN status:

    ITIN Status And Then
    All ITINs are Active  
    1. If a math error is present, follow math error response procedures to resolve the math error for any associated active ITIN.

    2. If no math error, continue processing.

    One or more ITIN is Inactive
    1. The entire return is unprocessable based on paragraph 4 above.

    2. Some issues are processable.

    1. Send the entire return back to the taxpayer using Form 8009-A with fill-in: We are unable to process your amended return. Please submit a completed Form W-7 application with supporting document(s) to renew the Inactive/expired ITIN(s) listed on your return.

    2. Process any allowable adjustment unrelated to the inactive ITIN(s). If the allowable adjustment changes the taxpayer’s expected refund/balance due, send a Form 8009-A with fill-in: Your Amended Return is not being returned with this letter. Since there was one or more inactive Individual Taxpayer Identification Number (ITIN) this caused a change to your amended return. Please submit a completed Form W-7 application with supporting document(s) to renew the Inactive/expired ITIN(s) listed on your return.

  6. If a -R freeze is present on a module and the account will remain in a credit balance after your adjustment, use a hold code 1.

  7. When the adjustment changes the expected refund or balance due and:

    Reason for change Action
    Inactive ITIN or unvalidated ITIN Process per paragraph (4), (5) and (6) above.
    PATH Act disallowance Send a 105C/106C see, IRM 3.11.6.10.3 and input the TC 971 AC 113.
    Math error(s) for issues other than the inactive or unvalidated ITIN. Process following IRM 3.11.6.7.4.

Tax Period

  1. Amended returns must be for a specific tax period. When the tax period is missing and you cannot determine from return information or attachments, research IDRS for matching tax data.

  2. If the tax period can be determined, edit the tax period on the front of the return above the Entity section in YYMM or YYYYMM format or mark the appropriate box, even when routing document to another function.

  3. If you cannot determine the tax period through IDRS research, correspond unless return is being routed to another function. Correspond per IRM 3.11.6.10 using Form 8009-A, box 10.

    Note:

    Do not input TC 971 AC 270.

  4. If the taxpayer tries to submit an amended return for multiple tax periods on a single amended return: send the return back to the taxpayer. Use Form 8009-A box 3 to inform the taxpayer they must submit a separate amended return for each specific tax period that they are trying to amend. Input a TC 971 AC 270 on the tax year of your assigned case.

Received Date

  1. Every return should be stamped with a processing center Received Date stamp. If the Received Date stamp is missing from the front page, or illegible, but is found elsewhere in the return packet, edit the date to the front of the return in MMDDYY or MMDDYYYY format in the blank space above Line 1.

    Note:

    Other areas within the IRS may date stamp the return to indicate when the return arrived in that area (e.g., Statute, Adjustments, etc.), do not use that date stamp as the Received Date.

  2. Honor received dates that are edited in green ink on current year returns received with payments as the return received date to be used for processing.

  3. Other processing areas have instructions to edit the IRS received date, in red, on the front of the return, when certain conditions are met. Accept a red hand written received date located in the center portion of the amended return.

  4. If the Received Date stamp is not found or is obviously incorrect, edit the Received Date based on the order of precedence below in the same format and location as stated in (1) above.

    1. Latest postmark or designated private delivery service mark on the envelope.

    2. IRS Scamps date.

    3. IRS field office date stamp.

    4. IRS field office with a handwritten Received Date on a secured return. Must have "received" and a date with a signature and title of the authoring employee.

    5. Signature Date (only if the return was signed in the current year).

    6. Current Date.

  5. Use the following chart when there are multiple received dates stamped and/or edited on the return:

    If And Then
    Adjusting or routing an amended return
    1. Refund or Net Zero Return

    2. Balance Due Return

    1. Circle all but the latest received date.

      Example:

      The original received date is March 5, 2014, and the latest received date is April 4, 2014. Edit 040414 as the received date. Circle March 5, 2014.

    2. Circle all but the earliest received date.

      Example:

      One received date is March 5, 2014, the other received date is April 4, 2014. Circle April 4, 2014.

    Corresponding on
    1. Refund or Net Zero Return

    2. Balance Due Return

    1. Circle all received dates.

    2. Circle all but the earliest received dates.

  6. Input the received date of the return you are processing as the received date on IDRS. If the received date of the return does not match the established control base, see IRM 3.11.6.2.4.

    Exception:

    See IRM 3.11.6.4.3 for statute returns.

  7. OVERRIDE CODE - An Override Code is required when the IRS Received Date is over one year old and on cases when the statute has expired.

    1. R - Allows IRS Received Date to be older than a year in the past.

    2. S - Allows current date and the Refund Statute Control Date (RFSCD) to be later than the Refund Statue Expiration Date (RSED). Refer to IRM 3.11.6.4.3.

Determining Timeliness
  1. Always use the Received Date when determining timeliness of the claim. If the Received Date is missing, see IRM 3.11.6.3.3. When the postmark is missing or illegible consider any return received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ calendar days of the due date of the return timely.

  2. April 16 is Emancipation Day in Washington D.C., a legal holiday. This may affect taxpayers throughout the United States when a return is considered to be timely filed.

  3. Use the following table to determine if the claim is considered to be timely filed:

    If April 15 falls on Then the postmark must be
    Friday April 18 or earlier
    Saturday April 18 or earlier
    Sunday April 17 or earlier
  4. These timeliness instructions affect the process of Statute returns, see IRM 3.11.6.4.3.1; Superseding returns, see IRM 3.11.6.3.3.2; and returns involving PATH Act Credits, see IRM 3.11.6.9.6.1.

Superseding Returns
  1. The due date of a calendar year individual income tax return is April 15. A fiscal year individual income tax return is due the fifteenth day of the fourth month following the close of the fiscal year.

    1. An amended (Form 1040X) or corrected (duplicate) return filed on or before the due date or the extended due date is a superseding return.

    2. An amended (Form 1040X) postmarked on or before the due date or extended due date, is processed as a superseding return.

    Note:

    These amended returns are processed as any other amended return is processed.

  2. If the superseding return has an unpaid net balance due increase on the module, route to CIS/AM.

Amended Claims Date
  1. The Amended Claims Date is a REQ54 field that is used by Masterfile to apply the 45 day interest free period.

    1. Use the IRS received date as the Amended Claims Date.

    2. For suspended correspondence, the Amended Claims Date is the received date of the taxpayer’s reply that allows you to process the return.

    3. An Amended Claims Date is required on every adjustment unless specifically noted otherwise.

  2. Do not use an Amended Claims Date when processing CP 08, CP 09, CP 27 or Math Error Corrections.

  3. See IRM 3.11.6.3.3 for Received Date determination.

Processing Presidential Election Campaign Fund Requests

  1. The taxpayer may request that $3 go to the Presidential Election Campaign Fund (PECF) by checking one or both boxes on Page 2 of Form 1040X.

  2. A PECF request can only be processed for the current tax year and one tax year prior; and if there is a tax change on Line 11 of Form 1040X. Research RTVUE to verify the taxpayer(s) original PECF election. If the amended return and original return has the same election, do not process as a new election.

    Exception:

    Do not process a PECF request on any return that is being routed out.

  3. If the return meets correspondence criteria and an adjustment will not be input, do not process the PECF request. Correspond as required.

  4. To process a PECF request, edit the following items to a blank Form 1040X as a "Dummy PECF" return.

    1. "Dummy PECF" in the top margin.

    2. Tax period.

    3. Primary name control.

    4. Primary SSN and Secondary SSN.

    5. Filing Status Code box checked.

    6. "5" to the right of filing status just above column C if one PECF box is checked.

    7. "6" to the right of filing status just above column C if two PECF boxes are checked.

    8. Received date in MMDDYY format in the center portion.

    9. "O/S" on the signature line to indicate the original Form 1040X was signed.

    10. Your employee number/stamp in the upper left margin (if required by local procedure).

  5. Edit "PECF Prep" in the left margin of Form 1040X then continue processing the return.

  6. Route "Dummy PECF" to Batching/ISRP per local procedures.

Discovered Remittances

  1. A discovered remittance is any form of payment (cash, check, money order, stamp, jewelry, etc.) other than credit card that the taxpayer may send in.

    Note:

    When a US Treasury check is returned to the IRS, it is not considered a discovered remittance. Edit "Void" onto the check if it does not already have it. Forward the check and a copy of the return to the Refund Inquiry unit and continue processing the return.

    Exception:

    If the US Treasury check is made payable to the IRS this should be returned to Receipt and Control for proper disposition.

  2. When a remittance is discovered:

    1. If a Form 1040-V, Payment Voucher is attached, edit the received date and your TE number on the voucher then turn in the voucher and the remittance and continue processing the return.

    2. If a payment voucher is not attached or a loose remittance is discovered, complete Form 3244. Turn in the remittance with the Form 3244, following local procedures then continue processing your return.

  3. If the taxpayer sends in a credit card or credit card information, refer the case to the Manager or Lead for a 3956C letter to be issued.

  4. For additional information on discovered remittances, see IRM 3.8.46.1, Discovered Remittances.

Sorting, Routing, and Priority Processing

  1. Before adjustment input you should identify all documents requiring other actions. Research IDRS for transactions that require routing to another function.

  2. All cases being routed should be closed with category MISC unless specific instructions are provided.

  3. Keep all related tax years together if possible.

    Exception:

    Do not route non-statute year returns to the Statute unit.

  4. Notate on Form 1040X any action taken, such as routing to Statute, detached Form 2848 to Centralized Authorization File (CAF), etc.

  5. If the TC 150 has not posted, see IRM 3.11.6.6.1.

  6. Identify all possible route out criteria, then route to the highest priority as stated in paragraph 7 below.

  7. The priority order for routing is as follows, specific IRM references take precedence over these general instructions:

    1. Disaster Claims

    2. Carryback or Carryforward Claims (CIS/AM)

    3. IDTheft

    4. Statute

    5. Taxpayer Advocate Service (TAS)

    6. Open AIMS Cases/Exam

    7. Quiet Disclosure, OVDI, OVDP

    8. Frivolous/IVO

    9. Scheme Development Center (CI)

    10. Category A (Cat A)

    11. Underreporter (AUR/URP)

    12. International

    13. Premium Tax Credit (PTCX)

    14. Adjustment Function Criteria (CIS/AM) or controlled to an AM employee.

    15. Open cases (open to an employee other than an area listed above).

    16. All other claims.

  8. See IRM 3.11.6.4.24.1 for TC 971 and Action Codes and routing destination for specific items.

  9. See IRM 3.11.6.3.4 for editing instructions for ISRP input of "Dummy PECF" instructions.

  10. When routing screened returns follow specific IRM instructions and local procedures.

Disaster Claims

  1. For tax year 2018 and subsequent, personal casualty and theft losses are only allowed when caused by a Presidentially declared disaster. Verify the taxpayer had a loss in a qualified disaster area via the IRS Disaster Assistance Program.

  2. Taxpayers who live in a Federal "Declaration of Emergency or Major disaster" may file disaster claims. The IRS may place a -O/-S freeze on the module for the zip codes of the affected areas to indicate the taxpayer resides in a disaster area. Disaster claims are identified by either:

    • -O and/or -S freeze on the module

    • Taxpayer mentions the loss is a result of a federal declared disaster.

  3. A disaster claim is filed using Form 4684, Casualty and Theft Loss, and is reported in addition to the standard deduction on either:

    • Schedule A, line 15 or 16

    • A deduction to income on Form 1040

  4. Follow normal processing procedures if the return is not a disaster claim as defined in (2) or (3) above.

  5. Claims have Cat A criteria, see IRM 3.11.6.4.5.1.

    Note:

    A non-disaster claim is a casualty loss that is not related to a federal declared disaster.

  6. If a disaster claim has SP 1040X route criteria (i.e., Cat A, Statutes, Underreporter, CIS/AM, etc.), separate the disaster claim from the non-disaster returns being routed:

    • For disaster cases routed to CIS/AM, edit DSTR as the working trail. If the disaster claim is related to Hurricane Harvey, Hurricane Irma or Hurricane Maria use KATX as the working trail.

    • For all other routing, edit DSTR/(routing destination) as a working trail or on the routing slip.

    Note:

    Expedite routing, hand walking whenever possible, to the forwarding area, following local procedures.

  7. Form 4684 is required, correspond using a 324C letter. Do not mail the return back to the taxpayer.

  8. For tax years 2018 and subsequent if the federally declared disaster is not listed in Form 4684 Section A (1), correspond using 8009-A. Use fill-in Please provide the federally declared disaster and FEMA disaster declaration number on Form 4684 Section A. If the disaster claimed is not a federally declared disaster via the IRS Disaster Assistance Program follow IRM 3.11.6.10.9.

  9. If a Disaster claim is missing a signature (refund or balance due return), correspond using a 324C letter. Do not mail the return back to the taxpayer. Suspend the return until you secure a signature only on refund returns.

    1. If a reply is received within 45 days, continue processing the return and input under Blocking Series 05.

    2. If no reply is received after 45 days, send a 916C letter, paragraphs B, F, R, 1, 4. See IRM 3.11.6.10.9 for fill in paragraphs. Input a TC 290 .00 to file the return.

Processing a Disaster Claim
  1. If a TC 150 has not posted on a disaster claim, expedite to CIS/AM per local procedure.

  2. Taxpayers may claim a disaster loss in the actual year of the disaster or the tax year preceding the disaster year.

    If Then
    The loss is claimed for the year of the disaster The return must be filed within three years of the due date, without extensions.
    The loss is claimed for the year preceding the disaster The return must be filed by the current year due date or due date as extended.

    Example:

    A disaster occurs in August of 2017, the taxpayer can timely file the disaster loss for 2016 until April 15, 2018 or October 15, 2018 if an extension is on file. The taxpayer could choose to file the loss for 2017 and has until April 15, 2021.

  3. If a disaster claim is filed late, per (2) above, expedite to CIS/AM.

  4. To process a Disaster claim, check CC TXMOD for an -O/-S Freeze on the account.

    If And Then
    -O/-S freeze code is present   Process the claim.
    -O/S freeze code is not present
    1. Balance due

    2. Refund

    1. Expedite to CIS/AM per local procedure.

    2. Process the claim.

    Note:

    If the taxpayer requests the refund be issued to a name and/or address other than the one shown on Masterfile (e.g., temporary address, taxpayer representative, in care of name and/or address), route to CIS/AM for a manual refund.

  5. If processing a Disaster claim and Priority Code 8 is required, expedite to CIS/AM.

  6. The Disaster Tax Relief and Airport and Airway Extension Act of 2017, enacted on September 29, 2017, changed the rules on some personal casualty losses. The rules were expanded to include California Wildfires and 2016 Presidentially declared disasters even if the loss was realized in 2017. Qualifying individuals may be identified by a posted TC 971 AC 086 and/or 087 on the eligible modules. For a list of the qualifying disasters for 2016 see Disaster Declarations/FEMA http://www.tris.irs.gov/fema/. Changes to Form 4684 include:

    • $100 rule changed to $500

    • 10% rule does not apply

    Qualified individuals are those individuals who:

    • lived in the Tropical Storm or Hurricane Harvey disaster area on August 23, 2017

    • lived in the Hurricane Irma disaster area on September 4, 2017

    • lived in the Hurricane Maria disaster area on September 16, 2017

    • lived in the California Wildfires area between October 8, 2017 and January 18, 2018.

    • lived in a Presidentially declared Disaster area during tax year 2016.

    • claim a casualty or theft loss from a federally declared disaster and lists the FEMA disaster declaration number on Form 4684 Section A, item number 1 for tax years 2018 and subsequent.

  7. Below are procedures for processing these claims:

    1. Review the claim to determine if the taxpayer is claiming a Presidential declared disaster loss for personal use property during tax year 2016 or 2017. If other disaster or business property loss, follow normal procedures.

    2. Is Form 4684 attached? If not correspond with a 324C. If attached, determine if the taxpayer used the modified computation. If the taxpayer qualified for the modified computation but did not take advantage, edit the amount shown on Form 4684, Line 11 from $100 to $500 and change line 17 to $0.

    3. Manually calculate itemized deductions shown on Schedule A. Do not use the Schedule A worksheet found in the xClaim tool. Enter the total itemized deduction in the deduction field (line 2) of the xClaim tool.

    4. If the total itemized deduction (Schedule A, Line 29) is less than the standard deduction (see IRM 3.11.6.9.2) plus the net hurricane loss (Form 4684, Line 18) the taxpayer is entitled to an increased standard deduction.

      Example:

      The total itemized deductions shown on Schedule A is $20,000. The Standard deduction is $12,6000 plus a $15,000 loss reported on Form 4684. The taxpayer is entitled to a standard deduction of $27,600.

    5. If any disaster loss is combined with a carryback follow normal procedures to route to KATX/CB/CF.

    6. If any disaster loss meets Cat A criteria, follow normal procedures and route to KATX/CATA.

    7. Use RC 076, if adjusting Schedule A and change the Category Code to "KATX" .

    8. Use RC 092 if adjusting the Standard Deduction and change the Category Code to "KATX" .

    9. Send a 8009-A if changing the taxpayer refund amount,
      If RC 076 was used, send fill-in; Due to the Hurricane Disaster Relief legislation, enacted Sept. 29, 2017, we changed your total itemized deductions. On line 20 of your Sch. A, you showed $XXX, however, the correct amount is $XXX. For more information about the new legislation, visit our website at www.irs.gov.
      If RC 092 was used send fill-in: Due to the Hurricane Disaster Relief legislation, enacted Sept. 29, 2017, you are entitled to an increased standard deduction which includes your net personal casualty loss. The standard deduction plus the casualty loss was more than your itemized deductions. For more information about the new legislation, visit our website at www.irs.gov.

Carryback/Carryforward

  1. A Net Operating Loss (NOL) is created when certain deductions exceed income from all sources. These deductions must relate to a trade or business, work as an employee, or casualty or theft. A taxpayer who has an overpayment of tax as a result of a NOL, Net Capital Loss (NCL), Unused Credits, or a Claim-of-Right adjustment can file an application or claim for adjustment or refund. Any loss remaining after applying the NOL to preceding years lowers taxes in a later year.

    Note:

    Do not treat as a CB/CF return unless the conditions in (1) are met (e.g., the taxpayer may mark the carryback box of Form 1040X in error).

  2. ALL Carryback/Carryforward (CB/CF) claims are to be expedited to AM. Follow any local procedures for separating CB/CF claims from other CIS/AM issues.

    Note:

    If the case is 60 days or less before the ASED expires, or if the ASED is expired, prepare a Form 3210 and notate CB/CF/Statute Imminent in the remarks area. Leave a CC ACTON history item "STAT IMNT" .

  3. The taxpayer may elect to forgo the carryback period for any tax year and carry the entire NOL forward. Route all elections to forgo the carryback period to CB/CF unless the election has already been made (check TRDBV for e-filed returns look for the literal ELECTION).

  4. Do not treat the following claims as CB/CF claims:

    • The term “carryforward” can be used when identifying certain credits that can apply to future tax years. Since these are not restricted interest claims they are not CB/CF claims.

    • Schedule D loss that exceeds the $3,000 loss limit. Taxpayers are entitled to “roll-over” or “carryforward” any Schedule D loss that is greater than $3,000. Process these cases with RC 013.

    • Carryover of an IRA.

    • Schedule A with an entry on Line 18 “Carryover from prior year” for Gifts to Charity.

  5. Indications that a taxpayer is trying to take a loss are as follows:

    • An attached 1040 has a change on Line 21 related to a NOL.

    • Net Section 1256 contract losses carried back. Treat these as a carryback claim if the taxpayer attaches Form 6781 with box D checked or if there is any mention these losses are being carried back.

    • IRC 1341(b)(1) or attaches a worksheet, which mentions Regulation 5.6.411.1(d)

      Note:

      A Claim of Right Adjustment can be entered on line 2 or line 15 of the 1040X or line 28 of Schedule A.

    • Form 1045 and/or supporting schedules (Schedule A-NOL, Schedule BNOL Carryover, or Schedule D) are attached.

    • Taxpayer checks the carryback box of Form 1040X or notates NOL, Carryback, Carryforward, or Carryover on the return in the Form 1040X, Explanation of Changes.

    • Schedules K-1 from a partnership, S corporation, estate, trust, or similar wording is attached for the year of the loss.

      Reminder:

      If none of the CB/CF issues are changing do not route to CB/CF (e.g., A NOL is indicated on Line 21 of Form 1040, but is not changing).

Statute Clearance

  1. Beginning January 1, 2019 all statute year returns (TY 2015 and prior) must be cleared by Statute prior to processing. If the case is not stamped with an indication it has been reviewed or the stamp is more than 89 days old (from today) it should be routed to Statute.

  2. If the case is a Substitute for Return (SFR), see IRM 3.11.6.4.16.

  3. If your research of the return or the account indicates Identity (ID)Theft, forward to IDTVA. Possible ID Theft indicators include:
    •Form 14039 or police report
    Identity Theft written on return or in a statement
    •Form 8948 stating MeF reject because primary or secondary TIN was previously used
    •TC 971 AC 522, 501, 504, 505, 506
    •TC 150 refund is held by IVO
    •Open control to IDTVA

  4. If the assigned tax account is on retention, use CC IMFOLB to restore the module. Before adjusting or corresponding on the account, you must suspend the case, using RETREG as the activity, for 21 days, following local procedures, to allow the TC 370 to post. If the TC 370 has not posted when the suspense period expires, then route to CIS/AM.

  5. When there is no TC 150 posted on the account for a statute year return follow the procedures in the table below:

    If Then
    1. Statute year Form 1040 with no Form 1040X attached, Route to Statute Unit for Clearance. Input TC 971/014.

    Exception:

    If the return is stamped "statute cleared " send to Receipt and Control to be processed as an original. See IRM 3.11.6.6.4(2)a

    2. Statute year Form 1040X, an original Form 1040 or an "As Amended" Form 1040 is attached Follow the procedures in IRM 3.11.6.6.3 paragraph (5) except route to Statute Unit for Clearance. Input TC 971 AC 014.

    Exception:

    If the return is stamped "statute cleared" send to Receipt and Control to be processed as an original.

    3. Statute year Form 1040X Send to Statute Unit for clearance. IRM 3.11.6.6.3 Convert Form 1040X to a Form 1040 or Form 6114. Input TC 971 AC 014 and CC ACTON history of "X21502STAT."

    Exception:

    If the return is stamped "statute cleared" send to Receipt and Control to be processed as an original.

  6. If a Form 1040 is received in the 1040X unit and the Form 1040 is stamped Statute Cleared, research IDRS for a TC 150. If a TC 150 has posted, determine if it is a duplicate return or an amended return. If the return is a duplicate follow IRM 3.11.6.6.4 and if it is amended process per normal statute procedures.

Processing Statute Cases
  1. After a return has been cleared by Statute, use the following guidelines when processing a statute year case:

    1. Open case controls with a category of ST04 or -X04 meeting SP processing criteria should be worked by placing the control base in "B" status and upon case completion place the control base back in "A" status.

    2. If instructions are provided by statutes, refer the claim to your lead for guidance in processing the claim.

    3. Statute cases not meeting SP criteria should be expedited to the appropriate function per local procedure.

    4. When verifying the RSED and the received date is not timely, check the postmark. If the postmark is timely, use the postmark as the received date.

    5. When verifying the ASED use today’s date.

  2. Follow the procedures below to determine if the case should be routed.

    If And Then
    1. The case is within 60 days prior to the ASED. The case meets CB/CF criteria.
    1. Prepare a Form 3210 and notate "CB/CF/Statute Imminent" in the remarks area.

    2. Use CC ACTON to leave the history item "Statute Imminent or SI" on CC TXMOD.

    3. Expedite/hand walk to CIS/AM per IRM 3.11.6.4.2.

    2. The case is within 90 days of the ASED or the ASED is expired. The case has a total tax increase or a refundable credit decrease.

    Exception:

    A claim to decrease withholding is not considered a credit decrease and is processable without statute involvement.

    Exception:

    Route to CIS/AM any case regardless of any tax increase/credit decrease involving any of the following:
    A signed consent or request to extend the statute of limitations.
    Filing status changes to MFJ.
    Cases requiring a manual refund.
    A statement of Financial disability.

    1. Input a TC 971 AC 014.

    2. Keep all related statute tax years together as you would non-statute years.

    3. If the case is within 17 days of the ASED it should be expedited/hand walked to the Statute area per local procedure.

    3. The received date is within 60 days of the ASED or the ASED is expired. The RSED is open and there is a total tax decrease or a refundable credit increase of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and specific Cat A criteria does not exist for the issue(s). Route to Cat A.

    Note:

    If specific Cat A criteria exist, see IRM 3.11.6.4.5.1. If Cat A criteria is not met, continue to the next box.

    4. The RSED is expired and the module is in debit balance.   Route to CIS/AM.
    5. The RSED is expired on a full paid module and your amended return is not a math error correction. There are payments, credits, or offsets posted within two years of your case’s received date. Route to CIS/AM.
    6. The RSED is expired and there was a math error on the original return. The change on the Form 1040X is not a math error correction and/or also claims additional changes. Route to CIS/AM.
  3. Follow the procedures below to determine if the case requires correspondence.

    If And Then
    Total tax decrease and/or refundable credit increase resulting in a refund that was received (or postmarked) before the RSED. The claim is incomplete and additional information is required to process the case.
    1. Suspend the case for 45 days and request the missing information.

    2. Correspond with the taxpayer using a 916C letter. Use paragraphs B, E, J, R, S, 1, 4. Paragraph R fill-in: Please complete Form XX to support the changes you have made.or use the fill-in provided in the specific instructions. Paragraph S fill-in: Please send us the requested information within 30 days from the date of this letter. If we do not hear from you we will not be able to allow your claim if the statute of limitations has expired. Generally the Refund Statute expires 3 years from the original due date or 2 years from the date the tax was paid, whichever is later.

      Exception:

      If the signature is missing on the claim use a 324C letter with paragraphs: A, P, 3, 6, c. For the fill-in: Please send us the information requested within 30 days from the date of this letter. If we do not hear from you within 30 days we will not be able to allow your claim if the statute of limitations has expired. Generally, the Refund Statute expires 3 years from the original due date or 2 years from the date the tax was paid, whichever is later.

    3. The response was received before the RSED or after the RSED but within 45 days of the IRS request (date the letter was input) then allow the claim.

    4. If the timeframes are not met or the taxpayer did not provide a complete response, then send a 105C letter disallowing the claim. Use paragraphs A, 1, d, e, a, r, v. Follow IRM 3.11.6.10.3.

    The RSED is expired on a full paid module.
    1. There are no payments, credits, or offsets within the last two years on the module and no other route-out criteria exist.

    2. Exonerated Prisoner or similar is notated

    1. Send a 105C letter disallowing the claim. Use paragraphs A, 1, d, e, a, r, v following, IRM 3.11.6.10.3.

    2. Route to CIS/AM with EXPR as the working Trail.

  4. If the return is a duplicate, see IRM 3.11.6.6.5.

  5. The following procedures should be used to determine how to process your case.

    Note:

    When adjusting a timely filed amended return after the due date, input "S" in the Override Indicator field.

    If And Then
    You are making an adjustment to the account with a TC 290 .00 and adjusting Credit Reference Numbers that will not result in a credit or tax change.

    Example:

    Changing SE tax from the primary to secondary taxpayer. No tax change and no credit change

    Without regard to the ASED or RSED. Process using blocking series 05. If the RSED is expired, use the received date as the RFSCDT and enter an S override.

    Caution:

    Do not use Priority Code 9.

    The RSED is expired and there was a math error on the timely filed original return. The only change is a correction of the math error(s). Process the Form 1040X see IRM 3.11.6.7.4.1.

    Note:

    Input the received date of the original return in the RFSCDT field.

    Exception:

    If the original return was filed after the RSED, route to CIS/AM.

    The RSED is expired and there was a math error on a timely filed amended return. The only change is a correction of the math error(s). Process the Form 1040X see IRM 3.11.6.7.4.1.

    Note:

    Input the received date of the first amended return in the RFSCDT field.

    The ASED is greater than 90 days and the RSED is expired.
    1. The return is a tax increase and/or a credit decrease.

    2. The return has either a tax increase with a credit increase or a credit decrease with a tax decrease.

    1. Process as normal.

    2. Route to CIS/AM.

    Your amended return has a total tax decrease and/or refundable credit increase that resulting in a refund on a timely filed return. No route criteria exist. Process the 1040X using instructions in the following section.
  6. Follow the procedures and examples in the following section for determining the received date and amended claims date.

    Note:

    Verify postmark date when determining timeliness.

    Reminder:

    Always verify the RSED and ASED dates on CC TXMOD.

    If And Then
    Received date is after the RSED

    Example:

    The received date is 4-20- 20XX

    Postmark shows the claim is timely filed

    Example:

    The RSED is 4-15-20XX, and the postmark date is 4-15-20XX or prior.

    Example:

    The RSED is 10-15-2015, and the postmark date is 10-13-2015.

    Use the received date as normal, use the postmark date as the amended claims date and as the RFSCDT.

    Example:

    Input 4-15-20XX as the RFSCDT and the amended claims date.

    Example:

    Input 10-13-2015 as the amended claims date and RFSCDT.

    The received date is prior to the RSED

    Example:

    The received date is 3-30-20XX.

    You are processing the claim after the RSED

    Example:

    Postmark date is 3-28-20XX and the return is received in the 1040X unit to be processed 6-05-20XX.

    Use the received date as normal and as the amended claims date and RFSCDT.

    Example:

    Input 3-30-20XX as the amended claims date and the RFSCDT.

    Received date is prior to the RSED

    Example:

    The received date is 6-01-20XX and the RSED/ASED is 10-15-20XX.

    You are processing the claim prior to the RSED.

    Example:

    The claim is processed 6-20-20XX.

    Process the return following standard 1040X procedures.
    Claim is timely received

    Example:

    The received date is 4-15- 20XX or prior.

    The claim is incomplete and correspondence is required per paragraph (3), box 1. Response is received after the RSED, but within the timeframes in paragraph (3), box 1.

    Example:

    Correspondence was sent, and the reply was received 6-1-20XX.

    Use the original received date as the received date and RFSCDT. Use the response date as the amended claims date.
    No envelope/postmark is present, or the postmark is illegible, the received date is 4-20- 20XX. Received date is no later than seven (7) days after the RSED.

    Example:

    The return was received by or before 4-20-20XX, the RSED is 4-15-20XX

    Use the RSED date as the received date, amended claims date, and RFSCDT. Edit the RSED date onto the return and circle any other received date stamps.

    Example:

    Input 4-15-20XX as the received date, amended claims date, and RFSCDT.

    Note:

    If adjusting a timely received return after RSED, input an S in the Override Indicator field.

Integrity and Verification Operation (IVO) Guidance

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

    Note:

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

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡   ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

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

    Exception:

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

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

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

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

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

      Exception:

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

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡   ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Note:

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

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Process adjustments with a Hold Code "1" if there is a -R freeze and

    • a TC 971 AC 122 is on the account, or

    • a TC 971 AC 134 is on the account or

    • a 4800C is attached or mentioned.

      Note:

      If a 4800C is attached or mentioned and contains any documentation or narrative, then fax a copy of the letter and/or documentation to IVO: 855-855-0616 following local procedures.

    .

Examination

  1. Review all claims and amended returns for Examination involvement. This may include:

    1. Returns with an open TC 420 or -L freeze see IRM 3.11.6.4.5.2

    2. Returns meeting Cat A criteria IRM 3.11.6.4.5.1

  2. Do not refer incomplete returns to Cat A or EXAM. A claim is considered complete if it has all information required. Correspond for signatures and all missing forms or schedules needed to support the changes being requested. Suspend all 324C correspondence and do not input a partial adjustment until a reply is received.

  3. If correspondence is required for anything other than missing information and signatures, route to CIS/AM.

  4. Certain adjustments are not processable based on SP criteria. Route any return needing a partial adjustment, that does not meet SP criteria, to CIS/AM.

  5. If the case has a -W freeze, route to CIS/AM.

  6. A partial adjustment is required when a case involves tax increases and/or credit decreases. Do not use a change to SRP to determine if a partial adjustment is required.

  7. Follow the instructions below for inputting a partial adjustment on cases that are being forwarded to Examination or Cat A.

    1. Input all tax increases and credit decreases.
      -- Input a HC 4 and use NSD.
      -- Input a TC 470 with the current date and a posting delay code.

    2. Input any change to the Coverage Checkbox, Form 8965 exemption(s) and/or SRP (MFT 35) increase. Input a TC 470 with the current date on the MFT 35 adjustment with a posting delay code but do not use a Hold Code 4.

    3. When inputting a partial adjustment, update the DUPOL database for all issues related to the 1040X including any items not adjusted during the partial adjustment per IRM 3.11.6.8.

    Exception:

    If you receive the error message "ASED is imminent/expired. Clear through the Statute Unit" and the return has been cleared within the last 89 days, then route without the partial adjustment.

  8. If the dependent(s) are changing from an ITIN(s) to SSN(s), prepare a Form 4442 per IRM 3.11.6.9.3.1 before routing to Cat-A even if no partial adjustment is required.

  9. For an aid in determining partial adjustments, see Exhibit 3.11.6-7.

  10. The lead will forward cases needing technical assistance to the Examination Classification function.

Category A criteria
  1. To determine whether a return meets Cat A criteria, see Examination Criteria (CAT-A) – General and see Examination Criteria Cat A - credits.

    Note:

    Unless otherwise specified, the dollar amounts cited refer to the amount of the tax decrease or credit increase whether or not the claim results in a refund or a decrease to the balance due.

  2. Do not apply Cat A criteria to:

    • Combat Zone returns when the TP is actively serving in a Combat Zone, see IRM 3.11.6.4.20.

    • CP notices.

    • Credits that are being disallowed.

    • Credits that are being reduced below the Cat A tolerance due to Masterfile or Math verification.

  3. For CC DDBCK Cat A criteria see IRM 3.11.6.8.1

  4. When EIC is increasing and Schedule C meets Cat A criteria input CC DDBCK prior to referring the case to Cat A. If the CC DDBCK validation results screen shows the case as "Selected" , refer the case to Exam using the "Selected" cover sheet. Otherwise refer the case as Cat A for the Schedule C.

  5. If the case is being forwarded to Cat A:

    • A partial adjustment may be required, see IRM 3.11.6.4.5

    • Do not input a TC 971 AC 013.

  6. Once identified these cases will be placed in a special sort identified as Cat A and the issue will be identified by checking a box as to its category on a summary sheet. These will be expedited, per local procedure, to CIS/AM for disposition to Exam.

  7. If there is a math error on the module for an exemption, CTC, or ACTC, refer the case to CIS/AM, not Cat A.

Exam/-L Freeze Claim Processing
  1. If an –L freeze is present, use CC AMDISA to determine the AIMS status. The AIMS status will determine the current status of the potential audit; therefore, processing procedures differ based on the AIMS status.

    Note:

    If there is an open IDRS, control base to CI-SDC continue to follow processing procedures outlined in IRM 3.11.6.4.4.

  2. For accounts with a –L freeze and the AIMS status is 08 or less:

    • If the claim meets Cat A criteria, per IRM 3.11.6.4.5.1 route the case to Cat A after any required partial adjustment per IRM 3.11.6.4.5.

    • If the claim does not meet Cat A criteria, process the claim following normal processing procedures. Do not forward the case to Exam.

    Reminder:

    If both a priority code 8 and priority code 1 are needed on an adjustment, use priority code 1.

    Exception:

    A TC 290 for zero without credit reference number 766 or 806 will post without a priority code.

  3. For accounts with a –L freeze and the AIMS status is greater than 08:

    • Route based on the Exam Employee Group Code (EGC) identified on AIMS. See link to the EGC located on SERP under Who/Where Exam Employee Group Code http://mysbse.web.irs.gov/examination/mis/contacts/default.aspx.

    • Follow local procedures for routing, see IRM 3.11.6.4.5.

    Exception:

    If the AIMS status is 90 indicating a closed audit or there is a pending TC 300 - 361, refer the case to CIS/AM.

    Exception:

    Whether identified through an open control base or CC AMDISA, amended returns should not be routed to Appeals, IDRS # 66XXX, route to CIS/AM.

  4. If the case is being forwarded to Exam:

    • A partial adjustment may be required, see IRM 3.11.6.4.5.

    • Input a TC 971 AC 013. Use the received date of the amended return for the transaction date.

    Exception:

    On CC DDBCK "Selected" cases, IDRS will automatically input the TC 971 AC 013 when a TC 971 AC 010 is not present.

Offshore Voluntary Disclosure Program - Quiet Disclosure Cases
  1. Use the If/Then chart(s) to address amended returns relating to the Offshore Voluntary Disclosure Program:

    If And Then
    The amended return indicates:
    • Foreign source income

    • OVDI

    • OVDP

    • FBARs

    • Form 1114

    • Form 3520

    • A foreign bank listed on Schedule B part I or II.

    Note:

    There is no tolerance and the income amount does not need to be changing.

    Note:

    Quiet disclosure also includes: Schedule B, Part III questions 7A or 8 answered yes and the original filing was answered no or was blank. Use CC TRDBV or CC RTVUE to determine how the questions were answered on the original return.
    1 indicates yes
    2 indicates no

    The ASED is not expired and does not meet Statute Routing criteria. Route to:
    1. 4309 AUSC LB&I,
      11C, OVDP (Room 549)
      Austin, TX 78741

    2. Notate "Per IRM 3.11.6.4.5.3" on the routing sheet.

    3. Do not input a TC 971 AC 013.

    Note:

    Form 8938, Statement of Specified Foreign Financial Assets, is not an OVDP indicator, see IRM 3.11.6.4.24.1.

  2. You may receive amended returns after they have been to LB&I. When this occurs follow the procedures below.

    If And Then
    LB&I determines the amended return meets their criteria. (This will be indicated on the return or routing sheet).
    1. The ASED is not imminent or expired.

    2. There is a notation to extend the ASED.

    1. Continue to Process following normal procedures.

    2. Route to CIS/AM. Notate Extend ASED on your working trail.

    LB&I determines the amended return does not meet their criteria. The amended return is received with a notation "This tax return does not meet OVDI criteria, OK to process" (or similar statement) on the routing slip or the amended return. The notation "OK to Process" only bypasses the route to LB&I criteria. Normal processing criteria and verification procedures should be followed.

Processing of Form 1040X Returns Submitted under the Streamlined Program

  1. 1040X returns submitted under the Streamlined program need to be processed by Philadelphia Accounts Management (AM) as they are considered International returns. However, Large Business and International (LB&I) is requesting that all refunds be frozen until classification is performed by LB&I. These submissions will consist of original returns as well as Form 1040X/Amended Returns.

  2. LB&I will be reviewing these returns/claims to see if they qualify for the streamlined program. They are also requesting that original returns and amended returns from the same taxpayer should be maintained as a package. If a 1040X meets the criteria of the streamlined program it will be sent to the Austin Submission Processing 1040X area along with any related original returns to have a TC 290 .00 input for the Form 1040X. There are different processes depending on whether or not the 1040X is alone or is accompanied by a 1040:

    1. If the 1040X returns need a TC 290 .00 as determined by LB&I as a notation on the route slip, the 1040X area will input the TC 290 .00 and the 1040X will go to files if no original 1040 is attached.

    2. If the package is mixed Forms 1040X and 1040s, the package will be kept together. The 1040X will have the TC 290 .00 input by the 1040X area indicating “NSD” (No Source Document) on the input and the 1040Xs will then accompany the original Form 1040(s) to pipeline for processing. The entire package will be sent to PIN Unit.

Identity Theft

  1. ID Theft can be indicated by the taxpayer’s explanation, by markers on the account or by suspicious changes identified by tax examiners.

  2. Accounts the IRS has identified as ID Theft contain one of the indicators below. Verify ID Theft indicators have not been reversed prior to routing. If a TC 972 is present reversing the ID Theft indicator, ensure that no additional indicator(s) are present.

    • CC ENMOD: TC 971 with AC 501, 504, 505, 506, 522

    • CC TXMOD/IMFOLT: TC 971 AC 111

    • CC IMFOLI: MFT 32 is indicated for the Tax Year and No TC 150 is present on MFT 30, see paragraph 6 below.

    • CC TXMOD/IMFOLT: Unpostable TC 150 is present with either a TC 971 AC 121 or TC 971 AC 124.

    Note:

    The ID Theft literal on CC ENMOD, CC IMFOLE, or other TC 971 Action Codes should not be used as an ID Theft indicators.

  3. If the taxpayer self-identifies as a victim of ID Theft by:

    • The Explanation of Changes or a separate statement

    • Completed Form 14039, Identity Theft Affidavit

    • Responding to IRS correspondence related to ID Theft.

  4. If the taxpayer indicates only their dependent is a victim of Identity Theft, copy the statement, Form 14039 and any supporting documentation and route to CIS/AM.

  5. Tax Examiners may identify suspected ID Theft when the return does not master file verify and when certain account changes seem suspicious such as large, unusual or questionable line item changes. When this occurs use the following research steps to aid in determining if the return should be routed as ID Theft:

    1. Use CC RTVUE to verify the:
      Address for the first return(s) filed
      Dependents
      Type of Income
      Filing Status
      Schedules and Forms filed

    2. Use CC TRDBV to verify the:
      Significant changes in the filing history
      Occupation
      Requested method of refund payment
      Tax Preparer
      Multiple attempts to file a rejected return.

    3. Use CC DDBCK to verify:
      Exemptions and/or credits claimed on the original return.

    4. Use CC IMFOLI to verify:
      Number of years the TIN has been used
      Filing status changes
      Method of filing: paper or e-file.

    5. Use CC IRPTR to verify:
      Comparative review of reported income and payor information
      Previous and current employer
      Previous address.

    Reminder:

    Before routing as ID Theft you must have multiple suspicious changes between the original filing and the amended filing.

  6. Once a return is identified as being an ID Theft return, with or without a posted TC 150:

    If Then
    Form 1040X Route to CIS/AM, notating ID Theft.
    Form 1040 series
    • In the upper left hand corner of the return notate PAO (Process as Original).

    • Circle out any notation that suggests the return was previously filed.

    • Route to Batching.

    Form 1040 X with Form 1040
    1. If a TC 150 is posted (or pending):

      1. Move the Form 1040X to the front.

      2. Route to CIS/AM, working trail "ID Theft" .

    2. If no TC 150 is posted or pending:

      1. "X" Form 1040X and move the Form 1040 to the front.

      2. Edit POA in the upper left-hand corner of the return.

      3. Circle out any notation that suggests the return was previously filed.

      4. Route to Batching.

    Undeliverable Route to Entity.
    Statute returns Route the return to IDTVA Statute:
    • Austin - 6539 AUSC

    • Fresno - I-2300 FSC

    • Kansas City - MS 6507 C2 KCSC

Automated Underreporter (AUR)

  1. When a TC 922 is present, use the last process code to determine whether the AUR case is open or closed. Closed cases can result in an AUR reconsideration. The process codes are the two digit numbers below the TC 922. Other process codes may be present but only route based on the last process code listed in the table below. Definitions of the Underreporter Process Codes can be found in http://serp.enterprise.irs.gov/databases/irm.dr/current/4.dr/4.19.dr/4.19.3.dr/4.19.3-4.htm.

    Caution:

    If it can be determined the AUR issue is not included with the amended return, do not route to AUR. If AUR returns the amended return because it is unrelated to their issue, then process as normal. Keep in mind the taxpayer will sometimes use their original figures in Column A; do not take this as an indication the taxpayer is disagreeing with the AUR adjustment.

  2. If the TC 922 is:

    If the last TC 922 process code is: Then
    30, 34, or 54 Indicates AUR issue and a CP 2501 may or may not have been issued. Route as an open AUR per paragraph (6) below.

    Note:

    The CP 2501 will not be on AMS.

    20 or 53 The case was worked and closed by AUR with an adjustment to the tax liability and/or refundable credits. If the taxpayer files a claim or amended return requesting a refund or abatement of tax previously assessed by AUR, route as an open AUR per Paragraph (6) below.

    Note:

    Information will not be on AMS.

    55, 57-60, 75, 77-79, 81, 95, 97-99 Research AMS to determine the issues on the CP 2000 Notice then see paragraph (4) below.
    18
    • Refer to CIS/AM with the working trail KITA

    • Use CC ACTON to leave a history item 2KITA

    .
    11, 12, 13, 26, 35, 36, 38, 63, 64, 66, 80, 83, 85, 86 Route to Exam per IRM 3.11.6.4.5.
    39, 62, 67, 68, 69, 82, 87, 88, 89, 90, or 94
    and
    A TC 29X has been input after the TC 922 and has one of the following blocking series: 050-070, 500-519, 550-589, 600-619, 650-679, 980-999.
    Research AMS to determine the issues on the CP 2000 Notice then see paragraph (7) below.

    Note:

    If you are unable to determine if the claim is related to the AUR issue continue to process the Form 1040X.

    17 Route as ID Theft, see IRM 3.11.6.4.7.
    Any process code not listed Process as normal. Do not route to AUR even if there is an open control base to AUR.

    Note:

    If additional assistance is required, contact the appropriate AUR Coordinator provided on the WHO/Where tab on the SERP home page http://serp.enterprise.irs.gov/databases/who-where.dr/aur-coordinators.html.

  3. When AUR identifies an issue(s), a CP 2000 is issued to the taxpayer and a copy of the notice posts to AMS. The CP 2000 identifies the specific forms reported to the IRS and not reported by the taxpayer on their tax form. The CP 2000 also provides the adjustment needed to correct the account and a place for the taxpayer to agree or not agree. If the taxpayer does not respond to the CP 2000, the adjustment is input by AUR. Taxpayers may respond to the notice by filing an amended return either before or after the adjustment has been input.

  4. Open AUR cases must address at least one of the issues identified on the CP 2000 to be routed to AUR per paragraph (6) below. This includes:

    • Adjusting income and/or credits related to a specific form and issuer as described in the CP 2000.

    • Adding the income mentioned in the CP 2000 and also adding expenses that offset the income in part or in whole.

    • Any statement or documentation that the amount should not be added.

    • A statement that the taxpayer agrees with assessment.

  5. If unable to determine whether any AUR issue is being addressed, route as an open AUR per paragraph (6) below.

  6. When routing open AUR cases:

    • Determine the routing destination by using the first two digits of the TC 922 DLN, following local procedures: http://serp.enterprise.irs.gov/databases/who-where.dr/aur-addresses.html

    • Input a TC 971 AC 015.

  7. AUR reconsideration cases must disagree with at least one part of the AUR adjustment as shown on the CP 2000 to be routed as an AUR reconsideration per paragraph (9) below. Taxpayers may indicate disagreement by submitting:

    • An amended return that reduces the income and/or increases credit(s) related to the specific form and issuer as described in the CP 2000 and adjusted by AUR. This does not include cases where the taxpayer is adjusting mitigating factors such as expenses, cost basis, gambling losses or credits not previously claimed and unrelated to the AUR assessment.

    • The CP 2000 Response Form section indicating disagreement with Option 2.

    • Any statement indicating the taxpayer disagrees with the change that is related to the AUR adjustment, such as "I did not have gambling income" , "I did not work there" or "I did not earn that much" .

    Exception:

    If the taxpayer states that they earned more or should have a smaller credit than indicated by the CP 2000, do not route to AUR, process normally.

  8. When multiple years are present, route only those years that;

    • Have an AUR issue present

    • Are being used to demonstrate that the AUR issue belongs on another tax year.

    Example:

    The AUR issue is a 2016 Form 1099. The taxpayer disagrees with the AUR notice and states the payment was not received until 2017, their 2017 tax return is attached as proof.

  9. When routing AUR reconsideration cases:

    • Determination the routing destination by using the first two digits of the TC 922 DLN, following local procedures: http://serp.enterprise.irs.gov/databases/who-where.dr/aur-reconsideration.html

    • Input a TC 971 AC 015.

  10. Returns that decrease tax and/or increase credits after an AUR assessment has been made may meet Cat A criteria, see IRM 21.5.3-2.

  11. If the taxpayer is not disagreeing with any specific part of the AUR adjustment, as described on the CP 2000 or if you are unable to determine if any AUR issue is being address, process normally.

Accounts Management Cases

  1. Cases are referred to Accounts Management (AM) based on the issue, the dollar tolerance, computer program capabilities (e.g., Blocking Series), and other various reasons. Refer to the specific IRM instruction or the 1040X Routing Guide see IRM 3.11.6.12. Also see IRM 3.11.6.4.5.1 on screening and sorting Cat A criteria.

  2. Route all AM returns to Correspondence Imaging System (CIS) to be scanned. Follow any local procedure for separating the "Carryback/Carryforward" , "Disaster Claims" , etc. that require special handling.

  3. Do not input a TC 971 AC 010 when routing a case to CIS/AM.

  4. If a return has an open case to CIS/AM, route to your local CIS/AM.

  5. If a return is a CIS image then refer to CIS/AM.

    Exception:

    If a CIS imaged return is stamped/edited "Process as Original (PAO)" or similar verbiage and there is no TC 150 posted/pending then route the document to Receipt and Control to be processed as an original. When feasible use Prior Year and Conversion Form 1040 Edit Sheet for Tax Year YYYY. If it is current year and the conversion form is not available then "dummy" a current year Form 1040 for processing.

  6. A return must have a TC 150 posted before routing to CIS/AM, unless specific instructions are provided.

Affordable Care Act and Possible Health Professional Claims

  1. The Affordable Care Act enacted April 2010 expanded tax benefits for health professionals working in some communities. Health care professionals who received student loan relief under various state programs and work in under served communities may qualify for refunds on their 2009 federal income tax returns. If you receive the Form 1040X, Amended U.S. Individual Income Tax Return, referencing the “Excluded student loan amount under 2010 Health Care Act”, “Affordable Care Act” or “Student Loan Forgiveness”, route the claim to CIS/AM as they will be processing these claims.

Taxpayer Advocate Service Cases (TAS)

  1. Each and every taxpayer has a set of fundamental rights they should be made aware of when dealing with the IRS. One of those rights is, The Right to a Fair and Just Tax System. Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

  2. When a taxpayer asks to be referred to TAS or the taxpayer meets TAS criteria (listed below), refer the case to TAS per local procedure. Review all attachments for taxpayer notations/correspondence to determine whether the taxpayer meets TAS case criteria or requests TAS assistance.

    • Taxpayer is experiencing economic harm or is about to suffer economic harm.

    • The taxpayer is facing an immediate threat of adverse action.

    • The taxpayer will incur significant costs, if relief is not granted (including fees for professional representation).

    • The taxpayer will suffer irreparable injury to, or long term adverse impact if relief is not granted.

    • The taxpayer has experienced a delay of more than 30 calendar days to resolve a tax account problem.

    • The taxpayer has not received a response or resolution to their problem or inquiry by the date promised.

    • A system(s) or procedure(s) has either failed to operate as intended or failed to resolve the taxpayer’s problem or dispute within the IRS.

    Note:

    For exceptions to TAS criteria see IRM 13.1.7.3.

  3. If the taxpayer's issue cannot be completely resolved within 24 hours, but steps are taken to begin resolving the taxpayers issues within 24 hours, then do not forward Form 911 unless the taxpayer asks to be referred to TAS and it meets TAS criteria. The unit manager will ensure that a Form 911, Application for Taxpayer Advocate Assistance Order (ATAO), is timely forwarded to the local TAS office when necessary. (For additional information see IRM 13.1.7.4)

  4. Follow local procedures for routing to TAS.

    Note:

    Open controls to TAS can be identified by Control Category of ATAO or the Assigned to Employee IDRS number starts with 63.

Identifying Frivolous Claims

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by both individuals and businesses are included, but are not limited to, a list in Exhibit 3.11.6-5, Frivolous Claims.

  2. F- freezes are set by a posted TC 971 AC 089 and indicates that a frivolous return has been received and the entire account is frozen. Adjustments should not be made to accounts showing an F- freeze.

  3. Route any "suspicious" return to the designated boxes in Submission Processing as well as claims with an F- freeze. The same boxes can be used for original returns, as well as claims (e.g., Forms 1040X) identified as "frivolous claims" , or follow local procedures. Input TC 971 with AC 013. Enter Sent to FRP in the remarks area. The Frivolous Return Programmer (FRP) Coordinator will review any return which the taxpayer:

    1. Argues for any reason for filing a tax return or the paying of taxes.

    2. Uses one of the frivolous arguments or statements in Exhibit 3.11.6-5, Frivolous Claims.

    3. Marks out or alters in any manner, the penalty or perjury statement (i.e., the jurat) in the signature area.

  4. If a non-frivolous claim is received with an open control base to an employee in the FRP Unit (IDRS Numbers begin with: 14867, 14868, or 14869) route to FRP. Input a TC 971 with AC 013. Enter "Sent to FRP" in the remarks area.
    IRS Frivolous Return Program
    1973 N Rulon White Blvd
    Mail Stop 4450
    Ogden, UT 84404

International Returns

  1. Route all International returns to CIS/AM per local procedures.

    Note:

    A list of the International claims is included in Exhibit 3.11.6-6 PSPC International Returns. Common indicators of claims or forms to be routed are Foreign Addresses and Dual Status.

  2. Do not process Form 1040X if all the Forms W-2 and Forms 1099 attached are from the Virgin Islands (regardless of the address). Pull these returns and transship to the following address:
    Virgin Islands Bureau of Internal Revenue
    9601 Estate Thomas
    Charlotte Amalle
    St. Thomas, U.S. Virgin Islands 00802

  3. Route to CIS/AM if dual status is indicated by the following conditions on an "amended" Form 1040:

    Form 1040 Revision is: Filing Status Line is checked and Line is blank or zero
    2006 and subsequent Other than 3 39b 40
  4. Do not True Dupe International returns.

Form W-7 and ITIN Research (Austin Only)

  1. Form 1040/A/EZ/NR/X that have a red W-7 stamped in the bottom left corner of the return have been received from an ITIN Unit.

  2. Signature correspondence is not required when your return has the red W-7 stamp.

  3. If the primary and/or secondary taxpayer(s) have a newly issued ITIN(s), use the IAT Name Search Tool (or CC NAMEI, CC NAMES, CC DUPED, CC DDBCK, etc.) to determine if there is a TC 150 posted on the ITIN provided or under a different ITIN/TIN. See IRM 3.11.6.6.1 for TC 150 procedures.

  4. After research, process the return using the following instructions:

    If And Then
    A TC 150 is posted
    1. The return is a TRUE DUPE

    2. The Primary (or Secondary) TIN is different than found on the return

    3. The Primary (or Secondary) TIN is the same as the original filing, and other issues are present

    1. Input a TC 290 .00 with no reason code.

    2. Attach an IMFOLR screen print (for each TIN, if more than one) to the return. Route to CIS/AM using the current ITIN/IRSN DUPS coversheet.

    3. Process the return as a Form 1040X.

    No TC 150 is posted
    1. There is more than one TIN for the taxpayer.

    2. The return contains an IRSN for the primary taxpayer, but an ITIN/SSN is found.

    3. The return contains an ITIN for the primary taxpayer and an SSN is found.

    1. Route to Batching.

    2. Circle the primary taxpayer’s IRSN, edit the ITIN/SSN to the return then route to Batching.

    3. Circle the primary taxpayer’s ITIN, edit the SSN then route to Batching.

  5. When “ITIN REJECT” is stamped:

    In And Then
    The primary taxpayer box.
    1. You cannot locate a TIN after researching IDRS

    2. You find the correct TIN

    1. Route to Entity with working trail ENTITY.

    2. Circle ITIN REJECT, edit the correct TIN, and follow the chart.

    Secondary taxpayer’s SSN box and you cannot locate a TIN after research.
    1. Income subject to SE Tax is reported for the secondary taxpayer.

    2. A math error already exists for the secondary TIN.

    3. Neither previous condition exist.

    1. Route to Entity with working trail ENTITY.

    2. Input per paragraphs (8), (9), and (10) below. Allow the standard deduction and disallow the exemption.

    3. Input per paragraphs (8), (9), and (10) below. Allow the standard deduction and disallow the exemption.

    Secondary taxpayer’s SSN box. You locate a TIN after research. Continue processing.
    Dependent TIN box. with or without a previous math error for the dependent See paragraph (8) below and (9) if applicable.
  6. If the dependent(s) has a newly issued ITIN(s), follow normal 1040X procedures.

    Exception:

    If the TIN the ITIN unit assigned does not match CC INOLES, research CC NAMES for the correct TIN. If unable to determine, use Form 12305 to return the claim to the ITIN department, Stop 6085 AUSC with "ITIN N/C mismatch" in the Remarks area.

  7. If No W-7, or similar indication, is indicated in any TIN field of an exemption, correspond per IRM 3.11.6.9.3.1.

    Exception:

    For the Primary taxpayer, route to Entity per local procedures.

  8. If a return is received from the ITIN department that is workable:

    1. Input any allowable adjustment. PATH Act criteria applies for certain credits.

    2. Include entity changes.

    3. Update the DUPOL database if necessary.

    4. Input IRN 887 as needed.

    5. Enter the appropriate reason code(s). Enter the date from Form 3471, if attached, as the Amended Claims Date. See IRM 3.11.6.7.4.1 to determine the Amended Claims date for substantiated math errors.

  9. When the allowable adjustment changes the taxpayer’s expected refund or balance due:

    Reason for Change Action
    ITIN Reject Correspond using Form 8009-A with fill-in: Your Amended Return is not being returned with this letter. You should have received a separate notice informing you that one or more of your Form W-7 (Application for IRS Individual Taxpayer Identification Number) applications were rejected. This caused a change to your Amended return.

    Exception:

    If the issue is related to the spouse’s ITIN being rejected, see paragraph below for additional processing instructions.

    Path Act disallowance Send a 105C/106C see, IRM 3.11.6.10.3 and input TC 971 AC 113.
    Math error(s) for issues other than ITIN rejects Process following IRM 3.11.6.7.4. Use the date from Form 3471, if attached, as the Amended Claims Date. Send a 474C see, IRM 3.11.6.7.4.
  10. When using xClaim to allow the FSC 2 change and the spouse has "ITIN REJECTED" :

    1. Enter all zeros for the spouse’s TIN (000-00-0000) in xClaim.

    2. When reviewing the Entity change on CC INCHG remove the zeros then transmit.

Killed in Terrorist Action (KITA)

  1. Route all claims identified (on the return or on IDRS) as Killed in Terrorist Action (KITA), Killed in Action (KIA) or Victim of Terrorist Attack to CIS/AM, notate KITA in the working trail. Other terminology may include:

    • Anthrax

    • Oklahoma City

    • IRC 104(a)

    • 9 / 11

    • 911 Rescue Workers

    • Publication 3920

    • Tax Forgiveness Victims of Terrorist Act

    • World Trade Center (WTC)

    Note:

    Place a CC ACTON history item "2KITA" on CC TXMOD; do not input a TC 971 AC 010.

Collection Function Cases

  1. The following should be detached and routed to the Collection Function if attached to the Form 1040X. Continue processing the amended return.

    1. Form 9465, Installment Agreement Request.

    2. A written request for an Installment Agreement located in the Form 1040X, Explanation of Changes, or a separate attachment. Detach any Installment Agreement request and route to Collection as soon as it is identified.

    3. CP 503/504, Taxpayer Notification of Federal Tax Not Received with a statement of, or similar to; can’t pay, won’t pay, want to pay or Form 9465 is attached.

    4. CP 523, Past Due Payment Default Notice.

    5. 433-D, Installment agreement.

      Reminder:

      Verify that the taxpayer's name, TIN, and tax period are present on any detached item; perfect as necessary.

  2. If the entire return is being routed to Collection, input a TC 971 AC 012.

  3. Review returns for Automated Substitute For Return (ASFR) and Non-Filer Reject (NFR) as follows: to Collections. The most distinctive way to identify an ASFR account is the TC 150 for .00 with an SFR literal to the right of the Document Locator Number (DLN) on CC TXMOD or the SUBST4 on CC IMFOLI Vestigial: field.

  4. Collection function cases should be routed as follows:

    If And Then
    SFR returns
    1. TC 420 (unreversed) and a -L freeze

      Exception:

      If CC AMDISA status is 08 or less then see Non-filer Reject below.

    2. No unreversed TC 420 is present

    1. See IRM 3.11.6.4.5.2

    2. Route to Collection and input a TC 971 AC 012.

    NFR returns Identified by:
    • TC 420 or TC 424 and a CC AMDISA status of 08 or less

    • A reversed TC 420

    • CC AMDISA status 90

    Route to CIS/AM.
    Posted TC 599 cc 89 on CC TXMODA   Route to CIS/AM.
    Posted TC 599 cc 88 on CC TXMODA without a subsequent TC 599 cc 89 Route to :
    Fresno Campus
    ASFR Unit Stop 81304
    5045 E Butler Ave
    Fresno, CA 93727

    Reminder:

    Input a TC 971 AC 012.

    A T- freeze is present No Letter 1058, CP 90 or other notation such as a request for a payment plan (Installment agreement), "can’t pay," "won’t pay," "will pay later," etc is notated Workable
    A T- freeze is present A Letter 1058 or CP 90 is attached and a notation requesting a payment plan (Installment agreement), or statement can’t pay,won’t pay,will pay later, etc. Route per paragraph (5) below.
    A -Y freeze is present on the module
    1. There is an unreversed TC 480 on the module but no TC 780.

    2. There is an unreversed TC 480 on the module and a TC 780.

    1. Workable

    2. Route the case to the appropriate campus based on the Monitoring Offer in Compromise (MOIC) Compliance Campus Locations for Offers in Compromise. See Offer-in-Compromise (OIC) Compliance Campus Locations for the Monitoring of Accepted Offers located on SERP under the Who/Where tab, to determine the appropriate campus site.

  5. When instructed to route a T- freeze per paragraph 4 above, compare the case status in the SC-STS field on CC TXMOD or STATUS field on CC IMFOLT or the STAT HIS on CC IMFOLI and follow the instructions below:

    If And Then
    CC IMFOL/TXMOD shows the case is in Status 22 or 24 The IRS address is on the top of the letter 1. Detach the correspondence.
    2. Input TC 470, no closing code using CC REQ77.
    3. Leave a working trail on the correspondence and the Form 1040X, see IRM 3.11.6.2.5.
    4. Route the correspondence to the IRS address on the top of the letter.
    5. Continue processing Form 1040X.
    CC IMFOL/TXMOD shows the case is in Status 22 or 24 The IRS address is not on the top of the letter 1058 and correspondence is attached

    Exception:

    If no letter or correspondence is attached, continue processing Form 1040X.

    1. Research the appropriate ACS Support Site on SERP (http://serp.enterprise.irs.gov) under the Who/Where tab, select the link to ACS Support Liaison.

    Note:

    The BOD Code (W&I or SB/SE) will be needed to select the appropriate link.

    2. Detach the correspondence.
    3. Input TC 470, no closing code, using CC REQ77.
    4. Leave a working trail on the correspondence and the Form 1040X, see IRM 3.11.6.2.5.
    5. Mail the correspondence to the ACS Correspondence Address indicated on SERP.
    6. Continue processing Form 1040X.
    CC IMFOL/TXMOD shows the case is in Status 26 The last four digits of the Collection-Asgmt>field is 8000 (xxx8000),

    Note:

    The Collection-Asgmt>field is located at the top right hand side of CC TXMOD.

    • Route entire package to ASFR at either Austin or Fresno based on State mapping.

    • Input a TC 971 AC 012

    • See exceptions below because ASFR generally does not work 1040X claims.

    Caution:

    Do not route returns with imminent or expired ASED. Bring returns with imminent or expired ASEDs to Statute Coordinator or manager.

    CC IMFOL/TXMOD shows the case is in Status 26,

    Note:

    Route all amended returns when at least one tax period is in status 26.

    The last four digits of the Collection-Asgmt>field is not (xxx80000)

    Note:

    The Collection-Asgmt>field is located at the top right hand side of CC TXMOD.

    • Research the appropriate Revenue Officer Group office address on SERP (http://serp.enterprise.irs.gov) under the Who/Where tab, select the link RO by TSIGN/ZIP/STATE.

    • Input TC 470, no closing code, using CC REQ77.

    • Input TC 971 AC 012.

    • Route the entire case to the address obtained from SERP.

    • If the RO calls to inquire why the 1040X was routed to them explain we cannot process the amended return without their approval since it is assigned to them.

Innocent Spouse (Form 8857)

  1. Route innocent spouse claims on Forms 8857 or Form 1040X referencing innocent spouse (with or without Form 8857 attached) as follows.

  2. Innocent Spouse is the only issue.

    1. Per local procedures, photocopy the return then edit “No Action/Issue” across the top of the photocopy.

    2. Detach the Form 8857 then staple it to the back of the photocopy of the return.

      Note:

      If Form 8857 is not attached, edit “No Form 8857 Received” across the top of the photocopy.

    3. Input a TC 290 .00, blocking 05 and no RC.

    4. Input a TC 470 for all years listed on Form 8857
      - Include closing code 90 if the account is not in status 26.
      - If the account is in status 26, do not include a closing code.

      Note:

      To determine the status, refer to the fifth line of CC TXMOD "SC-STS."

    5. Input a TC 971 with AC 065 for all years listed on Form 8857.

    6. Edit “TC 971/470” and appropriate closing code and date in the upper left margin of Form 1040X.

    7. Per local procedures mail the photocopy packet to (must be done daily):
      IRS - CSPC
      201 W. Rivercenter Blvd
      Covington, KY 41011
      Stop 840F

  3. Innocent spouse is filed with an amended return and involves other issue(s).

    1. Per local procedures, photocopy the amended return then edit “Copy – Do Not Process” across the top of the photocopy.

    2. Detach the Form 8857 then staple it to the back of the photocopy of the amended return.

      Note:

      If Form 8857 is not attached, edit “No Form 8857 Received” across the top of the photocopy.

    3. Input the adjustment(s).

    4. Follow instructions (d) through (g) from paragraph (2) above.

Injured Spouse Allocation (Form 8379)

  1. Route the return packet to CIS/AM if:

    • the taxpayer files a return with the sole purpose of filing the Injured Spouse Claim.

    • the returns needs a corrected adjustment.

    • the return does not meet SP criteria.

    • a loose Form 8379.

    • the taxpayer indicates an Injured Spouse Allocation but does not submit Form 8379.

    Note:

    Do not correspond or input an adjustment. Input a TC 971 AC 071 and attach Form 8379 on the front of the packet.

  2. If the taxpayer files Form 8379 with their return that has a processable adjustment:

    1. Input the adjustment as "No Source Document" (NSD).

    2. If the adjustment will result in a credit balance or the account is in a credit balance, include a hold code 1 with the adjustment to prevent refund issuance, this applies to both MFT 30 and MFT 35.

    3. Input a TC 971 AC 071.

    4. Bring the Form 8379 to the top of the claim.

    5. Route the entire original package to CIS/AM.

    Note:

    Correspond for missing information or signature(s) per normal procedures. See IRM 3.11.6.10.

Prisoner Returns

  1. IDRS CC FTBOL definer P indicates whether a taxpayer is or has been incarcerated (prisoner) and the release date if appropriate.

  2. The Command Code is running so that tax examiners are aware they are processing a prisoner’s return. Prisoners have the same rights as any other taxpayer when it comes to income tax. However, many schemes and fraudulent returns originate from prisoner populations and tax examiners need to be aware when they are working a prisoner claim in order to identify any irregularity.

  3. CC FTBOL may not always pick up that a claim is from a prisoner. Other indications that it is a prisoner return are:

    • Marking on envelope that indicates prisoner mail.

    • PRI written on claim or line 7 Form 1040.

    • Form W-2 indicates wages earned in prison.

    • Address on return or envelope identifies a prisoner.

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

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

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

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

      Note:

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

      Note:

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

  5. Route returns to IVO if a full year prisoner claims any of the following or if income earned while incarcerated is used to qualify for a credit:

    • Earned Income Tax Credit

    • Additional Child Tax Credit when claiming one or two children

    • Form 8863, Education Credits

    Exception:

    Do not route CP notices to IVO. Send a 916C with paragraphs B, E, R, 1, 4 fill-in, Our records indicate that you are a prisoner and therefore do not qualify for certain credits.

  6. If a claim is returned from IVO, see IRM 3.11.6.4.4.

  7. If taxpayer is not a full year prisoner and there is no indication they were paid for work while incarcerated follow chart below.

    If Then
    If IRPTR data is available for the year of the tax return and the return verifies. Continue processing claim.
    If IRPTR data is not available for the tax year of the return or unable to verify wages. Route to IVO, see IRM 3.11.6.4.4 for routing criteria.

    Reminder:

    On a married filing jointly return verify CC IRPTR information for both spouses.

Combat Zone

  1. Submission Processing will only process Combat Zone claims with net refund or zero balance.

  2. If a -C freeze is displayed on CC TXMOD/IMFOL, verify the taxpayer is actively serving in a designated combat zone. Treat the return as a combat zone if:

    • There is a -C freeze on TXMOD/IMFOL and a Combat Indicator of 1 on CC IMFOLE.
      or

    • Taxpayer notates on the return that they are actively serving in a combat zone.

  3. If a -C freeze with a Combat Indicator of "1" is present, then CC IMFOLE or CC ENMOD will show a TC 500 with a Closing Code (cc). There may be several entry/exit dates, use only the most recent to determine current Combat Zone status.

    • If the closing code is an even number, treat as a Combat Zone return.

    • If the closing code is an odd number, continue processing the return and do not treat as a Combat Zone return.

    Note:

    If the literal "Combat Zone" is present on IDRS ensure there is a -C freeze before treating as a Combat Zone. The literal without the freeze is only an indication of prior Combat Zone status.

  4. If an active Combat Zone has a net balance due, route to CIS/AM

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but continue to route if they meet CIS/AM criteria.

    Note:

    All protective claims must be referred as Cat A even if the taxpayer is actively serving in a Combat Zone.

  6. If there is no -C freeze on a return that has been identified as a Combat Zone return, route CIS/AM.

  7. Follow correspondence procedures, see IRM 3.11.6.10 when required information is missing from the return.

  8. When processing do not enter an Amended Claims date.

  9. A taxpayer (or their spouse, if married filing jointly) receiving nontaxable combat pay may elect to include the amount when figuring his/her earned income for purposes of computing EIC.

  10. Do not confuse Combat Zone with the Military Family Relief Act, see IRM 3.11.6.9.1.2.

Military Retirement Benefit Claims

  1. Taxpayers file Form 1040X claims based on a recalculation of disability retirement income received from the Government for their military retirement. These claims are based on IRC section 122 and recalculate the amount of taxable versus non-taxable income received. This is a misinterpretation of the Code section and is not allowable. The Form 1099-R issued by the Government does not include any amounts received as disability and the taxpayer in actuality is attempting to take a double deduction.

  2. Disallow any claim citing "Internal Revenue Service Section 1.122-1" or "Pursuant to 26 CFR" , unless the VA Determination letter with entitlement award is included with the claim. The letter will show the award amount and the monthly entitlement award. If the letter and entitlement award are present, route to CIS/AM, otherwise follow paragraph (3) for disallowance procedures.

    Exception:

    When documentation is included and Cat A criteria for taxable to non-taxable is met, route to Cat A, see IRM 3.11.6.12.

  3. Refer to IRM 3.11.6.10.3 for disallowance letter and use fill-in: You are incorrectly applying the formulas under section 122 to your retirement pay that was reported on Form 1099-R. The nontaxable amount (if any) was already deducted by the Department of Defense from the amount shown on your Form 1099-R. You are not entitled to any further reduction.

Processing Decedent Returns

  1. Submission Processing will only process Balance Due and Zero Balance decedent 1040X returns.

  2. Indications of a deceased taxpayer may include any of the following:

    1. Date of death is present

    2. "Deceased" written on the top of the form.

    3. "Deceased, Filing as surviving spouse" , or similar notation in the signature area.

    4. Death certificate, Form 1310, or other documentation is attached.

    5. "DECD" on an IRS label or written after a person’s name.

    6. "Estate of" is present.

  3. Route the following to CIS/AM:

    1. Refund returns.

    2. MFR 08 is present on CC INOLES indicating the primary taxpayer is deceased.

    3. Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, is attached.

  4. Correspond for missing signature if return is not signed by a surviving spouse, an attorney, CPA or representative of bank/fiduciary institution (credit union, pension funds, etc.). Correspond per IRM 3.11.6.10 using a 324C letter, paragraphs A, P, 3, 6, c. Use fill-in: The return must be signed below the jurat but not on the paid preparer line. Additionally, if one spouse is deceased, then the surviving spouse should sign for them indicating, Filing as Surviving Spouse and include the date of death.

    Reminder:

    On MFJ claims, the surviving spouse must sign for the deceased spouse as a surviving spouse. It should clearly state the taxpayer's name filing as surviving spouse. Correspond if missing.

  5. If correspondence is required for any missing forms/schedules, do not address the correspondence to the deceased taxpayer.

    1. Filing status 2 -- address correspondence to surviving spouse

    2. All other filing status -- address correspondence to the "Estate of" place in front of taxpayer's name (e.g., Estate of John Smith Decd)

      Note:

      POA becomes void upon taxpayer's death.

  6. Documentary evidence is not required for the authority to sign the following:

    1. Balance due returns.

    2. Zero/even balance returns.

    3. Joint (FS 2) or married filing separate (FS 3) returns signed by the surviving spouse.

Open Cases / Open Control Base

  1. Generally, if an account has an open control base in CC TXMOD you will need to route the return to the assigned employee or a specified department. An open case can be in any of the following status: "A" Active; "B" Background; "S" Suspense; or "M" Monitor.

    Note:

    Do not route cases that are open in CC ENMOD.

  2. Cases in status A or S should be routed based on the ASSIGN-TO field of the open control.

  3. Do not route cases open in B or M status; continue to process if no route out criteria exist.

  4. The following exceptions apply to A, B, S, and M status:

    1. If the open control is in B status due to a P- freeze/TC 841 and your case is a net refund then route to CIS/AM.

    2. Refer cases with a category code NLUN, to the assigned IDRS number to process.

    3. Cases open to Accounts Management should be routed to your local CIS/AM. See (7) below to identify Accounts Management cases, more Accounts Management routing criteria might be identified through research found in (6) below.

    4. Cases open to a 1040X SP employee or the generic queue at your local campus should be referred to the manager or lead following local procedures.

    5. Follow local procedures for cases that are processable by placing the case in B status, inputting an adjustment and then returning it to its original status.

    6. For cases open to an SP suspense queue, IRM 3.11.6.2.4.

    7. Cases with Activity 9465 should be placed in “B” status and processed.

    8. Follow local procedures for routing cases open to TAS with status B or M.

    9. Cases controlled to Appeals, IDRS # 66XXX, route to CIS/AM.

    10. AUR controlled cases should be routed following IRM 3.11.6.4.8.

  5. If the open control is assigned to your current or previous IDRS number, close your open control before continuing to take any action on the return.

  6. Use CC MESSG and/or the IDRS Unit and USR Database, IUUD, web site to determine the appropriate campus location and stop number based on the IDRS number in the ASSIGN-TO field of the open control.

    Caution:

    Stop numbers are not always updated timely. CC MESSG and IUUD may show conflicting information. Consult your lead or manager if different.

  7. Accounts Management IDRS numbers are identified by the service center 2 digit code and 301-399 series. For instance, a Customer Service Representative (CSR) in Fresno would be 103XX. Submission Processing 1040X Units would use the SC code and the 200-244 series. This includes cases open to the AM suspense queue that do not contain 301-399 series:

    Campus Generic IDRS number
    Atlanta 0739900025
    Andover 0848900000
    Austin 0686100000
    Brookhaven 0138640000
    Cincinnati 0237500000
    Fresno 1042000000
    Kansas City 0938000000
    Memphis 0339300000
    Ogden 0439800000
    Philadelphia 0544300093
  8. To put a case into suspense use CC ACTON. Follow local procedures for suspending and monitoring cases.

  9. Follow local procedures when routing open cases.

Releasing Screened Returns

  1. To release forms that are screened, sort into batches for each category and follow local routing procedures (including Batch Transmittal).

  2. "Hand carry" statute returns to the area following local procedures.

  3. For "PECF Dummy" returns to be processed through ISRP, notate the correct Program Code and Blocking Series for Batching and Numbering function.

  4. Follow IDRS screening procedures for sorting and routing returns or correspondence to another function. For Carryback/Carryforward claims, Disaster Claims, Injured Spouse, Innocent Spouse, Statute returns, etc., follow local procedures for routing to CIS/AM.

TC 971 and Action Codes
  1. A TC 971, when input with one of the action codes shown in (2) below, indicates the taxpayer filed an amended return and begins an action trail for the document. The action code indicates where the return was routed. Since some of these actions generate a TC 977 on master file and a "-A or E-" freeze on IDRS, the Received Date of the Form 1040X must be input for the transaction date. For AC 270, the current date is entered when mailing a refund return back to the filer. Generally, do not enter an action code if you are only routing correspondence or form attached to a Form 1040X.

    Exception:

    Form 8938 requires an action code. (e.g., Input AC 698 even when routing to Files, CIS/AM etc.)

  2. The action codes most frequently used by Code and Edit in conjunction with TC 971 are as follows:

    ACTION CODE DESTINATION
    010 Amended return/claim forwarded to Accounts Management (Automatically input by CIS)
    120 Amended return/claim in Submission Processing
    012 Collection (When routing the entire return)
    013 EXAM/Frivolous
    014 Statute function
    015 Underreporter function
    016 Destination International Cases amended returns/claims go to Philadelphia (Automatically input by CIS)
    065 Form 8857, Request for Innocent Spouse Relief (and Separation of Liability and Equitable Relief) filed. Route to Covington, KY.
    071 Form 8379, Injured Spouse Claim and Allocation.
    111 ID Theft
    113 Total AOTC, CTC and/or EIC amounts that were disallowed due to the PATH Act.
    134 IVO or CI, Hold Code 1 is required on adjustment if -R freeze is present
    270 Amended return sent back to the taxpayer for additional information. Enter the current date as TRANS-DT.
    698 Form 8938, Statement of Foreign Financial Assets, attached to Form 1040X. If Form 8938 is the only issue, send entire package to files IRM 3.11.6.6.5. If other issues are involved, process as normal and keep Form 8938 with claim.

    Note:

    For further information see TC 971 action codes in Document 6209.

Forms 1040X Processed through ISRP Input

  1. The following returns may be prepared or edited by the 1040X Unit for input through the ISRP system instead of IDRS:

    1. PECF "Dummy" returns when the filer has checked one or both PECF boxes on the Form 1040X. See IRM 3.11.6.3.4.

    2. An "original" return is prepared by IRS from data shown on a Form 1040X when no TC 150 has posted for a statute return. The 1040X unit will convert the Form 1040X to a Form 1040 and route to Statutes instead of ISRP. See IRM 3.11.6.4.3.

  2. To release returns processed through ISRP, a transmittal to Receipt and Control is prepared and Program Code 44400 for the "Dummy PECF" returns is notated. Any return that is sent to Code and Edit to be processed as an original will be blocked in the correct series by Receipt and Control function.

Screening Criteria for Processable Return

  1. Before inputting any changes to a Form 1040X, check for the issue(s), freeze codes, transaction codes, math error condition, tax period, No TC 150, etc. that require routing to another area, see, IRM 3.11.6.12.

  2. If the return is not routed to another area, then check for the following items that may require correspondence or additional action:

    • Primary TIN

    • Tax period

    • Signature

    • Received date

    • Presidential Election Campaign Fund (PECF) boxes checked requiring preparation of a dummy return

    • Missing forms, schedules or other required information

  3. Unless otherwise specified, input the adjustment if the claim is processable, does not meet route-out criteria or require correspondence.

TC 150 Research (No TC 150)

  1. All amended claims require a posted TC 150, unless specifically instructed.

  2. The posted TC 150 must have a POSTED date, if the posting date shows 00000000 or is blank treat as a NO TC 150. After verifying the account, suspend the amended return until Posting Cycle 22.

    Note:

    If the amended return is received Posting Cycle 21 or later and the posting date shows 00000000 or is blank, then suspend the case for 14 days per local procedures. After the 14 day suspense period follow normal processing procedures.

  3. Research IDRS for a TC 150 for the tax period indicated on the return. If the figures on the return or the data on IDRS support a different tax period for either the Form 1040 or Form 1040X, edit the correct tax period onto the return. If the tax period is missing, see IRM 3.11.6.3.2.

    Note:

    If the tax period is missing, use these same instructions for determining the appropriate tax period. If unable to determine the correct tax period, refer to IRM 3.11.6.3.2 paragraph 3.

  4. If no TC 150 has posted for the same tax period follow the steps below to research for a TC 150.

    1. Look though entire return packet for a different TIN for the primary taxpayer, including taxpayer’s explanation.

    2. If a joint return, research for the TC 150 using the spouse's TIN.

    3. Research for the TIN, see IRM 3.11.6.3.1. If research shows the TC 150 for the primary or secondary taxpayer was filed under a different TIN:
      If the case is controlled, close the generic control base.
      Under the TIN that has the TC 150 posted, open a control base to your IDRS number and use SPX-1040X as the activity.
      Close the case to MISC.
      Input a TC 971 AC 120.
      Make a screen print of the IMFOLT, showing the TIN and posted TC 150, and attach it just below the entity section.
      Route to CIS/AM.

    4. Research the invalid side for a TC 150. If a TC 150 is present on the invalid side, route to CIS/AM.

    5. Research CC ERINV to see if the return is in ERS inventory; if present route to ERS per local procedure.

      Exception:

      If the ERS Status is "100" , suspend for 5 working days then continue processing.

    6. Research CC TRDBV for tax data. If the tax data is present and/or is pending (must be present on primary taxpayer for FS 3) suspend case for 60 days from the received date and monitor for the TC 150 to post. A Form 4868 will not post as a TC 150. See paragraph 5 below for instructions on suspending the return.

      Exception:

      Treat any status indicator containing REJECTED, DELETED OR VOIDED on CC TRDBV as if there is no tax data present (no TC 150). All other status indicators represent tax data (unpostable, resequenced, resequencing, posted with MFT update, etc.).

      Exception:

      If you find Master File information on CC TRDBV, but there is not information posted on MFT 30 research CC IMFOLI to see if information has posted to MFT 32 which is where Identify Theft accounts are moved for resolution. Treat as identity theft and route. See IRM 3.11.6.4.7.

    7. If there are dependents present on the return, research for a different TIN for the primary taxpayer using CC DDBKD or CC DUPED.

    8. Research using the IAT Name Search Tool for both the taxpayer and the spouse to verify the taxpayer has not previously filed under a different TIN. It may be necessary to use multiple name combinations in order to locate the TC 150.

  5. If the following TC 150 responses are found on CC TXMOD, take the following action:

    • RJ 150 Rejected Transaction, follow paragraph (4)e above.

    • Unnn 150 Unpostable, suspend for 45 days from today.

    • CU150 Corrected Unpostable, suspend for 10 days from today.

    • PN 150 Pending Transaction, suspend for 10 days from today.

    Monitor CC IMFOLT for the TC 150 to post following local procedures. If the TC 150 has not posted after the suspense period, route to CIS/AM.

  6. If a TC 150 is found, continue processing unless,

    1. It is a Form 1040 with no Form 1040X; see IRM 3.11.6.6.4.

    2. There is a previous posted/pending TC 29X; see IRM 3.11.6.6.5.

  7. If no TC 150 is found after all research has been exhausted:

    1. If no Form 1040 is attached, see IRM 3.11.6.6.2.

    2. If Form 1040 is attached, see IRM 3.11.6.6.3.

    3. If no Form 1040X is attached, see IRM 3.11.6.6.4.

    4. For Statute year returns see, IRM 3.11.6.4.3.

  8. Specific instructions to route without a posted TC 150 take priority over suspending or routing to Batching as NO TC 150.

Form 1040X with No Form 1040 Attached (No TC 150)

  1. After researching for a TC 150 per IRM 3.11.6.6.1, follow the instructions below.

  2. If no return has been filed, suspend case for 60 days from the IRS received date. When suspending a return for No TC 150:

    1. If a tax module has not been established for the amended return, use CC ACTON to establish a dummy module.

      Note:

      CC MFREQD should not be used if the taxpayer has never previously filed a return

    2. If the taxpayer previously had an ITIN or IRSN and is switching to a valid SSN and the return needs to be suspended, then suspend the return using the SSN.

    .

    Note:

    If disaster is indicated on Form 1040X and no TC 150 has posted, follow local procedures to expedite to CIS/AM, IRM 3.11.6.4.1.

  3. If at the end of 60 days there is still no posted or pending TC 150:

    1. If there are payments on the account indicating a balance due or a tax increase/credit decrease on the amended return, then route the return to CIS/AM.

    2. If there are no payments on the account, no tax increases/credit decreases on the amended return, then return the claim to the taxpayer. Use Form 8009-A to return claim. For Box 8 fill-in: We have no record of receiving your original return or we are unable to process your original return, therefore we cannot process your amended return. Please complete a new Form 1040 including your amended changes and mail back to us. Do not attach the Form 1040X we are returning with this letter.

      Exception:

      If CIS/AM returns the claim with an indication to "process as original" , convert the Form 1040X to a Form 1040, using a current year Form 1040 or Form 6114, following local procedure, then route to Batching.

  4. If the Form 1040X is returned undeliverable and a TC 150 is still not on the account:

    1. Research for a better address, see IRM 3.11.6.10.7. If a better address is found, send the 1040X with Form 8009-A back to the taxpayer.

    2. A better address is not found during research:

    If Then
    Form 1040X Amended U.S. Individual Income Tax Return with payments on the account Refer to CIS/AM.
    Form 1040X Amended U.S. Individual Income Tax Return with no payments on the account Treat the Form 1040X as classified waste.

Form 1040 Attached to Form 1040X

  1. After researching for a TC 150 per IRM 3.11.6.6.1, follow the instructions below.

  2. Sometimes the 1040X Unit will receive Forms 1040 attached to Form 1040X. Determine if the attached Form 1040 and Form 1040X is for the same or different tax period.

  3. If the Form 1040 is for a different tax period than the Form 1040X and:

    1. Form 1040 is being used as "support" for a carryback loss, keep the two returns together and treat as a carryback/carryforward claim.

    2. No TC 150 has posted for the tax period of Form 1040, detach Form 1040. Continue processing Form 1040X.

  4. When processing or suspending a Form 1040 attached to Form 1040X, staple the Form 1040 behind Form 1040X.

    Note:

    If Form 1040X is not signed, see IRM 3.11.6.6.7 paragraph 4

  5. If no TC 150 has posted for the same tax period, take the following action based on the chart below.

    If no TC 150 and Then
    Form 1040 does not match the Correct Amount column of Form 1040X,

    Note:

    Form 1040 may be notated "As originally filed"

    1. For Form 1040X:
    1. Convert taxpayer's Correct Amount figures using a Form 6114 or current year Form 1040, following local procedures:

    2. "X" Form 1040X and staple Form 1040X behind Form 1040 with any supporting documents.

    3. If Form 1040X is signed, edit a notation the 1040X is signed in the signature area of the conversion sheet.


    2. Staple Conversion Sheet to the front of the Form 1040, but below the entity section.
    3. Route to Batching to be processed as an original return.
    Form 1040 does match the Correct Amount column of Form 1040X,

    Note:

    Form 1040 may be notated with "As Amended"

    1. "X" Form 1040X and staple it behind Form 1040 with any supporting documents.
    2. For Form 1040:
    1. Edit "No TC 150" the date and TE Stamp in the upper left margin of Form 1040.

    2. On the front page of Form 1040, circle out any indication that Form 1040 is amended, corrected or a copy.

    3. If Form 1040 is not signed and Form 1040X is signed, edit a notation the 1040X is signed in the signature area of Form 1040.


    3. Route to Batching to be processed as an original return.
    Two Forms 1040 are attached to a Form 1040X.

    -One may be notated "As originally filed" and does not match the correct amount column
    -The second may be notated "As amended" and matches the correct amount column.
    1. "X" both Form 1040X and the Form 1040 "As originally filed" . Staple them behind Form 1040 "As amended" with any supporting documents.
    2. For Form 1040 "As amended"
    1. Edit the date and TE Stamp in the upper left margin of Form 1040.

    2. On the front page of Form 1040, circle out any indication that Form 1040 is amended, corrected or a copy.

    3. If Form 1040 is not signed and Form 1040X is signed, edit a notation the 1040X is signed in the signature area of Form 1040.
      Route to Batching to be processed as an original return.

    Note:

    If routing a Form 1040 to Batching that was received after April 22nd or the Form 1040 is a prior year and the Received Date is missing, edit the Received Date from the Form 1040X onto the Form 1040.

Amended Form 1040 with No Form 1040X Attached

  1. Research for a TC 150 per IRM 3.11.6.6.1. If no TC 150 has posted, circle out any notation that suggests the return was previously filed. Edit No TC 150 and the current date in the upper left margin and send to Batching to be processed as an original return. Do not notate PAO on the documents.

    Note:

    When it appears that Code & Edit has corresponded for a signature (i.e., Form 3531 attached or notated in the working trail) and the return is still unsigned follow normal procedures to route to Entity.

  2. If an undeliverable return is received see IRM 3.11.6.10.7.

Duplicate Returns

  1. A duplicate condition occurs when the taxpayer files a return that matches the most recent adjustment/filing figures. Further research is required to determine processing.

  2. Prior to treating any return as a duplicate, review the return and attachments for routing criteria. If routing criteria is located, follow the appropriate procedures.

    1. If the return is a duplicate but the taxpayer is requesting an additional action, follow general processing procedures.

    2. If a -R freeze is present, research IDRS for taxpayer correspondence. Research the type of letter(s) that have been sent. Route to the originating area following local procedures. This includes the 12C letter requesting a taxpayer signature.

    3. When it appears that Code and Edit has corresponded for a signature (Form 3531 attached or notated in the working trail) and the return is still unsigned. follow normal procedures and route to Entity.

    4. If the return is a duplicate, do not correspond for missing forms, schedules, or signature(s).

  3. Continue researching to determine the reason the taxpayer filed the form.

    If Then
    The taxpayer has requested a change that does not cause a change to a line item dollar amount Input a TC 290 .00 with the appropriate reason code.
    No change and no action is required Input a TC 290 .00 without a reason code.

    Note:

    If there is a prior pending adjustment, input a post delay code.

  4. Once a Form 1040/A/EZ is identified as an amended return and it will revert the module back to the original filing, look for any indication as to why. If no indication is found, then treat the return as classified waste following local procedures. If an active Combat Zone return, see IRM 3.11.6.4.20 will revert the module to the original filing, input a TC 290 .00 without a reason code.

Claims Returned from Other Areas

  1. Occasionally, claims that were routed to another function may be returned for processing.

  2. Determine if the return requires:

    • Routing to the next highest priority. Circle out previous working trails.

    • Additional research.

    • Input the adjustment (the return has been cleared from the area/function it was routed).

  3. If an adjustment is input, add "Adjusted per XXXX" in the remarks.

Signature

  1. The taxpayer must sign the claim or amended return requesting an adjustment; or a valid Power of Attorney (POA). Both spouses must sign if the adjustment is related to a joint return. The signature(s) is required anywhere below the jurat (perjury statement), but not in the paid preparer section on Amended returns and CP Notices. If an original signature is not present, correspond using IRM 3.11.6.10 and/or IRM 3.11.6.11.

  2. If the jurat has been altered, treat it as a Frivolous claim. If the jurat is missing, treat it as an unsigned return and correspond for the missing signature(s) using a 324C Letter to obtain the signature. Do not mail the return back to the taxpayer. Process the net balance due per IRM 3.11.6.10.1.

    Exception:

    If page 2 is missing on the new Form 1040X, do not treat as missing jurat. Follow procedures for missing signature.

  3. Do not correspond for a missing/incorrect signature(s) if:

    1. Any "Dummy" return that was prepared by the IRS.

    2. A fiduciary representative or parent for other than a minor child signs for a refund under $100 or a balance due.

    3. Form 2848 with Part II completed and is attached to the return, see IRM 3.11.6.6.8.

    4. The return is a true dupe.

    5. Taxpayer files as FS 3 and spouse did not sign the return.

    6. The return is a substantiated math error response.

    7. The claim meets route out criteria unless otherwise specified.

      Note:

      Do not confuse attorney with POA or Attorney-in-fact.

      Note:

      For decedent returns see IRM 3.11.6.4.22.

  4. If Form 1040X is not signed, however a Form 1040 matching the Correct Amount column of Form 1040X is attached and signed, accept the signature and continue processing the return. Edit a notation onto the signature line, if present, on Form 1040X indicating that the Form 1040 is signed. Otherwise edit the notation on the front bottom portion of Form 1040X.

  5. Correspond for the signature of two witnesses when the taxpayer signs with a mark such as an "X" . See IRM 3.11.6.10.

  6. Joint returns require the signature of both taxpayers unless one of the taxpayers falls into one of the categories below:

    1. One spouse is overseas and the signing spouse is authorized by a power of attorney (e.g., Form 2848) or similar signed document which clearly defines the scope of authorization granted to the POA.

    2. One Spouse is in a combat zone/qualified hazardous duty area and the signing spouse attaches a statement.

    3. One spouse is incapacitated. The signing spouse should attach a dated statement explaining the reason the incapacitated taxpayer cannot sign. The signing spouse will sign on his/her signature line as well as the spouse's signature line.

      Caution:

      Incapacitated means the taxpayer is physically unable to sign the return. In the case of a mentally incompetent taxpayer a court appointed representative who can act for the taxpayer must sign the tax return.

    4. Deceased spouse. See IRM 3.11.6.4.22.

  7. If the taxpayer is a minor (there must be a clear indication the child is a minor) the return must be signed by one of the following:

    1. The minor child

    2. A parent

    3. A guardian or other fiduciary representative ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. A guardian or other fiduciary representative with documentary evidence is attached.

    5. If none of the above applies, correspond for a missing signature. See IRM 3.11.6.10.

      Examples of Fiduciary representatives include:

      • Administrator (ADM)
      • Conservator (CONS)
      • Custodian (CUST)
      • Executor (EXEC)
      • Guardian (GDN)
      • Personal Representative (PER REP)
      • Trustee (TTEE)
  8. When corresponding for signature issues;

    If And 324C Form 8009-A
    A signature is missing Conditions 1 or 2 do not apply:
    1. Taxpayer is divorced (net zero or tax increases only), spouse overseas, or
    2. An “amended” Form 1040 reflecting the 1040X information is attached and signed.
    Paragraphs: A, P, 6, c Box 1

    Note:

    Include box a. if it is a joint return.

    A signature is missing on a decedent return The return is not signed by a surviving spouse, an attorney, CPA, or representative of a bank/fiduciary institution. Paragraphs: A, P, 6, c Note: Do not address correspondence to the deceased taxpayer. Box 1 Exception: Do not correspond on refund returns.
    A signature is someone other than the taxpayer (there is clear indication that the TP is a minor child) A parent did not sign, or fiduciary relationship such as a Guardian is clearly identified and the tax decrease/credit increase ≡ ≡ ≡ ≡ ≡ ≡ ≡ A, P, 6, c Box 1 and box c.
    The return is signed by someone other than the taxpayer The following apply:
    1. No General/Durable POA is attached
    2. Form 2848 is not attached
    A, P, 6, c Box 2
    The return is signed by someone other than the taxpayer There is no declaration of good standing attached and POA is granted to an attorney, CPA enrolled agent, or enrolled actuary A, P, 6, c Box 2
    The return is signed by someone other than the taxpayer Form 8821 is attached and the appointee signed the return A, P, 6, c Box 2
    The return is signed with an “X” Two witnesses did not sign A, P, 6, c Box 1b
    The jurat is missing

    Note:

    if the jurat has been altered route as Frivolous

    There is no amended Form 1040 attached or if attached the jurat is missing A, P, 6, c Send 324C letter do not mail the return back.

Centralized Authorization File (CAF) - Form 2848 (POA) and Form 8821 (TIA) and General /Durable POAs

  1. The CAF maintains a database of authorized representatives who are permitted to sign for the taxpayer. The CAF unit will assign unique identifiers (CAF numbers) to the representative(s) based on Form 2848, (POA) and acceptable General/Durable POAs submitted.

  2. Taxpayers will occasionally submit a tax return that has been signed by their enrolled agent, or some other representative or the taxpayer may attach a Form 2848 to indicate that they want a representative to be able to sign for them These personal representatives of the taxpayer must submit a Form 2848 (Part II completed), or acceptable General/Durable POA or already be on file with the CAF in order to sign the return.

    Note:

    For FSC 2 accounts, each taxpayer must execute their own power of attorney or tax information authorization on a separate 2848 even if the same representative/appointee is provided.

  3. Taxpayers may also submit a Form 8821, Tax Information Authorization and Declaration of Representative (TIA), as documentary evidence for signing the tax return; however, Form 8821 does not authorize the signing of the return. If Form 8821 is present detach and follow the routing instructions in paragraph 6. Correspond for a Form 2848 if the taxpayer submits a Form 8821 and the return is signed by someone other than the taxpayer. Refer to IRM 3.11.6.10 and use either Form 8009-A, box 2, or a 324C letter, paragraphs A, P, 6, c.

  4. When the taxpayer submits a General/Durable POA, leave the document attached to the return and continue processing.

  5. Use CC CFINK to verify attached Form 2848 per the table below. Instructions to detach and route Form 2848 should be followed even if the amended return is routed to another area or if correspondence will be sent.

    Note:

    If unable to verify a matching Form 2848 is already posted in CC CFINK, route Form 2848 to CAF per local procedures. Route Form 2848 even if incomplete.

    If And Then
    The signature on the return matches a representative listed on CC CFINK or the 2848 is already on file SIGN: field on CC CFINK is marked YES Continue processing the return.
    The signature on the return does not match a representative listed on CFINK, or no record is found
    Or SIGN: field on CC CFINK is marked NO
    1. Form 2848 is attached

    2. Form 2848 is not attached

      1. Detach from Form 1040X and route to the CAF unit per local procedures.

      2. Continue processing the amended return.

      3. Leave an action trail on the amended return and Form 2848.

    1. Correspond for Form 2848 per IRM 3.11.6.10 and use either Form 8009-A, box 2, or a 324C letter, paragraphs A, P, 6, c.

    Taxpayer signs the return and Form 2848 is attached The representative(s) is not listed or there is a change to the type of Authorization on CC CFINK Detach and route to the CAF unit per local procedures.
  6. If Line 4 of Form 2848 or Form 8821 is checked, continue processing the return, do not detach or route to the CAF unit.

  7. Use the following addresses when routing a Form 2848 or Form 8821, to a CAF Unit:

    SP 1040X site Fax Numbers Address
    Kansas City and Austin 855-214-7519 Internal Revenue Service
    5333 Getwell Rd.
    Stop 8423
    Memphis, TN 38118
    Fresno 801-620-4249

    855-214-7522
    Internal Revenue Service
    1973 N Rulon White Blvd
    Mail Stop 6737
    Ogden UT 84201
  8. Do not detach any "Worksheets" provided by the military to personnel assigned to a Combat Zone. They are not considered to be a POA in lieu of Form 2848. See IRM 3.11.6.4.20.

  9. If correspondence is attached to the return that is unrelated to the amended return, but needs to be detached and routed to the appropriate functional area, attach a photocopy of the POA/TIA to the correspondence. Indicate that the form has been detached and routed to the CAF unit.

Processing Form 1040X Using IDRS for Input of Adjustment

  1. Screen the Amended Return to determine if:

    1. Route out criteria is present.

      Note:

      Research IDRS for any Transaction Code or Freeze Code that require special attention.

    2. The claim is complete.

    3. The claim is allowable.

    4. The claim is processable.

  2. The following subsections cover:

    • Entity Changes.

    • Manual Refund.

    • Master File Verification.

    • Math Verification.

    • Setting A Math Error.

    • Transaction Codes and Reference Numbers.

    • IMF Processing Codes.

    • IDRS Transaction Codes and Freeze Codes.

    • Unpostable Conditions.

Entity Changes

  1. When making any Entity changes, input the change on IDRS using CC ENREQ to generate the CC INCHG screen.

    Caution:

    Do not update the Entity section if an adjustment or partial adjustment is not being input or the return is being routed.

  2. Input a posting delay code on any adjustment when making any changes to the taxpayer's address or name line information, or there is a pending change that affects the return you are processing.

    Exception:

    If xClaim inputs a posting delay code and the taxpayer is not changing their address or name line information then remove the posting delay code.

  3. If the address on the 1040X does not match CC ENMOD or one of the conditions below applies, update the entity.

    • Taxpayer alters the address in the Entity of the Form 1040X or on a CP notice.

    • Taxpayer specifically indicates in the Explanation of Changes.

    • Taxpayer attaches a separate sheet or Form 8822 requesting the address change.

    Exception:

    Do not update the address if an address change has posted after the Form 1040X received date. Use CC ENMOD to verify cycle date. If the 1040X is received in the same cycle that an address change has posted then update the address to the address on the 1040X.

  4. If both a PO Box and a street address are present on Form 1040X, input the PO Box on the address line and the street address on the continuation of the name line. If the city and zip code differ between the PO Box and the other address listed use the city and zip code of the PO box.

    Note:

    If the Form 1040X, Line A contains a "YES" or "NO" box, do not update the Entity if the "No" box is checked and TP alters the address.

  5. The In-Care-Of (C/O) is considered part of the address. If the entity information on IDRS shows an In-Care-Of person, but the amended return does not, update the Entity on IDRS and vice-versa. Use CC INCHG filed CONTINUATION-OF-PRIMARY NAME to update In-Care-Of information.

  6. If the address on the amended return appears to be incomplete, research the return packet for the missing information or use www.USPS.com to verify the address.

  7. For address changes on multiple year returns from the same taxpayer, use the address on the most current return.

  8. If the filer used Form 1040X instead of Form 8822 to inform us of an address change and there is no tax adjustment, input a TC 290 .00, Reason Code 099, Source Code 1. Update the address and process the return.

  9. If the taxpayer requests their refund to be issued in a name or address other than the one shown on the adjustment, route to CIS/AM per IRM 3.11.6.7.2.

  10. When Form 8822 is attached and the Form 1040X is being routed, detach Form 8822, route to Entity Control per local procedures.

  11. A signature (both if MFJ) is required before an address change can be input. If signature correspondence is required, use the address of record.

  12. Follow the instructions in the table below when a name change is requested:

    If Then
    Taxpayer files a Form 1040X to indicate a name change only Check CC INOLE for NEW SSA/NC or SSA:
    1. If the name control on Form 1040X matches NEW SSA/NC or SSA, input TC 290 .00 and route to Files. Do not update the name.
    2. If the name control on 1040X does not match new SSA/NC or SSA, route the return to Entity with a Buck Slip attached, annotate: Name change request -- do not process 1040X.
    Taxpayer files a Form 1040X to indicate a name change and tax changes are also required Check CC INOLE for NEW SSA/NC or SSA:
    1. If name control on 1040X does match new SSA/NC or SSA, continue to process the return, if no route out criteria is present. Do not update the name.
    2. If the name control on 1040X does not match NEW SSA/NC or SSA, route to CIS/AM.

    Note:

    Taxpayers will sometimes use variations of their first name including using initials when filing original (verification is performed by matching the name control to the SSN) and amended returns This is not considered an indication of a name change unless the taxpayer is specifically asking for a name change. If the taxpayer is requesting to change the name the table above would be followed.

    Exception:

    Input name change only if there is a clear indication that the name was transcribed incorrectly (e.g., SMITH transcribed as SMTH).

  13. Use the following chart when making a filing status change:

    If the taxpayer changes the filing status on Form 1040X: And Then
    To FS 1 (Single)   Update INCHG to FS 1. Use RC 001.
    To FS 2 (Married Filing Jointly)   Update INCHG to FS 2. Use RC 002. IRM 3.11.6.7.1.1
    To FS 3 (Married Filing Separate) From FS 1, FS 4, or FS 5 Update INCHG to FS 3. Use Reason Code 003. Enter the spouse’s SSN if known.
    From FS 3 (Married Filing Separate) Changing to FS 1, FS 4, or FS 5 The spouse’s SSN field may populate with 000-00-0001. This action removes the cross-reference and should not be altered. When manually changing from FS 3, input the spouse’s SSN following this example.
    • From FS 2 (Married Filing Joint)

    • To/From FS 6 Married filing separate return and spouse is not required to file a return and spouse exemption is claimed.

      Refer to CIS/AM
    • To FS 4 (Head of Household

    The taxpayer is claiming:
    1. A dependent exemption (name/TIN matches CC INOLE)
    2. A non-dependent (name and QND are provided or claimed for EIC)
    3. Any of the information in 1 or 2 is missing or does not match
    1. Update INCHG to FS 4. Use RC 004.
    2. Update INCHG to FS 4. Use RC 004.
    3. Correspond per IRM 3.11.6.10 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 7 and fill-in: Please provide the name of the person who qualifies you as Head of Household. For a 324C letter, use paragraphs A, F, G, 6.
    To FS 5 (Qualifying widow(er))   Update INCHG to FS 5. Use RC 005.

    Note:

    SP will not adjust any account that requires backing out tax information or merging the accounts. These will be Routed to CIS/AM.

    Note:

    The taxpayer may sometimes combine their standard deduction with their personal exemption.

  14. If a Form 1040X is received requesting a filing status change, and a TC 971 AC 137 is present on the module, route to CIS/AM.

Filing Status 2 Changes
  1. Research for a TC 150 on both the primary and secondary taxpayer's account. Use CC NAME to verify the taxpayer has not previously filed under a different TIN for the tax year that you are working. If both taxpayers have a TC 150 posted, route to CIS/AM.

    Note:

    If the spouse’s account is set up on the invalid segment of Master File (an asterisk after the TIN (000-00-0000*), refer to CIS/AM.

  2. For the tax year in which you are working, if one spouse did not previously file a return, adjust the established account of the taxpayer that has filed, to reflect the amended joint return.

    Exception:

    If the non-filed taxpayer has income that exceeds the exemption amount IRM 3.11.6.9.3and the ASED is less than one year from the IRS received date, then route to CIS/AM.

  3. Refer the following to CIS/AM, if any of the following conditions apply to the account of the taxpayer who did not previously file:

    • If a TC 140 is present.

    • If a E- freeze is present.

    • Any available credit or payments will need to be transferred to the primary account.

  4. The Form 1040 has two separate lines available for taxpayers to use when filing jointly, Masterfile contains only one primary name line. There are 35 characters/spaces available for both taxpayer names. The bracket "] is interpreted as a space. Do not use the second line as a continuation of the name line."

  5. The entering of two brackets around the PRIMARY taxpayer’s last name is required when the SECONDARY taxpayer’s last name is different than the primary taxpayer’s last name. Do not input an additional space before or after the bracket when entering taxpayer names. The ampersand indicates a break in joint filers’ names.

  6. The correct method to input name changes are shown below: The italicized print indicates the primary taxpayer’s name control.

    Tax Return Input format for joint filers
    a. John Doe
    Mary Doe
    John & Mary]Doe
    b. John Doe
    Mary Smith
    John]Doe]& Mary Smith
    c. John Doe
    Mary Smith-Doe
    John]Doe]& Mary Smith-Doe
    d. John D Doe
    Mary Ann Smith- Doe
    John D]Doe]& Mary Ann Smith-Doe
    e. John D Doe III
    MaryAnn L Smith
    John D]Doe]III & MaryAnn L Smith
    f. John D Doe Jr MaryAnn L Doe John D Jr & MaryAnn L]Doe
  7. Before shortening taxpayer name(s), all necessary research must be conducted (i.e., CC INOLE, CC RTVUE, CC IMFOL, CC NAMES, CC NAMEI) under both segments of the Master File.

  8. When taxpayers file jointly and it is necessary to reduce the taxpayers’ Name Lines/Name Controls, it is important to retain the first four characters of the secondary taxpayer’s surname.

  9. If the primary and/or secondary name(s) exceed the 35 character/space limit, use the table to correctly reduce the taxpayer’s name:

    • Substitute the appropriate initial for the secondary taxpayer’s middle name.

    • Delete middle initial of secondary taxpayer.

    • Substitute the appropriate initial for the primary taxpayer’s middle name.

    • Delete middle initial of primary taxpayer.

    • Substitute the appropriate initial for the secondary taxpayer’s first name.

    • Substitute the appropriate initial for the primary taxpayer’s first name.

    • Substitute the appropriate initials for both the primary and secondary taxpayers' first name(s) if their last name(s) total characters exceed the 35 characters/spaces limit.

    • Abbreviate the secondary taxpayer’s surname. Abbreviate the surname by removing the vowels (begin with the vowels at the end of the secondary taxpayer’s surname first).

      Example:

      OSullivan becomes OSullivn or OSullvn (if necessary)

    • Abbreviate the primary taxpayer’s surname as the last step. Abbreviate the surname by removing the vowels (begin with the vowels in the end of the primary taxpayer’s surname).

      Example:

      Sorrentino becomes Sorrentin or Sorrentn (if necessary).

Manual Refund

  1. Route cases to the Accounts Management Adjustment function for a Manual Refund if:

    1. The taxpayer requests the refund issued in a name other than shown on master file.

    2. The taxpayer requests the refund issued to a temporary address.

    3. Refund is less than one dollar.

    4. Refund is $10 million or more.

Master File Verification and Math Verification

  1. Master file verification is required on all amended returns, CPs and any misc. claim adjustment prior to:

    • Inputting an adjustment.

    • Initiating correspondence.

      Exception:

      Master File Verification is not required when corresponding for a missing tax period or TIN, or when a return has been perfected as stated in IRM 3.11.6.2.6.

  2. Master File Verification requires the comparison of lines 1-15 column A on Form 1040X, with CC IMFOL or CC TXMOD.

    1. If any combination of lines in Column A do not match CC TXMOD and no math error (MTH-ERR) is present, then math verification is required.

    2. Be sure to consider all previous adjustments.

    3. When Column A does not match and an Amended Form 1040 series is attached, matching Column C, adjust to the Column C amount(s).

  3. When the amount shown on a supporting form or schedule differs from the amount shown on the Form 1040X by:

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust using the 1040X amount.

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ , correspond using a Form 8009-A (box 8) or 324C paragraphs A, 3, 6. Fill-in: We are unable to correct your account as requested. The information provided on [insert Form #### or Schedule #] does not support the entry made on your Form 1040X. Please provide clarification and correct any documentation necessary to support your claim.

  4. When a dependent is being removed you must also verify the taxpayer is removing certain credits associated with that dependent.

    Reminder:

    Verify qualifications for Form 2441 and EIC.

  5. Math verification is required when one or more of the following are met:

    1. There is a total tax change (positive or negative) of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Column A entries do not match TXMOD or IMFOL (no math error code is present) and paragraph (2)(c) above does not apply.

    3. A math error is present. Also see IRM 3.11.6.7.4.1.

    4. There are amounts that are blank, illegible or incorrect.

    Exception:

    Math Verification is not required when the claim does not meet SP criteria, the entry is off by a dollar due to rounding or the error can be determined to be a misplaced entry that results in no difference between the taxpayer’s expected refund/balance due and the overall adjustment being made.

  6. Math verification includes doing the following:

    1. Verifying the math on the entire amended return, including any forms, schedules and worksheets that are related to the change.

    2. Verifying the taxpayer’s modified entries using the forms attached to the claim, schedules, worksheets, taxpayer remarks, and IDRS research.

    3. Verifying the corrected tax computation.

    4. Verifying any additional taxes on line 10 as reported by the taxpayer are calculated correctly.

    5. Verify all income based items on claims involving an income change. Recalculate the items when the income changes, even if the taxpayer does not address them.

  7. If you are unable to "perfect" the return based on information submitted and through IDRS research, correspond requesting clarification:

    If Then
    There is an unexplained amount that results in a change of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to lines 11-15, column B Accept the amount and adjust using Taxpayer’s Column B figures.
    The taxpayer's column A figures (original amount) do not match IDRS Use either Form 8009-A box 8 or a 324C letter paragraphs A, 3, 6 with fill-in: We are unable to correct your account with the information you provided on your Form 1040X as it is unclear what adjustment is being requested. The amounts entered in Column A, Original amount do not match our records. Please verify your information.
    For any other reason Use either Form 8009-A, boxes 15 and 5, or a 324C letter, paragraphs A, K, 3, 6. Use Fill-in: We are unable to correct your account with the information you supplied on your Form 1040X and/or supporting documents as it is unclear what adjustment is being requested. Please verify your information.
  8. When math verifying the return and an error is discovered, re-compute the correct amounts using the information supplied and IDRS research. After perfecting the Total Tax and computed lines 11 - 15 amounts is:

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust using the taxpayer’s figures.

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust the account using your recomputed figures see IRM 3.11.6.7.4.

Inputting a Corrected Adjustment and/or Setting a Math Error

  1. Use the following chart when the IRM states to send a 474C letter based on the condition(s).

    If Then
    • Lines 16 - 22 of Form 1040X do not match

    • Missing/incorrect entries do not affect the overall adjustment

    • The corrected adjustment results in no difference between the taxpayer’s expected refund/balance due

    Continue processing the return. Do not issue a 474C or set a math error.
    • The taxpayer is requesting a credit already received and it is the only issue

    1. Input the computed adjustment with:

      • BS 05

      • SC 1

      • Send a 474C letter with paragraphs C, 1, d, fill-in; We did not allow (appropriate title) Credit because our records indicate that you previously received the credit as part of your original or amended return.

    • There is only a correction to withholding

    • A tax decrease results in a larger refund than the taxpayer requested

    • The taxpayer requests the IRS to complete a form, even when the tax change is $100 or more

    Do not set a math error.
    1. Input the computed adjustment with

      • Blocking 05

      • Source Code 1

      • Appropriate RC, RN, CRN and other appropriate coding.

    2. Send an 474C with paragraphs C, 1, d, fill-in: Your Form 1040X, Amended Return, is not being returned with this letter. We corrected line #, because (description of error). This caused a change to your expected refund.

    • The corrected adjustment is a balance due

    • The corrected adjustment reduces the refund amount

    Issue a 474C letter and set a math error.
    1. Input the corrected adjustment using:

      • Blocking series 77 (78 if the original was paper filed)

      • Source Code 6

      • Appropriate RN(s)/CRN(s) and RCs to process the return for the corrected amount(s) and any other issues.

    2. Use the Letter button and select Write Your Own then send a 474C with:

      • Paragraphs C, G, H, 2, d.

      • For an ITIN reject see IRM 3.11.6.4.14.

    Note:

    Determine the correct adjustment by first completing Master File Verification and then researching the following: taxpayer explanation, a corrected Form 1040 series return, attachments, and IDRS research.

  2. For the 474C paragraph H:

    • Form - the type of Form used; Form 1040X, Form 1040, etc.

    • Line - the Form line number associated with the error.

    • Your entry - The taxpayer’s figure.

    • Corrected entry - The recalculated amount.

      Note:

      It is not necessary to list ripple effects.

  3. If a response is received to a 474C letter, see IRM 3.11.6.7.4.1.

Math Error Response
  1. If there is a math error(s) on the taxpayer's account then the tax examiner must determine whether or not the 1040X addresses the math error issue. An amended return may:

    1. Not address the math error(s) on the account.

    2. Agree with the math error(s) on the account

    3. Be a Substantiated Response. A Substantiated Response occurs when a taxpayer provides supporting documentation which proves the Service's math error calculation incorrect. Validate the substantiation by reviewing qualifications needed to allow adjustment.

      Example:

      The taxpayer's account contains math error 605, the taxpayer now provides a valid TIN that qualifies him/her for the exemption being claimed.

    4. Be an Unsubstantiated Response. An Unsubstantiated Response occurs when the taxpayer addresses the math error but does not provide required supporting documentation.

    5. Be an Unsubstantiated Protest. An Unsubstantiated Protest occurs when a taxpayer indicates they are unable or unwilling to provide required supporting documentation and they are still requesting the claim.

  2. Taxpayers often use their original figures (RTVUE per return column) in column A instead of the IRS corrected figures (RTVUE per computer column) when correcting a math error.

  3. Amended returns with math errors present:

    If Then
    The taxpayer files an amended return and does not specifically address the math error Process as normal.
    The taxpayer files an amended return and does not specifically address the math error and additional changes are requested Process as normal.
    The taxpayer agrees with the math error Process as normal.
    The taxpayer agrees with the math error and additional changes are requested Process as normal.
    The taxpayer files a Substantiated Response If the math error was set on:
    1. The original return

      1. Process the adjustment using Source Code 2.

      2. No Amended Claims Date.

    2. An Amended Return

      1. Process the adjustment using Source Code 2.

      2. Use the received date of the TC 29X that set the math error as the Amended Claims Date.

    The taxpayer files a Substantiated Response and additional changes are requested Two adjustments are required. If the math error was set on:
    1. The original return;

      1. Input the math error adjustment first. No Amended Claims Date, Source Code 2, Hold Code 4, NSD.

      2. The non math error adjustment will be input second. Follow normal processing procedures and use a posting delay code for "1" cycle more than the first adjustment.

    2. An Amended return:

      1. Input the math error adjustment first. Use the received date of the amended return that set the math error as the Amended Claims Date, Source Code 2, Hold Code 4, NSD.

      2. The non math error adjustment will be input second. Follow normal processing procedures and use a posting delay code for "1" cycle more than the first adjustment.

    The taxpayer files a Substantiated Response and the taxpayer does not substantiate all the math error(s) If the math error was set on:
    1. The original return.

      • Process the adjustment with Source Code 2.

      • No Amended Claims date.

    2. An amended return.

      • Process the adjustment with Source Code 2.

      • Use the received date of the amended return that set the math error as the Amended Claims Date.

      • Send a 916C, see; IRM 3.11.6.10.9.

    The taxpayer files a Substantiated Response and the taxpayer does not substantiate all the math error(s) and additional changes are requested Two adjustments are required. If the math error was set on:
    1. The original return.

      1. Input the math error adjustment first.

        • Process the adjustment with Source Code 2.

        • No Amended Claims date.

        • Hold Code 4

        • NSD

      2. Input the non-math error adjustment second. Follow normal processing procedures and use a Post Delay Code for 1 cycle more than the first adjustment.

    2. An amended return.

      1. Input the math error adjustment first.

        • Process the adjustment with Source Code 2.

        • Use the received date of the amended return that set the math error as the Amended Claims Date.

        • Hold Code 4

        • NSD

      2. Input the non-math error adjustment second. Follow normal processing procedures and use a Post Delay Code for 1 cycle more than the first adjustment.

    3. Send a 916C, see; IRM 3.11.6.10.9.

    The taxpayer files a Unsubstantiated Response and no additional changes are requested No consider the claim, send a 916C see IRM 3.11.6.10.9.
    The taxpayer files a Unsubstantiated Response and additional changes are requested Input any allowable changes and send a 916C see IRM 3.11.6.10.9.
    The taxpayer files a Unsubstantiated Protest Refer as CIS/AM.

    Note:

    When processing a math error response, do not correspond for forms, schedules or signatures that were on the original return.

    Note:

    If any additional changes results in a math error, route to CIS/AM.

  4. When a math error is issued for an exemption, unreliable data may be shown in the exemption field on CC TXMOD, CC RTVUE, and CC IMFOL screens. Verify the number of exemptions the taxpayer was allowed during original processing. Divide the total exemption amount shown on CC RTVUE-PER COMPUTER by the exemption amount for the tax year in question.

    Note:

    Does not apply to phase-out situations.

    Reminder:

    If an adjustment is made for exemptions, only input IRN 887 if the new total number of exemptions differs from the number shown in the exemption field on CC TXMOD/IMFOL.

Transaction Codes and Reference Numbers

  1. The following general instructions apply to transaction codes and reference numbers (RN):

    1. Input cents if filer entered cents for amounts in Column B, Net Change column, when present on Form 1040X.

    2. Do not input the IRN 886 below zero. Adjusting the taxable income below zero will cause the transaction to unpost. See IRM 3.11.6.7.8.

IMF Processing Codes

  1. The following subsection gives an explanation and the purpose for using the following codes:

    • Blocking series

    • Reason Codes.

    • Source Codes.

    • Priority Codes.

    • Category Codes.

    • Source Documents.

    • Post Delay Codes.

    • Transaction Codes.

Blocking Series
  1. Submission Processing adjusts tax accounts using a unique blocking series to indicate the nature of the adjustment. Use the following table to determine the blocking series for ADJ54 input:

    Blocking Series Usage
    05 For most processable Forms 1040X and CP notices unless otherwise directed.
    18 Partial Claim disallowance (106C) and the original return was paper filed.
    77 Setting a math error (474C) and the original return was filed electronically.
    78 Setting a math error (474C) and the original return was paper filed.
    98 Complete claim disallowance (105C) and the original return was paper filed.
    99 Complete claim disallowance (105C) and the original return was filed electronically.
    00 Partial claim disallowance (106C) and the original claim was electronically filed.
  2. The ninth and tenth digits of a Document Locator Number (DLN) represent the Blocking Series.

  3. For modules with a prior adjustment:

    If the Blocking Series on the prior TC 290 or TC 291 is, Then
    77, 78 Process as a math error response, see IRM 3.11.6.7.4.1.
    00, 18, 98, 99 Route to CIS/AM per IRM 3.11.6.10.3
Reason Codes (RC)
  1. Taxpayers receive a notice of adjustment when an action is taken on their account. The Reason Code (RC) designates the end of the statement that will be printed on the notice. The RC should describe the area(s) of the return affected by the adjustment action. For audit trail purposes, enter reason codes even when no adjustment is made to the account. You may use up to three reason codes. A reason code is not required for a ripple effect change.

    Note:

    CC IRPTR or CC IRPTR IDT may assist in determining the reason code(s) when there is not a sufficient explanation.

    Exception:

    Do not enter a reason code if specific instructions direct you not to enter.

  2. The fourth reason code position on ADJ54 is reserved for penalty reason codes. See IRM 3.11.6.9.10.1.

  3. The Reason Code Chart below, lists the common reason codes used in Submission Processing and the line reference number. The complete list of Reason Codes is contained in Document 6209, IRS Processing Codes and Information.

    Note:

    All of the Reason Codes listed in the Document 6209, IRS Processing Codes and Information or in IRM 21 are not applicable to instructions in this IRM, since not all issues are processed by Submission Processing.

    Reason Code Adjustment Item
    001 Change Filing Status to Single
    002 Change Filing Status to Married Filing Jointly
    003 Change Filing Status to Married Filing Separate
    004 Change Filing Status to Head of Household
    005 Change Filing Status to Qualifying Widow(er) with dependent Child(ren)
    006 Exemption Amount
    • Adding or removing exemptions claimed

    • Form 2120, Multiple Support Declaration

    • Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent

    • Increase/decrease of Exemption Dollar Amount Claimed

    • Phaseout of Exemption Amount

    007 Wages, Salaries, Tips
    • Bonus (W-2/Wage related)

    • Dependent Care Benefits

    • Disability

    • Employer Provided Education Asst. (IRC 127)

    • Form Wages

    • Grant (Form W-2 or reported on Form 1040, line 7)

    • HSH - Household Employee Income

    • Scholarship (form W-2 or reported on Form 1040, line 7)

    • Third Party Sick Pay (reported on Form 1040, line 7)

    008 Interest / Dividend Income
    • Form 1099 - INT / DIV / OID

    • Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989

    • Schedule B, Interest and Ordinary Dividends

    • Schedule K-1 Interest

    012 Business Income / Loss
    • Form 6198, At-Risk Limitations

    • Schedule C, Profit or Loss From Business (Sole Proprietorship)

    • Form 1099-K, Payment Card and Third Party Network Transactions

    013 Investment Income Gain / Loss
    • Cost Basis

    • Form 1099-B / 1099-S

    • Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains

    • Form 4684, Casualties and Thefts

    • Form 6252

    • Form 4797, Sales of Business Property

    • Form 4952, Investment Interest Expense Deduction

    • Form 8824, Like Kind Exchanges

    • Sale of Home (non-military)

    • Schedule D, Capital Gains and Losses

    • Schedule K-1 Capital Gain Income

    016 Pensions and Annuities
    • 401(K)

    • 403(b)

    • Form 1099-R (Distribution Code 1 or 7 only)

    • RRB 1099-R

    • Form 5329, Additional Taxes on Qualified Plans (including IRAs) and other Tax-Favored Accounts

    • Form 8606, Nondeductible IRAs

    • IRA Distribution

    018 Schedule E Income / Loss
    • Farm Rental

    • Form 1099-MISC (Rents / Royalties)

    • Form 4835, Farm Rental Income and Expenses

    • Form 4952, Investment Interest Expense Deduction

    • Form 6198, At-Risk Limitations

    • Form 1099-K, Payment Card and Third Party Network Transactions

    019 Schedule F, Profit or Loss From Farming
    020 Unemployment Compensation
    • Form 1099-G

    021 Other Income
    • Alaska Permanent Fund

    • Alimony Received

    • Awards (Reported on Form 1040, line 21)

    • Employee Stock Ownership Plan (ESOP)

    • Form 1040 Line 21

    • Form 1099-A, Acquisition or Abandonment of Secured Property

    • Form 1099-C (Cancellation of Debt)

    • Form 1099-G (State Income Tax Refund)

    • Form 1099-MISC (reported on Form 1040, line 21)

    • Form 8814, Parent’s Election to Report Child’s Interest and Dividends (reported on Form 1040, line 21)

    • Form W-2G (Gambling winnings)

    • Gifts

    • Jury Duty Pay

    • Medical & Life Insurance Reimbursements

    • Prizes

    • Self-Employment Income (not reported on Schedule C, E or F)

    • Taxable Coverdell Education Savings Account (ESA)

    • Taxable Scholarship / Grants (not reported on Form W-2)

    • Third Party Sick Pay (reported on Form 1040, line 21)

    025 Qualified Retirement Plan Payments
    • KEOGH

    • KPERS

    • SARSEP

    • SEP

    • SIMPLE

    027 Penalty on Early Withdrawal of Savings
    029 Taxable Social Security Benefits
    • Form RRB 1099

    • Form SSA 1099-SM

    • Income reported on Form 1040, Line 20b

    030 Adjustments to Income
    • Alimony Paid (without recipient's SSN)

    • Educator Expenses

    • Form 1098-E (Student Loan Interest)

    • Form 2106 / EZ Reserve Component (reported on Form 1040, line

    • Form 3903, Moving Expenses

    • Form 8917, Tuition and Fees Deduction

    • IRC 501(c)(18)(D)

    • Jury Duty Pay (Form 1040, line 36)

    • Military Family Relief Act

    • SE Tax (Deductible portion)

    • SE Health Insurance Deduction

    032 Adjusted Gross Income
    • HR 1134

    • IRC 179A

    033 Additional Taxes
    • Form 4970, Tax on Accumulation Distribution of Trusts (reported on Form 1040, line 60)

    • Form 4972, Tax on Lump-Sum Distributions (reported on Form 1040, line 44)

    • Form 8814, Parent’s Election to Report Child’s Interest and Dividends (Reported on Form 1040, line 44)

    • Section 72(m)(5) Penalty

    035 Education Credits
    • Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

    036 non refundable Tax Credits
    • Child Tax Credit - CTC

    • Form 2441, Child and Dependent Care Expenses

    • Form 3800, General Business Credit

    • Form 5695, Residential Energy Credit

    • Form 6478, Biofuel Producer Credit

    • Form 6765, Credit for Increasing Research Activities

    • Form 8396, Mortgage Interest Credit

    • Form 8586, Low Income Housing Credit

    • Form 8609, Low-Income Housing Credit Allocation and Certification

    • Form 8826, Disabled Access Credit

    • Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit

    • Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit

    • Form 8864, Biodiesel and Renewable Diesels Fuels Credit

    • Form 8880, Credit for Qualified Retirement Savings Contributions

    • Form 8907, Nonconventional Source Fuel Credit

    • Form 8910, Alternative Vehicle Credit

    043 Schedule D Computation
    • Revision to Schedule D Tax Computation

    • Switch to Schedule D Tax Computation

    044 Self-Employment Tax
    • Schedule SE

    045 Alternative Minimum Tax - Form 6251
    046 Miscellaneous Account Information
    • Schedule J ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    048 Tax on Individual Retirement Accounts (IRAs)
    • Form 1099-R (Distribution Code 1)

    • Form 5329 part I or II

    049 Miscellaneous Taxes
    • Other substantiated taxes on Form 1040X, line 10

    • Uncollected SS Tax / Medicare Tax (UT)

    051 Total Federal Income Tax Withheld
    053 Earned Income Tax Credit
    054 CP 09 / CP 27 Earned Income Credit Disallowed
    055 Excess Social Security Withheld
    • Excess RRTA Withheld

    057 Regulated Investment Company Credit
    • Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains

    061 Estimated Tax Payments
    • Additional Child Tax Credit

    • Form 8812, Additional Child Tax Credit

    • Form 4136, Credit for Federal Tax Paid on Fuels

    065 Estimated Tax Penalty
    • Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts

    076 Itemized Deductions / Schedule A
    • Change from Standard Deduction to Schedule A

    • Foreign Income Tax (reported on Schedule A)

    • Form 2106 (Schedule A support)

    • Form 4684 (Schedule A support)

    • Form 4952 (Schedule A support)

    • Increase / Decrease to Schedule A

    • Phase-out of Itemized Deductions

    • Schedule K-1 (Schedule A support)

    092 Standard Deduction
    • Change from Itemized Deduction to Standard Deduction.

    099 Miscellaneous Account Information
    • Any reason not listed

    • Social Security Benefits (reported on Form 1040, line 20a)

    • Unexplained Form 1099 income

    106 Refundable American Opportunity Credit
    • Form 8863, Education Credits, (American Opportunity and Lifetime Learning Credits)

    173 Other Dependent Credit

    Figure 3.11.6-1

    This is an Image: 33455001.gif
     

    Please click here for the text description of the image.

    Figure 3.11.6-2

    This is an Image: 33455002.gif
     

    Please click here for the text description of the image.

Source Codes (SC)
  1. Source code selection designates which opening statement will be used on a taxpayer's notice.

  2. Enter a "1" for the source code, except when setting a math error. When setting a math error, use "6" . When correcting a math error use "2" . The source codes are as follows:

    Source Code Literal
    0 or Blank None - no notice generated
    1

    Note:

    When a TC 290 .00 is input SC 1 will change to SC 0 once the adjustment posts to MF. The SC changes to 0 because a TC 290 .00 with a credit reference number for .00 will not generate an adjustment notice even if a reason code is utilized.

    As you requested, we changed your account for (YYYYXX) to correct your (RC).
    2 We changed your (YYYYXX) account to correct your (RC).

    Note:

    Use source code 2 when correcting math errors.

    6 You made a mistake on your (YYYYXX) account. We corrected the error when we adjusted your (RC).
Priority Codes (PC)
  1. Priority Codes must be used to post adjustments to the Master File when certain conditions exist. Failure to use the priority code when specified will cause the transaction to unpost.

    Priority Code When Required
    1 Making an adjustment to an account with a "-L" Freeze.
    2 Use only priority code 2 if both 1 and 3 are required to adjust the account. (Example: Account with -L freeze and the CP notice would require priority codes 1 and 3; therefore only 2 would be used.
    3 Adjusting CP Notices and when a 5600C is mentioned or attached.
    8
    • CRN 764 is input with a TC 29X and there is a prior posted TC 29X (except a previously posted TC 290 with priority code 6 or a TC 290 with Julian Date 999.)

    • TC 29X is input for a significant amount greater than $10 and is within $10 of a previously posted TC 29X. (EXAMPLE: $55 adjustment and the previous adjustment is $49 would require a PC: 8 on either TC 290/291 adjustment. See IRM 3.11.6.6.5

    • CRN 80X is input and there is a prior TC 17X on the account and the new TC 176 is to be computer generated.

    • CRN 806, 807, or 766 is input that is within $10 of a prior posted matching transaction (Example: CRN 806 is within $10 of a prior posted CRN 806, not within $10 of CRN 807).

    • When adjusting Fuel Tax Credit, Form 4136.

    Note:

    Use only priority code 1 if both 1 and 8 are required to adjust the account. (Example: Account with -L freeze and the EIC conditions above would require priority codes 1 and 8; therefore only 1 would be used.)

Category Codes
  1. Category Codes are four letter codes to denote the type or source of an adjustment or correspondence case. Category Code "XRET" is to be used when routing adjustments to files with IDRS Command Codes ADJ54 for all Forms 1040X.

  2. When routing to another area other than files or returning the claim to the taxpayer with correspondence is required, the Category of the case needs to be changed to "MISC" in order to prevent IDRS from recording the case as a closure.

  3. Change the category code to "KATX" when an adjustment is input on a claim related to Hurricane Harvey, Hurricane Irma or Hurricane Maria.

  4. Category Codes EICX, EICN and EICC are used for updating the DUPOL database using IDRS Command Code DDBCK. See, IRM 3.11.6.8.2.

Source Document Indicator
  1. Source Document (SD) Y is used when the amended return is sent to files in your completed folder. The amended return will be associated with the assigned DLN where it can be retrieved.

  2. No Source Document (NSD) Nis used when the amended return is not going to Files, examples:

    • Partial adjustments.

    • Streamlined Program.

    • MFT 35 adjustments.

    • Form 8379 (Injured Spouse)

    • Math errors with additional adjustment(s)

Posting Delay Codes
  1. A Posting Delay Code (PDC) range of one (1) to six (6) will cause a transaction to post later than another transaction when multiple transactions are required on one account. Input transactions will not post to MF until the indicated number of cycles have expired (with respect to the first transaction to be posted).

  2. There will never be a situation where the posting delay code will be greater than "1" on MFT 35.

  3. PDCs are applicable for IMF transactions using the following IDRS CCs:

    • ADJ54

    • INCHG

    • FRM77

  4. The PDC is not posted with the transaction or shown with the pending transaction. The pending (PN) MF posting cycle for the IDRS status transaction is extended to account for the PDC(s).

    Example:

    A PDC "1" should be used on the adjustment when an address change was input. This allows the adjustment notice to be sent to the new address of record.

IDRS Transaction Codes
  1. Some IDRS Transaction Codes require routing or special handling. For definitions of various Transaction Codes, refer to Document 6209, IRS Processing Codes and Information, or IRM 21.5.6.

  2. The table below lists the common transaction codes used in Submission Processing. The complete list of these codes is contained in Document 6209, IRS Processing Codes and Information.

    Transaction Codes Action
    TC 140 is present See IRM 3.11.6.7.1.1.
    No TC 150 (with no Form 1040 attached) See IRM 3.11.6.6.2.
    No TC 150 (with Form 1040 attached) See IRM 3.11.6.6.3.
    No TC 150 (with/without Form 1040 attached) If TC 594 is on primary TIN, research secondary TIN for TC 150.
    No TC 150 Disaster Return See IRM 3.11.6.4.1.1(1)b.
    No TC 150 Statute Imminent Convert to a Form 1040, add CC ACTON History Item "X21502STAT" .
    RJ 150 Rejected Transaction Monitor CC IMFOLT for TC 150 to post.
    Unnn150 Unpostable Monitor CC IMFOLT for TC 150 to post.
    CU150 Corrected Unpostable Monitor CC IMFOLT for TC 150 to post.
    DJ150 Deleted Transaction Monitor CC IMFOLT for TC 150 to post.
    PN150 Pending Transaction Monitor CC IMFOLT for TC 150 to post.
    TC 150 has no posting date Monitor CC IMFOLT for TC 150 to post
    UP150 Unpostable Monitor CC IMFOLT for TC 150 to post.
    TC 160/161/162 Route to CIS/AM.
    Indication of change:
    TC 170 change to tax or withholding; with Form 2210 only
    An account with a TC 170/176 is workable. The estimated tax penalty is based on the original return and the penalty cannot be changed. See IRM 3.11.6.9.10.1.
    Prior TC 29X .00 Workable
    TC 300-361 (TC 300 is most commonly used) CIS/AM

    Exception:

    If an -L freeze or TC 420 is present, see IRM 3.11.6.4.5.2.

    TC 420 and no 421 See IRM 3.11.6.4.5.2
    TC 420 and 421 with no TC 300 Workable
    TC 424 and 425 with no TC 300 Workable
    TC 424 (with no TC 425) See IRM 3.11.6.4.5.2.
    TC 480 and 780 (with Freeze -Y) See IRM 3.11.6.4.16.
    TC 520 (with no TC 521 or 522) CIS/AM
    TC 520 with 521 or 522 Workable
    TC 576 (with no TC 577) CIS/AM
    TC 576 with posed TC 577 Workable
    TC 582 Workable - the TC 582 is a lien indicator. Process as normal.
    TC 594 See IRM 3.11.6.6.1 paragraph (4) (b)
    TC 841 without subsequent 846 CIS/AM
    TC 885 CIS/AM
    TC 904 See IRM 3.11.6.6.2
    TC 914, 916 or 918 without subsequent 912, 915, 917 or 919 CI SDC - Scheme Development Center IRM 3.11.6.4.4
    TC 922 Check Underreporter Process Code IRM 3.11.6.4.8.
    TC 971, AC 111 ID Theft
    TC 971, AC 137 with filing status change CIS/AM
    TC 976 or 977 Workable

IDRS Freeze Codes

  1. Some IDRS Freeze codes will require routing or special handling. For definitions of various Freeze Codes or Transaction Codes, refer to Document 6209, IRS Processing Codes and Information, or IRM 21.5.6.

  2. The table below lists the common freeze codes used in Submission Processing. The complete list of these codes is contained in Document 6209, IRS Processing Codes and Information.

    Freeze Code Description Action
    -A Duplicate Return Refer to CIS/AM if there is an open control base of DUPF; otherwise, continue to process the return.
    -C Combat Zone See IRM 3.11.6.4.20
    - D RSED Expired Statute Unit
    E- Amended Return Follow TC No 150 instructions
    F- Frivolous Return Received Route FRP, see IRM 3.11.6.4.12
    -G Original Return which contains a math error code See IRM 3.11.6.7.4.1
    G- Restricted Failure To Pay Penalty CIS/AM
    -I/I- Restricted Credit/Debit Interest CIS/AM
    -J Unsubstantiated ME Tax Protest CIS/AM
    J- Excess Estimated Tax Credit Freeze CIS/AM
    -K Refund/offset is being held as the result of hold code 1, 2 or 4 CIS/AM
    -L AIMS Indicator See IRM 3.11.6.4.5.2 and IRM 3.11.6.4.4 paragraph (3).
    M- TC 370/400 MFT 31/No-Merge CIS/AM
    -O/-S Disaster Claim See IRM 3.11.6.4.1.1
    P- Refund Cancellation
    • Net balance due workable

    • Net refund CIS/AM

    -Q Unallowable Refund CIS/AM
    -R Credit Balance Process normally.

    Reminder:

    Check for IVO and ID Theft indicators. If a TC 971 AC 122 is on the account or a 4800C is attached or mentioned see IRM 3.11.6.4.4.

    S- Undelivered Refund Check CIS/AM
    T- TDA Status See IRM 3.11.6.4.16 paragraph (4)
    -U Erroneous Refund CIS/AM
    -V Bankruptcy Freeze CIS/AM
    -W Litigation Pending Freeze CIS/AM

    Note:

    A -W freeze which is set by a TC 520 will take priority over other freeze codes.

    -Y Offer in Compromise Collection, see IRM 3.11.6.4.16
    Y- Audit Adjustment CIS/AM
    -Z/Z- Refund Scheme SDC

    Exception:

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

Unpostable Conditions

  1. An unpostable condition is created when a transaction cannot post (update) to Master File due to an unprocessable condition. The most common cause for an unpostable are:

    1. Reducing an amount below zero.

    2. Removing an amount that did not previously exist.

    3. Adjusting an account without a posted TC 150.

  2. A transaction which fails to post to an account is returned to the Campus for corrective action with category NLUN.

  3. See, Document 6209, IRS Processing Codes and Information, or IRM 3.12.179, Individual Master File (IMF) Unpostable Resolution, for a more detailed explanation.

Unpostable Resolution (Use Local Procedures As Applicable)
  1. Transaction which cannot post to Master File create an open unpostable case on IDRS. The open control base will be in "A" status with category NLUN which will represent the unpostable and will be assigned to the tax examiner who input the unpostable condition.

    Note:

    If there are multiple open cases there will not be an open "A" case as stated above, however the open "A" case can be found in the "History Section" of CC TXMOD.

  2. When an unpostable condition occurs, a Charge-Out sheet (Form 4251) is generated and the case is returned to the responsible employee or appropriate function. If the case is routed to the incorrect function, return the case to the employee shown on the Charge-Out sheet.

  3. Form 4251 will contain an Unpostable Code (UPC) which will identify the condition that caused the transaction to unpost.

    Note:

    If the Charge-Out sheet shows the ASED indicating an imminent statute date (within 90 days) route the case to the Statute Unit for quick assessment.

  4. Determine the reason for the unpostable based on the "UPC" and/or "TC-S" code on the Charge-Out sheet, IDRS, and/or the return itself. Perform Masterfile Verification to determine if there are any other reasons the return may not be processable. The IAT CSI tool can be used to help in determining the unpostable reason. Input the unpostable code and unpostable reason code in the search field.

    Example:

    UPC 158 RC 1 would be entered as 1581.

    Note:

    Some of the common errors: Line 5 editing, reducing/removing an amount greater than what is posted, reducing/removing a credit that was not previously claimed (TC 807, 765, etc.), or making an adjustment when no TC 150 has posted. See IRM

    Reminder:

    If you have an unpostable on an account with a -L freeze verify that it was not the result of CC DDBCK Selected case. If it was the result of a CC DDBCK Selected case it needs to be routed as a CC DDBCK Selected case. See IRM 3.11.6.8.1.

  5. Review CC ENMOD for unpostable conditions as this may have caused the adjustment on CC TXMOD to unpost.

    Note:

    If an unpostable condition exists in CC ENMOD close the open case when correcting the account.

  6. If there is a previous TC 160/161 (late filing penalty) on the account route to CIS/AM.

  7. Cross out the DLN found on the CF 5147.

  8. Use the following tables to take the appropriate corrective action. Be sure to adjust the correct amount and tax period

    1. With Form 1040X Attached

      If IDRS Transaction Then
      The return meets CIS/AM criteria ACTON
      C02,CISAMTOADJ,C
      Route to CIS/AM.
      The return meets route out criteria other than CIS/AM ACTON
      C02,TO_____,C
      (indicate destination)
      Route accordingly.
      The error can be corrected ACTON
      C02, UNPCORR,C
      1. Line through the input sequence number originally edited at the top of the Form 1040X return.
      2. Input the correct adjustment.
      3. Staple the CF 5147 to the back of the return.
      4. Turn in charge out sheet to manager.
      The return was posted to the wrong SSN 1. Pull up TXMOD using the wrong SSN.
      2, ACTON C02,WRONGSSN,C
      3. ACTON C02,xxx-xx-xxxx,C (x's equal the correct SSN)
      Input the correct adjustment using the correct SSN.
    2. With Form 1040X not Attached

      If Then
      If unable to determine the appropriate corrective action, Have the workleader request the document from files using CC ESTAB. In remarks enter: "Expedite Second Request" .
      If able to determine the corrective action and the adjustment can be re-input 1. Take appropriate corrective action(s) and enter "SD4251" on remarks line.
      2. Attach any other research documentation you may have gathered.
      3. Place in brown folder with other source documents.
    3. With or Without 1040X Attached:

      If Then
      Someone else has changed your control base (case status "A" to "B" or "A" to "C" ) 1. Close your unpostable case (if not already closed).
      2. Route the 1040X and/or charge-outs to the person who took action on your unpostable case. Use routing slip Form 12305 and notate: "Action was taken on my open control base - please take any required corrective action. "

      Exception:

      If the corrective adjustment has already been completed route the return to files per IRM 3.11.6.6.5

      .

    .

  9. Turn in the Charge-Out sheet to the manager after you have completed the appropriate corrective action, or follow local procedures for the disposition of the charge out sheet.

Updating the DUPOL Database

  1. Submission Processing is responsible for updating the DUPOL database when you are editing (adding, replacing, changing, and/or deleting) records. Use CC DDBCK unless specifically instructed to use CC DUPED. If instructed to use CC DUPED, update for current year only. If it is a prior year, do not update the DUPOL database, continue processing the return.

  2. When adding a credit or exemption requiring TIN validation, always use CC INOLE or CC DDBKD to verify the TIN/ NAME/DOB prior to updating the DUPOL database.

  3. Refer to CIS/AM, if the account has been merged or resequenced and an update to the DUPOL database is required.

  4. Use the following chart for determining when to update the DUPOL database:

    If the Taxpayer is adding or removing: Then
    • Exemption
    • Earned Income Credit (for dependents)
    •EIC increase due to changes in income other than Form W-2
    • Child Care Credit
    • Education Credit
    • Child Tax Credit
    •Additional Child Tax Credit when the qualifying dependent is eligible for CTC, but cannot be claimed on Line 7
    • Credit reduced to zero
    • EIC TIN-related Math Errors
    • TIN related Math Errors
    • ITIN to SSN for Dependents
    Update using CC DDBCK then continue processing the return.
    • CP 08 responses.
    CP 27 Responses
    •Amended return where the taxpayer is claiming EIC for self/spouse only
    • Requesting filing status change which does not affect exemption/credit allowance
    • EIC increase due to Form W-2
    • EIC NON-TIN related Math Errors
    Continue processing the return.

    Note:

    Do not update DUPOL database.

    • TIN has been merged or resequenced
    • Change to Primary or Secondary TIN
    • Mixed Entity cases
    • Scrambled SSN cases
    • Math error code 653 is posted on IDRS
    • The child failed validation (other than an invalid TIN/Name issue)
    Route to CIS/AM.
    • DDBCK Input screen is full (6 dependents were previously claimed)
    • CP 09 responses
    • Child Care Credit and the qualifying dependent is over age of 12 but disabled or turns age 13 in the year being claimed
    • NON-TIN related Math Errors
    • Employee does not have access to CC DDBCK
    Update using CC DUPED instead of CC DDBCK (Current year only), see IRM 3.11.6.8.2.

    Note:

    When unable to determine the exemption that is being added, changed or deleted, see IRM 3.11.6.9.3.1.

Command Code DDBCK

  1. CC DDBCK is the primary Command Code (CC) used to update the DUPOL database. CC DDBCK can be updated for the current tax year and two years prior.

    Reminder:

    If the dependent previously had an ITIN and now has a valid SSN, CC DDBCK must be used to update the exemption's SSN for current year claims as well as prior year claims. Only update the DUPOL database for the year of the amended claim.

  2. When working EITC TIN-Related Math Error responses, overlay the YYYYMMDD on the CC DDBCK Return Summary Screen, under Change Dates, with the received date of the Form 1040X.

  3. When required to update CC DDBCK, use the following chart.

    If and Then/Use
    EIC is decreasing or is not involved Exemption is being changed, added, deleted
    or
    There is an increase to ACTC and/or AOTC
    1. CATEGORY: EICN

    2. CLAIM AMOUNT: 0

    3. SCHED C: N

    4. AGI INC/DEC: Skip

    5. EITC INC/DEC: Skip

    6. RefCR: Total of increases to ACTC and/or AOTC.

    EIC is increasing and does not involve an EIC Math Error Schedule C is not attached, not changing or is being removed
    1. CATEGORY: EICX

    2. CLAIM AMOUNT: The net refund/balance due of the MFT 30 adjustment (dollars only).

    3. SCHED C: N

    4. AGI INC/DEC: xClaim, Line 1b (use a leading minus sign for decreases).

    5. EITC INC/DEC: xClaim, Line 14B.

    6. RefCR: Total of increases to ACTC and/or AOTC.

    EIC is increasing and does not involve an EIC Math Error
    • Schedule C is changing; or

    • Schedule C is being added; or

    • Claiming additional income (except Schedule F, Schedule E, Schedule K-1 or minister income) that is subject to SE Tax

    Example:

    Form 1040X shows SE Tax due to non-employee compensation from a Form 1099-MISC. Typically this will be other income reported on line 21 of the Form 1040. The Schedule C indicator would be "Y" The non-employee compensation income shown on the Form 1099-MISC would be the amount of the "Gross Receipts" and the "Net Profit" on the DDBCK Return Update Screen-Schedule C.

    1. CATEGORY: EICX

    2. CLAIM AMOUNT: The net refund/balance due of the MFT 30 adjustment (dollars only).

    3. SCHED C: Y

    4. AGI INC/DEC: xClaim, Line 1b (use a leading minus sign for decreases).

    5. EITC INC/DEC: xClaim, Line 13B

    6. RefCR: Total of increases to ACTC and/or AOTC.

    7. GROSS RCPT: Sum of all Schedules C line 1.

    8. COST GOOD SOLD: Sum of all Schedules C line 4.

    9. HOME OFFICE EXPENSE: Sum of all Schedules C line 30.

    10. NET PROFIT: Sum of all Schedules C line 31 or Schedule C-EZ line 3.

    11. WAGES: Amount of W-2 wages being amended, if any (add leading minus sign for decreases).

    EIC is increasing and does involve an EIC TIN related Math Error

    Note:

    EIC TIN related math errors include ME 604 / 605 / 610/ 701 / 702 / 741 / 743 / 745 / 748.

    Schedule C is not attached, not changing or is being removed
    1. CATEGORY: EICC

    2. CLAIM AMOUNT: Net refund/balance due of the MFT 30 adjustment (dollars only).

    3. SCHED C: N

    4. AGI INC/DEC: 1040X line 1B (add leading negative sign if the amount is decreasing).

    5. EITC INC/DEC: 1040X line 14B.

    6. RefCR: Total of increases to ACTC and/or AOTC.

    EIC is increasing and does involve an EIC TIN related Math Error

    Note:

    EIC TIN related math errors include ME 604 / 605 / 610/ 701 / 702 / 741 / 743 / 745 / 748.

    • Schedule C is changing; or

    • Schedule C is being added; or

    • Claiming additional income (except Schedule F, Schedule E, Schedule K-1 or minister income) that is subject to SE Tax

    Example:

    Form 1040X shows SE Tax due to non-employee compensation from a Form 1099-MISC. Typically this will be other income reported on line 21 of the Form 1040. The Schedule C indicator would be "Y" The non-employee compensation income shown on the Form 1099-MISC would be the amount of the "Gross Receipts" and the "Net Profit" on the DDBCK Return Update Screen-Schedule C.

    1. CATEGORY: EICC

    2. CLAIM AMOUNT: The net refund/balance due of the MFT 30 adjustment (dollars only).

    3. SCHED C: Y

    4. AGI INC/DEC: xClaim, Line 1b (use a leading minus sign for decreases).

    5. EITC INC/DEC: xClaim, Line 13B

    6. RefCR: Total of increases to ACTC and/or AOTC.

    7. GROSS RCPT: Sum of all Schedules C line 1.

    8. COST GOOD SOLD: Sum of all Schedules C line 4.

    9. HOME OFFICE EXPENSE: Sum of all Schedules C line 30.

    10. NET PROFIT: Sum of all Schedules C line 31 or Schedule C-EZ line 3.

    11. WAGES: Amount of W-2 wages being amended, if any (add leading minus sign for decreases).

  4. Take the following action when the DDBCK response displays the following literal:

    If Then
    OK to input ADJ54 if eligibility met Input the adjustment following the appropriate procedures
    OK to input ADJ54 if eligibility met, enter reason code 103 Route to CIS/AM. (RC 103 indicates that taxpayer is part of the EIC certification program)
    RECERT IND Route to CIS/AM
    Date Older Than 18 Month DDBCK will not allow an entry 18 months or later. Overlay the pre-populated date with the received date of the return.
    Date Cannot be a Future Date This occurs when dealing with a current year that is timely filed prior to 4-15. The computer will show the IRS Received Date as 4-15-YYYY and if working the case in Jan, Feb, Mar of the current year the programming considers the 4-15-YYYY as a future date. In this instance use the current date for the input.
  5. If the response to either the initial DDBCK screen or validation results screen displays Selected or Send As a CAT A, take the following action:

    1. Make a print of the CC DDBCK Summary Screen and attach to the front of the Form 1040X.

    2. Attach cover sheet indicating the response received:
      • 1040X -- DDBCK -- Selected
      • 1040X -- DDBCK -- Sent to Cat A.

    3. Indicate on cover sheet (per local procedures): Expedite scanning; Scan directly to IDRS #xxxxxxxxx, route to CIS/AM. (The IDRS number will be provided by your local Accounts Management).

    4. See IRM 3.11.6.4.5 for additional routing instructions.

      Note:

      Do not delete the CC DDBCK update prior to routing.

      Exception:

      If there is a math error for an exemption, CTC or ACTC, route the case to CIS/AM.

  6. On Selected cases, TC 424 is generated automatically in IDRS and places a -L freeze on the account. If DDBCK is updated in error, the input needs to be deleted to prevent an erroneous case from opening in Exam.

  7. On "Follow IRM" cases, you must use the appropriate section of the IRM 3.11.6 to process the amended return.

Command Code DUPED

  1. CC DUPED is an extension to the DUPOL database used for TIN validation. CC DUPED allows a user to edit (Add, Change and Delete) records on the DUPOL database for current tax year only.

  2. When an exemption, EIC or a credit requiring TIN validation for allowance is being added/deleted, use CC DUPED to update the TIN database (DUPOL). CC DUPED is only used when changing the TIN's record (either add, change or delete). If the amount of a particular "TIN related" credit amount is changed because of an income change and there is not change to the TIN, you would not use CC DUPED. See (3) for additional conditions.

  3. Do not update CC DUPED if the only reason for the update/change is:

    1. Claiming EIC for self/spouse only, or

    2. a filing status change, which does not affect exemption(s) credit allowance.

  4. If the taxpayer does not provide the TIN of the dependent to be removed, research RTVUE. If found, update the DUPOL database.

  5. The display screen allows user to find the exact record they want to modify. A record number is shown for each record that can be edited. CC DUPED procedures apply only to the current tax year return.

  6. On line 2 of the command code request, a user can enter P=xxxxxxxxx where xxxxxxxxx is the primary TIN. This will display only records for that TIN which also matches the input primary TIN.

  7. The TIN SOURCE CD field on the edit screen has been expanded to three positions to allow adding and changing of multiple records. To change multiple records for the same TIN from a single return, bring up the change screen for the record. You can then enter two additional TIN SOURCE codes and all three will be changed at the same time.

  8. CC DUPED does not replace Master File account action; appropriate account transactions are still required.

  9. Do not disclose CC DUPED data. Taxpayers are not entitled to know who has claimed the dependent exemption or EITC credit. If the message "Duplicate use of SSN" occurs, continue processing the return.

  10. If the taxpayer clearly indicates who will be claiming the exemption, do not update the other account based on this information.

Add a Record
  1. Use these instructions when adding a dependent exemption or to add a new Form 2441 credit, Form 8863 and/or Schedule EIC.

    Exception:

    If a Primary Taxpayer is trying to claim their own personal exemption, use the" Change a Record" instructions.

  2. To add the record, type CC DUPEDA and the TIN of the person being added (DUPEDANNN-NN-NNNN).

  3. When the edit screen is displayed, enter the record information on the edit screen and then transmit.

    • Name Control (NC) -- Enter the name control of the dependent/exemption being added.

    • Primary TIN on return -- Enter the Primary TIN from Form 1040X.

    • Service Center Code -- Enter the two-digit File Location Code from the TC 150 DLN for the Processing Center where the taxpayer originally filed. The Edit Screen provides Processing Codes for ELF (Electronic Filing System). Use ELF codes only if appropriate. (Refer to Doc 6209, IRS Processing Codes and Information, Section 4.4 for a list of valid File Location Codes).

    • Filing Status -- Enter the "On this return" filing status from Form 1040X.

    • Dependent Status -- Enter "0" to indicate the exemption cannot be claimed on another return.

    • TIN Source -- Enter how the TIN is being applied during this action. This is a required entry.
      P=Primary
      S=Secondary
      D=Dependent
      B=Form 2441, Child and Dependent Care Expenses
      C=Form 8863, Education Credit
      E=EIC, Earned Income Tax Credit

  4. When the information is transmitted, the DUPED response screen is displayed to show the updated information.

Change a Record
  1. Use these instructions to remove a primary taxpayer’s exemption.

  2. To change a record, use CC DUPED, without a definer, and the TIN of the person being claimed to display all the records for that TIN.

    Exception:

    Do not update the DUPOL database on invalid primary or secondary TINs. Route to CIS/AM.

  3. Enter a "C" in the request type field and the record number in the record number field and then transmit. This is equivalent to entering a CC DUPED with the definer "C" and the record number in line "1" of the command code.

  4. When the edit screen is displayed, enter the appropriate corrected information and then transmit.

    • Name Control (N/C) -- Enter the name control of the dependent/exemption being changed.

    • Filing Status -- If the filing status is changing, enter the appropriate code.

    • Dependent Status -- Enter "1" to indicate the exemption will be claimed on another return or enter a "0" to indicate the Primary Taxpayer is claiming his/her own personal exemption.

  5. If you delete a record, the response will be shown with a dash under REC NUM and the Julian date in the REV DATE column. If we "Change a record" , the response will still show a Record Number (REC NUM) and under column "DEPD STAT IND" will show the change.

    Note:

    Multiple taxpayers may have claimed the same exemption and/or credit. Only change the record/records that relate to the account you are working.

Delete a Record
  1. Use these instructions to delete (reverse):

    • EITC, Form 2441 or Form 8863 record

    • Credit for that exemption is reduced to zero

    • Dependent’s exemption

  2. When reversing a record, use command code DUPED with the TIN of the exemption for which the action is being taken to delete the record.

  3. Delete records that you created in error.

  4. Enter a "D" in the request type and the record number in the record number field and then transmit. This is equivalent to entering a DUPED with the definer "D" and the record number in line "1" of the command code.

  5. The edit screen is displayed along with a delete confirmation message. Enter "Y" to delete the record, and then transmit. When the information is transmitted the display screen is displayed with the corrected information.

Specific IMF Adjustments

  1. The following subsections contain procedures for processing the Form 1040X:

    • Line 1, Adjusted Gross Income

    • Line 2, Itemized/Standard Deductions

    • Line 4, Exemptions

    • Line 5, Taxable Income

    • Line 6, Tax, (may include ACA)

    • Line 7, Credits - non refundable

    • Line 9, Health care: Individual Responsibility

    • Line 10, Form 5329/1099R and Self Employment (SE) Tax

    • Line 11, Total Tax

    • Line 12, Federal Income Tax Withheld and Excess Social Security and Tier 1 RRTA Tax Withheld

    • Line 13, Estimated Tax Payments

    • Line 14, Earned Income Credit

    • Line 15, Credits - Refundable

    • Line 23, Credit Elect

  2. If inputting adjustments and there are more RN/CRNs than fields available, input the adjustment as follows:

    Input changes from lines 11 - 15.

    • Appropriate reason codes

    • Appropriate blocking series

    • Appropriate source code

    • Any necessary hold codes or priority codes

    • SD

      Note:

      If xClaim is used allow xClaim to input the two adjustments.

    2nd Adjustment:

    • TC 290 .00

    • Appropriate blocking series

    • Input RNs for lines 1 - 9.

    • RC 099

    • Input a posting delay code of 1.

    • Any necessary hold codes or priority codes

    • NSD.

      Note:

      If there is a change to the name line information or taxpayer's address the first adjustment will require a posting delay code of 1 and the second will require a posting delay code of 2.

Adjusted Gross Income (Line 1)

  1. Any adjustments to income or deductions to income are reported on Line 1 of Form 1040X. This includes any entry on the front page of a Form 1040.

  2. If taxpayer receives wages from ministerial duties, some of the income reported on Form 1040, line 7, may also be shown on Schedule SE, line 2, route to CIS/AM.

  3. Use Reference Number (RN) 888 for any positive or negative change to AGI.

    Note:

    The AGI can be a negative number or be reduced below zero.

Employer Provided Education Assistance (IRC 127) (Line 1)
  1. Internal Revenue Code Section 127 allows employers to exclude educational expenses from the employee's taxable income. The maximum annual exclusion is $5,250.

    If And Then
    An amended return is filed claiming an exclusion of $5,250 or less
    1. Form W-2/W-2C attached and reflecting the change

    2. Form W-2/W-2C missing or does not reflect the exclusion

    1. Adjust the account and use Reason Code 007 and Source Code 1

    2. Return Form 1040X to taxpayer using Form 8009-A. See IRM paragraph (2) below

    An amended return is filed claiming an exclusion of more than $5,250   See table below
    If Then
    Employer provided assistance is the only issue Send a 474C letter disallowing the exceeded amount. For the fill-in use: If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in wages the amount that you must include in income.
    Other issues are involved Send a 474C letter disallowing the exceeded amount with the fill-in; If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in wages the amount that you must include in income. Continue to process the return for other issues.
  2. When corresponding, refer to IRM 3.11.6.10 and send either Form 8009-A or a 324C letter. For Form 8009-A, box 8 and for a 324C letter, use paragraphs A, 3, 6, fill-in: Please provide a copy of your Form W-2 to substantiate your claim for a reduction of wages due to employer provided educational assistance benefits. We will accept a duplicate from your employer or a photocopy.

Military Family Relief Act (Line 1)
  1. On November 11, 2003, President Bush signed into law the Military Family Tax Relief Act of 2003. Taxpayers have been instructed to write "Military Family Tax Relief Act" in red in the top margin to identify the cases. See corresponding TCD

  2. One provision of the Act allows the filer to exclude the gain on the Sale of a Personal Residence for a home sale after May 6, 1997. Route claims for this exclusion marked "Military Family Tax Relief Act" to AM. Any claim received after November 10, 2004 for tax periods 1997 through 2001 are to be disallowed. Do not send these prior year claims to Statute. Route Tax Year 1997 and subsequent to AM for processing.

  3. Beginning in Tax Year 2003, Reservists who stayed overnight more than 100 miles from home for a drill or meeting may deduct unreimbursed travel expenses. For Tax Year 2006 and subsequent, it is claimed on the Form 2106 and reported on Line 24 of Form 1040. Process using RC 030.

Form 8606, Nondeductible IRA Contribution (Line 1)
  1. Nondeductible IRA contribution are those contributions made to a traditional IRA which are within the contribution limit but do not qualify as deductible.

  2. If there is an amount on line 15b or 25b then route to CIS/AM.

  3. Form 8606 must be attached if taxpayer is reporting or has indicated a change to a Nondeductible IRA Contribution in the explanation part of the Form 1040X. If Form 8606 is not attached, correspond per IRM 3.11.6.10 and use either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, I, 6. Use the fill-in: Please complete Form 8606 to support the changes you have made.

  4. If Form 8606 is attached and the line 15b is blank then; process using RC 016.

Processing Loose Form 8606
  1. If the taxpayer has an amount on line 15b or 25b, route to CIS/ AM.

  2. Follow instructions below for processing loose Form 8606. Check first to see if a return has posted. Follow local procedures as necessary.

    If Then
    A return was filed Input the adjustment with RC 016.
    No return was filed
    1. If no tax is indicated, then Route to Files to be filed in the Alpha File.

    2. If tax is indicated by entries on line 15c, 18, or 25c; then route to CIS/AM.

    Taxpayer submits $50 penalty payment 1. Send a 474C letter with paragraphs A, 1, d with fill-in: We are returning your payment of $50.00 submitted with the Form 8606, Nondeductible IRA Contributions, because the penalty is currently not being assessed.
    2. Input TC 290 .00 BS 05 RC 016.

    Note:

    The TC 290 .00 will release the payment for refund.

  3. Form 8606 processed as a loose form does not require Statute clearance.

Form 8917, Tuition and Fees Deduction (Line 1)
  1. Taxpayers who paid tuition and fees expenses to an accredited post secondary educational institution (college, university or vocational school) for an eligible student may be eligible to deduct up to $4,000. The deduction is valid for tax year 2017 and prior.

  2. Taxpayers can claim Tuition and Fees deduction if they meet the following conditions:

    • They paid qualified tuition and fees for themselves, their spouse or dependent(s).

    • Their filing status is not married filing separately (FS 3 or 6).

    • The student must be claimed as an exemption on the primary taxpayer's tax return.

    • $4,000 deductions if their modified adjusted gross income (MAGI) is $65,000, or less if filing Single or Head of Household or Qualified Widow(er); $130,000 or less if filing Married Filing Jointly.

    • $2,000 deductions if their MAGI is between $65,001 and $80,000 for filing Single or Head of Household or Qualified Widow(er); between $130,001 and $160,000 if filing Married Filing Jointly.

      Note:

      When MAGI exceed the upper limit for all filing statuses the deduction is zero (0).

    • They are not claiming Education Credits for the same student.

  3. If the taxpayer claims both the Education Credit and the Tuition and Fees Deduction and the Form 8917 indicates that the credits were for the same student, disallow Tuition and Fees per paragraph (4) below. Also disallow a deduction for a student if the taxpayer or anyone else has claimed the American Opportunity Credit for that student. Taxpayers may add Form 8863 and remove Form 8917, see IRM 3.11.6.9.6.7.

  4. Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.10.3. Use fill-in: We disallowed your claim on Form 8917, Tuition and Fees Deduction. You may not claim the deduction for Form 8917, Tuition and Fees Deduction and Form 8863, Education Credits for the same student.

  5. Form 8917 must be attached if taxpayer is claiming the Tuition and Fees Deduction. If not attached correspond per IRM 3.11.6.10 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6. Use fill-in: Please complete Form 8917 to support the changes you have made.

  6. If Form 1098-T is being used to support the Tuition and Fees deductions on Line 1 of Form 1040X, correspond for Form 8917 per IRM 3.11.6.10 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6. Use fill-in: Please complete Form 8917 to support the changes you have made.

  7. Since Form 8917 is based on qualified education expenses paid to an eligible post secondary educational institution, when the age of the student is such that the deduction becomes questionable or there are other circumstances that are questionable and the Form 1098-T is not present on IRPTR, no consider the claim and request a copy of the Form 1098-T, Tuition Statement. Use the 916C letter paragraphs B, F, R, 1, 4 or Form 8009-A and use fill-in: We did not receive a Form 1098-T, Tuition Statement from your education institution for the student to support your claim on Form 8917. This form is used to verify enrollment and qualified educational expenses. Please contact the educational institution and ask them to issue Form 1098-T to the IRS to verify the enrollment status and qualified expense information.

    Note:

    It is not required to research IRPTR on all claims, the return should be questionable prior to research.

  8. If the taxpayer removes their exemption and doesn't remove the Tuition and Fees deductions remove the deduction and send a 474C per IRM 3.11.6.7.4.

  9. If present, process using RC 030.

Student Loan Interest Deduction
  1. Student loan interest is interest paid during the year on a qualified student loan. It includes both required and voluntary payments. Taxpayers are provided Form 1098-E which lists the interest paid on the student loan.

  2. The maximum deduction is $2,500.00. The $2,500.00 amount is eliminated if the Modified Adjusted Gross Income (MAGI) is:

    Tax year Single, Head of Household and Qualifying Widower Married Filing Joint
    2017 and 2018 $80,000 or more $165,000 or more
    2015 and 2016 $80,000 or more $160,000 or more
    2014 $80,000 or more $120,000 or more

    Note:

    The MAGI has varying additions to the AGI depending on the situation if computed, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. For processable claims, use RC 030.

Form 3903, Moving Expenses (Line 1)
  1. For 2018, Form 3903, Moving Expenses is used by Members of the Armed Forces.

  2. For 2017 and prior, there is no Armed Forces requirement.

  3. Form 3903 is required, correspond if missing. See IRM 3.11.6.10.

    Note:

    Correspondence is not required if the taxpayer is amending a previously filed Form 3903 and the nature of the change is explained on the Form 1040X.

  4. Process using RC 030.

Standard and Itemized Deductions (Line 2)

  1. The standard deduction is a dollar amount that reduces taxable income. The standard deduction may change when the taxpayer changes filing status, is age 65 (or older) and/or blind.

    FILING STATUS # of Boxes Checked 2018 Standard Deduction 2017 Standard Deduction 2016 Standard Deduction 2015 Standard Deduction 2014 Standard Deduction
    1 0
    1
    2
    $12,000
    $13,600
    $15,200
    $6,350
    $7,900
    $9,450
    $6,300
    $7,850
    $9,400
    $6,300
    $7,850
    $9,400
    $6,200
    $7,750
    $9,300
    2 0
    1
    2
    3
    4
    $24,000
    $25,300
    $26,600
    $27,900
    $29,200
    $12,700
    $13,950
    $15,200
    $16,450
    $17,700
    $12,600
    $13,850
    $15,100
    $16,350
    $17,600
    $12,600
    $13,850
    $15,100
    $16,350
    $17,600
    $12,400
    $13,600
    $14,800
    $16,000
    $17,200
    3 0
    1
    2
    3
    4
    $12,000
    $13,300
    $14,600
    $15,900
    $17,200
    $6,350
    $7,600
    $8,850
    $10,100
    $11,350
    $6,300
    $7,550
    $8,800
    $10,050
    $11,300
    $6,300
    $7,550
    $8,800
    $10,050
    $11,300
    $6,200
    $7,400
    $8,600
    $9,850
    $11,000
    4 0
    1
    2
    $18,000
    $19,600
    $21,200
    $9,350
    $10,900
    $12,450
    $9,300
    $10,850
    $12,400
    $9,250
    $10,800
    $12,350
    $9,100
    $10,650
    $12,200
    5 0
    1
    2
    3
    4
    $24,000
    $25,300
    $26,600
    $27,900
    $29,200
    $12,700
    $13,950
    $15,200
    $16,450
    $17,700
    $12,600
    $13,850
    $15,100
    $16,350
    $17,600
    $12,600
    $13,850
    $15,100
    $16,350
    $17,600
    $12,400
    $13,600
    $14,800
    $16,000
    $17,200
  2. Taxpayers that file a Form 1040 EZ combine their standard deduction with their personal exemption.

  3. For tax years 2018 and subsequent, taxpayers may file Form 4684, Casualties and Thefts, to claim certain disaster losses by either adding this amount to their standard deduction or by including on their Schedule A. Form 4684 is required, correspond per IRM 3.11.6.4.1, if missing.

  4. If the taxpayer can be claimed as a dependent on another taxpayer’s return, then the taxpayer’s standard deduction allowed is the greater of the following amounts up to the amount of the regular standard deduction:

    Tax year Greater of
    2018 $1,050 or $350 + earned income
    2017, 2016 and 2015 $1,050 or $350 + earned income
    2014 and 2013 $1,000 or $350 + earned income

    Note:

    Taxpayer’s sometimes combine their standard deduction with their personal exemption.

  5. Use reason code 092:

    • Changes to standard deduction

    • When the taxpayer changes from itemized deduction to standard deduction.

Itemized Deductions (line 2)
  1. Itemized deductions are claimed in place of the standard deduction.

  2. When the taxpayer changes from a standard deduction to itemized deductions, Schedule A must be attached. If missing, correspond for Schedule A per IRM 3.11.6.10 using either Form 8009-A, box 8, or a 324C letter, paragraphs A, 3, 6. For the fill-in use: Please complete a Schedule A to support the changes you have made including completing Form 2106 if necessary.

  3. Correspond for a revised Schedule A if the refund is over $500 and:

    • The change is not the result of a ripple effect
      or

    • The taxpayer did not explain the type of deduction being claimed for a previously filed Schedule A.

  4. For tax year 2018, many Itemized Deduction expenses are not allowed or have been modified.

    1. If the Schedule A is the only issue on the claim, disallow all or part of the Schedule A:
      •Adjust the claim for any allowable expense(s), disallow the expenses that are no longer available.
      •If the total allowable expenses are less than the standard deduction, disallow the Schedule A.
      •If there are no allowable expenses, disallow the Schedule A.

    2. If the Schedule A is not the only issue on the claim, process the claim for allowable issues and follow partial disallowance procedures, see IRM 3.11.6.10.3.

    3. For the disallowance fill-in, use The 2018 Tax Cuts and Jobs Act eliminated or modified the (name of expense(s)) for tax year 2018.

  5. The Sales Tax Deduction Calculator can be used to determine unexplained Schedule A changes, https://apps.irs.gov/app/stdc/stdc.html

  6. Form 4684, Casualties and Thefts is required, see IRM 3.11.6.4.1 for correspondence procedures.

  7. For tax years 2017 and prior, if the taxpayer is claiming Form 2106 Employee Expenses, see IRM 3.11.6.9.2.2.

  8. Itemized Deductions have different Cat A criteria depending on the type of deduction claimed.

    Issue Tax Decrease Amount
    Basic criteria - Applies to new or amended Schedule A changes, unless one of the criteria below is met. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    If the only changes to Schedule A involves medical expenses and the taxpayer is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (either TP if FS 2) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    If the only change to Schedule A involves Investment Interest Expense. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    Disaster/non-disaster casualty losses, IRC § 165 theft losses, and Form 2106, Employee Business Expenses, have separate criteria.

    Note:

    If the only change or deduction on Schedule A is due to mortgage interest or property tax and the deduction can be verified with CC IRPTRL, do not refer to Cat A regardless of the amount of tax change.

    Example:

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

  9. Gambling losses can only be deducted against gambling winnings (line 21 of Form 1040). The losses can only reduce the winnings lower or to zero, but never below zero as an outright loss. If the losses claimed exceed winnings, see IRM 3.11.6.7.4.

  10. Seller Paid Points: Taxpayers may claim seller paid points when purchasing a principal residence. The deduction is claimed on Schedule A, Itemized Deductions. Appraisal, inspection, title, and attorney fees are not deductible. Property taxes paid are not deductible as points even if designated as points. Reject the claim and set the math error per IRM 3.11.6.7.4 if proof of the claim is not provided. For the fill-in: Please submit: Form HUD-1, Settlement Statement or other settlement statements. Form HUD-1 or other settlement statement must explicitly mention Loan Origination Fees.

  11. For tax years 2018 and subsequent, there is no limitation on itemized deductions.

  12. For tax years 2013-2017, taxpayers are subject to the limit on certain itemized deductions if their adjusted gross income (AGI) is more than:

    Tax Year FS 1 FS 2 or 5 FS 3 FS 4
    2017 $261,500 $313,800 $156,900 $287,650
    2016 $259,400 $311,300 $155,650 $285,350
    2015 $258,250 $309,900 $154,950 $284,050
    2014 $254,200 $305,050 $152,525 $279,650
  13. Reason Code 076:

    • Changes to itemized deduction

    • When the taxpayer changes from a standard deduction to itemized deductions (Schedule A)

    • Taxpayer may elect to deduct Foreign income tax as an itemized deduction on Line 8 of Schedule A

Form 2106, Unreimbursed Business Expenses
  1. For tax years 2018 and subsequent, Form 2106 Employee Expenses are not allowed. If taxpayer reports expenses on Form 2106, follow IRM 3.11.6.10 use fill-in: We disallowed your claim for Employee Expenses because these expenses are not allowed for tax years 2018 and subsequent.

  2. Taxpayers file Form 2106 to deduct ordinary and necessary expenses for their job on Schedule A or as a deduction to income. There are different ways taxpayers report additional expenses that belong on Form 2106.

  3. If the taxpayer is claiming Form 2106 and the new or added expenses result in a decrease in total tax of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when isolated, refer as Cat A.

  4. Form 2106 is required for unexplained new increases of ≡ ≡ ≡ ≡ ≡ ≡ . If Line 21 of Schedule A has an entry and there is an indication it is from travel, transportation, meal, or entertainment expenses Form 2106 is required. Correspond for the missing Form 2106 using either a Form 8009-A, box 4; or a 324C, paragraphs A, 3, 6, fill-in: Please complete Form 2106 to support the changes you have made.

  5. If there is a notation of Forced Pay Reduction, follow IRM 3.11.6.10.3 use fill-in: We disallowed your claim citing “Forced Pay Reduction” because it did not include supporting documentation.

Exemptions (Line 4)

  1. Taxpayers use Line 4 and Page 2 of Form 1040X to indicate a change to the number of exemptions on their return. See below for exemption amounts:

    Year Amount
    2018 Not Applicable
    2017 and 2016 $4,050
    2015 $4,000
    2014 $3,950
  2. When the taxpayer's AGI reaches a certain limit, their standard exemption amount starts to phase out for the number of exemptions claimed. The exemption amount is reduced by 2% for each $2,500 or part of $2,500 that the AGI exceeds the AGI phase out limit based on the filing status. (See the chart below)

    Filing Status 2017 2016 2015 2014
    1 $261,500 $259,400 $258,250 $254,200
    2 and 5 $313,800 $311,300 $309,900 $305,050
    3 $156,900 $155,650 $154,950 $152,525
    4 $287,650 $285,350 $284,050 $279,650

    Note:

    For TY 2010 through 2012, the exemption amount is not subject to a phase-out.

  3. If a Form W-7, Application for IRS Individual Taxpayer Identification Number is attached to the Form 1040X, or the taxpayer requests additional information in order to complete processing Forms W-7, route the entire packet to the following address:
    Austin Submission Processing Campus
    ITIN Operation Stop: AUSC 6090
    3651 S IH 35
    Austin, TX 78714-9342

  4. If a Form W-7 A, Application for Taxpayer Identification Number for Pending U.S. Adoptions (ATIN) is attached to a Form 1040X, route the entire packet to the following address:
    Austin Submission Processing Campus
    ATIN Unit -- Stop 6182
    3651 S IH 35
    Austin, TX 78767

Changes to Exemptions
  1. When the taxpayer adds or deletes an exemption, review Form 1040X and any related attachments for the person's name and TIN.

  2. When adding a dependency exemption, perform thorough research, to verify a dependent’s name and TIN using IDRS and attachments. If a TIN is obviously inappropriate, for example (111-11-1111) or (123-45-6789) or a similar TIN configuration, correspond for the correct TIN per IRM 3.11.6.10 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9. For a 324C letter, use paragraphs A, T, 6. If Form 8962 is not attached to the amended return and xClaim did not caution the presence of Premium Tax Credit (PTC) or Advanced Premium Tax Credit (APTC), then you must research the CDR through the AMS tool. The tool will indicate whether APTC was paid on behalf of the dependent.

    1. If APTC is indicated then route the Form 1040X to CIS/AM, notate PTCX in the working trail.

    2. If APTC is not indicated, follow normal procedures.

    Note:

    Perform the above verification prior to inputting CC DDBCK/DUPED data base.

    If Then
    The person's TIN and name control matches any of the CC INOLE information or CC DDBKD Allow the exemption, adjust the account, and update CC DDBCK for current year claims as well as prior year claims.
    The person's name control and TIN do not match any of the CC INOLE information or CC DDBKD 1. Research CC NAMES for the correct name and/or TIN.
    2. If unable to determine, correspond per IRM 3.11.6.10 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9. For a 324C letter, use paragraphs A, T, 6.

    Exception:

    When working returns received from the ITIN department, see IRM 3.11.6.4.14.

    The taxpayer
    • States "religious or conscience based objection" to providing the TIN for the additional exemption

    • Makes changes to the primary or secondary taxpayer's TIN

    • Or the primary or secondary taxpayer’s TIN is invalid

    Forward to CIS/AM.
    The taxpayer states they could not obtain a TIN because a child was born and died in the same tax year
    1. Process as normal if the taxpayer provides any of the following:

      • Birth certificate,

      • death certificate,

      • doctor/midwife statement on letterhead with business address and telephone number,

      • copies of hospital medical records

      Note:

      Do not update the DUPOL database.

    2. If the taxpayer has not provided the required documentation, correspond with a 3050C using paragraphs, A, 1, 2, 4, 5.

  3. When the taxpayer adds an exemption that has an ITIN, research CC DUPED (DDBCK/INOLE if updated) for the current ITIN status see IRM 3.11.6.3.1.1 for processing instructions.

  4. When adding or removing exemptions, verify that the total number of exemptions amount claimed on Line 4, of Form 1040X corresponds to the number of exemptions on the "NUM-EXEMPT>" field on CC TXMOD or TOT Exemptions: field on CC IMFOL.

    Note:

    If a correction was made to the taxpayer’s original filing due to a/an dependent/exemption related issue, the NUM-EXEMPT or TOT Exemptions fields may not reflect the correct information. Refer to IRM 3.11.6.7.3, IRM 3.11.6.7.4.1 and IRM 3.11.6.7.4.

    Note:

    If there is an indication that the dependent does not live with the taxpayer, see IRM 3.11.6.9.3.2.

  5. If the taxpayer attempts to add a dependent who will be born in a future year or who died in a prior year, see IRM 3.11.6.7.4. Use fill-in: We did not add your dependent as requested based on the dependent's date of birth or date of death.

  6. If taxpayer is adding, changing or deleting an exemption and you cannot determine the correct exemption or it is unclear, correspond per IRM 3.11.6.10 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9. For a 324C letter, use paragraphs A, T, 6.

    Exception:

    In a situation in which the dependent(s) being added has a rejected ITIN and therefore will not have an SSN, see the instructions per IRM 3.11.6.4.14.

  7. When changing exemptions use CRN 887 for the change in number of exemptions using a two-digit decimal format (+/-) and Reason Code 006.

  8. Update the DUPOL database using CC DDBCK when the taxpayer is adding or removing exemptions. When CC DDBCK is not available use CC DUPED for current year returns, and do not update CC DUPED for prior year returns, see IRM 3.11.6.8.

  9. If the dependent previously had an ITIN and now has a valid SSN, DDBCK must be used to update the exemption to the SSN.

    Reminder:

    Send a Form 4442 to the Austin ITIN Unit to have the ITIN revoked. Annotate both TINs on the Form 4442 referral and specify the ITIN that should be revoked. The individual’s name, Date of Birth (DOB) and a statement that a merge has posted (primary taxpayer only) or no merge action is required (dependent). The reason for revoking the ITIN is "the dependent now has a valid SSN per IRM reference 3.11.6.8.3(4)" .

  10. If the taxpayer changes the number of exemptions, their filing status may also change.

    Note:

    If taxpayer is filing status 4, HOH and removes all dependent exemptions, correspond for QND if taxpayer does not change filing status to FS1.

  11. Refer as CIS/AM if the taxpayer has a notation or attachment that states conscience based objection to providing TINs for exemption (i.e., religious objection or some other similar type of statement).

Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents
  1. A taxpayer who is claiming an exemption for a child who did not live with him/her under the rules for children of divorced or separated parents will indicate this by:

    • Attaching Form 8332

    • Entering an amount on Part I, Line 26

    • Indicating on Line 30 or notates in the explanation area of the Form 1040X.


    The noncustodial parent must attach a Form 8332. If missing, correspond per IRM 3.11.6.10 using either Form 8009-A, box 8, or a 324C letter, paragraphs A, 3, 6. For the fill-in use: Please complete Form 8332 to support your changes.

  2. If the taxpayer submits a copy of their divorce decree and/or Form 2120 and does not submit Form 8332, route to CIS/AM.

  3. If Form 8332 is attached, continue processing, using RC 006.

    Note:

    Update the DUPOL database.

Taxable Income (Line 5)

  1. Taxpayers use Line 5 to indicate how much taxable income they are reporting. Their initial tax will be based on taxable income. When adjusting Line 5, use IRN 886.

    Note:

    If the adjustment affects the AGI on line 1, column B, by either a positive or negative amount and there is no change to the taxable income on Line 5, Column B, then use IRN 886 with .00 as the amount of change for Column B.

  2. Do not adjust taxable income below zero.

    Note:

    If the taxpayer attempts to adjust an amount on line 5 below zero, only make the adjustment to zero.

Calculation of Tax Liability Methods (Line 6)

  1. Line 6 – Calculation of tax on the taxable income shown on Line 5. Generally, the tax table should be used or other method that was used to figure the tax on the original return. However, a different method may have to be employed if the amendment changes the character of the income such as capital gains or qualified dividends. See table below for the various methods of tax calculations:

    If the tax was calculated using: Then the taxpayer will enter in the box on Line 6 the following method:
    Tax Table Table
    Tax Computation Worksheet TCW
    Schedule D worksheet Sch D
    Schedule J (Form 1040) Schedule J

    Note:

    Schedule J more than ≡ ≡ ≡ route to CIS/AM

    Qualified Dividends and Capital Gain Tax Worksheet QDCGTW
    Form 2555 or Form 2555 A, Foreign Earned Income Tax (Worksheet) FEITW

    Note:

    Route to CIS/AM

    Form 8615 Route to CIS/AM
  2. Use the AMS worksheets to verify the tax on line 6 when the taxpayer has not used the tax tables and math verification is required.

  3. Schedule D reason codes: When adding Investment Gain (Or loss) use Reason Code 13 to identify the change to income. Use RC 043 when there is a change to the Schedule D tax worksheet or the QDCGTW.

Alternative Minimum Tax
  1. Alternative Minimum Tax (AMT) is assessed in addition to the tax on taxable income.

  2. Form 6251 may involve CB/CF issues. See IRM 3.11.6.4.2.

  3. AMT is reported on Form 6251 and line 45 of Form 1040. If a change is discovered math verify the taxpayer's figures ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ by completing the appropriate AMS worksheets.

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

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Reminder:

    Form 6251 or Form 1040 does not have to be attached to determine if a change has occurred to AMT.

  4. Use reason code 045 when inputting an adjustment that involves a change to AMT.

Credits - Non Refundable (Line 7)

  1. Taxpayers use Line 7 to reduce their tax by claiming non refundable credits by an amount not to exceed the tax before credits on Line 6.

  2. If the taxpayer claims a credit(s) greater than the tax before credits (line 6) and the full amount of the credit(s) is used to reduce the corrected Total Tax or if the taxpayer is not eligible for all or part of non refundable credit(s) see IRM 3.11.6.7.4.

  3. If unable to determine the source of the line 7 change, research IDRS and attachments for indications of routing criteria or other processing. If the cause of the change cannot be determined and the change is under ≡ ≡ ≡ ≡ , process normally.

  4. If the taxpayer makes an initial claim ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Line 7 that cannot be substantiated, correspond for an explanation and/or supporting documents.

    Note:

    Correspond for an explanation per IRM 3.11.6.10 using either Form 8009-A, boxes 5 and 15, or a 324C letter, paragraphs A, K, 3, 6. Fill-in: We are unable to correct your account with the information you supplied on your Form 1040X. There is not a sufficient explanation to determine what changes are being requested. Please correct the appropriate column(s) and/or supply an explanation and tell us what changes you made to your income, deductions, credits and the amount and reason for each change.

    Note:

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

  5. When you update DUPOL to delete a dependent you must also verify the taxpayer is removing certain credits associated with the dependent. The credits received on behalf of each dependent are listed on the CC DDBCK screen and the taxpayer should remove all Child Tax Credit, Additional Child Tax Credit, Education Credit, and Adoption Credit that was received based on the dependent. The taxpayer may qualify for Earned Income Credit and Child Care Credit in special circumstances. If the taxpayer did not remove Child Tax Credit, Additional Child Tax Credit, and Education Credit, you must reverse the credit(s) and input a corrected adjustment following procedures in IRM 3.11.6.7.4. If the taxpayer claimed Adoption Credit route CIS/AM.

  6. Unless otherwise specified, use RC 036 for all workable credits.

Protecting Americans from Tax Hikes (PATH Act)
  1. The Protecting Americans from Tax Hikes Act (PATH Act) was enacted December 18, 2015. The PATH Act prohibits taxpayers from retroactively claiming certain TIN related credits for any tax year in which the taxpayer, spouse or qualifying child did not have a valid SSN assigned or ITIN/ATIN application received by return due date or due date as extended. The PATH Act applies to:

    • Child Tax Credit (CTC)

    • Additional Child Tax Credit (ACTC)

    • American Opportunity Credit (AOTC) -both refundable and non-refundable

    • Earned Income Credit (EIC)

    • CP notices 08, 09 and 27.

  2. Credit specific eligibility requirements apply in addition to the PATH Act criteria.

  3. The PATH Act prohibits current year refunds of EIC or ACTC before February 15, all amended returns, without a C- freeze, that add EIC or ACTC must be held until then.

  4. PATH Act does not apply to superseding returns.

  5. Do not remove PATH credits previously allowed due to a filing status change to Married filing jointly unless initiated by the taxpayer. Apply the PATH Act using the following table:

    If And Then
    The spouse has a newly assigned ITIN The XRET is for the current processing year or the assignment date is more than 90 days after the Return Due Date or due date as extended for a prior year Disallow with a 105C or 106C, see IRM 3.11.6.10.3 and follow (8) below.
    The spouse has a SSN
    1. The SSN was issued after the return due date

    2. The SSN was issued on or before the return due date or due date as extended

    1. Disallow with a 105C or 106C. See IRM 3.11.6.10.3

    2. Process the return

    The spouse has a newly assigned SSN
    1. The SSN was issued after the return due date and EIC is increasing

    2. The SSN was issued after the return due date and EIC is decreasing

    3. The SSN was issued on or before the return due date

    1. Disallow the additional EIC with a 105C or 106C. See IRM 3.11.6.10.3.Do not remove existing EIC.

    2. Decrease the EIC.

    3. Process the return.

  6. Research is required prior to adding PATH Act credits. To qualify a SSN associated with the credit(s) must have been assigned on or before the due date or due date as extended of the return being processed. Use CC INOLES - TIN ASGNMT to research when the SSN was issued. If the field is populated with all zeros, the assignment date is prior to January 1, 2012. To qualify, an ITIN application must be received on or before the due date or due date as extended of the return being processed. For 201512 and prior returns, if the ITIN assignment date is 90 days or less after the return due date, the Real Time System (RTS) must be used to verify the received date of the application. If received on or before the due date, allow the credit; RTS will not be available to all tax examiners and the research should be performed following local procedures.

  7. After thoroughly exhaustive in-depth research:

    If Then
    The taxpayer had a valid SSN assignment date or had an ITIN/ATIN application received date on or before the due date of the original return or due date as extended. Continue processing the return.
    The SSN was not assigned by the due date. Disallow with a 105C or 106C, see IRM 3.11.6.10.3 also follow (8) below.
    The SSN shows all zeros in the TIN-ASGMT field and your return is 2010 or prior and after research the assignment date cannot be determined. Correspond using a 324C paragraphs A, 3, *, 6, or Form 8009-A fill-ins The Protecting Americans From Tax Hikes Act of 2015 prevents retroactive claims of certain refundable credits, if the social security number (SSN) of the taxpayer, spouse, or qualifying child was issued after the due date (including extensions) of the tax return for the tax year involved.Please send us a copy of your social security card (if applicable), your spouse’s social security card (if applicable) and/or qualifying child’s social security card (if applicable). The local Social Security Administration office may also provide you with proof of the issuance date of the SSN.

    Note:

    Only request documentation for the SSNs where you cannot verify timely issuance.

    Note:

    If the response does not provide the requested qualifying information, then disallow per IRM 3.11.6.10.3 and follow (8) below.

    The ITIN was assigned after the return due date Disallow with a 105C or 106C, see IRM 3.11.6.10.3 and follow (8) below.

    Note:

    For prior year returns, if the ITIN assignment date is 90 days or less after the return due date, RTS must be used to verify the received date of the application. If received prior to the due date, allow the credit; research RTS following local procedures.

    The ATIN was assigned after the return due date Disallow with a 105C or 106C, see IRM 3.11.6.10.3 and follow (8) below.

    Note:

    For prior year returns, if the ATIN assignment date is 90 days or less after the return due date, RTS must be used to verify the received date of the application. If received prior to the due date, allow the credit; research RTS following local procedures.

  8. When a PATH Act credit(s) has been disallowed, input a TC 971 AC 113.

    • Use the received date for the transaction date.

    • Enter the total of all PATH Act credit(s) claimed on Form 1040X that are being disallowed in the "Freeze Release>" field.

  9. Do not input a TC 971 AC 113 if:

    • Routing

    • Ripple effects caused by AGI or Tax changes

    • Amending a credit claimed on the original return

    • Partial adjustments

Child Tax Credit (CTC) (Line 7)
  1. Child Tax Credit (CTC) is a non refundable credit which is used to reduce the taxpayer’s tax liability.

  2. Route to CIS/AM if there is a change to CTC and CTC/ACTC Recertification indicator 1, 2, 3, 4 or 9 is present on IDRS.

  3. If the taxpayer attaches a Form 8862 for a credit not addressed on the amended return and there is an indicator for that credit, then return the Form 8862 to the taxpayer with a Form 8009-A and fill-in: We are returning your Form 8862, this form should be filed with your next return that claims (name of credit(s). If the taxpayer does not have any indicators or does not have an indicator for the credit marked on the Form 8862, continue processing.

  4. PATH Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

  5. To qualify for the credit, the child(ren) must be:

    1. Claimed as a dependent on the return, and

    2. Son, daughter, stepchild, brother, sister, stepbrother, stepsister, or a descendent of any of them, and

    3. Was under age 17 at the end of the calendar year, and

    4. Did not provide over half of his or her own support for the taxable year, and

    5. Lived with the taxpayer for more than half of the taxable year, and

    6. A U.S. citizen, U.S. national, or a resident of the United States.

      Note:

      Taxpayer's child includes a legally adopted child, a child who is lawfully placed for adoption with the taxpayer, or a child who is placed with the taxpayer by an authorized placement agency or by judgment decree, or the order of any court of competent jurisdiction.

      Note:

      If the child is 17 or older at the end of the calendar year, and the tax year is 2017 and prior, disallow the claim per IRM 3.11.6.10.3 using the following fill-in: We have disallowed your claim on Form 1040X because in order to qualify for the Child Tax Credit, your dependent must be under the age of seventeen at the end of the calendar year.

      Example:

      A taxpayer claimed CTC for a child age 18. The child does not qualify for CTC, but would qualify for ODC. The claim should be partially disallowed.

  6. For 2018, to qualify for CTC/ACTC:

    1. The child(ren) must have a valid SSN. If the child(ren) has an ITIN or ATIN, disallow the claim per IRM 3.11.6.10.3, fill-in: Beginning in 2018, your child(ren) must have an SSN, issued before the due date of your return (including extensions), to qualify for the Child Tax Credit.

    2. If the child does not qualify for CTC/ACTC, they may qualify for ODC, see IRM 3.11.6.9.6.3. If the child meets the qualification criteria for ODC, disallow the CTC/ACTC following IRM 3.11.6.10.3. Use fill-in, We disallowed your claim for Child Tax Credit and allowed you the Credit for Other Dependents.

    3. If the taxpayer claims both the CTC/ACTC and ODC for the same dependent:
      •Allow the ACTC if qualified. Send a 105C or 106C per IRM 3.11.6.10.3, fill-in, We have disallowed your claim for Other Dependent Credit. The same dependent(s) cannot qualify for both the Other Dependent Credit and the (Additional) Child Tax Credit.
      •Disallow the ACTC if not qualified and allow the ODC, if qualified. Send a 105C or 106C per IRM 3.11.6.10.3 and use the fill-in from paragraph (4) or (11) as appropriate.
      •Disallow both credits if qualifications are not met. Send a 105C or 106C per IRM 3.11.6.10.3 with fill-in: We have disallowed your claim for Additional Child Tax Credit and Credit for Other Dependents because the dependent(s) listed do not meet eligibility requirements.

  7. If a taxpayer claims the child tax credit for a dependent with an ITIN, Schedule 8812 must be attached for TY 2017 and prior. If Schedule 8812 is missing correspond using either Form 8009-A boxes 4 or 5 or 324C letter, paragraphs A, 3, 6 with fill-in: Complete Schedule 8812 to support the changes you made with your amended return.

  8. If the taxpayer indicates a religious or conscience-based objection to obtaining a TIN, route to CIS/AM

    Exception:

    IRS will allow the credit if the taxpayer identifies as either "Amish" , "Mennonite" or "Exempt 4029" , even if the individual does not have a valid TIN.

  9. The maximum allowable amount per child is determined by tax year. For tax years 2018 and subsequent:

    • Credit is $2,000 per child, $1,400 is refundable.

    • Qualifying child must have an SSN issued on or before the due date of the return including extensions.

    • See table in paragraph (10) below for phase out criteria based on tax year filed.

  10. For tax years 2017 and prior:

    • Credit amount is $1,000 per child.

    • Qualifying child must have a valid ITIN, SSN, or ATIN. For returns/amended returns filed after Dec. 18, 2015, the TIN must be issued by the due date of the return (including extensions).

    • See table in paragraph (10) below for phase out criteria based on tax year filed.

  11. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  12. The child credit is reduced (phase out) by $50 for each $1,000 that AGI exceeds:

    Filing Status 2018 2017 and Prior
    Married Filing Jointly (FS 2) $400,000 $110,000
    Married Filing Separately (FS 3) $200, 000 $55, 000
    All other (FS 1, 4, or 5) $200,000 $75,000
  13. The taxpayer must furnish a valid Taxpayer Identification Number (TIN) for each qualifying child. This number may be:

    1. A Social Security Number (SSN) issued by the Social Security Administration.

    2. For tax years 2017 and prior only, an Individual Taxpayer Identification Number (ITIN) issued by the IRS if the taxpayer is not eligible for an SSN.

    3. For tax years 2017 and prior only, an Adoption Taxpayer Identification Number (ATIN) issued by the IRS for a child while an adoption is pending.

    4. IRS will allow the credit if the taxpayer identifies as either "Amish" , "Mennonite" or "Exempt 4029" , even if the individual does not have a valid TIN.

    Note:

    For tax years 2017 and prior, if the taxpayer has answered the question in Part 1 of Schedule 8812 with "no" , the issue is not allowable based on law or regulation. Send the taxpayer a disallowance letter for fully disallowed or partially disallowed claims as appropriate. Follow IRM 3.11.6.10.3 using the fill-in: We have disallowed your claim for (Additional) Child Tax Credit because the dependent(s) listed as a qualifying child on your Schedule 8812 do not meet the substantial presence test. In special circumstances the taxpayer is instructed to check both the "yes" and "no" boxes in Part 1; these claims should be allowed.

  14. Math verify the taxpayer's figures by completing the appropriate worksheet in the instructions booklets, publication, or electronic web-based worksheets on AMS.

  15. Update the DUPOL database using CC DDBCK prior to inputting adjustment.

  16. Adjust the child tax credit with TC 291 to increase the credit (decreases the tax) and TC 290 to decrease a previously allowed credit (increases the tax) with RC 036.

  17. Any portion of this credit that was not used to reduce the income tax to zero may be eligible to be used as a refundable credit (Additional Child Tax Credit).

Credit for Other Dependents (ODC)
  1. Beginning in tax year 2018, the Credit for Other Dependents (ODC) is a $500 nonrefundable credit for those dependents that do not qualify for Child Tax Credit.

  2. For the taxpayer to claim ODC, the following eligibility criteria must be met.

    1. The taxpayer and spouse, if filing jointly, must not be claimed as a dependent on another tax return.

    2. A qualifying individual must:
      •Be a dependent of the taxpayer,
      •Have a valid SSN, ITIN, or ATIN and
      •Meet PATH Act requirements, see IRM 3.11.6.9.6.1.

    3. The taxpayer is not claiming CTC/ACTC and ODC for the same dependent.

  3. If eligibility requirements are not met, disallow the credit following IRM 3.11.6.10.3 fill-in: We have disallowed your claim for Credit for Other Dependents because the dependent(s) listed do not meet eligibility requirements.

  4. If there is a change to ODC, and CTC/ACTC Recertification Indicator 1, 2, 3, 4 or 9 is present on IDRS, route to CIS/AM.

  5. If the taxpayer attaches a Form 8862 for a credit not addressed on the amended return and there is an indicator for that credit, then return the Form 8862 to the taxpayer with a Form 8009-A and fill-in: We are returning your Form 8862, this form should be filed with your next return that claims (name of credit(s). If the taxpayer does not have any indicators or does not have an indicator for the credit marked on the Form 8862, continue processing.

  6. Adjust the ODC with RC 173.

Form 2441, Child and Dependent Care Credit (Line 7)
  1. The Child and Dependent Care Credit is claimed on Form 1040X, Line 7B.

  2. The qualifying person claimed for the Child and Dependent Care Benefit does not need to be claimed as a dependent on the return.

  3. Refer to CIS/AM if the taxpayer indicates a “religious or conscience based objection” to obtaining a TIN.

  4. Correspond for Form 2441 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ IRM 3.11.6.10 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form 2441 to support the changes requested on Form 1040X.

  5. If Form 2441 is attached, the following items must be completed:

    1. Line 1(a), Provider’s Name must be present.

    2. Line 1(c), Provider’s TIN must be present, unless the provider is an exempt organization, such as, but not limited to the following:
      • Churches, synagogues, mosques, or temples
      • Schools-both public and private
      • YMCA/YWCA or YMHA/YWHA
      • Other nonprofit organizations
      • The provider was a foreign citizen with no U.S. address and the child care was provided in a foreign country.

    Note:

    Correspond for Form 2441 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ IRM 3.11.6.10 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form 2441 to support the changes requested on Form 1040X.

    Note:

    Do not correspond for the missing TIN when more than one provider name is entered on Line 1, and at least one provider's TIN is present.

  6. The provider's TIN is not required when the taxpayer has exercised "due diligence" in his/her attempt to comply with the requirement. Due diligence applies only to notations that indicate:

    1. The provider has moved and the taxpayer is unable to find the provider to get the TIN, or

    2. The provider has refused to give the TIN to the taxpayer.

      Note:

      Notations that indicate the taxpayer is "unable" to get the TIN, that the TIN is "not available" , that it is "unknown" , "pending" , "applied for" or any notation other than those listed above are not acceptable due diligence statements.

  7. Line 2(a), Qualifying Person can be the taxpayer’s dependent child under age 13, or disabled spouse or dependent unable to care for himself or herself. If the TIN is missing and the taxpayer is not claiming an exemption for the person who appears to be the same child qualifying the taxpayer for the credit, correspond using Form 8009-A box 6 and 19. For a 324C letter use paragraphs A, 3, 6 fill-in: Please provide the taxpayer identification number of the person who qualifies you for the Child and Dependent Care Credit, Form 2441.

  8. Line 2(b), Qualifying Person(s) TIN must be furnished. It can be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification Number (ATIN), see IRM 3.11.6.3.1. If blank and the filer is claiming an additional exemption who appears to be the same child claimed for this credit, do not correspond.

    Note:

    For taxpayers indicating a religious group (e.g., Amish/Mennonite), "Exempt-Form 4029" , allow the credit without a TIN.

  9. A qualifying person may be a dependent qualifying child under the age of 13 years. If the child turns 13 during the year, the child is a qualifying person only for part of the year the child was under 13 unless they are incapable of self-care. Expenses incurred during that time period can be claimed.

    1. A qualifying person can also be a taxpayer’s disabled spouse who was not physically or mentally able to provide self-care for themselves. The taxpayer must identify the qualifying person and the condition in the explanation of changes or in an attached notation.

    2. A qualifying person can also be any disabled person who was not physically or mentally able to provide self-care and who can be claimed by the taxpayer as a dependent (or who the taxpayer could claim as a dependent except that the person had gross income of $3,500 or more or filed a joint return.)

    3. A qualifying person can also be any disabled person who was not physically or mentally able to provide self-care for themselves and whom the taxpayer can claim as a dependent except that the taxpayer or spouse if filing jointly could be claimed as a dependent by another taxpayer.

      Note:

      In a, b and c above, the taxpayer has to self-identify the qualifying condition and if the taxpayer does not meet the age criteria the claim will have to be disallowed per IRM 3.11.6.10.3 using fill-in: We have disallowed your claim on Form 2441, Child and Dependent Care Credit. To qualify for this credit, the qualifying person must be a dependent qualifying child under the age of 13 or a spouse or other dependent who is physically or mentally not able to provide self-care.

  10. Line 3 cannot exceed $3,000 for one dependent or $6,000 for more than one dependent. If blank, see Line 2(c) of Form 2441 for an amount paid.

  11. Lines 4 and 5 (Your Earned Income and Spouse’s Earned Income) must be complete in order to claim this credit.

    If And Then
    Filing Status 1, 3, 4, or 5 Line 4 is blank Research CC RTVUE and CC IRPTR to verify if the primary taxpayer has earned income.
    If unable to determine, send Form 8009-A with box 20 or 324C paragraphs A, 3, 6 fill-in: Please provide your Earned Income amount on Line 4, Part II. This line must be completed.
    Filing Status 1, 3, 4, or 5 Line 5 is blank Continue processing
    Filing Status 2 Line 4 is blank Research CC RTVUE and CC IRPTR to verify if the primary taxpayer has earned income.
    If unable to determine, send Form 8009-A with box 20 or 324C paragraphs A, 3, 6 fill-in: Please provide your Earned Income amount on Line 4, Part II. This line must be completed.
    Filing Status 2 Line 5 is blank Research CC RTVUE and CC IRPTR to verify if the secondary taxpayer has earned income.
    If unable to determine, send Form 8009-A with box 21 or 324C paragraphs A, 3, 6 fill-in: Please provide the spouse’s Earned Income amount on Line 5, Part II. This line must be completed when married filing a joint return.

    Note:

    Both spouses must have earned income if filing jointly to take the credit. See page 3 of the Form 2441 instructions Spouse Who Was a Student or Disabled for exceptions. If both spouses do not have earned income and do not meet the exceptions specified then disallow the claim per IRM 3.11.6.10.3 use fill-in: We have disallowed your claim for Form 2441, Child and Dependent Care Credit, because both spouses on a joint return must have earned income.

  12. Correspond for Lines 1(c) and 2(b) if missing and cannot be determined from NAMEI, NAMEB, NAMES, NAMEE, etc. See "NOTE" in paragraph (6) above for Line 1(c) on Form 2441.

    Note:

    Before corresponding for the care provider’s name, see IRM 3.11.6.9.6.2 (1) and (2). When corresponding for the care provider, follow instructions per IRM 3.11.6.9 and send either Form 8009-A or a 324C letter. For Form 8009-A, use box 18. For a 324C letter use paragraphs A, L, 6.

  13. Update the DUPOL database using CC DDBCK if a TIN is being added, or deleted, see IRM 3.11.6.8.

    Exception:

    For the current year only, CC DUPED must be used if the qualifying person was over the age of 12 but disabled or if the child turned 13 during the year.

  14. Process using RC 036.

    Note:

    If the taxpayer is reporting Dependent Care Benefits (DCB) on Line 1 of Form 1040X, process using RC 007.

Form 5695, Residential Energy Credits (Line 7)
  1. Form 5695 is used to claim both the Residential Energy Efficient Property Credit and Non-Business Energy Property Credit to qualified taxpayers who made energy efficient purchases.

  2. Residential Energy Efficient Property Credit provides taxpayer a credit for adding qualified solar panels, solar water heating equipment, or a fuel cell power plant to their homes in United States. The credit applies to qualified solar panels and solar water heating equipment placed into service after December 31, 2005 and before January 1, 2022. The credit applies to fuel cell power plants placed in service after December 31, 2005 and before January 1, 2018.

    Note:

    The taxpayer can claim 30% of the total cost, including certain installation, as the credit for the following: qualified solar (electric and water heating only), small wind energy, qualified fuel cell and geothermal heat pump property costs.

  3. Non-business Energy Property Credit provides taxpayers a credit for improving the energy efficiency of an existing home and for costs relating to residential energy property expenses. The credit is available for items such as high efficiency heating and cooling systems, water heaters, windows, doors and insulation. For TY 2011 and subsequent, the credit is limited to $500 and reduced by any amounts received in prior years. The credit is not available for property placed into service after December 31, 2016.

  4. If the taxpayer is claiming more than the maximum allowed for either credit, see IRM 3.11.6.7.3. Use fill-in: You claimed more than the maximum amount allowed on Form 5695, Residential Energy Credit and/or Residential Energy Efficient Property Credit. Continue to process the return for other issues.

  5. If Form 5695 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ correspond per IRM 3.11.6.10 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form XXXX to support the changes you have made.

  6. Process using RC 036.

Form 8396, Mortgage Interest Credit (Line 7)
  1. To qualify for the Mortgage Interest Credit, the taxpayer should have received a Mortgage Credit Certificate (MCC) issued under a qualified MCC program in connection with their principal residence.

    Note:

    The Mortgage Credit Certificate is not required to be attached to the Form 8396.

  2. If the Form 8396 is attached, it must be math verified if the claim is more than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. If the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , route to Cat A.

  4. If Form 8396 is not attached, correspond per IRM 3.11.6.10 using either Form 8009-A, box 4 or 5, or a 324C letter, paragraphs A, 3, 6. Use fill-in: Please complete Form 8396 to support the changes you have made.

    Note:

    Do not correspond if the form is missing and the amount claimed≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    .

  5. If Form 8396 is attached and the amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , process using RC 036.

Form 8863, Education Credit (Line 7)
  1. Form 8863, Education Credit is for qualified education expenses paid to an eligible post secondary educational institution. This credit is composed of two separate credits:
    •The American Opportunity Tax Credit(AOTC)
    •The Lifetime Learning Credit (LLC).

  2. The maximum amount for each credit:

    1. Lifetime Learning Credit: up to $2,000 (non-refundable only)

    2. Combined credit for the American Opportunity Credit: up to $2,500, refundable and non-refundable combined.
      • $1,500 for the non-refundable portion
      • $1,000 for the refundable portion.

  3. Refer to CIS/AM if:

    • The taxpayer Indicates a religious group (e.g., Amish/Mennonite) or conscience based objection to obtaining a TIN.

    • For tax years 2017 and subsequent, if a required Form 1098-T is not attached or on CC IRPTRL and the taxpayer provides other evidence they were a student.

  4. To be eligible for the Education Credit, the student(s) claimed on Form 8863 must be the primary, secondary or claimed as a dependent on the tax return.

  5. Research CCs TRDBV, RTVUE, DDBCK, DUPED to determine if the student claimed on Form 8863 was claimed as an exemption. If the student was the primary taxpayer, secondary taxpayer or claimed as an exemption, continue to process the return; otherwise see paragraph (10) below.

  6. Use the following table to determine if the education credit claim must be disallowed:

    If Then
    Through research, it is determined the person listed as the student was not a dependent of the taxpayer Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.10.3. Use fill-in: We disallowed your claim on Form 8863, Education Credit. You can claim this credit only if the person listed as a student was claimed as an exemption for (1) Yourself, (2) Your Spouse, (3) a dependent that was claimed on your tax return.
    The taxpayer did not phase out the credit amount:
    • For Lifetime Learning Credit, see IRM 3.11.6.9.6.7.1

    • For American Opportunity Credit, see IRM 3.11.6.9.6.7.2

    Input the adjustment per IRM 3.11.6.10.3 and send a 105C/106C letter disallowing the exceeded amount. Use fill-in: We disallowed part of your credit on Form 8863, Education Credit because the credit begins to be reduced when your Modified Adjusted Gross Income (MAGI) exceeds $ (use appropriate amount for filing status and tax year).
    The taxpayer meets or exceeds the elimination threshold amount:
    • For Lifetime Learning Credit, see IRM 3.11.6.9.6.7.1

    • For American Opportunity Credit, see IRM 3.11.6.9.6.7.2

    Input the adjustment per IRM 3.11.6.10.3 and send a 105C/106C letter disallowing the credit. Use fill-in: We disallowed your claim on Form 8863, Education Credit. You cannot claim the credit because your Modified Adjusted Gross Income (MAGI) exceeds $ (use appropriate amount for filing status and tax year).
    The taxpayer claimed both the American Opportunity Credit and Lifetime Learning Credit for the same student in the same year Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.10.3. Use fill-in: We disallowed your claim on Form 8863, Education Credit. You cannot claim both the American Opportunity Credit and the Lifetime Learning Credit for the same student for the same tax year.
    The taxpayer is filing as FS 3 (married filing separate) Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.10.3. Use fill-in: We disallowed your claim on Form 8863, Education Credit. You cannot claim this credit if you are married filing separate.
    The student indicates that they are claimed on another return Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.10.3. Use fill-in: We disallowed your claim on Form 8863, Education Credit. You cannot claim this credit if you are claimed as a dependent on your parent's or another person's return.
    The taxpayer previously claimed the Tuition and Fees deduction and is now claiming Education Credit for the same student Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.10.3. Use fill-in: Use fill-in: We disallowed your claim on Form 8863, Education Credit. You may not claim both Form 8917, Tuition and Fees Deduction and Form 8863, Education Credits for the same student.
  7. For tax years 2016 and subsequent, the taxpayer must provide the educational institution’s Employer Identification number on Form 8863. If the EIN is missing and cannot be determined through attachments or IDRS research, correspond using Form 8009-A box 6.

  8. If unable to determine for whom the credit is being claimed or if the student's name and/or TIN is illegible, missing, or cannot be determined, correspond per IRM 3.11.6.10 using either Form 8009-A, box 4 or 6; or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form 8863 to support the changes you have made.

    Note:

    Form 1098-T (Tuition Statement) may be used to determine the student's name, TIN, or other required information, if attached. The yes / no questions in Part III cannot be dummied.

    Note:

    For tax year 2012 and onward the student's name and TIN will be listed on page 2, Part III of Form 8863.

  9. If Form 1098-T is being used as support for the Tuition and Fees deductions on Line 1 of Form 1040X, correspond for Form 8917.

  10. If the taxpayer claims more than the maximum credit allowed recalculate and input the correct credit amount. Refer to IRM 3.11.6.7.3.

  11. Form 8863 must be attached for the initial claim for each dependent. If missing correspond per IRM 3.11.6.10 using either Form 8009-A, box 4 or 5, or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form 8863 to support the changes you have made.

  12. Update the DUPOL database to add or delete a Form 8863, Education Credit record using CC DDBCK.

    Note:

    It is not necessary to update the DUPOL database if the taxpayer is amending a previously claimed education credit amount for the same student that was originally claimed; unless the credit for that student is reduced to zero.

Lifetime Learning Credit (LLC)
  1. The Lifetime Learning Credit portion of Form 8863 can only be claimed as a non-refundable credit. The maximum amount for the Lifetime Learning Credit is $2,000 per student. Form 8863 must be attached for all initial claims unless AOTC was previously claimed for the student.

  2. The Lifetime Learning Credit begins to phase-out when the MAGI is between:

    Filing Status 2018 2017 2016 2015
    FS 2 $114,000-$134,000 $112,000 -$132,000 $111,000 - $131,000 $110,000 - $130,000
    FS 1, 4 or 5 $57,000 - $67,000 $56,000 - $66,000 $55,000 - $65,000 $55,000 -$65,000

    The credit is phases out by:

    • 5% for every $1,000 that exceeds the threshold amount for FS 2.

    • 10% for every $1,000 that exceeds the threshold amount for FS 1, 4 or 5.

    If the taxpayer does not phase-out the LLC, disallow see IRM 3.11.6.9.6.7.

  3. The Lifetime Learning Credit is eliminated when the MAGI reaches or exceeds:

    Filing Status 2018 2017 2016 2015
    FS 2 $134,000 $132,000 $131,000 $130,000
    FS 1, 4 or 5 $67,000 $66,000 $65,000 $65,000

    Note:

    Disallow the claim when the taxpayer claims the LLC and the MAGI meets or exceeds the threshold amount, see IRM 3.11.6.9.6.7.

  4. Since the Lifetime Learning Credit is based on qualified education expenses paid to an eligible post secondary educational institution, when the age of the student is such that the credit becomes questionable or there are other circumstances that are questionable and the Form 1098-T is not present on IRPTR, no consider the claim and request a copy of the Form 1098-T, Tuition Statement. Use the 916C letter paragraphs B, F, R, 1, 4 or Form 8009-A fill-in: We did not receive a Form 1098-T, Tuition Statement from your education institution for the student to support your claim on Form 8863. This form is used to verify enrollment and qualified educational expenses. Please contact the educational institution and ask them to issue Form 1098-T to the IRS to verify the enrollment status and qualified expense information.

  5. If the taxpayer does not complete lines 20 thru 22 in Part III of Form 8863, return the claim to the taxpayer using Form 8009-A box 6 or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete line(s) XX on Form 8863.

  6. To adjust the LLC use a TC 29X with RC 035.

American Opportunity Credit (AOTC)
  1. The American Opportunity Credit portion of Form 8863 can be claimed as a non-refundable credit, refundable credit or both and must be attached for all initial claims.

  2. The maximum amount for AOTC is $2,500 combined refundable and non-refundable credit per student. The maximum amount of each portion is:

    • $1,500 non-refundable

    • $1,000 refundable.

  3. Typically, this will be a maximum of $1,500 non-refundable and $1,000 refundable credit. If the non-refundable credit exceeds $1,500 per student, there should not be a refundable credit on Line 15. If the box on Form 8863, Part 1, Line 7 is checked, the taxpayer does not qualify for the refundable portion.

  4. If there is a change to AOTC and AOTC Recertification indicator 1, 2, 3, 4 or 9 is present on IDRS, route to CIS/AM.

  5. If the taxpayer attaches a Form 8862 for a credit not addressed on the amended return and there is an indicator for that credit, then return the Form 8862 to the taxpayer with a Form 8009-A and fill-in: We are returning your Form 8862, this form should be filed with your next return that claims (name of credit(s). If the taxpayer does not have any indicators or does not have an indicator for the credit marked on the Form 8862, continue processing.

  6. PATH Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

    Note:

    If the taxpayer replaces the LLC with the AOTC, treat as a new claim.

  7. Cat A criteria may apply to this credit, see IRM 3.11.6.4.5.1.

  8. AOTC has additional requirement:

    If Then
    The student, for which AOTC is claimed, indicates the credit has been claimed for any four prior years Send a 105C/106C letter disallowing the claim per IRM 3.11.6.10.3. Fill-in: We disallowed your claim for Form 8863, American Opportunity credit because you can only claim the credit for four years for each student.
    The student, for which the credit is claimed, indicates they were not enrolled at least half-time for at least one academic period (that began during the tax period) at an eligible education institution Send a 105C/106C letter disallowing the claim per IRM 3.11.6.10.3. Fill-in: We disallowed your claim for Form 8863, American Opportunity credit because the student listed has been convicted of a felony for possession or distribution of a controlled substance.
    The student, for which the credit is claimed, indicates they were convicted of a felony for possession or distribution of a controlled substance and the conviction was before the end of the tax period for which the credit was claimed Send a 105C/106C letter disallowing the claim per IRM 3.11.6.10.3. Fill-in: We disallowed your claim for Form 8863, American Opportunity Credit because the student listed must be enrolled at least half-time for at least one academic period.
  9. For increases to AOTC (non-refundable, refundable or combination) of ≡ ≡ ≡ ≡ ≡ ≡ or more:

    If And Then
    1098-T is not attached and not present on CC IRPTR   Send a 916C per (1) below
    Form 1098-T is attached
    or
    Form 1098-T is not attached but is present on CC IRPTR
    1. The student was enrolled less than half-time (box 8 of Form 1098-T is not checked).

    2. The student is ≡ ≡ ≡ ≡ ≡ of age or younger at the end of the tax year.

    3. The student is ≡ ≡ ≡ ≡ ≡ of age or older at the end of the tax year.

    1. Send a 916C with paragraphs B, F, R, 1, 4. Fill-in: We did not receive information from the educational institution to verify eligibility for the credit claimed.

      Note:

      If there are allowable items, use fill-in: We did not receive information from the educational institution to very eligibility for the credit claimed. You will receive a separate notice for the items we adjusted.

    2. Allow the credit.

    3. Refer to Cat A.

  10. The non-refundable portion of AOTC begins to phase-out when the modified Adjusted Gross Income (MAGI) is between:

    Filing Status 2018 2017 2016 2015
    FS 2 $114,000-$134,000 $112,000 -$132,000 $111,000 - $131,000 $110,000 - $130,000
    FS 1, 4 or 5 $57,000 - $67,000 $56,000 - $66,000 $55,000 - $65,000 $55,000 -$65,000

    The credit is phases out by:

    • 5% for every $1,000 that exceeds the threshold amount for FS 2.

    • 10% for every $1,000 that exceeds the threshold amount for FS 1, 4 or 5.

  11. The refundable portion of AOTC is reduced (phased-out) if the taxpayer’s MAGI is between:

    • $80,000 and $90,000 for FS 1, 4 or 5

    • $160,000 and $180,000 for FS 2

    The credit is phased-out by:

    • 5% for every $1,000 that exceeds the threshold amount for FS 2.

    • 10% for every $1,000 that exceeds the threshold amount for FS 1, 4 or 5.

    Note:

    If the taxpayer does not phase-out AOTC, when required, disallow the exceeded amount. See IRM 3.11.6.9.6.7.

  12. The refundable portion of AOTC is eliminated when the MAGI meets or exceeds:

    • $90,000 for FS 1, 4 or 5

    • $180,000 for FS 2

    Note:

    Disallow the claim when the taxpayer claims AOTC and the MAGI meets or exceeds the elimination threshold amount. Input the adjustment and send a 105C/106C per IRM 3.11.6.10.3. Use fill-in: We disallowed your claim on Form 8863, Education Credit. You cannot claim the credit because your modified adjusted gross income is $90,000 or more ($180,000 or more if filing jointly).

  13. If the taxpayer does not complete lines 20 through 26 in pat III of Form 8863, return the claim to the taxpayer using Form 8009-A box 6 or a 324C letter with paragraphs A, 3, 6 fill-in: Please complete line(s) XX on Form 8863.

  14. To adjust AOTC:

    1. Non-refundable portion
      •Adjust the non-refundable portion of the credit with a TC 29X.
      • Use RC 035.

    2. Refundable portion
      •Adjust the refundable portion with CRN 260
      •Use RC 106.

Form 8880, Credit for Qualified Retirement Savings Contributions (Line 7)
  1. The credit for Qualified Retirement Savings Contributions is a non refundable income tax credit for taxpayers whose AGI is equal to or less than:

    Filing Status 2018 2017 2016 2015 2014
    2 $63,000 $62,000 $61,500 $61,000 $60,000
    1 or 3 $31,500 $31,000 $30,750 $30,500 $30,000
    4 or 5 $47,250 $46,500 $46,125 $45,750 $45,000
  2. An eligible individual must:

    • Be at least 18 as of the close of the tax year.

    • Not be claimed as a dependent on someone else's tax return.

    • Not be a full-time student.

  3. Taxpayers may be able to take a credit of up to $1,000 ($2,000 if married filing jointly) for making eligible contributions to an employer-sponsored retirement plan or to an Individual Retirement Arrangement (IRA). The credit is a percentage of the qualifying contributions. See Form 8880.

  4. Qualified retirement savings contributions are the sum of participant contributions and elective deferrals made to qualified plans, traditional IRAs and Roth IRAs.

  5. If present, math verify the taxpayer's figure. Continue processing using RC 036 If missing and the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ , correspond using either Form 8009-A, box 4 or 5 or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form 8880 to support the changes you have made.

  6. If claim is being disallowed for any reason, see IRM 3.11.6.7.3.

Schedule R Credit for the Elderly or the Disabled (Line 7)
  1. To qualify for the credit, taxpayer must be:

    • U.S. citizen or resident alien.

    • Within certain income limits.

    • Age 65 or older by the end of the tax year.

      Exception:

      If under age 65 see paragraph 2 below.

      Note:

      A taxpayer is considered age 65 on the day before the 65th birthday.

  2. A taxpayer under the age of 65 must be considered permanently and totally disabled in order to take this credit, and all of the following conditions must be met:

    • The taxpayer retired on permanent and total disability.

    • They received taxable disability income during the tax year.

    • On January 1st of the tax year they had not reached mandatory retirement age.

  3. Schedule R (Form 1040) or Schedule 3 (Form 1040A) must be submitted ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the following must be present. If missing or incomplete, correspond:

    • Filing status/age must be checked.

    • A physician's statement must certify the disability condition or the box must be checked to indicate the statement was filed or obtained in a previous year.

    • On a joint return, if both spouses are disabled, both must submit a statement.

      Note:

      A physician's statement is only required if the taxpayer(s) checked box 2, 4, 5, 6, or 9 in Part I of the Schedule R and did not check the box in #2 of Part II.

    Note:

    Correspond ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ per IRM 3.11.6.9 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form XXXX to support the changes you have made.

    Note:

    If the taxpayer requests that the IRS compute the credit, route to CIS/AM.

  4. Taxpayers may qualify for this credit, but cannot take the credit if the following applies:

    If filing status is Adjusted gross income (AGI) is equal to or more than Or the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than
    Single, head of household, or qualifying widow(er) with dependent child $17,500 $5,000
    Married filing a joint return and both spouses qualify $25,000 $7,500
    Married filing a joint return and only one spouse qualifies $20,000 $5,000
    Married filing a separate return and you lived apart from your spouse the entire year $12,500 $3,750
  5. If present, continue processing with RC 036.

  6. If claim is being disallowed for any reason, set a math error per IRM 3.11.6.7.3.

Form 3800, General Business Credits (Line 7)
  1. Form 3800 is used to report General Business credits.

  2. Taxpayers can file the Form 3800 and/or the specific form for the credit they are claiming, but at least one must be present. If not present, correspond following instructions in IRM 3.11.6.9 requesting the specific form ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Use Form 8009-A, box 4 or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Form XXXX to support the changes you have made. to request the correct form(s).

  3. If the taxpayer claims ≡ ≡ ≡ ≡ ≡ ≡ on Forms 6765 or 8586, route to CIS/AM.

  4. Use CRN 884 when adjust Form 8864 Biodiesel and Renewable Diesel Fuels credit or 6478, Alcohol and Cellulosic Biofuel Credit and CRN 883 when adjusting Form 8907, Non-conventional Source Fuel Credit.

  5. If Form 5884-B either attached to the Form 3800 or loose should be routed to CIS/AM.

  6. If Form 8826, Disabled Access Credit, is filed with an amended return, one or more of the following must be present on the original or amended return: Schedule C, Schedule E, Schedule F or "Other Income" claimed on Form 1040, line 21. If Form 8826 or Form 3800 claim this credit and the supporting forms are present, follow Cat A procedures if the claim exceeds ≡ ≡ ≡ . If the supporting forms are not present, disallow see IRM 3.11.6.10.3 use the following open paragraph. "We have not allowed your claim for the Disabled Access Credit. You have no indication of a business ownership or activity that would qualify you for this credit based on your tax return information for this tax year."

  7. Verify the credit claimed in part III of the Form 3800, process using reason code 036 if not routeable per IRM 3.11.6.12.

Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit
  1. Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit, is used to claim a credit for qualified plug-in electric drive motor vehicles placed in service during the tax year.

  2. Taxpayers are not required to complete or file this form if their only source for this credit is a partnership or S corporation. Instead, they can report this credit directly on Form 3800, General Business Credit. See IRM 3.11.6.9.6.10.

  3. The maximum amount of the credit for a qualified plug-in electric drive vehicle can be found at https://www.irs.gov/Businesses/Qualified-Vehicles-Acquired-after-12-31-2009.

  4. The calculated amount cannot exceed the maximum amount for any qualified vehicle. Input the allowable amount and send a 916C, see IRM 3.11.6.10.9.

  5. The following requirements must be met to qualify for the credit:

    1. Form 8936 must be attached for the initial claim of the credit.

    2. The VIN number, on the title or car purchase agreement must match the VIN number on Form 8936. Generally, the VIN is 17 characters made up of numbers and letters.

    3. The car must be on the list per (3) above or have a Manufacturer's Certification attached.

    4. The car title or car purchase agreement.

  6. Correspond:

    If And Then
    Form 8936 is missing   Correspond using either a 324C with paragraphs A, 3, 6 or Form 8009-A box 8, fill-in Please provide Form 8936 with a copy of your vehicle’s title or car purchase agreement.
    Either the car title or car purchase agreement is missing   Correspond using either a 324C with paragraphs A, 3, 6 or Form 8009-A box 8, fill-in Please provide a copy of your vehicle’s title or car purchase agreement.
    The VIN number is missing or does not match.   Correspond using Form 8009-A paragraph 8 or a 324C paragraphs A, 3, 6 fill-in: Please provide the correct or missing Vehicle Identification Number (VIN) on your Form 8936. The number provided on the title or car purchase agreement either does not match or was missing from your Form 8936.
    The vehicle is not on the list per (3) above or the Manufacturer's Certification is missing   If missing correspond using Form 8009-A paragraph 8 or 324C letter paragraphs A, 3, 6 fill-in: To be allowed the Qualified Plug-In Electric Drive Motor Vehicle Credit you must provide documentation that qualifies you for this credit.
  7. Use RC 036 when adjusting the credit.

Other Taxes (Line 10)

  1. Taxpayers use Line 10 to report additional taxes owed.

    Note:

    Uncollected Taxes (UT) from line 60 of Form 1040 may be reported on line 10 or 11 of Form 1040X. Use RC 049 when UT is changing.

  2. Refer to CIS/AM if the taxpayer is amending any of the following and no higher route criteria exists:

    1. Form 4137, Social Security and Medicare Tax on Unreported Tip Income.

    2. Form 5329, Additional Taxes on Qualified Plans (Including IRA's) and Other Tax Favored Accounts -- with Parts III - VIII completed.

    3. Form 8919, Uncollected Social Security and Medicare Tax on Wages.

    4. Form 8959, Additional Medicare Tax.

    5. Form 8960, Net Investment Income Tax.

    6. Schedule H, Household Employment Taxes.

    Note:

    If there is an unexplained entry on line 10, and the type of income or reason for the change cannot be determined through attachments or IDRS research, refer to your manager or lead.

Additional Tax on Early Distribution-Form 5329/ Form 1099-R (Line 10)
  1. Taxpayers use Form 5329 or Form 1099-R to report the amount and the penalty for early withdrawal/distribution or an excess contribution of their IRA. Taxpayers may explain they are claiming this amount in lieu of submitting Form 5329 or Form 1099-R

    Note:

    If taxpayer sends in both Form 5329 and 1099-R, follow the 1099-R instructions.

  2. When a taxpayer submits an amended Form 5329, only process claims that have Part I or Part II of Form 5329 completed. Refer to CIS/AM any Form 5329 with entries in Parts III through IX. Use the following Reason Codes when processing:

    1. RC 016 for the IRA distribution

    2. For Distribution Code 1, the 10% penalty is required unless exception code 1-11 is provided. If the penalty is changing, use RC 048.

  3. If the taxpayer used Form 1099-R instead of Form 5329 to report the amount, process only those claims that have a Distribution Code of "1" or "7" . Refer as CIS/AM any Form 1099-R with a Distribution Code other than a 1 or 7. If the taxpayer identifies a change to Form 1099-R, verify the distribution code even if there is no dollar change.

    Exception:

    If the taxpayer is claiming ONLY withholding from a 1099-R that has a distribution code other than a 1 or a 7, continue processing the return. Use reason code 051.

    1. For Distribution Code 1, the taxpayer should report the taxable portion of the distribution (box 2a of Form 1099-R) on Line 1 of Form 1040X. The taxpayer is also generally subject to a 10% penalty for early withdrawal which is reported on Line 10 of Form 1040X as "Other Taxes."

    2. If the Distribution Code is "1" and the taxpayer states they are not subject to the 10% penalty, Form 5329 must be attached correspond if missing IRM 3.11.6.11 row 24a. Form 5329 must have an Exception Code 1 through 11, listed on Line 2. The full distribution amount should be listed on Line 1 and the excluded amount should be listed on Line 2; otherwise refer CIS/AM.

    3. If the Distribution Code is "1" and the taxpayer did not include the 10% penalty and no Form 5329 is attached, refer to CIS/AM.

    4. For Distribution Code 7, the taxpayer is not subject to any penalty. This distribution is a "Normal Distribution" from Education Accounts.

      Note:

      If the taxpayer does not provide a Form 1099-R, research IDRS using CC IRPTR to determine the distribution code. If unable to determine the distribution code through IDRS research, refer as CIS/AM. Prior year data will be available; however current year data will not be available until mid-year.

  4. The 10% penalty will be waived for reservists called to active duty.

    1. Taxpayers have been instructed to write "Active Duty Reservist" in the top margin of the Form 1040X if the 10% tax was already paid on a distribution. Eligible reservists may file Form 1040X Amended U.S. Individual Income Tax Return, to claim a refund. The words "Active Duty" should be written on the top of the form. Part II, Explanation of Changes should include:

    • The date they were called to active duty.

    • The amount of the retirement distribution.

    • The amount of early distribution tax paid.

  5. If the taxpayer does not provide the early retirement distribution amount or tax paid and the distribution cannot be verified through IRPTR or the active duty date is not provided, correspond using Form 8009-A box 8 or 324C Paragraphs: A, 3, 6 fill-in: Please provide the date you were called to active duty, the amount of the retirement distribution, and the amount of early distribution tax paid.

  6. Process claim using reason code 048.

Self-Employment (SE) Tax (Line 10)
  1. SE tax is figured using Schedule SE and is reported on Line 10 of Form 1040X.

  2. Taxpayers must pay SE tax if they had net-earnings ≡ ≡ ≡ ≡ ≡ ≡ ≡ from a non-exempt trade or business.

    Note:

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

  3. Native American Tribal income is not subject to SE Tax.

  4. SE income is reported on Schedules C, C-EZ, E, F or as Other Income on Form 1040, Line 21 (e.g., Form 1099-MISC) If the taxpayer is a statutory employee (indicated on Form W-2, box 13), use Schedule C or C-EZ, line 1, as earned income. This income is not subject to SE tax.

  5. New lines have been added to Schedule C, C-EZ, E, and F to report merchant card payments and third party network payments from Form 1099-K instead of Form 1099-MISC. Self-Employed taxpayers will be responsible for reporting this income on the respective schedules.

  6. Take the following action based on the chart below:

    If And Then
    a) The taxpayer is making an adjustment that results in income ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ that is subject to self-employment tax, but the taxpayer is not addressing/assessing the self-employment tax SE Tax not reported Refer to Cat A
    • Indicate "Questionable SE income" on Cat A cover sheet
    b) If the taxpayer is excluding or reducing SE Tax and Form 4361 is attached, or mentioned, or minister is indicated

    Note:

    Adjust the account if the taxpayer is paying the full SE Tax amount even if minister (or similar) is mentioned or Form 4361 is attached.

      Refer to CIS/AM
    c) There is an indication of partnership (i.e., Schedule E) SE Tax is based off this income Refer to CIS/AM
    d) The Optional Method in Section II of Schedule SE was used to calculate SE tax   Refer to CIS/AM
    On a joint return both taxpayers have self-employment income Taxpayers combined their SE Tax onto one Schedule SE Correspond using Form 8009-A box 12 or a 324C letter, paragraphs A, 3, 7 fill-in: Taxpayers filing jointly must file separate Schedules SE if they both have self-employment income. If only one spouse has self-employment income list only that spouse's name on the Schedule SE. Otherwise file two separate Schedules SE.
    On a joint return You are unable to determine which taxpayer's account to adjust Correspond for the correct TIN to adjust the SE Tax per IRM 3.11.6.9 For Form 8009-A, use box 12 For a 324C letter, use paragraphs A, 3, 7 fill-in: We cannot determine which taxpayer is filing Schedule SE. Please enter the name and social security number (SSN) or IRS Individual Taxpayer Identification Number (ITIN) of the taxpayer who is required to pay this tax. Please complete Schedule SE as appropriate. If both husband and wife are required to pay this tax, each must file a separate Schedule SE.

    Note:

    If the correspondence is undelivered or no-reply, then assign the full SE to the primary taxpayer. If assigning the full SE to the primary exceeds the maximum SE tax, IRM 3.11.6.9.7.2.2 then assign the full SE to the secondary taxpayer.

Adjusting SE Tax
  1. In addition to SE tax, Line 10 is used to report various "other taxes" (e.g., changes to Form 5329). Do not include these amounts when adjusting SE tax. To verify Line 10 is only composed of SE tax, compare the posted total of SE tax "SET>" on CC TXMOD/IMFOL to Line 10 of the Original Amount Column, if column is present on Form 1040X

  2. Compute the difference between the posted SE tax on CC TXMOD (SET>) to the amended Schedule SE. On Schedule SE this is:

    • Line 5 (short Schedule SE)

    • Line 12 (long Schedule SE)

      Note:

      Do not decrease any posted amounts to less than zero.

  3. When the taxpayer adjusts SE tax on Line 10 they should have included as a deduction to Line 1 (AGI) an amount equal the deductible part of the SE tax change from Line 10, column B. Verify the taxpayer included this amount by comparing the correlating lines from Form 1040 on CC RTVUE. If not considered, recompute the tax using the deductible part of SE tax included into Line 1.

  4. Use Reference Number (RN) 889 only for changes only to SE Tax. Use RC 044 for Self Employment Tax, RC 030 for the deductible part of Self Employment Tax (adjustment to income) and the specific RC for the type of income reported.

SE Social Security
  1. The self-employment tax rate is 15.3% and consists of two parts: 12.4% for social security (old-age survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

    Exception:

    Social security tax for TY 2012 is 10.4%.

  2. Only a portion of the taxpayer's SE income is subject to the social security part of SE tax. See the table below for the maximum amounts for the tax year. The adjustments for the IRN 878 or IRN 879 cannot exceed this amount.

    Tax Year Maximum amount subject to SE Social Security
    2018 $128,400
    2017 $127,200
    2015/2016 $118,500
    2014 $117,000
  3. For each taxpayer whose SE Social Security is changing, compute the difference between the original posted total on CC TXMOD to the amended Schedule SE. On the Schedule SE, this is:

    • Line 4 (short Schedule SE)

    • Smaller of line 6 or line 9 (long Schedule SE)

  4. When adjusting SE social security, use:

    1. IRN 878 to identify the primary taxpayer (PRIM-SE-INCM)

    2. IRN 879 to identify the secondary taxpayer (SECND-SE-INCM)

SE Medicare
  1. All of the taxpayer's SE income is subject to the 2.9% Medicare portion of SE tax, even if the entire SE Social Security portion has been met.

  2. For each taxpayer whose SE Medicare is changing, compute the difference between the original posted total on CC TXMOD to the amended Schedule SE. On the Schedule SE, this is:

    • Line 4 (short Schedule SE)

    • Line 6 (long Schedule SE)

  3. When adjusting SE Medicare, use:

    1. RN 895 to identify the primary taxpayer (PRIM-MEDICARE-INC).

    2. RN 896 to identify the secondary taxpayer (SECND-MEDICARE-INC).

Total Tax (Line 11)

  1. Line 11 is used to indicate the taxpayer's total tax liability. Unless otherwise indicated, any reference to total tax is referring to Line 11, Form 1040X. Total tax liability is the sum of:

    • Tax before credits (based on taxable income).

    • Minus any non refundable credits from Line 7.

    • Plus any additional "other taxes" from Line 10.

      Note:

      The amount of Total Tax based on the original filed return is represented by a Tc 150 on CC TXMOD or CC IMFOL.

  2. If the amount on Line 11, is from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, move the amount to Line 15.

  3. Math Verification is required on a total tax change of≡ ≡ ≡ ≡ ≡ or more, see IRM 3.11.6.7.3 if there is a discrepancy between IRS and taxpayer's figures, or there is a math error.

  4. Do not include SRP changes in the TC 29X amount.

  5. All processable claims require either a TC 290 or TC 291:

    Transaction Code Tax Adjustment
    Use TC 290
    Increase in line 11

    No change on line 11 (zero tax change)
    Use TC 291
    Decrease on line 11

    Note:

    Never adjust Line 11 below zero, regardless of what the taxpayer has indicated. If the adjustment cannot be input because you cannot reduce an item below zero then adjust the account following IRM 3.11.6.7.3.

Federal Income Tax Withholding (Line 12)

  1. Taxpayers use Line 12 to report their Federal income tax withheld (TC 806/807) and/or any excess Social Security/Railroad Retirement Tax Act (RRTA) Tier 1 (TC 766).

  2. If the amount on Line 12 is from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, move the amount to Line 15.

  3. If Form W-2 or Form 1099 series is missing and the change to the withholding credit is ≡ ≡ ≡ ≡ ≡ or more and you are unable to verify the credit on IRPTR, correspond per IRM 3.11.6.10 using either Form 8009-A, box 16, or a 324C letter paragraphs A, 3, 6 fill-in: We need Forms W-2 or 1099 for the change in withholding you claimed. We’ll accept a duplicate from your employer or a photocopy.

  4. The following action should be taken on any Form 1040X claiming withholding associated with Social Security Administration (SSA) benefits:

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

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

    • If IRPTR does not substantiate the withholding, "No Consider" the claim using a 916C letter. Use paragraphs B, F, R, 1, 4 fill-in: Please provide documentation to substantiate your claim such as Form 1099-SSA or other appropriate documentation and we will reconsider your claim.

      Caution:

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

  5. If withholding is being claimed per Schedule K-1, route to CIS/AM.

    Exception:

    If the amount can be verified on CC IRPTR continue processing.

  6. When adjusting Line 12, use RC 051 for changes to withholding and RC 055 for Excess Social Security and Tier RRTA:

    1. CRN 806 for increases to withholding.

    2. CRN 807 for decreases to withholding.

    3. CRN 252 for increases/decreases to Excess Social Security.

    Note:

    Use Priority Code 8 when there is a TC 17X posted on the account to prevent unpostables.

    Note:

    Never adjust Line 12 below zero.

Excess Social Security and Railroad Retirement Tax Act (RRTA)
  1. To process an excess social security/RRTA claim the individual taxpayer must report wages from more than one employer (see following chart for the wage base limit for the year).

  2. Social Security/RRTA wages and tax withheld must exceed the maximum amount required for the tax year:

    Tax Year Maximum SS (see note) and RRTA Tier 1 (Wages) Maximum SS and RRTA Tier 1 (Tax Limit – 6.2%)
    2018 $128,400 $7,960.80
    2017 $127,200 $7,886.40
    2015/2016 $118,500 $7,347.00
    2014 $117,000 $7,254.00

    Note:

    Social Security Wages are found in Box 3 of the W-2 Form.

    Note:

    The employee's portion of the social security tax for TY 2012 is 4.2%.

  3. Use the following when the taxpayer does not meet the necessary qualifications to claim excess social security/RRTA Tier 1:

    If Then
    The excess social security was withheld by only one employer and there is one W-2
    1. Input a TC290 .00. If additional issues are present, continue to process for the remaining issues.

    2. Send a 404C letter using paragraphs A, C, D, E, M (8374).

    The taxpayer has separate Forms W-2 with the same employer EIN The taxpayer can claim excess social security or RRTA Tier I tax withheld if:
    • A parent company and one or more of it’s subsidiaries are responsible.

    • A company acted as an agent for more than one of the taxpayer’s employers.

    • The W-2 was issued by a Certified Professional Employer Organization (CPEO). Participation must be verified on the List of CPEOs, see https://www.irs.gov/pub/irs-utl/list_of_cpeos.pdf.

    The taxpayer is MFJ and used earnings / social security from both the primary and secondary taxpayers to calculate excess social security
    1. Input a TC290 .00. If additional issues are present, continue to process for the remaining issues.

    2. Send a 404C letter using paragraphs A, C, F, M (8374).

    The taxpayer’s wages do not exceed the wage base limit for the tax year Send a 105/106C letter disallowing the claim per IRM 3.11.6.10 fill-in: We disallowed your claim for excess social security withheld. Your wages do not exceed $XXX,XXX. for tax year XXXX. In order to claim excess social security, you must have reported wages from more than one employer, your total wages must exceed the wage base limit and the social security tax withheld must exceed the maximum amount required for the tax year.
    The taxpayer’s social security withheld does not exceed the maximum amount required for the tax year Send a 105/106C letter disallowing the claim per IRM 3.11.6.10 fill-in: We have disallowed your claim for excess social security withheld. Your social security withheld does not exceed $XXXX for tax year XXXX. In order to claim excess social security, you must have reported wages from more than one employer and the social security tax withheld must exceed the maximum amount required for the tax year.
  4. Use CRN 252 for an increase or decrease to excess social security/RRTA Tier 1 use RC 055.

    Note:

    If an error message is displayed, input N in the override field.

Estimated Tax Payments (Line 13)

  1. Estimated tax payments are payments made by the taxpayer under certain conditions. The following is not an all-inclusive list, but the payments may be recorded as TC 430, TC 660, TC 670, TC 710 or TC 716. Depending on the results of your IDRS research, you may need to use the CSI Tool to determine other payment types.

  2. When making a determination on whether a payment is misapplied, you must look at the overall status of the account and how the payment(s) are being used. To help with your determination, you will need to perfect the return, see IRM 3.11.6.7.3. Once the return is perfected, compare your perfected Line 13 figures with the payments on the module. Be sure to take into account any adjustment that is being made on the amended return then use the following table.

    If And Then
    The payments do not match the amount claimed after perfecting the return
    1. Credit balance is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Credit balance is ≡ ≡ ≡ ≡ ≡ ≡

    1. Follow normal processing procedures.

    2. Route to CIS/AM.

    There are payments posted
    1. The module will be a zero balance or balance due after the adjustment

    2. Credit balance is ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Credit balance is ≡ ≡ ≡ ≡ ≡ ≡

    1. Process following normal procedures.

    2. Process following normal procedures.

    3. Route to CIS/AM

    The taxpayer submits a payment with the amended return (TC 670)
    1. The payment matches the adjustment

    2. The module is in balance due after the adjustment

    3. The remaining credit balance on the module is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    4. The remaining credit balance on the module is ≡ ≡ ≡ ≡ ≡ ≡

    1. Process following normal procedures.

    2. Process following normal procedures.

    3. Process following normal procedures.

    4. Route to CIS/AM.

    The estimated tax payment is the only issue The total posted to the module matches the amount claimed Input a TC 290 .00, RC 61, and SC 1.
Estimated Tax Penalty
  1. Estimated (ES) tax penalty is assessed based on the original filed return, the penalty is posted as a TC 170 or TC 176.

  2. The taxpayer must clearly indicate an intent to change their ES Penalty by any of the following:

    1. Mentioning the change on the Form 1040X or attachments.

    2. Attaching an amended Form 2210.

    3. Including it on a Form 1040 series return when no Form 1040X is attached.

    4. Attaching a Form 1040 series return to a Form 1040X and showing intent to change, such as:
      Penalty change is reflected in a payment the taxpayer sent with the return.
      Penalty change is reflected on Form 1040X lines 6, 10 or 11.
      Penalty change is reflected on Form 1040X lines 16-22.
      Taxpayer mentions the penalty or similar statement in the explanation or attachments.

  3. If no indication to change the ES Penalty is present per (2) above, do not adjust the penalty. Continue processing the return and do not adjust the penalty or correspond for a Form 2210.

  4. Route to CIS/AM if the taxpayer is requesting a change to the penalty:

    • due to a filing status change to married filing jointly (FS 2) or

    • to a change in withholding or

    • checked box A, B, or E in Part II, Form 2210.

  5. If the return is being routing to EXAM or Cat A, do not adjust the penalty or correspond for a Form 2210.

  6. If the return is a superseding return process the adjustment per paragraphs (11) and (13) below.

  7. If the return is not a superseding return:

    If the penalty is And the change is Then
    Increasing   Do not adjust the ES Penalty.
    Decreasing
    1. Less than $100

    2. $100 or more with Form 2210 attached and one of the boxes in Part 2 checked.

    3. $100 or more and Form 2210 is not attached or Form 2210 is attached and none of the boxes in Part 2 are checked.

    1. Adjust per paragraph (13) below.

    2. Process per paragraphs (11) and (12) below.

    3. Process per paragraph (10) below.

  8. When the taxpayer is changing their penalty by $100 or more and a Form 2210 is not attached or none of the boxes in Part II are checked send a 369C letter:

    • Do not adjust the penalty.

    • Adjust the return for all other allowable issues.

    • Send a 369C with paragraphs A, G, U, 1.

    • Use call back number 1-800-829-0922.

    • Fill-in: If you qualify for one of the exceptions in Part II, Form 2210, you may be able to reduce your penalty. Complete and submit a Form 2210 according to the instructions.

  9. Math verify the estimated tax penalty using the AMS worksheets when Form 2210 is attached and at least one of the boxes in Part II is checked. If the difference between the AMS penalty amount and the taxpayer’s amount is:

    1. $100 or more– adjust the account using the recomputed amount. See IRM 3.11.6.7.3.

    2. Less than $100 – adjust the account using the taxpayer’s amount.

  10. If unable to math verify, correspond per IRM 3.11.6.7.3.

  11. To adjust the ES Penalty use:

    • TC 170 to increase the penalty.

    • TC 171 to decrease the penalty.

    • RC 065 (required when a TC 17X is input)

    If the estimated tax penalty is reducing, include a Penalty Reason Code (PRC) in the fourth position, see below:

    If And Then use
    A TC 170 is posted on the account
    1. The taxpayer is filing a superseding return

    2. The taxpayer is providing a corrected computation

    1. PRC 010

    2. PRC 016

    A TC 176 is posted on the account
    • The taxpayer is filing a superseding return or

    • The taxpayer is providing their own penalty computation on Form 2210

    PRC 013
    A TC 170 or 176 is posted on the account Correcting an IRS computational error PRC 045

Earned Income Credit (EIC) Adjustments (Line 14)

  1. The following items are necessary for EIC to be claimed on an amended return:

    • Schedule EIC is required to be attached if a qualifying child (not claimed as a qualifying child for EIC originally) is being claimed for EIC.

    • Schedule EIC must contain the qualifying children's SSN information.

    • The type of income must be identified.

  2. Route to CIS/AM if there is a change to EIC and EITC Recertification indicator 1, 2, 3, 4 or 9 is present on IDRS.

  3. If the taxpayer attaches a Form 8862 for a credit not addressed on the amended return and there is an indicator for that credit, return the Form 8862 to the taxpayer with a Form 8009-A and fill-in: We are returning your Form 8862, this form should be filed with your next return that claims (name of credit(s). If the taxpayer does not have any indicators or does not have an indicator for the credit marked on the Form 8862, continue processing.

  4. The Disaster Tax Relief and Airway Extension Act of 2017 added a rule for qualifying taxpayers that were affected by Hurricane Harvey, Irma or Maria. Taxpayers whose 2016 Earned Income is greater than their 2017 Earned Income may elect to use the 2016 Earned Income to figure their 2017 EIC. Taxpayers are instructed to write "PYEI" and their 2016 earned income amount on the dotted line for EIC. Qualifying individuals are those individuals who:

    • lived in the Tropical Storm or Hurricane Harvey disaster area on August 23, 2017.

    • lived in the Hurricane Irma disaster area on September 4, 2017.

    • lived in the Hurricane Maria disaster area on September 16, 2017.

    • California Wildfires area between October 8, 2017 and January 18, 2018.

    Note:

    Change the category to KATX if adjusting.

EIC Eligibility Criteria
  1. Taxpayer (and spouse if filing a joint return) must have a valid Social Security Number (SSN) issued by the Social Security Administration (SSA) to claim the EIC. Any qualifying child listed on Schedule EIC must also have a valid SSN. A valid SSN does not include an Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN) or Internal Revenue Service Number (IRSN).

  2. When the taxpayer changes to married filing jointly, and the taxpayer has an:

    • ITIN, allow the filing status change and disallow all of the EIC. Send a 105/106C per IRM 3.11.6.10.3; fill-in, We have disallowed your claim for the Earned Income Credit because both the primary and secondary taxpayers listed on the return must have a valid Social Security Number.

    • SSN, issued after the return due date, disallow any additional EIC being claimed on the amended return, see paragraph (3) below.

    Note:

    If the qualifying dependent has an ITIN, send a 105C/106C letter fill-in: "We have disallowed your claim for the Earned Income Credit because the qualifying person must have a valid Social Security Number."

  3. PATH Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

    Note:

    The PATH Act applies to filing status changes only to the extent of any additional EIC claimed. The PATH Act does not allow the removal of EIC previously allowed due to a filing status change to married filing jointly unless initiated by the taxpayer.

  4. Taxpayers filing married filing separate do not qualify for the credit. Disallow the claim and send a 105C/106C per IRM 3.11.6.10.3.

  5. The qualifying person claimed for the EIC does not need to be claimed as a dependent.

  6. Taxpayer investment income must be less than:

    Tax year Investment Income
    2018 $3,500
    2017 $3,450
    2015/2016 $3,400
    2014 $3,350

    Note:

    If the taxpayer's investment income is more than the designated limit, send a 105C/106C letter disallowing the claim per IRM 3.11.6.10.3 Use fill-in: We have disallowed your claim for the Earned Income Tax Credit because your investment income is greater than $XXXX.

  7. Taxpayer must have earned income, refer to IRM 3.11.6.9.12 to determine what qualifies as earned income.

  8. Taxpayer (and spouse if filing jointly) is not the dependent of another taxpayer for the same year.

Taxpayer With/Without Qualifying Child(ren) on Schedule EIC
  1. Taxpayers who claim EIC based on having a qualifying child must also have a child who meets the following three tests:

    • Relationship

    • Age

    • Residency

    Note:

    The Additional Child Tax Credit may have to be recomputed if EIC is allowed and the taxpayer claimed three or more qualifying children for the Child Tax Credit. See IRM 3.11.6.9.12.

    Test Requirements
    Relationship test To be your qualifying child, a child must be the taxpayer’s:
    • Son, daughter, stepchild, foster child or a descendent of any of them (i.e., grandchild), adopted child or
    • Brother, sister, half-brother, half-sister, stepbrother, stepsister or a descendent of them (i.e., niece or nephew)
    Age test The child must be:
    • Under age 19 at the end of the calendar year.

    • Under age 24 at the end of the calendar and a student, or

    • Permanently and totally disabled at any time during the calendar year, regardless of age.

    Residency Test The child must live with the taxpayer in the U.S. for more than half of the tax year. Temporary absences, such as for schooling, medical care or vacation, are counted as time lived at home. If a child fails the residency test solely because the child was born or died during the tax year, the child is treated as meeting the test, if the child lived with taxpayer for more than half of the time the child was alive during the tax year.
    • A foster child (child placed with the taxpayer by an authorized placement agency) and who lived with the taxpayer for more than half of the year will pass the residency test.
  2. If a child does not appear to meet the age requirements, do not assume the child is a student or disabled. The taxpayer must indicate the child meets the age test. If a qualifying dependent does not appear to meet the age test, send a 474C paragraphs C, 1, d fill-in: We disallowed part of your claim for Earned Income Credit because a child shown on your Schedule EIC does not appear to meet the age requirement. If your child meets this requirement as a student or disabled dependent, you must file a new Form 1040X and complete a new Schedule EIC. Input a partial adjustment to allow child(ren) that meet all qualifications.

    Note:

    Taxpayer's child does not have to be a dependent of the taxpayer in order for the taxpayer to claim the EIC.

  3. If a child does not appear to meet the relationship or residency test send a 105C/106C. Fill-in,: We have disallowed your claim for the Earned Income Credit because the qualifying person did not meet either the relationship or residency requirements needed to claim this credit.

    Exception:

    The taxpayer's kidnapped child can meet the residency requirement if the following requirements are also met. If met the child is treated as meeting the residency requirement for all taxable years ending during the period that the child is kidnapped. The child must be presumed by law enforcements authorities to have been kidnapped by someone who is not a member of the family of the child or the taxpayer. The child must have had, for the taxable year in which the kidnapping occurred, the same principal place of abode as the taxpayer for more than half of the portion of the year before the date of the kidnapping.

    Note:

    This rule applies for all tax years ending during the period that the child is kidnapped. It does not apply as of the first tax year beginning after the year in which the child is determined to be dead ( or, if earlier, the year in which the child would have reached age 18).

  4. A taxpayer with no qualifying child must also meet these requirements:

    • Taxpayer must be at least 25 but under age 65 (either spouse, if joint).

      Example:

      For a taxpayer whose birthday is on January 1st and is turning 25 on January 1st of a year immediately subsequent to the tax year (i.e., taxpayer turns 25 on January 1st, 2016 and is filing a TY 2015 return) the service will allow the claim for EIC provided other eligibility criteria are met.

    • Taxpayer must claim his/her exemption on the return (both spouses, if joint).

    Note:

    If the taxpayer does not meet the requirements outlined in paragraph (3) send a 105C/106C letter. Fill-in: We have disallowed your claim for the Earned Income Credit because in order to qualify for this credit you must meet the Age, Residency, and Exemption requirements.

Adjusting EIC
  1. When the taxpayer makes an initial claim for EIC or when adding a qualifying child, Schedule EIC must be attached; correspond if missing per IRM 3.11.6.10.

    Note:

    Correspond using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, 3, 6 fill-in: Please complete Schedule EIC to support the changes you have made.

    Exception:

    When claiming EIC for self and/or spouse only, Schedule EIC is not required.

  2. Before allowing the EIC, verify the qualifying child(ren) name(s), date of birth and SSN(s) using CC DDBCK, CC INOLE and CC NAMES.

    Exception:

    Do not disallow the claim or set a math error if the taxpayer provides a valid SSN for the individual.

    Note:

    If the qualifying child's SSN does not verify, correspond using Form 8009-A box 22, or a 324C letter, paragraphs A, 3, 6 fill-in: The SSN provided on your Schedule EIC for the qualifying child was either incomplete or did not match our records. Please verify your information.

  3. Always verify EIC amount when there is a change to Earned Income, AGI, Filing Status and/or Exemptions.

  4. Use either CC EICMP or EIC worksheet on AMS to compute the EIC amount.

    Reminder:

    See IRM 3.11.6.9.11.1 EIC income.

  5. After calculating the allowable EIC:

    If Then
    The EIC amount matches taxpayer's figure Continue processing the return.
    The taxpayer's figure is within ≡ ≡ ≡ ≡ (above or below) of the computed EIC

    Caution:

    Do not exceed the maximum EIC per the table in Paragraph 6 below.

    Accept the taxpayer’s figure and continue processing the return.
    The taxpayer’s figure is less than the computed EIC amount by ≡ ≡ ≡ or more Adjust the EIC amount using your computed figure. Do not correspond or set a math error.
    The taxpayer's figure is greater than the computed EIC by ≡ ≡ ≡ ≡ ≡ or more Adjust the amount to the computed EIC and set the math error per IRM 3.11.6.7.4.

    Note:

    Use CC RTVUE and the taxpayer's explanation when determining Earned Income.

  6. The following is the maximum allowable EIC amounts. If the taxpayer’s EIC amount exceeds the maximum allowable amount below, adjust to the computed amount to avoid an unpostable condition.

    Tax Year No children 1 child 2 children 3 or more children
    2018 $519 $3,461 $5,716 $6,431
    2017 $510 $3,400 $5,616 $6,318
    2016 $506 $3,373 $5,572 $6,269
    2015 $503 $3,359 $5,548 $6,242
    2014 $496 $3,305 $5,460 $6,143

    Note:

    If the taxpayer’s EIC amount exceeds the maximum amount by less than ≡ ≡ ≡ ≡ do not correspond or set a math error.

    Example:

    On a 2016 return the taxpayer with two children claims an EIC amount of $5,575. Your EIC worksheet calculates $5,565 and the maximum EIC for two children in 2016 is $5,572. Adjust to the computed amount and not set a math error or correspond.

  7. If the taxpayer has already received EIC, send a 474C letter, paragraphs C, 1, d; fill-in: We did not allow the Earned Income Credit because our records indicate that you previously received the credit as part of your original or amended return.

  8. EIC allowed on the original return posts as a computer-generated TC 768 with a minus after the amount.

  9. Update the DUPOL database using CC DDBCK prior to making any adjustments when:

    • Adding/deleting a qualifying child for EIC

    • Increasing EIC

      Exception:

      Do not update when EIC increase is due to additional Form W-2, or when working EIC Non-TIN related math error responses except for ME 653 (see paragraph 9 ME 653). SP is now working TIN related math errors. TIN related math error codes include 604, 610, 605, 654, 667, 701, 702, 741, 743, 745 and 748.

      Note:

      If the DDBCK response states that the child failed validation (other than an invalid TIN/Name issue), refer to CIS/AM.

  10. When making an adjustment to EIC, use RC 053 and:

    • CRN 764 for increases

    • CRN 765 for decreases

    Note:

    Priority code ''8'' is required when a TC 764 is input with TC 29X and there is a prior posted TC 29X (except a previously posted TC 290 with priority code 6 or a TC 290 with Julian Date 999). Use priority code ''1'' if both priority code ''1'' and ''8'' are required to adjust the account. Example: Account with -L freeze and the conditions above would require priority codes ''1'' and ''8'' and therefore ''1'' would be used.

CP 09, Earned Income Credit for Taxpayer with Qualifying Children
  1. The CP 09 notice, Earned Income Credit - You May Be Entitled to EIC, is generated from criteria on the original return. A CP 09 notice is issued to low income taxpayers with qualifying children who appear to qualify for Earned Income Tax Credit (EITC) but did not claim it on their original return.

  2. In certain instances the 2D-Barcode due to print quality cannot be read by the handheld scanner. If this occurs and there is no other identifying information on the notice such as an address, dependent SSN, legible signature, etc. then the notice will have to be handled as classified waste.

  3. If the taxpayer claims a child on the CP 09 that was not claimed on the original return, issue correspondence informing the taxpayer of the requirement to file a Form 1040X to claim the child as a qualifying child. Allow the qualifying child(ren) claimed on the original return and send a 474C letter paragraphs C, 1, d fill-in: We disallowed part of your claim for the Earned Income Credit because a child shown on your CP 09 notice was not claimed on your original return. To claim an additional child as a qualifying child, you must file a Form 1040X.

  4. PATH Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

  5. Follow instructions in IRM 3.11.6.9.11.1 and IRM 3.11.6.9.11.2 for determining taxpayer's EIC eligibility.

  6. If a child appears not to meet the age requirements, do not assume that the child is a student or disabled. The taxpayer must indicate the child meets the age test. If a child appears not to meet the age test, send a 474C paragraphs C, 1, d with fill-in: We disallowed your claim for Earned Income Credit because a child shown on your CP 09 appears not to meet the age requirement. If the child meets the age requirement as a student or disabled individual, you must file a Form 1040X and complete Schedule EIC.

    Note:

    You should input a partial adjustment for any child(ren) that meet all qualifications and send a 474C paragraphs C, 1, d fill-in: We disallowed part of your claim for Earned Income Credit because one or more of the children shown on your CP 09 did not meet the age requirement. In order to claim a student or disabled dependent, you must file a Form 1040X and complete Schedule EIC.

  7. Compute the EITC amount using IDRS CC EICMP definer "R" or the EIC worksheet on AMS then adjust the account accordingly.

  8. If current year, update Command Code DUPED when allowing EITC based on a CP 09.

  9. When adjusting an account based on a CP 09 use:
    A) If allowing the credit:

    • BS 05

    • SC 1

    • Reason Codes (RC) 017 and 053

    • CRN 764

    • Priority Code 3

      Note:

      Do not input the amended claims date.


    B) If disallowing the credit:

    • BS 05

    • SC 1

    • RC 054

      Note:

      Do not input an amended claims date.

  10. If the taxpayer is not eligible for EITC based on our computations or eligibility criteria, and send a 474C letter, paragraphs C, 1, d. Use fill-in: We are writing in response to the Notice Number CP 09 we recently mailed to you. We are sorry to inform you that you do not qualify for the Earned Income Tax Credit. We apologize for this inconvenience. For the adjustment use TC 290 .00, BS 05, SC 1, RC 054.

  11. If the filer requests direct deposit, use a 474C paragraphs C, 3, d see IRM 3.11.6.10.6.

  12. The Additional Child Tax Credit may have to be recomputed if EITC is allowed and the taxpayer claimed three or more qualifying children for the Child Tax Credit.

CP 27, EIC Potential for Taxpayer Without Qualifying Children
  1. The CP 27 notice, EIC Potential for T/P Without Qualifying Children, is generated from criteria on the original return. A CP 27 notice is issued to low income taxpayers without qualifying children who appear to qualify for Earned Income Tax Credit (EITC) but did not claim it on their original return.

    Note:

    In certain instances the 2D-Barcode due to print quality cannot be read by the handheld scanner. If this occurs and there is no other identifying information on the notice such as an address, dependent SSN, legible signature, etc., then the notice will have to be handled as classified waste.

  2. PATH Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

  3. Follow instructions in IRM 3.11.6.9.11.1 for determining taxpayer's EIC eligibility.

  4. Compute the EITC amount using IDRS CC EICMP definer "R" or the EIC worksheet on AMS then adjust the account accordingly.

  5. When adjusting an account based on a CP 27 use:
    A) If allowing the credit:

    • BS 05

    • SC 1

    • RC 017 and 053

    • CRN 764

    • PC 3

      Note:

      Do not input an amended claims date.


    B) If disallowing the credit:

    • BS 05

    • SC 1

    • RC 054

      Note:

      Do not input an amended claims date.

  6. If the taxpayer is not eligible for EITC based on our computations or eligibility criteria, disallow the credit: send a 474C letter with paragraphs C, 1, d fill-in: We are writing in response to the Notice Number CP 27 we recently mailed to you. We are sorry to inform you that you do not qualify for the Earned Income Tax Credit. We apologize for this inconvenience. For the adjustment use TC 290 .00, BS 05, SC 1, RC 054.

  7. If the filer requests direct deposit, send a 474C paragraphs C, 3, d.

Earned Income

  1. Earned income includes all employee compensation subject to income tax, net earnings from self-employment (SE), and gross income received by a statutory employee.

  2. Taxable earned income includes:

    • Wages

    • Salaries

    • Tips

    • Strike pay

    • Sick pay

    • Union strike benefits

    • Net earnings from self-employment (SE) or gross income received by a statutory employee.

    • Disability benefits (not disability Social Security) received by taxpayers under minimum retirement age (normally, this is reported on the Form 1040 as wages).

    Note:

    Minimum retirement age may vary.

  3. An amount paid to an inmate in a penal institution, for work, is not considered earned income for EIC purposes. Refer to IRM 3.11.6.4.19.

  4. For EIC purposes, use SE income as reported on Schedule SE, minus the deductible part of SE tax or use EIC Worksheet B in Publication 596, Earned Income Credit.

  5. If Schedule SE is not present because the net earnings from self-employment shown on Schedule C, C-EZ, or F (or the combined net earnings) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , use the amount of net profit or loss reported on Schedule C, C-EZ or F.

  6. If Schedule SE is not present and there is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ reported, refer to Cat A.

  7. If SE income is a loss, subtract the amount from other earned income.

  8. If the optional method is used, use the optional amount as income; do not subtract the SE loss.

  9. If the taxpayer is a statutory employee (indicated on Form W-2, box 13), use Schedule C or C-EZ, line 1, as earned income.

    Note:

    If taxpayer receives wages from ministerial duties, some of the income reported on Form 1040, line 7, may also be shown on Schedule SE, line 2. Refer to CIS/AM.

  10. Native American Tribe Members who report Form 1099-MISC tribal related income on a Form 1040X are not subject to SET, nor is the amount considered as "earned income" for EIC purposes. The literals are:

    1. Indian gaming/Indian Gaming Proceeds/IGP

    2. Indian tribal distribution, income, fund, or earnings

    3. Native American

    4. IGE

    5. ITI

    6. Alaska Permanent Fund/APF

    7. Alaska Permanent Fund DIV/APFD

  11. Earned Income includes:

    • Form· W-2 or similar statement

    • Form 1099-MISC

      Note:

      Not all income reported on a 1099-MISC is considered earned income.

    • Form 1099R with Distribution Code 3 and/or Disability

    • Form 4137

    • Form 8919

    • Schedule C

    • Schedule E, Part II (Line 29b col h, line 29a col j, line 40))

    • Schedule F

    • Schedule SE

    • Notation of HSH, Household Employee Income, Household Help

    • Notation to the left of line 21 indicating self-employment

    • Notation of prior year earned income (PYEI)

  12. Income that is not Earned Income:

    • Welfare payments and benefits

    • Pensions

    • Taxable scholarships or fellowship grants not reported on Form W-2

    • Workers compensation benefits

    • Alimony and child support

    • Interest and dividends

    • Non-disability pensions and annuities (e.g., Form 1099R showing income other than Distribution Code 3)

    • Nontaxable foster care payments

    • Social Security and railroad retirement benefits (including disability benefits)

    • Unemployment compensation (insurance)

    • Veterans' benefits (including VA rehabilitation benefits)

    • Workfare payments

    • Conservation Reserve Program (CRP) payments

    • Nontaxable military pay

    • Form 1099 C - cancellation of debt

      Exception:

      Taxpayers can elect to include nontaxable COMBAT pay in earned income for the earned income credit.

Credits -- Refundable (Line 15)

  1. The following subsections provide processing instructions for Line 15:

    • Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains

    • Form 4136, Credit for Federal Tax Paid on Fuels

    • Form 8812, Additional Child Tax Credit

    • Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. If the taxpayer claims a non refundable credit on line 15 of Form 1040X, move the amount to line 7. See IRM 3.11.6.9.6 paragraph (5).

Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains (Line 15)
  1. A regulated investment company (RIC) may elect to keep and pay income tax on certain capital gain income it received during the tax year. The RIC is required to issue a Form 2439 to each of its shareholders for the amount of the undistributed capital gain to be included on the shareholders Schedule D, Form 1040. In addition, the tax paid by the RIC may be claimed by its shareholders as a credit on their respective Form 1040s.

    Note:

    Be aware of frivolous claims (e.g., "Reparation Tax" ) filed on this form. (See Exhibit 3.11.6-4, Frivolous Claims)

  2. The shareholder should attach Copy B, Form 2439, to the original or amended tax return. Do not reject claim or correspond for a missing Form 2439 if the taxpayer claims ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . If the amount claimed on Line 15 (1040X) is ≡ ≡ ≡ ≡ ≡ ≡ ≡ , correspond.

    Note:

    Correspond per IRM 3.11.6.10 use either Form 8009-A, box 17 or a 324C letter paragraphs A, 3, 6 fill-in: Please provide Form 2439 to support your change to line 15. A duplicate or photocopy is acceptable.

  3. Loose Forms 2439, Copy A and/or B, may be received. If "NOMINEE" is noted at the top of the form, no adjustment is made to the taxpayer’s account. Associate the form with the return of the taxpayer who appears in the Shareholder's name and address box. (If this is a company entity, route to CIS/AM.)

  4. Action required:

    1. Input TC 290.00 if no other adjustment is required.

    2. Use credit reference number 766 to allow the credit.

    3. Use Reason Code 057.

Form 4136, Credit For Federal Tax Paid on Fuels (Line 15)
  1. Form 4136 must be attached if credit claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Route to Cat A if the credit claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Route to Frivolous see IRM 3.11.6.4.12 or follow local procedures when the Form 4136 claims for occupations that would not justify the use of vehicles for off road use.

    Example:

    Occupations that normally qualify include: farming, logging, and commercial fishing.

  4. If Form 4136 is ≡ ≡ ≡ ≡ and not attached, then correspond.

    Note:

    Correspond per IRM 3.11.6.10 using Form 8009-A, box 4 or a 324C letter using paragraphs A, 3, 6 fill-in: Please complete Form 4136 to support the changes you have made.

  5. If Form 4136 is present or ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , process using RC 061 and the CRNs on Form 4136. Use CRN 362 if the Form 4136 is missing and under tolerance.

    Note:

    Fuel Tax Credit posted without a CRN in 2015 and prior. Beginning in 2016 the credit claimed on the original filing posted as a CRN 450, beginning in 2017 the CRN 450 will also post on adjustments. Use the CRN from Form 4136 to adjust/add the credit; do not use CRN 450.

  6. Include priority code 8 when making an adjustment.

Form 8812, Additional Child Tax Credit (Line 15)
  1. This refundable credit is for certain individuals who qualify for CTC, see IRM 3.11.6.9.6.2 but received less than the full amount of the credit. The additional child tax credit (ACTC)may result in a refund even if no tax is owed.

    Note:

    If the credit was allowed during the original processing, TC 766 with CRN 336 will be present on the tax module.

  2. If there is a change to ACTC and CTC/ACTC Recertification indicator 1, 2, 3, 4 or 9 is present on IDRS, route to CIS/AM.

  3. If the taxpayer attaches a Form 8862 for a credit not addressed on the amended return and there is an indicator for that credit, then return the Form 8862 to the taxpayer with a Form 8009-A and fill-in: We are returning your Form 8862, this form should be filed with your next return that claims (name of credit(s). If the taxpayer does not have any indicators or does not have an indicator for the credit marked on the Form 8862, continue processing.

  4. Path Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

  5. In order to qualify for the Additional Child Tax Credit (ACTC) the taxpayer must meet the qualifications for the child tax credit. If the taxpayer does not meet all of the criteria, partially/completely disallow the claim depending on the issues. Follow instructions in IRM 3.11.6.9.6.2 and IRM 3.11.6.9.13.3 for determining taxpayer’s Additional Child Tax Credit.

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

    Exception:

    For a claim with both EITC and ACTC input the claim through CC DDBCK, if CC DDBCK response is "ok to input REQ54" , do not route to Cat A for ACTC.

    Exception:

    If there is a math error on the account for the exemption, CTC, or ACTC, route to CIS/AM per local procedures, not Cat A.

    Note:

    Continue to route as Cat A if the claim meets Cat A criteria for any issue(s) other than ACTC.

  7. This credit has been expanded to include taxpayers with any number of qualifying individuals.

  8. If the taxpayer indicates a religious or conscience-based objection to obtaining or using a TIN, route to CIS/AM.

    Note:

    IRS will allow the credit if the taxpayer identifies as either Amish, Mennonite or Exempt 4029, even if the individual does not have a valid TIN. If the credit should have been allowed during original processing, adjust the account and/or process the claim.

  9. If Form 8812 is incomplete or missing, and cannot be perfected or "dummied" by using AMS worksheets, correspond per IRM 3.11.6.10 for required information to complete processing.

    Note:

    Correspond using either Form 8009-A, box 4 or 5; or a 324C letter with paragraphs A, 3, 6 fill-in: Please complete [Form/Schedule] 8812 to support the changes you have made.

  10. If a taxpayer (or the spouse if married filing jointly) received nontaxable combat pay, they must include the amount in figuring their earned income when figuring the additional child tax credit.

  11. Math verify the taxpayer's figure by completing the appropriate worksheet in the instruction booklets, publication, or electronic web-based worksheets on AMS.

    If And Then
    The allowable ACTC matches taxpayer’s figure   Continue processing the return
    The allowable ACTC does not match taxpayer’s figure
    • 1. The taxpayer's figure is within ≡ ≡ ≡ of the allowable ACTC

    • 2. The taxpayer’s figure is ≡ ≡ ≡ or more greater than the allowed ACTC

    • 3. The allowed ACTC is ≡ ≡ ≡ or more greater than the taxpayer’s figure (taxpayer is due more ACTC)

    • 1. Accept the taxpayer’s figure and continue processing the return.

    • 2. Adjust the ACTC for the correct amount and set the math error per IRM 3.11.6.7.3.

    • 3. Adjust the ACTC amount using your recomputed figure. Do not correspond or set a math error.

  12. Update the DUPOL database per IRM 3.11.6.8prior to making any adjustment.

  13. To increase or allow the credit, input CRN 336 with a positive amount; to decrease or remove a previously posted credit, input CRN 336 with an amount followed by a hyphen (-) and RC 061.

  14. The Disaster Tax Relief and Airway Extension Act of 2017 added a rule for qualifying taxpayers that were affected by Hurricane Harvey, Irma or Maria. Taxpayers whose 2016 Earned Income is greater than their 2017 Earned Income may elect to use the 2016 Earned Income to figure their 2017 EIC. Taxpayers are instructed to write "PYEI" and their 2016 earned income amount on the dotted line for EIC. Qualifying individuals are those individuals who:

    • lived in the Tropical Storm or Hurricane Harvey disaster area on August 23, 2017.

    • lived in the Hurricane Irma disaster area on September 4, 2017.

    • lived in the Hurricane Maria disaster area on September 16, 2017.

    • California Wildfires area between October 8, 2017 and January 18, 2018.

    Note:

    Change the category to KATX if adjusting.

CP 08, Additional Child Tax Credit
  1. The CP 08, You May Qualify for a Refund From the Additional Child Tax Credit, is generated from criteria on the original return. Taxpayers will be issued a CP 08, informing them of their potential eligibility to claim the Additional Child Tax Credit, when they:

    1. Compute an amount for the Child Tax Credit, have no total tax liability, and fail to use the remaining portion of the credit to claim the Additional Child Tax Credit, or

    2. Indicate eligibility for the Child Tax Credit (by checking the boxes on line 6c), do not claim the Child Tax Credit due to no tax before credits and do not claim the Additional Child Tax Credit.

    Note:

    In certain instances the 2D-Barcode due to print quality cannot be read by the handheld scanner. If this occurs and there is no other identifying information on the notice such as an address, dependent SSN, legible signature, etc. then the notice will have to be handled as classified waste.

  2. Path Act criteria may apply to this credit, see IRM 3.11.6.9.6.1.

  3. In order to qualify for the Additional Child Tax Credit (ACTC) the taxpayer must meet the qualifications for the child tax credit. If the taxpayer does not meet all of the criteria, partially/completely disallow the claim depending on the issues. Follow instructions in IRM 3.11.6.9.6.2 and IRM 3.11.6.9.13.3 for determining taxpayer’s Additional Child Tax Credit eligibility including PATH Act criteria and recertification indicators.

    Note:

    Do not route CP 08s to Cat A.

  4. Compute the amount of the credit based on the qualifying children claimed on the CP 08 that meet the following criteria:

    1. The same children were allowed as dependent exemptions on the original return.

    2. The children are less than 17 years old at the end of the calendar year.

  5. If the taxpayer claims additional children on the CP 08 that were not claimed on the original return as dependent exemption, issue correspondence informing the taxpayer of the requirement to file a Form 1040X to increase the number of dependents.

    If Then
    Taxpayer claims additional children on the CP 08 that were not claimed on the original return
    OR
    Taxpayer claims ANY children on the CP 08 that were disallowed as exemptions
    Adjust for the originally claimed children who qualify and send a 474C letter paragraphs C, 1, d, using fill-in: We disallowed part of your claim for the Additional Child Tax Credit because of the additional children shown on your CP 08 notice. In order to claim additional dependents, you must file a Form 1040X.
    Some of the children that the taxpayer claimed on the CP 08 notice are eligible, allow the ACTC for those dependents 1. Input the adjustment with a TC 290 .00, Use CRN 336 and the recomputed credit change, Use RC 061
    There are other issues in addition to the taxpayer claiming more children on the CP 08 than were claimed on the original return Route to CIS/AM.
  6. Follow the procedures below when a taxpayer claimed the Child Tax Credit on their original return, and submits a CP 08 with less than 3 qualifying children claimed and does not submit Form 8812, Additional Child Tax Credit:

    1. Verify the taxpayer meets the criteria for receiving the Child Tax Credit, and if eligible, compute the amount of the Additional Child Tax Credit per Form 8812 instructions.

    2. Research CC RTVUE to determine if the taxpayer used non-taxable combat pay when figuring his/her earned income tax credit. If claimed, then do not include that amount when figuring the amount for earned income on Form 8812.

  7. If the taxpayer did not use an amount for non-taxable combat pay when figuring EIC, or if EIC was not claimed, then include the amount of non-taxable combat pay when figuring earned income on Form 8812.

  8. When adjusting an account based on CP 08:

    1. Use BS 05

    2. Use CRN 336 to allow the credit

    3. Use RC 061, SC 1

    4. Use Priority Code 3 to allow interest to be systemically calculated as an IRS initiated adjustment. Do not input the amended claims date.

  9. If the filer requests direct deposit, send a 474C paragraphs C, 3, d.

American Opportunity Credit
  1. For claims involving the refundable portion of the American Opportunity Tax Credit (Form 8863) see IRM 3.11.6.9.6.7.2.

  2. Form 8863 must be attached for the initial claim of the refundable portion of the American Opportunity Credit.

Affordable Care Act (ACA) Overview
  1. The Patient Protection and Affordable Care ACT (ACA) required that certain individuals must have minimum essential health coverage, have a coverage exemption, or make a Shared Responsibility Payment (SRP).

  2. The ACA created a refundable tax credit for health insurance purchased through a Health Insurance Marketplace, the Premium Tax Credit (PTC).

  3. Certain individuals who did not have minimum essential health insurance coverage may be required to make a SRP on their tax return. This will be the only adjustment performed on MFT 35.

  4. All ACA related actions should be input using the tools provided (xClaim, Credit transfer etc.) if available.

  5. SP 1040X will accept ACA related forms and entries as filed. Do not perfect any ACA entry based on IDRS research, associated forms or entries.

Coverage Checkbox
  1. When the taxpayer files their original return, they are required to indicate if everyone in their tax household had minimum essential health coverage for the entire year. The coverage indicator can be found on:

    • For tax year 2018, the checkbox is found in the entity section of Form 1040.

    • For tax years 2014-2017, the checkbox is found on Form 1040 line 61, Form 1040A line 38, Form 1040EZ line 11, and Form 1040-X full-year coverage,

    • CC TXMOD with the literal "1" in the "COVERAGE-IND" field.

    • CC IMFOLR with the literal "COVERAGE" in the "INDS" field.

      Note:

      If a previous adjustment is on the account, these fields may display unreliable information. Review any posted adjustments for a TC 869 that may indicate the coverage indicator has been changed.

    Note:

    The Coverage Checkbox is valid for tax year 2014 and subsequent, ignore any request to update the checkbox for tax year 2013 and prior.

  2. If the case meets route out criteria, do not update the coverage checkbox.

  3. Changing the coverage checkbox will depend on the version of Form 1040X the taxpayer used.

    If And Then
    Originally the coverage checkbox was “off” The coverage box is checked Turn the coverage indicator “on”
    Originally the coverage checkbox was “on” The coverage box is not checked and:
    1. An SRP exemption is claimed on F8965 or SRP is claimed or taxpayer states they did not have full year coverage

    2. None of the above

    1. Turn the coverage indicator “off”

    2. Take no action with the coverage indicator

  4. If the taxpayer changes the full-year checkbox and there are no other changes to MFT 30, input:

    1. TC 290 for .00.

    2. No reason code (RC).

    3. No amended claims date.

    4. Item Reference Number (IRN) 869 with a:
      -“.00” if the taxpayer is removing full-year coverage – (off)
      -“.01” if the taxpayer is adding full-year coverage – (on).

    5. Enter “Y” in the source document field.

    6. Enter “SD1040X” in the remarks field.

    Note:

    No supporting documentation is required.

  5. If the taxpayer changes the full-year checkbox and there are other changes to MFT 30, include the checkbox change with your adjustment by following paragraph 4(d) above.

  6. During September 2017 certain taxpayers were informed they had not reconciled their ACA coverage or exemption for 2014 and/or 2015 and 2016. Taxpayers have responded by filing one Form 1040X that has multiple tax years checked and indicating the full year coverage checkbox had been omitted on the original filing. Process amended returns where the checkbox is the only issue as follows:

    1. Control the most recent year amended return.

    2. Make one copy of the front page of the Form 1040X for each additional year checked, 2014 and subsequent.

    3. Edit the copy(s) with O/S 2016 or O/S 2015 as appropriate.

    4. Update the coverage checkbox for each year checked; 2014 through 2016 following paragraph (4) above.

    5. Use the original signed Form 1040X as the source document for the most recent year and use the annotated copies as the source document for the older year(s).

Premium Tax Credit (PTC)
  1. The Premium Tax Credit (PTC) is allowed for tax years 2014 and subsequent. Taxpayers use Form 8962, to claim the Premium Tax Credit.

  2. Taxpayers eligible for PTC may have elected to receive Advance Premium Tax Credit (APTC). Taxpayers who receive the benefit of APTC must complete Form 8962 to reconcile the advance payment(s). As a result, Form 8962 may be reported:

    1. On line 6, as a tax liability for excess APTC.

    2. On line 15, as a refundable credit for PTC.

  3. Refer to CIS/AM if:

    • Form 8962 is being added, deleted, or changed, unless the entire return is a true duplicate, see IRM 3.11.6.6.5.

    • Form 1040X Line 6 is being increased/decreased and write-in reflects "APTC Repayment" or similar.

    • PTC/APTC is present on CC TXMOD or CC IMFOL and there is a change to income, filing status or the taxpayer is changing the size of their tax household. (i.e., adding or deleting an exemption claimed on their return).

    • APTC data is indicated through Coverage Data Repository (CDR) research when adding an exemption.

    • Form 1095–A is submitted with an amount(s) in Part III column C.

  4. Notate PTCX in the working trail when routing the amended return due to PTC / APTC impact and follow any local procedures.

  5. All amended returns potentially impacting PTC will need to be researched using CC TXMOD or CC IMFOL. A change to PTC may not be clear, such as a change to filing status, income, and/or size of their tax household and Form 8962 is not attached nor addressed.

    Note:

    When adding exemptions use AMS to research the Coverage Data Repository (CDR) per IRM 3.11.6.9.3.1.

  6. PTC allowed on the original return posts as TC 766 with CRN 262. Posted PTC associated data can be identified by the following data elements:

    CC TXMOD CC IMFOL
    ADV-PTC-AMT TOTAL PTC
    PTC-LIAB-AMT TOTAL APTC
    PTC-AMT LIMIT AMT
    PTC LIMITATION AMT APTC TX LIAB
      APTC REPMT
Shared Responsibility Payment Overview
  1. Beginning in 2014, certain individuals must have Minimum Essential health Coverage (MEC), have a coverage exemption, or make a Shared Responsibility Payment (SRP). On their returns, taxpayers may check a full-year coverage checkbox if all family members were covered or:

    • Attach Form 8965, Health Coverage Exemptions.
      and/or

    • Make a SRP.

  2. A taxpayer is liable for the SRP, if the taxpayer or another individual in the same tax household, does not have either MEC or a coverage exemption. The SRP is assessed and collected on MFT 35.

  3. Master File Verification is required on MFT 35 for all 2014 and subsequent returns. To verify MFT 35, compare Form 1040X, Column A, Line 9 to IDRS.

    If And Then
    Form 1040X, Column A, Line 9 matches IDRS   Continue processing the Form 1040X
    Form 1040X, Column A, Line 9 does not match IDRS "MFT 35 Display" is present on xClaim or a TC 971 AC 530 is present on IDRS Research MFT 35 using CC IMFOLT.
    1. If the SRP amount matches Form 1040X, Column A, Line 9, continue processing the return.

    2. If the SRP amount does not match Form 1040X, Column A, Line 9, adjust to the column C amount.

    If And Then
    SRP is decreasing or SRP is increasing from any amount greater than zero SRP has not posted on MFT 35
    1. Hold the return per local procedures.

    2. Monitor the case weekly for the MFT 35 to post.

    3. After MFT 35 posts, continue to process the amended return.

    Note:

    Do not count the return on your Daily Work Record until the MFT 35 adjustment is input.

    Note:

    Research should include reviewing the posting date of the TC 150 compared to today’s date; if less than two weeks then research CC RTVUE for a SRP entry, Line 61; if an entry is present, suspend the case for five workdays.

    Caution:

    During Master File Verification, the Total Tax line of Form 1040X will not match if there is a SRP present on the account. The SRP is not included in the TC 150 amount. Math verification normally done per IRM 3.11.6.7.3, Master File Verification is not required if the difference is only the amount of the SRP on MFT 35.

  4. Do not set a math error on SRP adjustments.

Adjusting the Shared Responsibility Payment (SRP)
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The SRP worksheet is not required, do not correspond if missing.

  2. If the taxpayer reduces SRP to zero and doesn’t show full year coverage or an exemption from SRP, send a 916C with paragraphs B, F R, 1, 4. If the taxpayer:

    1. References Executive Order 13765, regarding SRP use fill-in: On January 20, 2017, Executive Order 13765, Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal was signed. However, the Affordable Care Act legislation has not been repealed and you are still required to have full-year coverage, have an exemption from health-care coverage, or make a Shared Responsibility Payment.

    2. Doesn’t provide an explanation use fill-in: The Affordable Care Act requires taxpayers to have full year health care coverage, have an exemption from the coverage or make a Shared Responsibility Payment (SRP). You did not provide an explanation for removing your previously reported SRP.

  3. Research CC TXMOD or CC IMFOL to determine if Exam has assessed/adjusted the SRP (TC 24X RC 154 on MFT 35) or is in the process of reviewing the account (–L freeze on MFT 30).

    If And Then